Posted on

ACA and Medicare for All

There is an old saying, “Be careful what you wish for; you just might get it.”


In just a few weeks, this country will seat a new justice to the Supreme Court, hold an election and have the highest court in the land hear oral arguments to possibly throw out the largest piece of health care legislation since Medicare was created in 1965.  Each of these issues is emotionally charged and could have long-lasting impacts on this country in a very profound way.


Physicians are taught to weigh the benefits of treatment options with the side effects and long-term impacts.  That kind of thinking is sorely missing when you look at the court battle over the Affordable Care Act and what may happen as a result.


Let me stop right here.  This is not a biased piece to support the ACA or glorify its virtues.  Since the ACA was passed, I have been very consistent in evaluating the good things it did and where it went wrong.  What follows is just a real and possible scenario of what may happen due to the path we are already on and is a cautionary tale about focusing on one thing and forgetting the big picture.


Ok, with that out of the way.  Let’s play this scenario out, shall we?  Ok, let’s say the polls are right and Biden wins the white house.  Let’s say the polls are also correct, and the balance of the Senate shifts Democrat.  Shortly after the election, the supreme court hears the arguments on the ACA with the new conservative justice seating and part of the process.  Sometime after Biden takes the oath of office and the new Congress is seated, the high court, in a 5-4 vote with Chief Justice Roberts siding with the three liberal justices, throws out the ACA by ruling that the individual mandate is not only unconstitutional but also not able to be severed from the rest of the law.


Immediately 20 million Americans lose their insurance.  Insurance reform is no longer the law of the land, and neither is Medicaid expansion.  The Republicans have finally gotten their wish and killed Obama Care.  This is the part where I remind you of the opening.  Be careful of what you wish for; you just might get it.


The Democrats are in control of Congress, and they are angry.  Obama Care is no more, and the deciding vote was cast by a justice that they don’t think should have ever been seated.  Cries of hypocrisy and the knowledge that RBG would never have allowed this to happen fill the news cycle.  President Biden is pressured by the more progressive section of his party.  Senator Schumer, now in control of the Senate, starts legislation to end the filibuster.  The legislation passes on a pure party-line vote.  Speaker Pelosi allows Medicare for All legislation to be introduced in the house where it is quickly passed on another strict party-line vote.  The bill is sent to the Senate for consideration.


President Biden, who has never been in favor of Medicare for All, can’t get in front of this runaway train.  The Senate has a floor vote on the House bill, and it passes.  It’s not even the end of President Biden’s first 100 days, and he finds himself with a Medicare for All law on his desk and the cries of his party to sign the bill and stick it to the Republicans like they “stuck it to us.”  Biden signs the bill, and before you know it, we have universal health care, and the entire insurance industry has been destroyed.  I will pause while some of you cheer about the demise of the insurance industry.  Go ahead, get it out of your system.  I understand.


Now, as the dust settles, someone asks the intriguing question, “what have we just done?”


Well, the short answer is everyone in the country now has free health care.  To pass the bill quickly, we have decided that all doctors and hospitals will be paid at Medicare rates.  They will submit all claims to the government for processing.  Hurray!  We did it!  But wait, that’s not the end of the story.


On day two, someone else speaks up and asks two even better questions; “How are we going to pay for this, and what will happen to our doctors and hospitals?”   I will leave the question on how we pay for this because that would take a whole book and more economic analysis than I want to do right now. Instead, let’s focus on what happens to our doctors and hospitals.


The quick answer is they take it in the shorts.  Doctors and hospitals would take an immediate and crushing reduction in revenue.  A CBO study shows that, on average, doctors get paid 30% more than Medicare from insurance companies, and hospitals get paid an average of 80% more than Medicare from insurance companies.  These statistics may be understated, but even if they aren’t, can you tell me any industry or business that survives without dramatic changes if their revenue dropped by 30% to 80% over night?  I didn’t think so.


This kind of dramatic hit to revenue would cause many rural hospitals to fail, and the urban hospitals that did survive would have to change the way they provide care.  Expenses would have to be cut, and those cuts would hurt.


The same thing and worse would happen to doctors.  Again, expenses would have to be cut, and those cuts would impact patient care.  Also, large numbers of physicians would likely retire.  Remember that 42% of the practicing physicians in this country are over the age of 55.  If just half of them retired early, that would mean around 170,000 doctors were leaving practice.  Right now, about 25,000 doctors graduate medical school each year.  So, if we had a mass exodus of doctors to the tune of 170,000, it would take us seven years to replace them, and that is only if no more doctors retire during that seven years.


So, at a time when everyone has free health care, and demand for care and services inevitably go up, we could see hospitals close and a shortage of doctors.  Wait times go up, and the quality of care derived goes down.


Be careful what you ask for; you just might get it.


Take a listen to our latest podcast! Streaming now on Soundcloud and Apple Podcasts!

Posted on

The Trump Health Care Plan

I just read the 40-page Executive Order signed by President Trump outlining his “vision” for health care.  Here is what it says.


First of all, 35 of the 40 pages are just a list of all the incredible things he has already done.  It’s impressive how much of the health care problems he has already fixed.  In case you missed all of these, here are the incredible things he has already done.


