In the least surprising conclusion of recent articles in the New England Journal of Medicine (N. Engl. J. Med. 2011;365:1704-12,) it was proven that older, sicker patients cost more money to take care of!

from the summary in Internal Medicine News, 

"Eight commercial disease-management companies using nurse-based telephone care programs failed to improve quality of care, reduce hospital admissions, decrease emergency department visits, or cut health care costs in a pilot project of fee-for-service Medicare patients.

 Companies were required to meet preset targets for clinical quality and patient satisfaction, and to hold health care costs under a preset limit. An independent group, RTI International, won a competitive bid to evaluate the programs.

However, before the evaluation could be completed, five of the eight companies incurred such "substantial financial liability" that they terminated their programs, according to Nancy McCall, Sc.D., and Jerry Cromwell, Ph.D., of RTI International in Washington.

  

These findings show "it is unlikely that simply managing the care of elderly patients through telephone contact or an occasional visit will achieve the level of savings Congress had hoped for when it mandated the Medicare Health Support Pilot Program," Dr. McCall and Dr. Cromwell said."

So a majority of participating companies with extremely sophisticated resources to manage these patients could not make the numbers work, and Medicare is trying to capitate costs and financial risk of these patients onto providers in the future via "Accountable care Organizations" (ACO)?

This is the same thinking that led the geniuses who run Wall Street to put together a bunch of high risk,crappy mortgages together into a new vehicle, the synthetic  Collateralized Debt Obligation (CDO), and expect it to perform better then the underlying parts.  These products later nuked our economy by hyper accelerating speculative housing market bets.


Just as it took a physician running a hedge fund, Dr. Michael Burry (hero of the excellent book by Michael Lewis "The Big Short"), to point out that the emperor had no clothes in the housing bubble, major medical centers like the Mayo Clinic and Cleavland Clinic  have already told the government "no thanks!" on assuming open-ended risk on capitated care contracts for medicare patients.


Rob

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In January, I wrote about the Mayo Clinic's satellite in Arizona dropping Medicare patients claiming it was financially unsustainable. (see "The Mayo Clinic decision signals the health care bill is "One Big Ass Mistake, America"). Besides being embarrassing for the Obama administration as he'd held it up as his model health delivery vehicle, it produced a lot of teeth gnashing. For many people, they always assumed nearly all doctors accepted Medicare, and certainly an institution like the Mayo Clinic would accept Medicare rates (no questions asked).

Mayo exists as a really weird historical quick of American Medicine. It established a reputation for excellence generations ago and managed to make that name a "franchise" for medical care. While Mayo has some fine clinicians, it's kind of well known among most surgeons that a place like Mayo has had a hard time keeping the talent happy in terms of compensation and selling rural Minnesota as a destination to live. It takes a certain kind of personality to accept the trade-offs of that clinic system, but security of such a protected & salaried position is certainly going to become more common.

Exactly how Mayo operates as to your insurance has always been confusing to many people, and the Medicare announcement had a lot of people looking for answers. I found a great letter to the Editor in a Boston Globe article that is the most succinct summary to date

I am a surgeon practicing in Phoenix, Arizona. I also grew up in Rochester, MN where my father was a physician at Mayo for 35+ years. It's time to set the record straight on the misconceptions of the Mayo Clinic as a model for efficiency.

1)Mayo does not take Medicare, as outlined in the article.
2)Mayo does not take Medicare supplements for new patients.
3)Mayo has never emphasized primary care and in fact closed their family practice program here in Phoenix at a time of acute shortage in our state, citing costs. Primary care is labor intensive
4)Mayo refuses to provide care to citizens of Phoenix, the city in which they reside, in need of specialty care in situations where their specialists have availability and where there are acute shortages in the community. Their decisions for taking patients is made by administrators, not doctors, based solely on insurance. Doctor to doctor requests are frequently denied.

5)The Dartmouth Study, touted by many as the proof of efficiency of the Model compared Medicare expenditures county by county, throughout the country. Mayo Rochester resides in a rural farming community, where Medicare usage would be expected to be low. But since Mayo does cares for virtually none of these Medicare patients, extrapolating the cost efficiency of Mayo is simply wrong.
6) Mayo's model is very much a boutique model, catering to the wealthy, those willing to pay extra or out of pocket for their care or those with very good indemnity insurance coverage. Mayo is not in network for virtually every HMO and PPO plan, based simply on the high reimbursements demanded by Mayo. Mayo quotes 2-4 times the cost for surgical procedures that those in the community at large get paid.
7)Mayo relies heavily on the$ 200-300M/year in endowment money each year, to supplement their payrolls, build their buildings, fund research, and fund their pension plan. The cost structure of the Mayo Clinic is prohibitive without this additional funding. In this recession, Mayo is having considerable difficulty because it has been having appealing to those who used to come out of pocket for perceived more individualized care.
7) Community physicians in Jacksonville and Phoenix/Scottsdale assume virtually all the care for those in need, regardless of ability to pay.

