By Miranda Rosenberg
The Hartford Courant, Nov. 15, 2013
While most Americans have been focusing on the recent problems surrounding the rollout of the new healthcare.gov website, another health insurance story has been largely overlooked. Last month, just as Medicare’s open enrollment period was set to begin, UnitedHealthcare dropped thousands of physicians nation-wide, including thousands in Connecticut, from its Medicare Advantage programs without an explanation.
Who are these physicians and why were they dismissed from United’s Medicare Advantage plans en masse without being dropped from any of United’s commercial programs? Company executives remain notably tight-lipped despite public inquiries from physicians, newspapers and lawmakers. Connecticut’s five-member congressional delegation and attorney general have become involved. Based on the information available, it is clear that the company’s end goal is to unload its sickest, costliest patients.
Typically insurance companies entice patients to join by including large networks of highly regarded providers. United’s doctor drop, however, accomplished almost the exact opposite, wiping out entire services in some areas and removing the most talented physicians from the network.
Many of the physicians in question carry United’s premium designation, the company’s official recognition of excellence in “quality of care and cost efficiency.” In Florida, United dropped an estimated 45 percent of its Medicare Advantage provider network, including the nationally renowned Moffitt Cancer Center in Tampa. United also dropped the only nephrologists in Connecticut’s greater New Britain area as well as the entire Yale Medical Group, which represents more than 1,000 physicians on the faculty of the Yale School of Medicine. It is not only specialists that United is targeting — more than a third of the 2,250 physicians dropped in Connecticut are primary care providers.
What does this mean for patients? Thousands of senior citizens now must either find new in-network physicians, enroll with a different company’s Medicare Advantage plan, or go back into traditional Medicare before open enrollment ends on December 7th.
Finding a new doctor can be challenging because many doctors, especially primary care physicians, either do not accept new patients or have long waiting times for new patient appointments. Many of our nation’s seniors have complicated, ongoing health problems and complex medical histories — they cannot afford to wait months to see a new doctor. Their current physicians are familiar with their health needs; abruptly changing doctors only serves to disrupt their care.
The healthiest patients who rarely need medical care are more profitable for United; these patients may not have developed strong physician-patient relationships. Patients undergoing costly, long-term treatments such as dialysis and chemotherapy, however, are more likely to choose to leave United’s Medicare Advantage programs in order to stay in the care of their current physicians.
When Medicare Advantage programs debuted, they tended to attract younger, healthier patients. Now that those patients are getting older and sicker, the cost of their care is increasing, pushing United to look for a way to remove them selectively from their coverage programs.
If managed care is meant to represent successful health maintenance, however, then the patients United has been covering for the past decade should be healthier than average. United should enact policies that aim to retain these policyholders rather than drop physicians in order to encourage the patients to go elsewhere for coverage. Getting expensive patients to leave the United network enables United to maximize its own revenue and protect its 2014 projected earnings, but it comes at the expense of the other insurers and traditional Medicare which will be forced to absorb this high-cost patient population.
Ultimately, what United has done is enact a back door plan to unload the sickest, costliest patients and put the financial burden back onto traditional Medicare and other health insurance companies.
Miranda Rosenberg of Philadelphia is a first year student at the Perelman School of Medicine at the University of Pennsylvania with a research focus on health policy.
http://www.courant.com/news/opinion/hc-op-rosenberg-insurer-cuts-doctors-patients-left-20131115,0,4306559.story
The United States is worse in access, affordability and insurance complexity
Access, Affordability, And Insurance Complexity Are Often Worse In The United States Compared To Ten Other Countries
By Cathy Schoen, Robin Osborn, David Squires, and Michelle M. Doty
Health Affairs, December 2013 (online November 13, 2013)
The United States is in the midst of the most sweeping health insurance expansions and market reforms since the enactment of Medicare and Medicaid in 1965. Our 2013 survey of the general population in eleven countries — Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States — found that US adults were significantly more likely than their counterparts in other countries to forgo care because of cost, to have difficulty paying for care even when insured, and to encounter time-consuming insurance complexity. Signaling the lack of timely access to primary care, adults in the United States and Canada reported long waits to be seen in primary care and high use of hospital emergency departments, compared to other countries. Perhaps not surprisingly, US adults were the most likely to endorse major reforms: Three out of four called for fundamental change or rebuilding.
Insurance Design And Affordability
In this study, US adults — both the insured and the uninsured — were more likely than adults in other countries to report going without care because of costs, having high out-of-pocket costs, and having difficulty paying medical bills.
Reforms scheduled under the Affordable Care Act provide for subsidies to lower cost sharing for those with incomes below specified thresholds as well as reductions in premiums for people with low or modest incomes. However, by international standards, cost-sharing exposure will remain high for those with low incomes. Also, states will have considerable leeway in insurance design for middle- and high-income families, with annual out-of-pocket maximums and deductibles that will continue to be high compared to those in other countries. For people with chronic, ongoing conditions, the result could be continued high medical cost burdens.
Insurance And Primary Care
Insurance design and payment policies also matter for access and countries’ primary care infrastructure.
The high rates of ED use associated with long waits for primary care in the United States (including among insured patients) and several other countries underscore the importance of 24/7 primary care coverage in terms of overall system cost and resource allocation.
Insurance Complexity
The experiences of patients and physicians in other countries regarding the time-consuming complexity of insurance also provide potential insights for the United States.
A recent Institute of Medicine study estimated that administrative layers throughout the US health insurance and care system add as much as $360 billion per year to the cost of health care — and much of that sum was deemed to be wasted, with little or no return in value. Evidence from other countries suggests opportunities to reduce such costs.
