A Physician Will Lead Them

I began my career in health care management and finance with a health system, Appalachian Regional Healthcare, based in Lexington, Kentucky. ARH provided hospital and home health services in one of the most troubled regions in the United States, central Appalachia. From there, I moved on to a major accounting firm and until the mid-1990s, focused almost exclusively on hospitals, nursing homes, and home health agencies; institutional providers in essence.

My early involvement with physicians focused around the “acquisition” of primary care practices by health care systems. The health system’s objective then was to “gain control” or “get in front” of the referral network in an effort to direct services to the system’s providers. From the perspective of a hospital administrator in the 1990s, this made perfect strategic sense and for some systems, while initially difficult, the strategy ultimately paid market share dividends.

Like many people who have had the benefit of considerable experience, my view of this strategy  has changed considerably. Winston Churchill’s quote, “However beautiful the strategy, you should occasionally look at the results”, resonates with me.

I would argue that, from the standpoint of the community, employment of primary care physicians by health systems has been an abject failure.

Why? Well there are the obvious points: Access to primary care physicians has become more restricted as fewer medical students are entering the field and those who do are restricting their hours of availability. Primary care physician earnings, while increasing early on during the post-transaction boom, have gone bust. Economies of scale have not materialized. And so on.

But the main reason this strategy has been a failure is that it was built upon a fundamentally flawed objective…filling hospital beds, utilizing expensive diagnostic equipment and directing (and increasing) referrals to favored specialists.

Today, it has become crystal clear that keeping people healthy is the right goal for communities, and by extension for health systems. Doing so lowers the cost of health care and improves the health of the citizens of the community. A new focus is needed.

Will Hospitals provide this new focus? I don’t think so because the incentives remain the same for hospitals (and likely will under the current proposed reform, at least over the next several years). And, while we have some great leaders in our C-Suites, those willing to bet their careers on innovation are few and far between. The new focus and leadership will  need to come from primary care physicians.

Primary care docs have their backs against the proverbial wall. Reimbursement formulas are constructed in a way that disadvantages them as a group, with only paltry payments for office visits and hospital rounding. Many are frustrated and some would be retired except that they fear a retirement in relative poverty.

And yet, the market seems to be waking up to the direct cost benefits associated with a healthy society and the critical role primary care physicians play in that regard. The Centers for Medicare and Medicaid Services are now talking about moving away from fee-for-service payment and tying payment in the future to outcomes. Evidence-based guidelines, the subject of a lot of happy talk over the years, have been implemented in some highly visible organizations and shown to improve quality and cost.  And enlightened organizations have been using technology to successfully mange the health (as opposed to the health care) of populations. Even the primary care physician market has become to organize more efficiently as evidenced by the rise of hospitalists.

I believe this environment provides an opportunity for primary care physicians to take the lead in reforming health care market by market. My time as a health system CFO helped form this point of view. That experience made it clear that they only way to improve hospital quality, cost and customer service was to not only engage the physicians, but to find strong physician leadership.

Imagine the impact an independent 150 – 250 person primary care group could have in the greater Louisville market.

Such a group would be important to employers and payers who would be willing to pay for the management of their member’s health. It might demand payment from payers based upon outcomes as opposed to the current speciality driven fee-for-service system. The group would hold hospitals and specialists to very high standards of quality and cost effectiveness. It might coordinate and facilitate medical tourism. The Group could be the source of health care information for the community using the internet, direct mail, and community education programs. I think the sky is the limit.

What is needed is physician leadership for such an effort. Where will it come from? This is the most daunting question we face. The environment requiring the change is the barrier to change. Most docs are simply too busy fighting the daily battles to be able to focus on creating a better future. I do believe leadership will emerge from either a young emerging talent or an old lion determined to help those who follow (or maybe a combination of the two).

Time will tell.

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2 Responses

  1. I completely agree with your Churchill comment: “However beautiful the strategy, you should occasionally look at the results.” People who take a if-it-ain’t-broke-don’t-fix-it approach to health care are missing the point. It is broken and doesn’t work for many doctors, patients, or other health care providers. The current health care plan–and one would have to view the word “plan” quite loosely here–needs fixing. Those who don’t keep up fall behind, and American health care is this in a nutshell.

  2. I enjoyed reading your insights in this blog post. The trick will be for primary care physician group to get enough traction (in terms of size and influence) to be able to push back against the traditional systems and third-party payers. It will be interesting to see if they are able to assemble in such a way.

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