I have always been of the belief that Mayo has the perfect right to practice Medicine the way in which they believe. Their doctors are dedicated to their mission and contribute each and everyday to the growth of medical knowledge.

Please, however be honest about what the Mayo model is: exclusive medical care for those with means and those willing to pay considerably more for their services.

Cheers!

Rob

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There's a collision course of sorts that's been playing out in medicine for the last 25 years. As the costs of health care have consumed more and more of GDP, the system has become unsustainable. Physician salaries bore the brunt of early cost containment with effective pay cuts of 50-60% in real income since the mid 1980's. More recently it's been the patients on the receiving end, with more employers dropping coverage and more people enrolled in high deductible/high copay plans.

An article in the New Yorker Magazine, "The Cost Conundrum - What a Texas town can teach us about health care" profiles McAllen, Texas. McAllen is the most expensive place in the country in terms of annual expenditures on medicare beneficiaries. It illustrates the law of unintended consequences and reinforces the notion that anyone who thinks health care costs will come down with universal coverage is foolish. More coverage = more utilization, particularly when patients do not bare much of the costs themselves out of pocket.

The article also features the behavioral changes of physicians as they've become more entrepreneurial. It's profiled as a negative in the article, but it really should be encouraged. In modern medicine, if you do not run your practice like a business, then your practice will fail. Physicians should be encouraged (when able) to align their entrepreneurial interests with their patients. In many instances this will run you head first into government bureaucracy and established interests as in the case of my office surgery suite. Don't even get me started on the fact that I'd be able to do some procedures in my soon to be accredited office O.R. at 40%+ discounts to Medicare and Blue Cross for what it costs to do in a hospital. You'd think this would be of interest to Medicare and the state of Alabama as it would likely save several hundred thousand dollars annually, but instead it's like talking to a brick wall.

Cosmetic Plastic Surgery practices has been the attentive to economics for a long time, and you're forced to be cost-conscious to maintain that kind of practice. The revenue from the cosmetic procedures I do affords me the opportunity to maintain a busy reconstructive practice on cancer patients.

Rob

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There's an op-ed piece in today's Wall Street Journal by one Betsy McCaughey which has my blood pressure up. The article titled, "Hospital Infections: Preventable and Unacceptable" implies that any hospital acquired infection was preventable and should be remedied with class action lawsuits.

For someone who's bright like Ms. McCaughey, she shows little insight and understanding apparently into what drives and perpetuates many different types of infections. Nobody disagrees that common sense steps like hand washing and protocols for invasive intravenous (IV) access maintenance are important in limiting infections, it is both a dangerous and disingenuous idea to suggest that a goal of ZERO is attainable. It is impossible to achieve a failure rate of 0% for system or process, particularly one with infinite numbers of variables (as with a human population of patients). Unlike a Toyota, no two models of the human assembly line are exactly alike (even identical twins gradual accumulate differences due to environmental exposure).

Patients with more comorbities are going to have higher infection rates PERIOD. An overweight, diabetic, smoker (a frequent demographic for vascular disease patients in my neck of the woods) who has open heart surgery has more problems then others and an increased infection rate is more attributable to the patient's behavior rather then the hospital. Obese patients and smokers have higher rates of problems after elective plastic surgery (like breast reconstruction or reduction for instance)as well for that matter. You can be sure at some point, hospitals (and doctors) will be looking at patient demographic data to exclude higher risk patients from treatment at their facility whatsoever.

In referring to a list of "never events" recently laid out by Medicare for which they will not cover the cost of complications she blithely writes

"No wonder Medicare calls these infections "never events" Why should jurors reach a different conclusion in a lawsuit."

This coming from a bureaucrat and politician is hard to take. While we should always strive to be perfect, it's important to realize that there are processes which we can all agree on to attain low and reproducible rates of infection.

For a related writing here on Plastic Surgery 101 see the post "Medicare announces they won't pay for complications - How the F*** is this going to work?" that I wrote last year.


Cheers!
Rob

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A nerdy public policy-wonk post today!

Despite a surprisingly brief blurb on the AP wire & broadcast news media, there was a very important move last week by the Supreme Court of the United States (SCOTUS) about the future of health care in this country. The court refused to hear an appeal by the American Association of Retired Peoples (AARP) about a companies ability to terminate health care benefits when a retired former employee becomes eligible for Medicare at 65. The AARP is one of the most powerful political lobbies in the United States, and this is a pretty big defeat for them.
The court's action upholdsa a rule adopted last year by regulators that says the "coordination of retiree health benefits with Medicare" is exempt from the anti-age-bias law.