  1. Produced temporary plans that are 60% cheaper, saving 500,000 people from being uninsured.
  2. Improved HSAs for 11 million employees, saving another 800,000 people from being uninsured.
  3. Created association plans covering another 400,000 individuals
  4. Lowered health care premiums in Wisconsin by 11%, Minnesota by 20%, and Maryland by 43%.
  5. Saved seniors $2.65 billion in lower Medicare premiums.


The list goes on and on.  This was all done despite being strapped with a terrible law (The ACA).  But the job is not done.  So, in the last five pages, the executive order lays out the President’s vision for the future.


Hold your breath; it’s a good one.


  1. Giving American’s more choice: “The Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services shall maintain and build upon existing actions and expand access to and options for affordable healthcare.”


Seriously, that’s what it says.  That’s it.  Sort of a “There will be more access because I say there will be more access!”


  1. Lowering Healthcare Costs for Americans: (a) “…shall maintain and build upon existing actions to expand access to affordable medicines.”(b)…. shall maintain and build upon existing actions to ensure consumers have access to meaningful prices and quality information prior to the delivery of care.”  “work with Congress to reach a legislative solution (to surprise billing) by December 31, 2020.  If a legislative solution is not reached by 12/31/2020, the Secretary of HHS shall take administrative action to prevent (surprise billing)”. – Note:  This is my favorite.  You see, we only get the solution if he wins the election. (c) “…. shall maintain and build upon the existing actions to reduce waste, fraud, and abuse in the health care system.”
  2. Provide Better Care to Americans:(a) “….shall maintain and build upon existing actions to improve the quality in delivery of care for veterans” (b)”….shall continue to promote medical innovations to find novel and improved treatments for Covid-19, Alzheimer’s disease, sickle cell disease, pediatric cancer, and other conditions threatening the well-being of Americans.”



That’s its friends.  His vision for the future of health care.  In summary, he will give us more choice, lower costs, improve care, and cure all the diseases we face right now.  Amazing!


This, to me, is a little like a football coach talking to his team before a big game and saying, “What we need to do is win on defense, win on offense and win on special teams.  The key will be to score points while keeping the other team from scoring points.  Now go out there and win!”


Oh, you know what wasn’t in the “actions” part of the executive order?  How he plans to deal with pre-existing conditions if the ACA is ruled unconstitutional.  There is only one line addressing that in the last five pages. “It has been and will continue to be the policy of the United States to give Americans seeking healthcare more choice, lower costs, and better care and to ensure that Americans with pre-existing conditions can obtain the insurance of their choice at affordable rates.”


Whew, well as long as that’s our “policy,” we are all going to be ok.  That was a close one.


Do you know what else wasn’t in the order anywhere?  His promise to send seniors each a $200 prescription drug coupon.  That didn’t make the final draft of the order he signed.  Maybe it’s because there are some serious questions about his ability to spend 7 billion dollars without congressional approval.  The administration says the money comes from savings that will be achieved from his “most favored nations” drug pricing proposal (which was also not outlined in the order).  That’s right, the President plans on spending 7 billion dollars to give $200 to seniors right before the election, and he plans on paying for it from savings achieved by a program that doesn’t exist.  Does anyone other than me see the problem with this?  Anyone?


So, there it is—the President’s “vision” on how to fix health care.  I don’t know about you, but I will sleep better tonight knowing we have that problem solved.  Good night moon.


Take a listen to our latest podcast. Streaming now on Soundcloud and Apple Podcasts!

Posted on

The Biden Health Care Plan


With the election just around the corner, I thought it might be useful to analyze the Biden Health Care plan and what it would mean for doctors.  Let me begin by saying this is not an endorsement or criticism of or for either candidate.  This is simply an analysis of the impact that the proposed Biden health care plan would have on our industry.


For this analysis, let’s assume Biden wins the election, the Democrats keep control of the House and take control of the Senate.  I want to make this assumption because some of these things have no possibility of being implemented if the Republicans control either the Senate or the House.


Ok, so with our scenario set, let’s look at what candidate Biden says he will do to address the problems we have in health care once he is President.


  1. Decrease the age for Medicare down to 60.  Candidate Biden has talked about being in favor of reducing the age for Medicare down to 60 and allowing people to choose between their employer’s coverage and Medicare.  One of the interesting impacts of this move would be to give some people a path for earlier retirement as some people continue to work purely for health care benefits.  To the extent that people retire earlier, it would lower the unemployment rate.  Businesses would like the ability to have their most expensive employees switch to Medicare and probably provide incentives to help.  So, what does this mean for doctors?  Well, it means a reduction in revenue for most doctors.  Most physicians get paid better by commercial insurance companies than they do by Medicare.   If you are getting say, 150% of Medicare from BCBS for a 61-year-old patient and they switch to Medicare, you will see that same patient but for less money.
  2. Add the Public Option to the Affordable Care Act. Candidate Biden wants to add a Government-run insurance company call the “Public Option” as an option for any individual purchasing on the exchanges.  This public option will most likely be a full network of physicians compensated at 100% of Medicare rates.  This will make this insurance very affordable.  What will this do for doctors?  Well, just like the reduction of the Medicare age, this will mean that some portion of your patients will switch from another carrier to this government option, and that will mean you will get paid less.  It will also put pressure on the other insurance carriers who have to compete with this public option to drive down their reimbursement to your practice.  This one could be a double whammy.
  3. Boost the ACA – Candidate Biden has several strategies to further boost and support the Affordable Care Act to help drive down the uninsured populations. On the one hand, having more people with coverage is good for doctors, but since these people are likely to come with lower reimbursement levels, it could be a net negative.
  4. End Surprise Billing – This may be the only thing that Candidate Biden and President Trump agree on. Both candidates have said they want to eliminate surprise billing.  What does this mean for doctors?  Well, for most specialties, not much.  However, for Anesthesia, Emergency Medicine, and Radiology, well for those specialties, it’s Game Over.  This will seriously damage, if not kill, independent groups in those specialties by giving incredible power to insurance companies.  If you think I am overreacting, consider this.  Several years ago, there was a change in reimbursement from Medicare that significantly impacted cardiologists.  Today over 70% of the practicing Cardiologists are employed by a hospital or delivery system.  The impact that a surprise billing law could have on hospital-based physicians could be worse than the event that drove Cardiologists into the arms of hospitals.  In case you are keeping score, that little move increased the cost of Cardiology.
  5. Drug Reform – Wait, we have something else that both Trump and Biden agree on. Both candidates want to reform our current system and go after the drug companies to reduce costs.  This one is not likely to impact doctors, and given the power of the drug companies, it may be the hardest one for Biden to accomplish.


