Friday, August 6, 2010

Chapter Four. Health Reform in Perspective

This is the fourth chapter in my new book Health Reform in Perspective. I apologize for the length of this chapter, but when I conduct interviews, my policy is to hear people out.

Worldviews – West Coast Reform Activist and National Physician Recruiter

Prologue: Your worldview rests on beliefs and experiences. Here a professor of medicine, a top-down health reform activist, describes how he would reform the system, and a national physician recruiter, relates what her firm’s surveys indicate about young doctors’ wants and expectations.

Interview with Arnold Milstein, MD, Health Care Innovator and Health Improvement Activist. Ambitions and Objectives at Stanford

Mercer Chief Physician and US Health Care Thought Leader Arnold Milstein, MD, has been appointed a tenured Professor of Medicine at Stanford University, where he will establish a new research center dedicated to accelerating innovations in health care delivery in the US and globally that improve the value of health care.

Q: Dr. Milstein, I am conducting this interview on behalf of The Physicians Foundation, which represents all physicians in state medical societies, most of whom are in physician-owned independent practices. The interview will appear in my blog,, and in As for myself, I have recently written two books, Innovation-Driven Health Care and Obama, Doctors, and Health Reform. My main interests are innovation and reform. Dr. Milstein, what is your present title and your forthcoming title at Stanford University.

A: I am currently the Chief Physician at Mercer Health and Benefits and Medical Director of the Pacific Business Group on Health. Beginning in July, I will be a Professor of Medicine at Stanford, remain medical director of the Pacific Business Group on Health and maintain a part-time connection to Mercer.

Q: What are your ambitions at Stanford? What do you hope to accomplish there?

A: At Stanford, I will found and support the development of a new research center. The center will bring together three different sciences in an effort to hypothesize and then test, better, more affordable ways of producing health: engineering science, management science, and medical science.

Q: Stanford has a glittering reputation in all three of these disciplines. It produces a host of innovative information technology graduates, including the two founders of Google. It is cheek-to-jowl with Silicon Valley, which has an innovative culture all of its own. Are you excited about your new job?

A: I am. Stanford offers globally recognized engineering, business, and medical schools within a ten minute walk of each other. In addition, Stanford has been a long-standing contributor to innovation and entrepreneurship in America’s IT and bioscience industries and more broadly to global prosperity that depends on knowledge creation.

Q: I am conscious of the scope of your work at the Pacific Group on Health, your co-founding of the Leapfrog Group, your articles on medical tourism and Medicare “never events”, and your service on the Medicare Payment Advisory Commission (MEDPAC). I begin with knowledge of your work. You are considered America’s leading activist specializing in health care improvement. What do you hope to achieve in your new position at Stanford?

A: Our first objective is a research objective- to mobilize a more disciplined scientific effort to accelerate improvement in the value of health care, first for the U.S. population and over time, for the world population.
Our second objective is a service objective. The tests of the new care designs will typically be at Stanford-affiliated clinics and hospitals. If the test results demonstrate more value for patients and payers, then we will test their replicability more widely.

Our third objective is to transform our discovery process into useful educational experiences for students in clinical and pre-clinical training, since continuous study and redesign of care needs to become a much more prominent component of the professional identity of health care professionals.

Q: Will you be working closely with the federal government?

A: Given the Institute of Medicine’s recommendations on priorities for comparative effectiveness research, funding for testing the effectiveness of care delivery innovations will originate from the federal government is likely. We also might find ourselves working with the government to the degree that care innovations discovered at our research center would benefit the Medicare and Medicaid population.

Q: The reason I asked about the government was I was just reading a government-directed report from the Council of American Medical Innovation. The report is called “Gone Tomorrow, A Call to Private Medical Innovation to Create Jobs, and End Cures in America.” The report claims the U.S. is falling behind other nations in health care innovation. According to Richard Gephart, former Congressional leader from Missouri, “Advancing a national strategy for medical innovation that engages all sectors – public, private, and academic- through a empowered federal office is an effective first step in turning around our health and economic crises.” Do you agree?

