Fwd: qotd: Disruption in the financing of primary care

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Subject: qotd: Disruption in the financing of primary care
Date: Mon, 3 Mar 2014 12:54:27 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The New York Times
March 2, 2014
New Law's Demands on Doctors Have Many Seeking a Network
By Abby Goodnough

Dr. Sven Jonsson, a primary care physician in this rural community, is
seeing a steady tide of new patients under President Obama's health care
law, the Affordable Care Act. And so far, it is working out for him. His
employer, a big hospital system, provides expensive equipment, takes
care of bureaucratic chores and has buffered him from the turmoil of his
rapidly changing business.

About 25 miles away in the more affluent suburb of Crestwood, Dr. Tracy
Ragland, 46, an independent primary care physician, is more anxious
about the future of her small practice. The law is bringing new
regulations and payment rates that she says squeeze self-employed
doctors. She cherishes the autonomy of private practice and speaks
darkly of the rush of independent physicians into hospital networks,
which she sees as growing monopolies.

(Dr. Ragland) said that she embraced the goal of extending health
coverage to far more Americans, but that Medicaid paid too poorly for
her to treat any of the new enrollees. And while she is accepting some
of the private plans sold through Kentucky's new online insurance
exchange, she has rejected others — again, because she considers the
payment too low.

Dr. Jonsson owned his practice in Louisville for a decade — and did not
accept Medicaid, for the same reasons that Dr. Ragland generally does
not — but sold it in 2010, months after the Affordable Care Act passed.
He did so, he said, expressly out of concern that the law and related
requirements were about to ratchet up the pressures and expense of
private practice. In particular, he dreaded having to buy and learn how
to use an electronic records system, not only because such systems are
expensive but because doctors' productivity slows down while they are
learning the computerized systems, threatening tight margins.

Only about 40 percent of family doctors and pediatricians remain
independent, according to the American Medical Association — and many,
including Dr. Ragland, feel that harsh economic winds that were already
pushing against them have been accelerated by the Affordable Care Act.

Dr. Jonsson is less mired in the daily worries of running a medical
business. His hospital system (Baptist Health), with far more bargaining
power than a private practice, negotiates with insurers on his behalf,
pays his overhead and malpractice insurance, and handles much of the
ever-expanding paperwork. It provides him with an X-ray machine and a
costly system for keeping digital patient records, a move encouraged by
the new law. He has been able to take his first long vacations in years,
including a recent month in his native South Africa.

Since the passage of the act in 2010, hospital systems have been
acquiring physician practices to shore up their market positions and
form networks to take advantage of incentives under the new law. For
now, Baptist is taking a financial hit by putting so many doctors on
staff: Moody's Investors Service downgraded its credit rating in
September, citing "increased losses from an aggressive and rapid
physician employment strategy."

Baptist enlisted about a dozen of its primary care providers in the
Louisville region to take on new Medicaid patients, officials there
said, both to get more paying customers in the door and, as a nonprofit
system with a stated charitable mission, to help more of Kentucky's poor
get medical care under the law.

http://www.nytimes.com/2014/03/03/us/new-laws-demands-on-doctors-have-many-seeking-a-network.html

****


Comment by Don McCanne, MD

The primary care practices of Dr. Sven Jonsson and Dr. Tracy Ragland
described in this article are not merely anecdotal. They are truly
representative of major changes taking place in the financing of primary
care today. Is this change a disruptive innovation that will deliver on
the promise of an expanded primary care infrastructure with higher
quality and lower costs? Let's take a closer look.

How disruptive is this? Both Dr. Jonsson and Dr. Ragland practice in
free standing clinics with only a few associates. They see similar
patients with acute and chronic care needs. Previously they both felt
that they could not afford to accept Medicaid patients because of the
very low payment rates under their state Medicaid program. Since
becoming employed by Baptist Health, Dr. Jonsson now includes Medicaid
patients in his practice, whereas Dr. Ragland, who continues with her
traditional primary care practice, still does not accept Medicaid
patients and, furthermore, does not accept patients who are now insured
through certain plans in Kentucky's new insurance exchange - plans that
have payment rates which she considers too low for her practice.

Although their practices are very similar, Dr. Jonsson is the more
contented physician. He simply practices medicine without the economic
concerns that he formerly faced. Dr. Ragland still has these concerns.

The difference is that Dr. Jonsson, along with his Medicaid patients and
patients covered by exchange plans, are benefiting from the
consolidation that is taking place in the health care delivery system in
which hospitals and physicians are merging. These consolidated systems
are able to extract greater concessions from the insurers since they
become "must have" organizations when the insurers establish their
provider networks.

Dr. Jonsson's association with Baptist Health - a nonprofit health care
organization with a charitable mission of caring for the poor - seems to
be an ideal arrangement for meeting the health care needs of the
community. So what could be wrong?

The obvious reason that Dr. Jonsson is personally financially secure in
spite of seeing Medicaid patients is that Baptist Health is paying him
more than he would be receiving from Medicaid or the exchange plans. How
is that working? Moody's Investors Service has downgraded Baptist
Health's credit rating citing "increased losses from an aggressive and
rapid physician employment strategy."

Under our current fragmented, dysfunctional financing system, when
hospitals and physicians are trying to do the right thing, it still
isn't working in spite of the enactment of the Affordable Care Act. The
current flux in primary care financing is highly unstable and likely
will continue to be disruptive to traditional primary care practices.
For those who say good riddance, realize two things: 1) prices are
higher in the consolidated systems and will not be tolerated for long,
and 2) traditional primary care practices, including community health
centers, provide essential community health care services in regions
often not attractive to large, consolidated health systems.

If we switched everyone to Medicare right now, the system would work,
though many problems would remain because of the deficiencies in
Medicare. On the other hand, if we created a well designed single payer
system (an improved Medicare for all) our financing problems would be
solved, and we could get on with repairing our health care delivery
system - one in which both Dr. Jonsson and Dr. Ragland would take pride
in their ability to meet the health care needs of their patients.