So, in a world where Joe Biden becomes our next President, and his party has the majority in the House and the Senate, doctors’ bottom line is pretty bleak.  Several of his directives would reduce your revenue and pressure insurance companies to reduce your income further.  For hospital-based physicians, the picture gets even darker.


So, what should you do?  Since its Hurricane season, I will use this analogy.  Don’t wait for the Hurricane to arrive.  It’s tough to board up your windows in 100 mph winds.  The time to prepare is before the thing hits landfall.  Every medical practice should be running scenarios on how much revenue you could lose in all of this.  Take a look at your practice and calculate the revenue loss if 50% of your patients from the age of 60 to 65 convert to a Medicare payment level.  Calculate how much revenue loss would happen if 50% of your patients who get their insurance from the exchange convert to a Medicare payment level.  That will give you a good idea of what kind of revenue hole you may be looking at.  Then develop some plans on how you would respond.  What can you do to reduce expenses?  How can you make sure you attract more of the better paying commercial insurance population?  That is the kind of planning and preparation you should be doing now.


We got caught off guard and unprepared by COVID.  Don’t get caught off guard again by the election.


When and if President Trump releases any details on his health care plan, I will do the same analysis on a scenario where he wins re-election, and the Republicans control both bodies of Congress.


Take a listen to our latest podcast. Streaming now on Soundcloud and Apple Podcasts!

Posted on

Let’s Move Forward

Covid-19 became real for me on March 13th.  That is the day that I shut down my office and sent my people home.  That was six months ago.  What a long and challenging six months it has been.


We have learned a great deal in the last six months.  Our health care professionals have gained great knowledge about this virus works and how to combat it.  We have done incredible work in record time to develop not one but possibly three different vaccines that hold the hope of ending this crisis.  We have seen countless stories of essential workers putting themselves at significant risk to keep the rest of us healthy and supplied.  We have witnessed heartache as millions of people have lost their jobs.  We have seen small businesses close, never to open again.  We have seen almost 200,000 people in this country die from this virus. Nearly 600 of those were health care professionals working hard to try and treat those who had contracted the virus.


We have also seen a great divide in this country as some people seem determined to argue along mostly political lines about things that either shouldn’t be debatable or have no bearing on where we go from here.  I will point some fingers now and fully admit that I am guilty of some of the very things I am calling out.


Right now, six months into this crisis, anyone arguing over the value of wearing a mask or if this was a plot by China or if the fatality count is overstated should just stop.  All those people arguing over who said what in January or February, just stop.  Anyone suggesting that there is some deep state conspiracy here by either political party, just stop.  Stop it right now.  There are 200,000 Americans that would love to tell you why you should stop this nonsense, but they can’t.


Ok, let’s get this out once and for all.  This sucks!  No way around it.  It sucks for everyone involved.  I have told my kids that this is likely the worst thing they will ever experience.  Think about this, on 9/11; we lost about 3,000 American’s.  That was a very dark day and one we should never forget.  Over the last six months, we lost an average of 1,000 American’s every day.  That’s like having a 9/11 every three days for six months.  I know this isn’t good.  Everyone knows it’s terrible, and I am just as guilty as everyone else of wanting to find someone or something to blame.  I want a bad guy in all of this—someone I can hate and punish.  The problem is, there is no bad guy.  There is no villain dressed in black for us to despise.  The other problem with wanting someone to blame is it doesn’t help us move forward.


Now, I know that people will base their vote in November on what they think their Governor did or didn’t do.  I know people will consider the President’s response to COVID when they cast their ballot in November.  That’s great.  Please do.  I know I’m going to.


I’m not saying that you shouldn’t look back on how elected officials handled this crisis as part of your election decision making.  You should do that.  What I am saying is the arguments over silly things that aren’t going to change or help us get out of this mess are not only pointless but just widen the divide in this country.  Let’s all do what we did after 9/11.  Let’s pull together and find our way out of this dark time.  Let’s work on how to get our kids back in school safely.  Let’s work on opening the economy fully without increasing the number of people who will get this virus and die from it.  Let’s root for a vaccine.  Let’s become American’s again.


Thank you.


Take a listen to our latest podcast. Streaming now on Soundcloud and Apple Podcasts!