Cost Control
A key challenge for the United States is its already high level of health spending, which is 50–167 percent higher per capita than in the other study countries. These costs undermine the financial protections offered by insurance and drive premiums up.
Support For Reform
Polls in the United States show mixed public support and lack of knowledge about the provisions of the Affordable Care Act. Yet in the survey most US adults called for major change, with a minority preferring the status quo. People who had experienced problems with access to or affordability of care or who had time-consuming insurance problems had more negative views than people who had not had such problems.
http://content.healthaffairs.org/content/early/2013/11/12/hlthaff.2013.0879.full.pdf+html?ijkey=7LvT
Comment:
By Don McCanne, M.D. This 2013 survey sponsored by the Commonwealth Fund is very helpful during the Affordable Care Act transition because it tells us how the United States is doing compared to ten other industrialized nations with universal systems. Our results are terrible, and when we look ahead at the changes yet to be implemented, it is clear that they will have an almost negligible impact on correcting the serious deficiencies in the United States. Our per capita costs will remain far higher than those of other nations. Our insurance products will remain very expensive yet highly flawed in design since they leave those individuals who have significant health care needs with high medical cost burdens. The excessive complexity of our insurance products will continue to waste hundreds of billions of dollars that could be used on health care. Measures intended to provide much needed reinforcement of our primary care infrastructure are all too meager, so timely access to care will remain impaired for too many. Three-fourths of Americans believe that we need fundamental changes or complete rebuilding of our health system. We have a far greater percentage dissatisfied than are in the other developed nations. Although it will be several weeks before the exchange plans and the Medicaid expansions will be in effect, most Americans will not be able to detect any improvements in their health care financing and access. In fact, many will have greater out-of-pocket costs because of increased shifting of costs to patients through measures such as high deductibles, and others will lose access to their current health care professionals and institutions because of the greater use of narrow provider networks – further reducing choices in health care. In spite of the noble intentions of the Affordable Care Act, most of us will not see any correction of the serious flaws demonstrated in this international survey which shows how costly and dysfunctional our system is, and too many of us will be even worse off. As we watch the 2014 implementation unfold, we have to keep in mind that it didn’t have to be this way. We could have had and still can have a single payer national health program – an improved Medicare covering everyone. With what we spend, we should be at the top in these international comparisons. Single payer would get us there.
]]>AHIP statement on consumers keeping their current coverage
AHIP Statement on Consumers Keeping Their Current Coverage
America’s Health Insurance Plans (AHIP), November 14, 2013 America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement on today’s announcement by the administration related to policy cancellations: “Making sure consumers have secure, affordable coverage is health plans’ top priority. The only reason consumers are getting notices about their current coverage changing is because the ACA requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today. “Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers. Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers. Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.” http://www.ahipcoverage.com/?p=12831
Comment:
By Don McCanne, M.D. President Obama’s decision today to allow individuals to keep the insurance they have has devastating policy implications. It is no wonder that AHIP released this statement only minutes after the President’s announcement. The insurance plans that were to be cancelled are plans that have fewer benefits than are now required by the Affordable Care Act. If the replacement plans have more comprehensive benefits, then why would people want to keep their old plan? Individuals place a high priority on the premium to be paid when they select their plans. They will almost always select the plan with the lowest premium that at least superficially seems to meet their needs. If they have major health care needs, they will select plans with more comprehensive benefits, even if they are more expensive. On the other hand, healthy individuals who are watching their budgets will often select the cheapest plan – their old plan in this case, even though it has fewer benefits. So what will happen when people are allowed to keep their old plans? Younger, healthier individuals will stay with those plans whereas older individuals with greater heath care needs will move into the new plans available in the exchanges. This adverse selection that concentrates expensive patients in the new plans will drive premiums up. When the premiums go up, more will drop out, causing the premiums to go up even further – so high that the plan has to be pulled from the market – the death spiral of adverse selection. Karen Ignagni is right when she says that allowing people to keep the insurance they have will destabilize the insurance market and cause premiums to rise, but only for the new insurance marketplaces (exchanges) that the insurance industry is counting on for their expanded business opportunities, made possible by the insurance-industry-designed Affordable Care Act. Although the spinmeisters are busy trying to discredit the President and his administration for the false promise of allowing you to keep your insurance, and for the rollout of the exchange website before it was ready, this noise is a distraction from the real problem here. The Affordable Care Act is an irreparably flawed model of financing health care, and no amount of patching is going to fix it. It is and always will be an unstable, expensive and inequitable model of financing health care. You know what is stable? Medicare. And it is less expensive and more equitable. Yes, it needs continual oversight and refinements, but it has the support of the public. If it were our only health care financing program, in an improved single payer version, virtually all of us would be demanding to keep the insurance that we would then have – an Improved Medicare for All.
]]>Health reform’s problems run deeper than a glitchy website
By Philip Caper, M.D.
Bangor (Maine) Daily News, Nov. 14, 2013
Serious problems with the websites created by the Affordable Care Act continue, and probably will for a long time. Although frantic efforts at incrementally improving them are being made by the Obama administration, and some sites are working better than others, they are a long way from working well.
As I’ve written before, the causes of the website’s problems are far more serious than poor software design. They are baked into the law by its extreme complexity.
There is growing frustration and anger at the administration in Congress from both Democrats and Republicans. Much of it is being expressed by the same people whose hypocrisy and obstructionism is responsible for a failure to do the right thing in the first place. Calls from members of Congress to delay the ACA’s implementation or to repeal it entirely will intensify.
Instead of expanding our existing Medicare program, which has been working well for almost 50 years and is our country’s most efficient and least intrusive health care financing program, the ACA creates complex new law that perpetuates and reinforces the chaos and confusion of our hodgepodge of public and private insurance programs. Coverage and financial assistance continue to depend on an individual’s employment status, income, place of residence, age, conjectures about future health status, and many other factors, some of them subject to change with little or no warning and many impossible to predict.