A: It’s a worthy government priority. The well-being of Americans depends on increasing their yield from our investments in clinical innovation. Comparisons of the U.S. health system to the systems of other countries show that we’re not getting enough in return for our much higher levels of health care spending than are other wealthy countries. With a coherent national clinical innovation investment strategy, we can unlock the creativity of U.S. clinicians and make the U.S. health care system a basis for global competitive advantage.

Q: What are your hopes and expectations this new health reform law?

A: For the past 6 years, I’ve served as an advisor to Congress on the Medicare program. I received a sobering education in federal health care politics. I realized that any health reform legislation likely to be signed into law was going to be “half a loaf”.

The new reform law is a step in the right direction, but falls short of what ultimately will be needed. It was not a failure in legislative drafting; rather, it reflects how political campaigns are financed. Industries that have the most at stake invest the most heavily to influence legislators to limit reform to changes that will least disrupt them.

We now have a health reform law that covers most of our uninsured and moderately encourages physicians to align with larger organizations generating more health with less money. Congress will need to twist the legislative dial from “moderately” to “strongly”.

Q: These days there is a lot of talk about “disruptive innovations.” Do you think this new health reform law will be disruptive to current medical practices?

A: It will not induce highly disruptive changes in the ways that care is delivered. Its effects will be gradual. An example is Medicare’s new bundled ACO payments to doctors and hospitals. Wider bundles that encompass longer time periods than a single patient encounter will shift accountability for quality and total costs more squarely onto the shoulders of doctors and hospitals. Unless other big payers harmonize with Medicare, ACOs will stimulate incremental but nonetheless valuable clinical innovation by physicians and hospital administrators.

Q: In your work at Mercer, you described two innovations in peer-reviewed publications - travel surgery and the Ambulatory Intensive Caring Unit (A-ICU). Could you talk briefly about those innovations?

A: The idea behind travel surgery is pretty intuitive. We’re in a world where it‘s become easy to compare crudely the relative value of major high risk, high cost elective surgeries across borders. Patients and major employers are growing interested in travel to hospitals where complication risks and the total cost of care are lower, including surgery performed outside the U.S. As surgical outcomes become more validly comparable across hospitals and surgeons, travel surgery will slowly increase.

Q: And what about Ambulatory Intensive Caring Units (A- ICUs)?

A: One strategy for lowering costs is to provide much better quality care to the segment of health plan enrollees who are at the highest risk—that is, the 20 percent of enrollees who generate approximately 70 percent of a health plan's spending in a given year.

With funding from the California Health Care Foundation, I led a team of clinicians and engineers who designed a new primary care model called the Ambulatory Intensive Caring Unit (A-ICU). The model paired redesigned clinical teams with high-risk patients—those with severe chronic illness and/or socio-economic challenges that contribute to preventable health crises, high health care usage and very high annual per capita health care spending. Our strategy for lowering costs was to form specialized teams to provide much more intensive primary care to this 20% segment of health plan enrollees.

Our aim was to prevent high immediate "downstream" costs attributable to the limits of traditional primary care. The A-ICU team also intensively managed discretionary specialty care and ER care. We implemented three design features:

• "First Floor" care was provided by well-trained community health workers. These "health coaches," were supervised by A-ICU nurses and/or physicians. They help patients to manage their primary hospitalization risk factors 24/7.

• "Second Floor" care was provided by physicians supported by a team of medical assistants and nurses. The team uses an electronic health record, on-the-spot telephone consultations with specialists and selective in-sourced onsite specialist services to reduce the costs and increase the health impact of primary care visits. For example, a behavioral health specialist visits the second floor regularly to work with patients in need of such services.

• "Third Floor" care was careful management of specialist consultations including hospitalist care. Using data from a cooperating insurer, the A-ICU team selects a narrow referral roster of cost-effective and high-quality specialists with whom to coordinate actively.