Posted on

What we have learned from COVID-19

I woke up this morning and realized that we have been dealing with Covid-19 for about six months.  I closed the Fulcrum offices and sent my people to work from home on March 13th.  I started thinking about all that we have learned about the virus and ourselves over the last six months—looking back I many positive things and some negative ones.


At the start of this pandemic, our health care delivery system was presented with a new virus that they had never seen.  As patients started rolling into the hospitals and ICU’s our health care professionals were truly learning as they went.  The approaches to patient care and the treatments at their disposal during those early days are very different than what they do and have now.  You can see a dramatic drop in the fatality rate from those early days to now.  Simply put, our health care delivery system and the professionals who work in it responded to this new challenge with incredible speed and effectiveness.  Even today, they continuously challenge themselves to do better every day.  One of the things we have learned from this crisis is just how amazing and capable our health care professionals are and that we are lucky to have them.


In addition to the advances in the clinical approach to COVID, we learned that, for the most part, the people who have dedicated their lives to caring for others did it because of the passion and commitment they have for patient care.  If not, we would not have seen so many stories of doctors, nurses, and other professionals working mind-numbing hours while putting themselves at risk of contracting the virus.  We saw stories of nurses leaving the safety of their homes and traveling to New York and other hot spots to help out.  I, for one, gained a little bit more hope for humanity watching these health care professionals.  We owe them a debt of gratitude that should not be soon forgotten.  I hope none of you know someone in an ICU with COVID, and I hope you never do, but for those who do know someone, you understand what I am saying.


We have also learned that America has an incredible capacity to rise to a challenge.  We were presented with a never before seen virus, and it looks like in less than 12 months, we will have not one but possibly three safe and effective vaccines available and fully vetted by large scale clinical trials available to protect not only our country but the world over.  That is truly amazing.  I would argue that this is bigger than Kennedy’s challenge to walk on the moon.  If 2021 is a return to normal, it will be in large part to the incredible efforts of those people who did the work and the research to develop these vaccines.


We also learned that as a society, we have an incredible capacity to adapt.  Our education system adapted to distance learning, businesses adapted to things like curbside pick-up, and physicians adapted to telehealth.  We adapted and made the best of a bad situation.  Don’t get me wrong; there are still way too many people who have been hurt by this crisis and too many small businesses that will never recover from this blow.  I don’t want anyone to think that I am minimizing that.


We have also learned some bad things about our society right now.  Like any challenge, we have stumbled along the way.  As long as we learn from these stumbles, we will be ok.  If we fail to learn from our mistakes, then we are doomed to repeat them.


At times we have stumbled by not trusting the experts and believing the science.  My son as a t-shirt that says; “Science. It’s like magic but real”.  We need to remember that and trust the science.  We stumbled with Hydroxychloroquine by rushing to use if before it was proven safe and effective.  What we eventually learned is that it is neither.  We stumble when we don’t listen to the experts talk about mask-wearing and social distancing.  It still amazes me when I go to the grocery store and watch adults walking around with no mask.  I watch them walk right next to someone who is elderly and, as such, is at high risk for COVID.


Speaking of mask-wearing.  We have learned that we are incredibly polarized right now.  We see polarization on race relations, political affiliations, and many other areas.  What amazes me is how we can turn something like wearing a mask into a political debate.  In my mind, and the minds of any rational physician out there, mask-wearing is not a debatable issue.  It is clearly a good and easy way to help slow down the spread of a very dangerous virus.  How anyone can be in public not wearing a mask is beyond me, but I see it happen every day.  We have stumbled here, and we need to learn from this mistake.


My last concern is around the very promising work on a vaccine for Covid-19.  Let’s not stumble on this one.  Let’s not rush these vaccines to market before they have completed the necessary clinical trials.  Trust the science.  Let’s not make the same mistake we made with Hydroxychloroquine.  Then when the vaccine is available, let’s not turn that into a political issue.  Here is a news flash for everyone.  COVID doesn’t care if you are a republican or a democrat.  It’s an equal opportunity virus.  If you get the virus it also doesn’t care who you give it to.  It is just as happy to spread to your loved ones, strangers, and yes, it will equally spread to those people who agree with your politics just as well as to those that don’t.  There is overwhelming consensus from the scientists who have spent a lifetime in this field that our best chance of beating this virus is social distancing, mask-wearing, good hygiene, and a safe and effective vaccine.  No matter what anyone else says, sunlight, ingesting disinfectant, and toxic plant extracts will not do the trick.


So, to end on a positive note.  If you are reading or listening to this and you are a front-line healthcare worker, Thank You.  If you are an essential worker making sure the rest of us can get our food and other essentials, Thank You.  If you are a teacher in this challenging time, Thank You.  If you are doing your part to help us all get through this, Thank you.  If you don’t fall into one of those buckets and can’t even be bothered to wear a mask in public, get with the program because if you aren’t part of the solution, you are part of the problem.


Thank you.  Be safe and Be well!


Check out our latest podcast. Streaming now on Soundcloud and Apple Podcasts!