Smooth implementation of the ACA depends upon the ability of many parts of government and thousands of insurance companies to seamlessly communicate with one another and agree on data drawn from myriad different public and private sources. Some in the health insurance field believe such a task will be difficult or impossible to achieve.
We have to ask ourselves, who are the winners from requiring us to go through the expense and confusion inherent in trying to implement a law of over 2,000 pages? The answer is clear. It’s a health insurance industry that profits from complexity and confusion, and providers of pharmaceuticals, medical supplies, devices and services who benefit excessively from the very weak cost controls inherent in our fragmented system of paying for services.
The losers are all the rest of us. The ACA’s objective, access to health care for all Americans, could have been accomplished much more easily with far less confusion, expense and complexity.
I talk to a lot of people from across the political spectrum about health care reform. There is a growing consensus that improved Medicare for all is the necessary first step in repairing our badly broken health care system.
During a trip to California last week, I ran into House Minority Leader Nancy Pelosi. When I explained to her that while I admired her efforts to reform our health care system, I remain an advocate for “Improved Medicare for All,” she responded, “Yes, we should have done single payer.”
Perhaps there’s still hope. Between Harry Reid’s recent comments and Pelosi’s epiphany, there seems to be a growing understanding of the problem, and its solution, in some parts of Congress.
But first, we will have to get rid of the obstructionist politicians whose only interest seems to be in preserving a health insurance industry that has become one of the most destructive forces in American society.
That task is up to us.
Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.
http://bangordailynews.com/2013/11/14/health/health-reforms-problems-run-deeper-than-a-glitchy-website
Expanding Medicare to all can solve health care disaster
By Caroline Poplin, M.D.
Newsday, Nov. 14, 2013
Republicans can hardly believe their good luck.
The Obama administration has once again snatched defeat from the jaws of victory. After successfully holding off Republican efforts to destroy Obamacare by shutting down the government and threatening default, the administration badly bungled the rollout of the crown jewel of health reform: the insurance exchanges. (No surprise to those of us who wrestle with computers daily.) Somehow administration leaders also failed to anticipate the predictable response of insurance companies to a perfect opportunity to raise premiums wholesale, while blaming someone else.
Nevertheless, we need to keep in mind that even as they gleefully tear into the ACA, Republicans have not offered an alternative.
On reflection, however, this is no surprise. Republicans don’t see a problem with health care in America. Insurers can sell what they chose to whom they chose; people can select policies they like and can afford, or save their money for other things.
This is how markets work. The only change Republicans would make is deregulation, so insurers and good prospects can find one another more easily across state lines.
As Ronald Reagan said: “Government is not the solution to the problem, government (in this case, the ACA) is the problem.” For conservatives, health insurance and health care are ordinary commodities to be traded in the marketplace, just like automobile insurance and automobiles.
But health care is not just another item in the shopping cart. As the African-American spiritual observed, “If living were something that money could buy, the rich would live and the poor would die.” And that is where we are in the 21st century. Health care is a matter of life and death. Our medicine is highly effective. Today, we can cure, or treat, diseases that were once fatal – heart attacks, many cancers, even HIV. That is, if you have the money. Today rich Americans live, on average, five years longer than poor citizens.
Nor is health insurance an ordinary insurance product.
Illness today is not evenly distributed across the population. Some 10 percent of people are responsible for 60 percent of health-care costs in the United States. Because most illness continues for many years after diagnosis, these people are easy to identify: patients with multiple sclerosis, congestive heart failure, lymphoma.
No one wants to pay for the sick people – not the insurance companies (particularly if they cannot recover their costs by charging the sick higher premiums), and not healthy customers. We hear this now, as single men and older people complain that to comply with the ACA, they have to pay for maternity benefits that they will never use.
A free market with lots of choices among multiple insurers, risk pools, policies with all sorts of benefits and price structures, allows insurers and healthy individuals to avoid the sick. The less affluent healthy can gamble on inexpensive policies with spotty coverage (useless to the chronically ill): since most people are healthy most of the time, few of them will ever need to test their insurance. (Or they can join large groups of other healthy people working for large employers who provide insurance.) Insurers can charge sick people thousands of dollars a month to cover the cost of their claims, and then some.
The result? The people who need health care the most have the most difficulty getting insurance that covers it. Doesn’t this defeat the whole purpose of the exercise? That, however, is the Republican alternative to the ACA. And remember, even before the ACA, things were not stable, but deteriorating: as health costs rose, premiums, co-pays and deductibles were going up, employers were cutting back. Without the ACA, those trends will continue.
The ACA was an effort to preserve a private health insurance market, using regulation to achieve a better result. As we see, this is very complicated.
There is a third option. If everyone is in the same, large, pool, everything medically necessary is covered, insurers are paid merely to process claims, and premiums are scaled to income, there is enough money to cover everyone at reasonable cost without elaborate, expensive, error-prone computer programs and geniuses to run them. People will be able to choose their doctors and hospitals. (And the rich can always buy more if they want.)
A crazy, wild-eyed socialist nightmare? No, this is Medicare, a familiar, popular, competently-run public insurance system that everyone’s parents or grandparents rely on. Person-for-person, disease-for-disease, Medicare is the cheapest, most efficient health insurance program in the country. (There is virtue in simplicity.)
Medicare already controls health care costs better than private insurers, and with a few tweaks, could do much more, forcing prices down to the level citizens of every other advanced democracy pay, with no sacrifice in quality.
Given the alternatives, maybe Medicare-for-all deserves a second look.
