Health Reform and the Economy: Pragmatism Works in Texas

June 11, 2011 – This morning I find myself in a pragmatic frame of mind. I believe what works, works. If there was ever a time for pragmatic realism, that time is now.

Take health reform and the economy. The two are tied closely together. Together they will determine the next presidential election. It will not be one’s ideology that counts. It will be how one reacts to economic news and how the news affects one’s behavior.

Physician and Hospital Pragmatism

Consider physician and hospital economic behaviors. Ideologically, if one believes the health reform law, physicians and hospitals should be paid on the basis of “quality” and evidence thereof, and on their ability to lower costs and produce better outcomes.Yet, according to a just released Merritt Hawkins 2011 review of Physician Recruiting Incentives, this is not the case.

Hospitals are recruiting physicians on the basis of a guaranteed salary plus productivity bonuses , i.e. the number of patients they see or the procedures they perform, not because of the so-called “quality” of care they deliver.

Hospitals and medical groups are paying more for those specialists, who, on average, bring more revenues to hospitals or the group, For example, on average, specialists command these incomes $521,000 for orthopedic surgeon; $532,000 for invasive cardiologists, $453,000 for urologists, $424,000 for gastroenterologists, and $402,000 for radiologists - versus $178,000 for family physicians, $205, 000 for internists, and $217, 000 for hospitalists.

Physicians are pragmatic too. Why would they pick primary care as a career when they can double even triple their income in a specialty and work shorter hours? And why should they join an accountable care organization and be guaranteed a lower income with the threat of being sued for antitrust behavior?

What is “Quality”?

Part of the differences between ideologues and pragmatists hinges not upon money but on the perception of what defines quality.

In The Health Care Blog today, Humphrey Taylor, Chairman of the Harris Poll and Harris Interactive, points out that quality is in minds of the beholder.

Physicians, he says, define quality not just in terms of money or outcomes but with having happy patients. They equate quality with access to new technology, low hassle factors and autonomy, good ancillary services, absence of obstacles to appropriate care, and being part of a strong team.

Policy wonks, on the other hand, focus on the use of evidence-based-medicine, use of practice guidelines, appropriate and inappropriate care. They advocate the use of process measures (beta blockers for heart attack patients), intermediate outcomes measures ( control of blood pressure, A1C, and cholesterol) and “real” outcome measures including the impact of care on mortality, morbidity , disability, and quality of life.

The Economy

Finally, there’s the economy itself. Physicians, like others, tend to gravitate towards cities of over 100,000 in states with robust economies. They shy away from states with high unemployment – like Michigan, Florida, and Illinois – with high malpractice premiums – and move to states like Texas, with low unemployment, low malpractice rates, and high demand for physicians.

Since the recession began Texas, a state with a pragmatic state if mind, has produced 37% of all new jobs in the United States. Richard Fisher, president of the Federal Reserve Bank in Dallas, says this remarkable job growth is due to these pragmatic factors: a business friendly environment, flexible economic policies, small government, no state income tax, no right to work laws, a 30.5% health care growth, and systematic tort reform (editorial, “The Lone Star Jobs Surge, “ Wall Street Journal, June 10, 2010).

Pragmatism, not political ideology, is working in Texas.