Posted on

Transparency in Health Care

I have worked in health care for over 30 years.  I have worked on the payer side, in medical group operations, and as a consultant for physician groups.  I have interacted with literally thousands of physicians over the last 30 years.  The most amazing thing about my career is that every single doctor I have ever worked with is the best in their field.  All of them provide the highest quality of care for their patients, and they are also cost-effective.  How do I know this?  Well, they all told me they are.   I have yet to interact with a doctor that will tell me, “I’m actually a mediocre doctor.  I graduated at the bottom of my class and, I order more tests than my peers.  My quality is average, and I’m more expensive.”  Is that amazing how I have been able to only work with the very best doctors out there?


Ok, I will now take my tongue out of my check and get serious.


The reality is that most doctors are very good at what they do.  The vast majority of doctors are also doing what they think is right for the patient and trying to be cost-effective.  I can tell you countless stories where doctors do the right thing for their patients and control costs even when it is detrimental to their business or paycheck.  Like any profession, there are bad actors out there.  There are bad doctors just like there are bad lawyers and bad politicians…. wait, that may have been a lousy comparison.  Anyway, the point to all of this is not that all doctors are good or that all doctors are bad but that in the new world of transparency and consumerism, you will have to prove your quality and cost-effectiveness or someone else is going to prove it for you.


Recently I have had clients receive what can only be described as a “report card” from one of their payers.  The payer will grade them on “quality” measures as well as cost.  What makes this even more real for the provider is the fact that payers are now basing reimbursement on these grades.  In addition to that, payers are actively selling narrow-network products.  If you are on the wrong side of the quality/cost line, you are excluded from these networks, which means those patients can’t come, see you.  When this happens, “stuff gets real.”


At first, many physicians have a very visceral and adverse reaction to being graded by an insurance company.  Statements like, “Who are they to tell me my quality is bad!”  and “What does an insurance company know about quality?”  are often the first things out of their mouths.  These are valid concerns.  Insurance companies have access to limited amounts of data, and several studies have shown that insurance company physician profiling is not very accurate or predictive.   There are many reasons why it’s difficult for an insurance company to measure and predict individual physicians’ quality and cost-effectiveness accurately, but that’s not the point.


The point is they are going to do it anyway, and it’s the world we live in.  Combine that with the rise of consumerism and the digital native populations’ use of this kind of information in purchasing decisions, and we have a whole new world out there.  A world where it’s not good enough to say you are high quality, you have to be able to prove it and respond to anyone who says you are not.


So, what’s a doctor to do?  Well, there are three things that every practice should start doing to be prepared for this new world.


First, from the top of the organization, you have to accept this new environment and adopt a culture of quality, self-reflection, and continuous improvement. Merely shouting at the wind that this “isn’t fair” won’t help at all and won’t stop the changes that are happening and will continue to happen.  Like a smart man once said, “If you don’t like change, you will hate being irrelevant.”


Secondly, develop or secure the knowledge, talent, and resources to evaluate and, where necessary, challenge any data about your quality and cost profile.  When a payer sends you a report card, the first response should be; “Thank you.  Would it be possible for me to see the data behind this report so that we can use it to improve?”  Yelling at the payer and complaining about the injustice of it all won’t help.  You need to engage the payer, or whomever else is producing the report card, and get as much data as possible.  When you find an error in the data or a reasonable explanation for the discrepancy, then point it out.  When the data shows gaps in your quality, then address it internally, close the gap, and do better next time.  Groups that do this well and quickly are going to do well in this new world.  Think about it for a minute.  If these report cards are good, you have an external source, a payer, verifying your quality.  Now you can see, “We are the best group in our area.  That’s not just our opinion; BCBS thinks so too”.


Finally, get proactive.  Develop internal measures of quality.  Make them the kind of criteria a payer would look at.  Analyze and evaluate your doctor’s performance against these measures and work with any of your doctors that are outliers while also trying to move the needle for all of your doctors.  If you know that a payer is going to measure how many of your female patients over the age of 50 are getting a screening mammogram, then look at your EMR data and make a point of talking with those patients that have not followed through with getting this done.  A couple of years ago, one of my Radiology clients wanted to engage a major payer on a quality argument.  Their position was that their callback rate on screening mammograms was lower than their competitors, and because of that, they saved money.  The payer did engage and did an exhaustive analysis.  The analysis showed little to no difference between the two radiology groups in town on mammo callback rates.  When my client did a deep dive into their data, they found that one doctor was driving up the group’s call back rates significantly.

Simply put, most of their doctors were better, but one doctor in the group had such a high call back rate that it was driving up the group’s average.  This doctor was an older physician that in all honesty, probably either lost some skills or didn’t keep up with his peers and the technology.  He probably should have retired.  The point to this story is that this group should have been looking at this data proactively, and they should have addressed this issue before approaching their payer partner.  I know these are hard discussions and that it’s difficult for a group to tell a long time partner that it may be time to hang it up, but that’s the world we live in now, and that is what successful groups are going to have to do.


The bottom line is this.  Change is happening.  Payers and consumers are going to grade and rate your performance.  You can be angry about this or accept it and develop the necessary tools and expertise to deal with it.


The choice is yours, and so will be the results.


Check out our latest podcast. Streaming now on Soundcloud and Apple Podcasts!

Posted on

Clinical Quality in the US Health Care System

Anyone who has worked in health care or has even a moderate interest health care has heard that the US health care system is the most expensive in the world and we don’t get much for our money.  Usually, when people make that statement, they use the World Health Organization’s ranking of the US as proof that our quality is not very good. WHO ranks the US 37th in the world for health care. This is a false argument as the WHO doesn’t really measure quality.  However, the WHO rankings do bring up the question of quality, which a good question to put to bed once and for all.  I would suggest that the US health care delivery system produces the best quality of care in the world and I have the data to prove it.