Caroline Poplin is a physician, attorney and policy analyst in Bethesda, Md.
This article has been distributed by the McClatchy-Tribune News Service.
http://www.newsday.com/opinion/oped/poplin-expanding-medicare-to-all-can-solve-health-care-disaster-1.6435431
Support HR 676, for a single-payer health care system
By Richard Damon, M.D.
The Montana Standard (Butte, Mont.), Letters, Nov. 14, 2013
If you had choices, would you keep the health care insurance coverage you have if you had comprehensive, accessible, affordable, quality, insurance from birth to death, free choice of physician and hospital, no co-pays, no deductibles, no monthly premiums, no more hassle with private insurers, no more threat of medical bankruptcy, and the security that comes with knowing that you will not be one of the thousands who die needlessly because of health rationing imposed by private insurers who provide insurance based on age, gender, health history, or what health care costs have been paid out because of your chronic condition?
Would you choose insurers that focus on profits as their primary objective instead of covering care?
Would you choose to not worry that your sick asthmatic child has to repeatedly end up in the ER?
Would you be willing to pay a modest increase in your taxes to know that whatever health condition you may develop in the future, it would be covered?
Would you choose a program of health care that provides preventive care to prevent illness, and readjusts the distribution of health care providers so care is available to both rural and urban folks?
Would you like to rest at night and not worry about the symptoms that are growing in frequency and intensity that keep you awake?
Would you like to rid yourself of the worrying that your employer might cut your insurance previously provided to you?
Well, you have choice of a single-payer healthcare system, HR 676. The challenge is to speak out, joining a loud national voice to demand it be done.
Write or call your congressional members now.
If you do nothing you are acting like Congress.
You will choose to not make a choice. Your voice can change things.
Dr. Richard Damon resides in Bozeman.
http://mtstandard.com/news/opinion/mailbag/ourreadersspeak-support-hr-it-provides-single-payer-healthcare-system/article_c24b2de8-4ccd-11e3-ae1c-001a4bcf887a.html
Kip Sullivan on the policy community's compromised work on ACOs
Accountable care organization formation is associated with integrated systems but not high medical spending.
By David I. Auerbach, Hangsheng Liu, Peter S. Hussey, Christopher Lau, and Ateev Mehrotra
Health Affairs, October 2013
“[P]roponents hope that ACOs will deliver better quality and outcomes … and have lower costs. Independent analysts have projected savings for ACOs [endnote 3], and a recent evaluation of an ongoing private prototype has found evidence of savings and quality improvement [endnote 4].”
Endnote 3: “Congressional Budget Office, Budget options, volume 1: health care: CBO;2008 Aug…..”
Endnote 4: “Song Z, …, et al. The “Alternative Quality Contract,” based on a global budget, lowered medical spending and improved quality. Health Aff (Millwood). 2012;31:1885-94.”
http://content.healthaffairs.org/content/32/10/1781.abstract
Comment:
By Kip Sullivan, J.D.
The “accountable care organization” is the latest health policy fad to captivate lawmakers. The term was invented at a meeting of the Medicare Payment Advisory Commission on November 9, 2006. Despite the vague definition of ACO, and despite the absence of any evidence supporting claims made for ACOs, Congress included in the Affordable Care Act provisions authorizing the Centers for Medicare and Medicaid Services to initiate an ACO program. CMS has designated some 250 entities as Medicare ACOs.
The two sentences quoted above indicate that even as of mid-2013, seven years after the ACO label was invented and four years after Democrats inserted ACO provisions into the legislation that was to become the Affordable Care Act, ACO proponents must either leave their praise for ACOs undocumented or misrepresent the research on ACOs. The authors of these two sentences chose the latter approach. They cited a study by the Congressional Budget Office which found that ACOs would have almost no impact on Medicare spending, and they cited a study of an ACO-like entity in Massachusetts which found the entity is generating higher, not lower, total health care spending.
The two sentences quoted above are from a paper by David Auerbach and colleagues designed to determine where the 250 Medicare ACOs are forming. They reported they are more likely to form where provider consolidation is higher, notably the Midwest and the Northeast. Because the paper simply asked where ACOs are forming, there was no need for the authors to praise ACOs. However, as the quote above indicates, the authors chose to do so. And, given the state of the research on ACOs, they were reduced to exaggerating one study and misrepresenting another in order to “document” their praise.
The first study cited by Auerbach et al. was the 2008 report to Congress by the Congressional Budget Office. In that report, the CBO analyzed 115 health care reform proposals or “options.” Option number 37 was the ACO, although CBO didn’t label it that way. CBO called it a “bonus-eligible organization.” The CBO stated: “Under this option, groups of providers meeting certain qualifications would have the opportunity to participate … in Medicare as bonus-eligible organizations (BEOs). The concept of BEOs is similar to the accountable care organization models proposed by some researchers” [p. 72]. After describing the BEO in the terms CMS would use several years later when it announced its definition of an ACO, the CBO concluded: “This option would reduce Medicare spending … by $5.3 billion over the 2010-2019 period” [p. 73]. http://www.brookings.edu/~/media/events/2009/3/11%20aco/cbohealthoption37.pdf
Auerbach et al. should have known that five billion dollars is a minuscule portion of a decade of Medicare spending. The 2010 National Health Expenditure Accounts estimated total Medicare spending over the 2010-2019 period would be more than 7 trillion dollars — $7,135,000,000 to be more precise (my calculation using the numbers shown for Medicare in Table 3
http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/proj2009.pdf) If we divide $5.3 billion into $7.135 trillion, the savings CBO said ACOs would achieve turns out to be less than one-tenth of one percent of Medicare spending.