This case has pitted the interests of younger employees and unions against retirees over the dwindling budget for job-related benefits. In recent years, many employers have pulled back from providing these kind of benefits to their retirees because of the soaring cost obligations. But until Monday it had been unclear whether it was illegal to use a worker's age -- in this instance, 65 -- to trigger a reduction in benefits.

"In some cases, it's become a millstone around their necks," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. "Corporations aren't all heartless, but in many cases, you're competing with multinational corporations that don't have quite the obligations that domestic firms have."

This decision not to hear the appeal is interesting because it's going to grease the skids for a large shift of healthcare obligations from the private sector to the feds. As I remained convinced that we're quickly moving towards "Medicare for all" as the eventual American adoption of universal health coverage, the incorporation of more people under it's existing umbrella seems another move in that direction.


Rob

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Something dramatic is about to hit health care practices in the United States. The Federal government has announced regulations such that Medicare and Medicaid programs will not pay hospitals for the costs of treating certain “conditions that could reasonably have been prevented.”.

This list will apparently include:

• Injuries from falls in the hospital
• Urinary tract infections
• Surgical Site infections
• Blood transfusion reactions
• Re-operations for retained surgical instruments
• Bedsores and pressure ulcers
  

While no episodes of any of these events is the goal of medicine, it is IMPOSSIBLE to achieve that for a number of reasons. Consider the inpatient population in many locations - older, more obese, more medical co-morbidities, etc....

Only a bureaucrat who's never worked in a hospital could think up a program that's all stick and no carrot to address these. It makes more sense to reward achieving benchmarks rather then to punish oft impossible goals. But even the "carrot" from the feds is usually rotten, as can be witnessed by their attempts to establish similar outpatient medicine practice guidelines under the concept of "pay for performance".

To offset planned medicare fee cuts, they recently had a small trial offering a small 1.5% bonus for compliance with electronic medical reporting and some clinical issues. At the end of the trial, almost none of the large primary care groups could meet the threshold for the bonuses despite spending substancial amounts of capital to upgrade infrastructure to do it. While quality may have been improved, these groups essentially took pay cuts to do it. Does that sound like a program which is going to get much enthusiasm for participating?

WARNING: Trainwreck ahead!

What's going to happen in the real world with the new program as I envision it?

There's going to be not so subtle exclusion of high risk patients from inpatient treatments whenever possible. There will also be tremendous pressure for hospitals to dissociate themselves from physicians who bring older, sicker patients to their facility. Also expect to see lots of dodgy urinary tract infections and phantom pressure sores documented on admission surveys, as apparently making a paper trail will shield hospitals from being left holding the bag.

This whole thing is going to get really ugly as these predictable responses occur. Just look at a report like this report which documents a 40% reduction in complications in specialty Orthopedic hospitals which cherry-pick healthy patients and tell me that the take home message isn't to avoid sick patients! Want to make your catheter-related UTI rates better? Just don't put catheters in elderly patients and let them pee on themselves constantly. That's going to happen, WRITE IT DOWN!

Still not clear to me is what happens to Physicians who treat such complications. Will a Doctor get paid for treating a pressure sore or fractured hip from a fall? You don't even want to imagine the practical fallout from that scenario. I'll be looking forward to that report (scheduled to be released tomorrow) with interest.

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A little depressing medical economics for today.

A story in Tuesday's USA-Today hints at the looming financial catastrophe largely driven by federal Medicare & state Medicaid programs. As usual, politicians and bureaucracy are jockeying over the "lipstick on this pig" (ie. how it's hidden on the accounting sheet) rather then the problems and painful solutions itself by arguing for less transparent and accurate accounting practices to keep the books looking prettier. In fairness (I guess) the true numbers would affect interest rates for the worse for the US debt burden.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined. Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities.

The Financial Accounting Standards Advisory Board, which sets federal accounting standards, is considering requiring the government to adopt accounting rules similar to those for corporations. The change would move Social Security and Medicare onto the government's income statement and balance sheet, instead of keeping them separate. The White House and the Congressional Budget Office oppose the change, arguing that the programs are not true liabilities because government can cancel or cut them. Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities, says it can be misleading to focus on the government's unfunded liabilities because Medicare's financial problems overwhelm the analysis. "There is a shortfall in Medicare and Medicaid that is potentially explosive, but that is related to overall trends in health care spending," he says.

Rob

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