First of all, its ridiculous to think that the quality of care in the US is behind countries like Chili, Morocco, Cyprus, Columbia and Greece, all of whom are ranked higher than we are by the WHO.  I mean has anyone ever been diagnosed with Cancer in this country and said; “If only I lived in Greece.  Then I could get some really quality care.”


Rather than point out all of the problems with the WHO rankings, let me point to some data that explains and supports my position that we have the best health care quality in the world in the United States.  That may seem counter to what many people believe, because on the surface it doesn’t appear that way when you look at mortality, life expectancy or infant mortality statistics.  The Peterson Kaiser Family foundation produced a wonderful report in 2019 comparing the quality of the US healthcare system to other countries.  For this study they used the Netherlands, Australia, Sweden, Japan, Austria, Germany, France, Canada and the UK as the group of comparable countries for comparison.


The report produced some interesting and telling results.  When looking at age adjusted mortality rates, we see steadily falling rates for all of the countries studied with the US still above the comparable country average.  The Healthcare Quality and Access (HAQ) rating has the US with the lowest rating of all the comparable countries.


Another way to measure mortality rates and life expectancy is the Years of Life Lost measure.  The United States again trails all other comparable countries.

At this point you are probably wondering how I can make the argument that the clinical quality in the US is very good when we seem to fall behind all other comparable countries in these three measures?  Well, that gets us to the rest of the story.  The United States being the richest country in the world has produced a lifestyle that is extremely unhealthy.  Consider the following.


The United States leads the world in average daily caloric intake.  Of the comparable countries in the Peterson-KFF study the US had the highest obesity rate at 36.2%.  That’s right, over a third of our population is clinically obese.  None of the other comparable countries are even close to us with the average of the comparable countries at 21.7%.  That means that our rate of obesity in this country is 40% higher than the average of the other comparable countries.  We know that obesity leads to many significant health issues like diabetes and cardiac disease.


Another area where our lifestyle impacts overall health is in the area of substance abuse.  The rate of substance abuse in the US is twice that of the average from those comparable countries.  Just think about these two factors and the impact they have on our overall health as a country.  People in the US are 40% more likely to be obese and twice as likely to have a substance abuse problem than the average citizen in comparable countries.


The Peterson-KFF study looked at disease burden in their study.  They did so by measuring the Disability adjusted life years.  This is a measure of disease burden and the rate per 100,000 shows the total number of years lost to disability and premature death.  In 2017, the DALYs rate for the US was 31% higher than the comparable country average.


So, with that the data starts to become clear and paint a different picture.  We can see that the US lags behind comparable countries in mortality rates.  However, we also see that it’s not a level playing field.  As a population we are doing everything we can to die at a young age.  We suffer from obesity and substance abuse issues among other things that significantly impact our health.  My question to you is this; should we blame our health care delivery system for this or is it time to look in a mirror? I mean, blaming our health care system for individual and societal issues around things like obesity and substance abuse is a little bit like me blaming my fork for my weight problem.


I would argue that a better measure of clinical quality comes from our delivery systems results combating serious conditions and diseases.  Even here we have made life hard for our doctors and hospitals because things like obesity and diabetes are comorbidities for most other serious health issues.  Be that as it may, when looking at specific diseases and conditions we start to see a true picture of the clinical quality of our health care delivery system.


Again, from the Peterson-KFF study we see the US has a lower 30-day mortality rate for heart attack and stroke than the average of the comparable countries.  That is amazing considering that those individuals who have a heart attack or stroke in this country are much more likely to have a significant comorbidity condition than other countries.  Simply put, with a less healthy patient our doctors and hospitals still produce better results for heart attacks and strokes than the other countries.  In addition to that our mortality rate for breast, colorectal and cervical cancers are also below the average of the comparable countries.  This is again with a much less health patient population to work with.  The same holds true for the age adjusted mortality rate for all cancers.  Again, the US has lower mortality rates for all cancers than the comparable country average.


To me the picture is pretty clear.  Our wealth and lifestyle have produced some very unhealthy habits.  The fact that our statistics are not worse than they are is a credit the quality of care available in this country.  Our doctors and hospitals are keeping us alive while we are doing everything we can to die at a young age.


Again, I reiterate my statement; I don’t think anyone with cancer or other serious diseases is sorry they are in this country and would rather be treated in Greece or Columbia.


Check out our latest podcast! Streaming now on Apple Podcasts and Soundcloud!

Posted on

Remember 2019?

Remember 2019?  What was that about 10 years ago?  I remember it like it was just last year.  Back then before all this Covid mess we were worried about health care and how we needed to do something to reform our health care system.  We had polls showing that health care would be the number one issue for voters in the upcoming election.  Well, it’s still going to be the number one issue but now for a different reason.


Sometime next year we are going to wake up from this Covid nightmare.  We are going to have an effective vaccine and much better treatments for the virus.  We are going to wake up and the elections will be over with some poor schmuck having taken the oath of office.  I’m serious, if both Trump and Biden knew what they were in for, they would both try to endorse the other guy.