The second paper Auerbach et al. cited – a 2012 paper published in Health Affairs by Song et al. – has already been the subject of two letters published in Health Affairs as well as a comment by Don McCanne on this blog https://www.pnhp.org/news/2013/june/academyhealths-ill-judged-choice-of-the-2013-article-of-the-year. The letter writers (I was one of them) pointed out an extremely obvious defect in the Song paper: The title of the paper claimed the ACO-like entity was saving money when the text stated it wasn’t. Despite the two letters and Don’s comment, Auerbach et al. chose to misrepresent the Song paper, and the editors of Health Affairs let them do it.
Auerbach et al.’s misuse of research is not an isolated example. Over the last several decades, a culture of permissiveness has developed within the US health services research community. This culture tolerates exaggeration and misrepresentation, especially when the exaggeration or misrepresentation promotes the managed care ideology that dominates the health policy debate in this country. As we contemplate how President Obama and the Democrats find themselves burdened by an Affordable Care Act that is not affordable, we should begin our analysis with this question: What role did the US health policy community play in causing policy-makers to think ACOs would make the ACA affordable?
Deloitte’s take on hospital mergers and acquisitions
My Take: The art of becoming big: the dilemma of mergers & acquisitions in health care
By Mitch Morris, MD, Vice Chairman and National Health care Provider Lead, Deloitte LLP
Deloitte, Health Care Current, November 12, 2013
Consolidation has transformed nearly every U.S. industry—manufacturing, retail, life sciences and hospitality — you name it.
The U.S. health care industry is well into another round of consolidation. Already, according to the American Hospital Association, 3,007 hospitals (roughly 53 percent) are part of a health system. The industry went through a round of consolidation in the 1990’s but many would say that, other than better access to the debt market, the resulting health systems were, for the most part, holding companies and not operators that had a focus on economies of scale or reduced costs.
According to Irving Levin Associates, in 2012 there was twice the number of hospital mergers as compared to 2009 and this shows no sign of slowing down. The Affordable Care Act (ACA) has served as a catalyst to accelerate the consolidation movement, which seems to have taken on a life of its own. Several trends are beginning to emerge across the industry:
* As reimbursement rates continue their downward trend and the costs of maintaining infrastructure and regulatory compliance march ever higher, the acute care industry seeks scale to better manage costs. Many acute care players are beginning to reduce costs through economies of scale, including the implementation of shared services, programmatic integration and consolidation, selective sourcing and addressing clinical effectiveness. The hope is that costs can be shaved by as much as 30 percent, which is certainly not a goal that can be achieved simply by headcount reduction.
* The stand-alone hospital may be an endangered species—many smaller organizations simply cannot afford to invest in keeping up with facilities, upgrading IT capabilities, attracting the best clinicians, or playing an active role in the emerging payment model innovation game. Nor do they all have the market clout to be considered essential players in narrow health plan networks. As margins shrink and access to capital becomes more difficult, even hospitals in affluent communities are feeling the pinch.
* Health plans, which also continue to consolidate, are dipping their toes into the provider business through the acquisition of medical groups. Many are also developing capabilities to manage population health.
So is bigger better? How big is big enough? And can a system be too big?
It’s not uncommon for mergers to fail to produce expected benefits for the new organization or the communities they serve. But there is some data to suggest that, by some measures of performance, hospital acquisitions do produce a benefit. A Deloitte Center for Health Solutions report, Hospital Consolidation: Analysis of Acute Sector M&A Activity, recently studied hospitals that were acquired in 2007 and 2008 and found that, over several years, the acquired hospitals had increased volumes and improved margins compared to a cohort of similar size (case mix adjusted) that was not acquired. The benefit was most pronounced when the acquirer was a national chain as compared to a regional system.
We are quickly moving toward needing a larger scale to successfully compete. In the 90’s we did not have the same economic or legislative imperative to achieve higher value in a lower cost structure. Now we do. And those organizations that don’t get both the art and science of this transition are likely to find themselves in a difficult position.
****
An online poll of Health Care Current readers (results as of 11/12/13, 1:47 PM EST):
There are many factors driving consolidation in health care, but I believe the greatest is…
37.84% Margin constraints such as declining reimbursement rates and costs of infrastructure
10.81% The increasing complexity of regulatory compliance
51.35% Companies vying to remain in a competitive market position
00.00% Consumer demand
00.00% Innovation and new technologies
http://www.deloitte.com/view/en_US/us/Insights/Browse-by-Content-Type/Newsletters/health-care-current/4a2992c0bab42410VgnVCM3000003456f70aRCRD.htm
Deloitte report: “Hospital Consolidation: Analysis of Acute Sector M&A Activity” (26 pp): http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Center%20for%20health%20solutions/us_dchs_2013HospitalConsolidation_05292013.pdf
Comment:
By Don McCanne, M.D. This Deloitte report reveals that hospital merger and acquisitions are occurring at an accelerated pace. Is that good or is that bad? The answer depends on whether you believe that hospitals should be run like businesses, trying to obtain competitive advantages in the health care marketplace, or if you believe that they should be run as a service organization, emphasizing patient care as its predominant role in the community. Consolidation through merger and acquisition increases market clout. It is anti-competitive, giving the merged entity a larger share of the market. Because of the ability to negotiate better rates, prices go up without the need to provide additional services and amenities that might be more attractive to patients. There is less need to improve quality when competitors are less able to increase revenues that might be allocated for their own quality improvements. Private sector consolidation leading to oligopolies or monopolies result in the opposite of what markets are supposed to bring us. They result in lower quality and higher costs. Yet health care reform is supposed to bring us higher quality at lower costs. Maybe we overuse the example of a fire department, but it is a useful analogy. We think of the fire department as a service organization, always there when we need it to put out fires or to perform other community service functions. We don’t think of it as a business that competes in the marketplace. We don’t shop for fire services based on price and quality. We simply pay for them through the tax system, and we expect that the fire personnel will continue to take pride in the services that they provide to the community. Health care should be the same. Hospitals should be service organizations, always there for when we need them. Instead of us shopping prices, whether directly or through our insurers, they should be financed through the tax system – using global budgets just as fire departments do. And quality? That is automatic and stems from the fundamental moral fiber of dedicated health care professionals, as long as they are not corrupted by the business element that is increasing its presence to fulfill its mission of using private market business tools, such as consolidation, to maximize market share. Yet, consolidation of a public service entity can be used to improve efficiency, quality, and value. The readers of Deloitte’s Health Care Current likely represent the business oriented element in health care. It is interesting to see the response of the online poll of what they believe is the greatest factor driving consolidation. A majority believe that it is due to the business goal of trying to achieve a better market position. A large minority believes that it is due to declining margins – lower payment rates and higher infrastructure costs. A few believe that it is due to greater regulatory complexity. In general, these concerns that encourage greater consolidation are more business concerns rather than patient service concerns. What is particularly revealing is what these health care businessmen do not believe are contributing to efforts to consolidate. They do not believe that innovation and new technologies are primary driv ers, though they continually tout them as being one of the great products of a business economy. When service is the goal, new innovation would be adopted based more on patient benefit rather than on business opportunities afforded by the technology. In a service model, efficiency could be improved by consolidation if efforts are made to improve efficiency by assuring optimal capacity – neither excess nor deficient capacity. Most impressive in the current phase of health care evolution, wherein the health care business community is foisting on us consumer-driven health care, is that not one of these businessmen believe that consumer demand is a major reason for consolidation. It is not about the patient; it’s about businesses and markets. We need to change that. We could if we adopted our own single payer national health program, dedicated to patient service.
]]>Do MedPAC commissioners understand ACOs?
MedPAC Toys with Asking ACOs to Assume Some Risk
By Kerry Young
The Commonwealth Fund, November 7, 2013
Medicare may need to ask accountable care organizations (ACOs) to accept some financial risk as part of a larger effort to make health care both more effective and less expensive, members of the Medicare Payment Advisory Commission (MedPAC) recently said.
While not making an official recommendation, many MedPAC members said that they favored increased use of a two-sided approach for accountable care organizations, meaning that they enter arrangements in which they would share in both potentials savings and losses. The alternative is a one-sided arrangement, with no potential for shared losses for the ACOs.
“Ultimately, these ACOs need to be accountable for delivering on outcomes including cost lower than fee-for-service,” which is Medicare’s more traditional payment model, said MedPAC member Scott Armstrong of Group Health Cooperative in Seattle.
Several MedPAC members said that medical practices and hospitals would need time to adjust to the notion of risk-sharing, and should be allowed some time to operate under agreements that only shared savings to adjust to this new model.
MedPAC members also stressed the need for ACOs to build greater ties with the people whose medical outcomes will determine the success of cost-sharing models.
“How in the world can a group be accountable for care for a population of patients that they don’t have a relationship with?” asked MedPAC Commissioner Armstrong.
MedPAC Chairman Glenn M. Hackbarth said that policymakers will need to keep in mind what payment alternatives remain for medical practices and hospitals in designing any changes for ACOs.
The old traditional Medicare fee-for-service model encourages “a volume-focused business,” he said.
“For a voluntary ACO, you have got to make the terms really delicious” to compete widely against the model, he said.
But, the success of the ACO program may not rest on how common they become, he said. The ACO programs may be most attractive to physician groups, and less so to hospital groups and larger university health programs, he added.
“If all of the academic medical centers are out, if there are no hospital based ACOs, if they are all sponsored by physician organizations, is that necessarily a bad thing?” Hackbarth said. “I could imagine that, in fact, that may be ultimately the most sustainable model on an ACO, and trying to jimmy the rules so that it attractive to academic medical centers may compromise your design.”
http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Review/2013/Nov/November-11-2013/MedPAC-Toys-With-Asking-ACOs-to-Assume-Some-Risk.aspx?omnicid=16
Comment:
By Don McCanne, M.D. MedPAC, the Medicare Payment Advisory Commission, has the important function of providing to Congress and CMS advice regarding Medicare payments. Since MedPAC is where the action is, it is helpful to understand the committee members’ views on what has been touted as the most important provision of the Affordable Care Act that would provide greater efficiency and lower costs in health care – the accountable care organizations (ACOs). Based on the members’ comments, it is not difficult to see why others are having difficulties designing ACOs. Although they suggest that the ACOs should bear some financial risk for the services provided, they express caution in making the transition since physicians are apt to prefer the current fee-for-service model – a model that ACO advocates wish to replace – over a model that is designed to reduce spending partly by placing physicians at financial risk. Why would a physician who is being paid for all of the services being provided want to replace that with a model that extracts financial penalties for providing that same level of care? Also it is somewhat insulting to the physicians who believe that are trying to provide optimal care to be accused of pushing extra services purely for the money (likely some do, but my personal observation is that such behavior is uncommon). ACOs are also a bizarre model of coordinated care since the participating providers are selected by the providers themselves and not by the patient. It is difficult to see how the ACOs could be fully accountable for the patients’ care when the patients are not bound to the ACOs. How can you make the physicians responsible for the spending when the patient is referred for a $400 imaging study within the ACO, but the patient decides to get a $2000 study outside of the ACO? MedPAC Chairman Glenn Hackbarth even suggests that academic medical centers and other hospitals should be left out of the ACOs, leaving them to physician organizations. When the ACOs are supposed to achieve success by bundling services for a given clinical circumstance, such as heart valve replacement or a kidney transplant, how do you leave the hospital out of the bundled package? And do we really want academic medical centers to be excluded from the financing model? Of course, the insurers have been very interested in taking over the management of the ACOs, but their concept is not much different from their old managed care models in which the patients are made captive through the insurance plans they have – a model that angered patients and physicians alike. It is fine to look for efficiencies and quality improvement in health care delivery, but we should not let the ACO craze distract us from advocacy for a model that we already know improves quality and contains costs – a single payer national health program.
]]>Common sense health care for all would save money, lives
By Bill Roy
The Topeka Capital-Journal, Nov. 10, 2013
Americans don’t have to suffocate themselves with wasteful health care spending that does not do the job. The system I describe below would save Americans nearly $1 trillion annually. Budgets from households to governments could be balanced. And, oh, it is so simple and sure!
Health care would be administered by states and other independent jurisdictions within principles set forth by the federal government, and required for federal matching funds. States could qualify for funds on their schedule.
The first principle is universality.
Every American should be able to access health care without payment at the point of delivery within the state or jurisdiction in which he or she lives. The state and federal government will pay the bills from taxes imposed and collected. Each state may decide upon which taxes to levy, and deductibles and co-payments within reason.
The second principle is comprehensiveness.
The system must provide those services that are medically proven effective. Within this broad requirement each state will decide what it pays for. Many of the nostrums you presently see advertised on television, you would have to buy on your own.
The third principle is availability and accessibility.
We cannot provide everything for everyone everywhere. But we can remember there are people west of US-81 highway, and to the extent possible provide timely services for them or arrange to get them to where services can be provided.
The fourth principle is one’s right to care must be portable.
It should go where you go. That does not mean you can fly to Switzerland and order up a panoply of services which your state automatically pays for. But it does mean if you are in Switzerland and become ill, your state will take responsibility to pay bills within limits provided by state legislation.
The fifth and key principle is the health care system must be publicly administered.
In 2010, we spent $8,233 per person for health care, at least $3,000 more than any other developed nation. They had universal care, which reduces doctors’ business offices from 10 rooms to one.
Currently, health insurance companies take 10 to 30 cents out of each dollar for sales, administration and dividends. Medicare is administered for less than 5 cents on the dollar. Obamacare will attempt to recover overpayments to insurance companies — lots of luck. It also throws money at Medicaid (a federal-state program for the medically indigent). But states may in turn assign the poor (340,000 KanCare patients) to for-profit insurance companies, which benefit from administering or providing their care.
For dessert, this system will let you choose your doctor and hospital — as does Medicare today. The above proposals have many components of Medicare for all. But, most of all they are the principles of Canada’s Medicare, a program that has worked (they live two years longer, and have lower new-born and infant mortality than we do) for about 50 years for two-thirds our cost.
A caveat: Every nation in the world is struggling with health care costs because medicine can do more each day to help people. Some scientific advances save money but many, such as the joint replacements that weren’t done 40 years ago, cost more.
There would be new taxes but overall costs would go down dramatically. First and foremost, we’d avoid thousands of deaths each year that result from no or delayed medical care. And by opening the door to those who struggle to get care, we would take our place among the civilized nations.
Bonus: For anyone who believes health care is too expensive, The Wall Street Journal reported in 2006 that United Healthgroup was about to pay retiring CEO William W. McGuire $1.767 billion. Our health care system produces one thousand seven hundred and sixty-seven million dollars for one person, and bankruptcy for thousands.
Bill Roy is a retired physician and former member of Congress. He has a law degree and lives in Topeka.
http://cjonline.com/opinion/2013-11-10/bill-roy-common-sense-health-care-all-would-save-money-lives
Anyone skeptical of National Health Insurance should read this
By Henry Blodget
Business Insider, Nov. 10, 2013
The American healthcare system sucks.
We pay more for healthcare than any country in the world and we only get average results. And tens of millions of Americans have no health insurance.
Our latest attempt to address this situation, Obamacare, is a mind-numbing kluge of laws and policies that is off to a very rough start. And even if Obamacare ends up working, it will only fix part of the problem.
The problem, as a ground-breaking article by Steve Brill made clear, is that America’s healthcare providers and insurers treat people differently. If you’re lucky enough to be included in a big insurance plan provided by a huge entity with a lot of negotiating leverage (such as the federal government), you pay low rates and low prices. If you’re unfortunate enough to be in a high-risk group or not to be included in any plan, you pay sky-high prices. Or you get all your “healthcare” from the emergency room and, thus, lay the costs off on everyone else that way.
The answer, as Brill’s article also made clear, is a fully national health insurance system, in which all Americans are covered in the same massive group and for-profit insurers and healthcare providers can’t pick and choose who to cover and how much to charge them. This system would effectively extend the current Medicare and Medicaid system to the whole population, and, in so doing, make it even more efficient. As in some other countries with national health insurance, Americans insured under this system would also be free to buy additional healthcare services, including additional private insurance. The system, in other words, wouldn’t limit anyone’s ability to pay for “premium” heathcare services if they chose to. But a lot of Americans still hate that idea. They have been told since birth that “national healthcare” is a disgrace. They have been brainwashed so thoroughly by America’s vastly profitable medical industrial complex that their resistance to reality and change has become a religion. Anti-change advocates don’t assess facts. They just claim, absurdly, that America currently has “the finest healthcare system in the world” and then cite horror stories about sick people dying in streets because they have to wait so long to get the (terrible) healthcare services available to them under “socialist” healthcare. (This horror story, naturally, is presented as the polar opposite of our current system, In fact, in many ways, it’s similar. Today, in America, many people without health insurance spend their lives waiting until they get so sick that they can go wait in emergency rooms. And then our often wildly profitable hospitals pay for their care by, effectively, sending their bills to everyone else.)