When we wake up from this nightmare and try to get back to normal, we are going to realize that healthcare is still a problem and the reality is that the problem just got much worse.  Think about it for a minute.  If healthcare and healthcare costs were a problem in a strong growing economy with record low unemployment, then what on earth is it going to be like in a damaged economy with the highest unemployment since the great depression.  What’s it going to be like after that government has racked up debt like a drunken college student on spring break with Daddy’s gold card?  Whom ever occupies 1500 Pennsylvania avenue in January is going to find a huge crap sandwich on the resolute desk and it’s called healthcare.


So, since I am pretty sure that guy won’t be me…. please don’t write my name in on your ballot…. seriously, don’t…. like I said, since it won’t be me, I have no problem providing my diagnosis and prescription for the President.  In the next several episodes I will attempt to tackle this problem and provide a list of things the President and Congress can do to try and fix the mess we are in.  I’ll warn you now.  It’s going to be a bit like watching sausage being made.  It won’t be pretty, and I might change your choice of breakfast food.


So where to start?


Let’s start with a foundation of how bad things are and how we got here.


The US healthcare system has a significant cost problem.  That cost problem is creating a coverage problem.  What we don’t have is a quality problem.  Let me explain.


In 2018 the US spent $10,586 per capita on healthcare.  That is more than any other country in the world.  A lot more!  If we look at nine comparable countries, we see that the second highest country is Germany at $5,987 per capita, which is almost half of what we spend.  If the US could get its healthcare spending down to the same per capita rate as Germany it would save our country over $1.5 trillion dollars per year.


This problem has been brewing over several decades but really took off from 1990 to 2010.  During those two decades healthcare spending jumped from an already inflated 12% of GDP to 17% of GDP.  That was before Covid and before the economic downturn we will experience this year and next.


Forecasting GDP and unemployment in 2021 right now is harder than forecasting the weather three months from now.  The Fed has projected GDP growth rates for next year at anywhere from -1% to 7%.  They are projecting the unemployment rate for 2021 to be anywhere from 4.5% to 12%.  That’s like saying the temperature tomorrow will be somewhere between zero and 120 degrees.


I think it’s safe to say that 2021 GDP will be well below where it would have been without Covid and that we will have an unemployment rate that is much higher than it would have been.  That seems like a safe bet to me.


Both of those things will put pressure on the Federal budget and deficits and will likely drive the healthcare spending as a percentage of GDP to rates approaching 20%.  Add to that the trillions, yes trillions, as in much more than one trillion, trillions of dollars added to the national debt in 2020 and you have a recipe for budgetary disaster.  That’s what the guy sitting behind the resolute desk will have to deal with.


So, with that foundation, let’s start our journey on how to fix this mess.  Tune in next week for a discussion on quality and why in spite of what some people believe, that is not our problem.


Check out our latest podcast! Streaming on Apple Podcasts and Soundcloud now!


Posted on

Capitation – The “C” Word

For years, if not decades, we have been hearing about healthcare reimbursement transitioning from a fee for service system to a value-based system.  Until recently these predictions were much like the song “tomorrow” from the movie Annie, where tomorrow is “always a day away.”  Oddly enough, it may be the Covid-19 pandemic that creates the catalyst to make tomorrow, today.


Recently BlueCross BlueShield of North Carolina announced a new program called “Accelerate to Value.” This program will provide independent primary care practices with additional funding to replace the revenue they lost during the Covid-19 crisis. To receive this money, the group must stay independent, join one of four approved ACOs, and consider a capitation contract next year.


For many physicians, the use of the “C” word causes a great deal of trepidation.  They get worried that capitation is just a slick way for payers to trick providers into accepting less money for the services they provide.


Let me begin by saying that being skeptical of anything coming from a payer is always a good thing. That being said, not everything they do is bad, and in this case it isn’t.


Capitation is a tool.  Nothing more, nothing less.  Like any tool its value and effectiveness lie with the skill of the person using the tool rather than the tool itself.  A scalpel in the hands of a gifted surgeon can save lives.  That same scalpel given to a child will result in someone getting hurt.


Capitation, as well as other forms of value-based reimbursement, is designed to help fix one of the fundamental economic flaws of our health care system; a flaw that contributes to our problem of health care hyperinflation in this country.  You see, our current fee for service system pays doctors to treat illness, injury and disease.  It does not pay doctors very well to keep people healthy or help them avoid illness and disease.  Capitation reverses this and pays doctors to keep people healthy.  For example, things like imaging go from being revenue sources to expense centers.  Under capitation, the most profitable patient is the patient that is healthy and stays healthy.  From a philosophical standpoint, most doctors would love to be paid for keeping people healthy rather than only being paid when treating an illness or disease.


The benefit or harm that a capitation contract can have on a practice is determined by the details of the agreement.  These details can be complicated and are the key to determining how these agreements function.  How do I know this?  Well, I negotiated my first capitation contract almost 30 years ago.  I have negotiated single specialty, PCP, hospital and full delivery system cap agreements.  Most of these I negotiated while working for insurance companies.  Some of these agreements worked very well for both parties, including the providers on the other side of the agreement.  Some of them were financially devastating.  I negotiated and managed one such agreement that went so poorly that the hospital system actually paid the insurance company for the pleasure of treating its members.  I’m not kidding.  The cap contract was so bad that after paying for leakage to other hospitals, the cap pool had a negative balance, so the hospital had to send a check to the insurance company to cover the deficit.  That’s how bad these things can get.  On the other side of the spectrum was a single specialty cap contract that performed so well for the physician group that their revenue was actually higher than the full billed charges for the services they provided.  While these are the extremes, it does point out the variability of these agreements.