Anyway, any American who is skeptical about national health insurance but has an open mind should read this testimonial from another American who is currently living in a country with national heath insurance — Britain.
The American, Dawn Rutherford Marchant, lives in the UK with her family. She was recently asked on Quora to describe her life there. Amid this description (full answer here), she had the following to say about Britain’s national healthcare system:
“A massive advantage of living here is the National Health Service. If an American could understand it, they would be amazed by its magnificence.
“In this past week I have seen an ENT consultant surgeon and have had surgery scheduled in a few weeks’ time. There was no direct cost to me.
“Tonight my GP (family doctor) rang at 8pm to check in on another health issue. She is chasing a consultant to authorise a new medication and will ring me back next week. This did not cost me a penny.
“So, three doctors and one medical procedure without a form to fill in or a bill to pay. Pretty damn impressive stuff — yes, I know it is in our taxes but the system works well. It is ‘from birth to grave’ care all woven together into one service — ambulance to GP to hospital to nursing care. There are all kinds of synergies created by such a system. It is to be deeply respected, emulated, and not feared.”
The British National Health Service was created shortly after World War II, when everyone began to realize what a mess the system of private and municipal insurance was. It was a political challenge to get it passed — not surprisingly, those doing well under the status quo pushed back — but it passed.
The NHS now costs the UK less than half as much per person as the U.S. system does. It is paid for with an ~11% tax. The contributions equate to about $3,000 a year per person.
In addition to the National Health Service, the UK also has private insurers, which about 10% of the population choose to use. In other words, the British system has all the benefits we say we love so much — the ability to pay more for premium heathcare if we want it — and it also covers the basics for everyone in the country at half of our per-capita costs. Not bad! Henry Blodget is co-founder, CEO and editor-in-chief of Business Insider. Read more: http://www.businessinsider.com/national-health-insurance-2013-11#ixzz2kLtV1Y60
]]>A Doctor With a Cure: 'Medicare for All'
By John Nichols
The Nation, Nov. 11, 2013
Gene Farley and I shared a deep affection for Tommy Douglas, the Baptist preacher-turned-statesman who as the leader of Saskatchewan’s Cooperative Commonwealth Federation established the framework for what would become Canada’s single-payer national health care system.
Douglas, who is often recalled as “the Greatest Canadian,” had a congenial style that belied his determination to address social and economic injustices he knew to be immoral. “The inescapable fact,” he argued, “is that when we build a society based on greed, selfishness, and ruthless competition, the fruits we can expect to reap are economic insecurity at home and international discord abroad.”
Paraphrasing Tennyson, Douglas roused Canadians with a promise: “Courage, my friends; ’tis not too late to build a better world.” That line always came to mind when I was with Gene, who died Friday at 86.
Gene was an internationally renowned physician, an originator of family practice residency programs and innovative public-health initiatives who finished a distinguished academic career as chair of the Department of Family Medicine at the University of Wisconsin.
Yet, his great passion was as a “build a better world” campaigner. The man who proudly recalled joining the March on Washington for Jobs and Freedom in 1963 was still marching for those same causes in 2013.
With his beloved wife, Dr. Linda Farley, Gene devoted two decades of “retirement” to advancing a broad justice vision that — after Linda’s death in 2009 — could be seen in the remarkable ecological, agricultural and community-building work of the Linda & Gene Farley Center for Peace, Justice and Sustainability.
Because of their professional background, Gene and Linda focused particularly on advancing the cause of universal health care. With their longtime friend Dr. Quentin Young, they were early and enthusiastic leaders of the “Physicians for a National Health Program” movement, which for decades has encouraged US leaders to develop “an expanded and improved version of Medicare (to) cover every American for all necessary medical care.”
The man who refused offers of prestigious international positions because he felt a duty to carry on the battle to reform the US health-care system knew understood the challenge of seeking that reform at a time “when society is going toward selfish extremes… when (governments) pay anything to build up the military but don’t want to give to the social good.” Still, he remained “fantastically optimistic.” And that optimism was often rewarded – especially with the 2012 election of his friend and ally Tammy Baldwin as the junior senator from Wisconsin.
Though Farley warned that the Affordable Care Act, with its deference to insurance companies, was more complicated and costly than need be, he hoped that the passage of the act would serve as an important step on the road to a creating a single-payer system in the United States. As we traveled in eastern Canada together last month — on a Nation Cruise where Gene delighted in comparing notes with his dear friends Dr. Michael Klein and Bonnie Sherr Klein — we spoke a good deal about the difficulty of implementing what has come to be known as “Obamacare.”
Yet, Gene, “fantastically optimistic” as ever, recalled that Canada went through decades of bitter wrangling before finally establishing a universal health care system that delivers longer life expectancy more efficiently and at a lower cost than the American system. “We have to be patient, but we have to be determined,” he said, explaining that the establishment of the principle of “health care as a right” is not just a medical mission, not even an economic or social responsibility.
It is, Gene said, “about morality.”
Canada came to recognize that morality, embracing the vision of Tommy Douglas.
And it is right and necessary to expect that America will come to recognize that morality, embracing the vision of Gene Farley.
John Nichols is Washington correspondent for The Nation and associate editor of The Capital Times (Madison, Wis.).
http://www.thenation.com/blog/177106/doctor-cure-medicare-all#
PNHP note: A memorial service for Dr. Farley was held in Madison on Nov. 10. Two additional obituaries of Dr. Farley have been published, one in the Wisconsin State Journal and the other in The Capital Times.
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