So how does a medical group ensure that the contract they enter into is beneficial?  The key lies in three areas.


  1. Understand the data.  You have to be able to compare the revenue from capitation to the revenue that the old fee for service agreement would have produced.  This will allow the group to figure out if they are starting out even, ahead, or behind.
  2. Understand the way the cap works. If you have seen one cap agreement, then you have seen one cap agreement.  They are all different and they all have different provisions.  Understanding how they work is key to being successful under these new payment models.
  3. Manage your group’s performance. Working under a cap environment is in many ways similar to managing under a fee for service agreement.  Groups have developed very good systems and reporting to measure physician production under fee for service agreements.  This is because production is king in a fee for service world.  In a capitation environment, you need to develop new tools and reporting to manage individual performance under these agreements.  If excessive imaging is a cost center under a capitation agreement, you need to be able to measure and manage any over utilization of imaging by the physicians in your group.


Groups that are able to effectively handle these three things, can and are very successful in a cap environment.  Those that can’t or don’t, are likely to fare very poorly.


New payment models, like capitation, have been predicted for years.  For many physicians, this was always a future problem that didn’t need to be addressed right away.  Well, the future is now.  It’s time to get started.  Your ability to transition to these new payment models will either secure your future or eliminate it.


Check out our latest podcast!

Posted on

Value Based Reimbursement. The time is now.

Throughout history major events have produced lasting impacts on this country often times bringing about quick, dramatic changes in many aspects of our lives.  9/11 forever changed how we travel in this country.  World War II made this country into a world superpower and gave birth to our current system of employer-based health insurance.  It remains to be seen what lasting impact will come from Covid-19 but its highly likely that this pandemic will drive significant changes in our health care system, how we deliver care and how we finance the care we deliver.


For decades now we have known that our health care cost trends are unsustainable.  The cost of our health care system and the portion of the US economy that it consumes have been steadily increasing for the last 50 plus years.  The only thing that has made this situation possible for so long is the strong and growing US economy.  Since the great depression our economy has been in a steady growth mode with the exception of some relatively short-lived recessions like the financial crisis of 2008/09.  Sergio Ermotti hit the nail on the head when he said; “Growth is what solves most big economic and social problems: poverty, government deficits, quality of life, rising healthcare and retirement costs.”


So, what happens if that growth cycle is broken?  What happens if our economy experiences a major economic downturn, one that lasts more than a year or so?  Well, ladies and gentlemen we are about to find out.  By all accounts and predictions, we are about to enter into a prolonged period of economic challenges the likes of which we have not seen since the great depression.  This will put significant pressure on our health care system, and how we finance the incredible amount of health care we consume as a country.  Let’s just look at some of the early numbers.


Current projections suggest that they US government will run budget deficits for 2020 and 2021 of well over $5 trillion dollars.  That’s more than the cumulative budget deficit for the last 9 years.  To put that number in perspective, our budget deficit for the next two years is more than the entire GDP for every other country in the world except China.  That’s right, we are going to put more money on our countries credit card over the next two years than the entire economic output of almost every other country in the world.


The CBO is projecting a reduction in US GDP for 2020 and 2021.  They are also predicting unemployment rates that are three times higher than the rate in 2019.  All of this spells trouble for the US economy and the federal budget.  Health care remains the largest single category in the federal budget and a significant part of every employer’s expense structure.  This will put pressure on our health care system like we have never seen before.


This perfect storm of economic factors could be the catalyst for major changes in how we deliver and finance health care in this country.  For years there has been talk about transitioning our health care system from a fee for service system to one that is value-based.  Proponents talk about the perverse incentives of a fee for service system and how inflationary it is.  They are correct.  The proponents of value-based systems of reimbursement suggest that paying doctors to keep people healthy rather than only paying them to treat people once they get sick will have a significant impact on health care costs and is the only way out of the mess we are in now.  While I agree that making the shift to value based reimbursement is necessary and will definitely help, it’s not a magic pill and other changes will also be necessary.  That being said, it is definitely a step in the right direction.


As we look to a very difficult future, physicians and other parts of our delivery system should start getting ready for this kind of tectonic shift from fee for service to value based methodologies.  Reimbursement models like capitation, shared savings and bundled payments are likely to move from experiments and the exception in most parts of the country to becoming the mainstream for everyone over the next couple of years.  This transition will not be easy or without its challenges.  The groups that get it right will do very well and those that don’t will have a hard time surviving.  The time to start working on this is now.


There is a story about Napoleon that illustrates the need for urgency here.  During his reign, Napoleon asked his engineers to plant trees on both sides of the roads that entered Paris.  He explained that he wanted his troops to march to and from battle in shade.  When an engineer asked him if he knew how long it took a sapling to grow tall enough to cast that kind of shade, Napoleon replied; “Of course I do.  That’s why you need to plant them today!”


In future blogs and pod casts I will explore in more detail the kinds of reimbursement methods that may be used in a new value-based world.  It is my hope that this information will help physicians and delivery systems prepare for the future.  Hope is not a strategy and it has been said that success is where preparation and opportunity meet.


Check out our latest podcast!