We estimated that the A-ICU could reduce annual per capita spending by 15-30% net of its higher operating costs and substantially improve clinical outcomes and experience of care for high risk patients that consume almost 50% of total spending for populations under 65 and over 70% for populations over 65.

Q: Were you happy with the results?

A: Yes. Physicians’ operation of ambulatory intensive caring units (A- ICUs) was often inspirational. Implementation testing sparked additional organizational innovations. It showed that collaboration among American clinicians and engineers can create new care models that generate much greater value per dollar for their patients. Taking care of highly unstable sick patients with traditional care models is like trying to guard Kobe Bryant with a high school player. They can’t keep up with the rapidly shifting needs of highly unstable patients 24/7.

Q: What were the new organizational models that you studied and described in your “Medical Home Run” paper in Health Affairs?

A: They form a spectrum. Some have been around, though often unappreciated, for over ten years. Others are newly evolving. They include primary care doctors owning and operating Medicare Advantage plans, visionary PCPs operating in progressive independent practice associations, as well as advanced multi-specialty groups and hospital-medical staff organizations.

Q: Which model did you find the most innovative?

A: Two Medicare Advantage HMOs founded and owned by visionary PCPs willing to take a big financial risk. Rather than complain about stress and underpayment of PCPs, they seized upon a new business model that freed them from their constraining relationships with their predominant insurers. They formed specialized new organization to fund and care for seniors.

Q: What’s unique about this business model?

A: Creative, ethical primary care practices realized that they could not afford to care adequately for sick, unstable patients if they were only paid for face-to-face care. Those that didn’t start their own MA plans forged novel payment relationships with their predominant payers before the term shared “ACO” was ever uttered. This allowed them to participate in the downstream savings generated by their intensified care models. It also funded the intensified care required to keep very sick people out of health care crisis.

Their innovation was two-pronged. It included innovations in the payment arrangements with insurers and in the care model.

Q: How does this tie in with the idea of hospitals and doctors negotiating bundled pay arrangements and sharing savings?

A: Provider participation in downstream savings can occur via several vehicles. On one end of the risk-sharing spectrum are physicians who start and operate their own health insurance company. In the middle is a kind of “super DRG” – a single payment is made to a combined hospital-physician entity to cover institutional and professional services for hospital stays and a 30 to 90 day post-hospital period.

On the other end are shared savings payments from payers to all providers involved in lowering health care spending per adult illness or annual per capita spending trend, if quality also increases. The common thread is use of payment innovation to allow physicians to take accountability for improving clinical outcomes and lowering total health care spending by improving their clinical effectiveness efficiently.

There is tremendous unlocked potential among American clinicians and hospital administrators to innovate in their methods of delivering care. Once we give physicians and hospital leaders strong incentives to generate more health with less money, we will see a faster of valuable clinical innovation.

We saw this in California in the early and mid-1990s when California‘s managed health plans began delegating responsibility for managing total annual per capita spending to organized physician groups. It spawned valuable innovations in California care delivery, such as, the hospitalist model.

Q: An expectation exists out there that HIT in general, and EHRs in particular, will transform and improve health care. What is the potential of an interoperable IT system linked by EHRs?

A: The preponderance of evidence is that when well-chosen HIT is put in hands of highly motivated physicians who are supported by skilled managers, it enables big improvements in care. Like any tool, it carries a risk of adverse consequences. However, its potential for benefit far exceeds its risks.

Q: Early on, you mentioned Kobe Bryant of the Lakers. Because of your education at Harvard and Tufts and later in California, you must be a little schizophrenic about the outcome of the Celtic-Lakers NBA finals.

A: I am from Wisconsin. My loyalty lies with the Green Bay Packers and the subtle delivery system design innovations of Vince Lombardi.

Q: With that confession, I will pack this interview up. Thank you for sharing your thoughts.

Interview with Lori Schutte, President of Cejka Search

Q: What is your background, leading up to the Presidency of Cejka Search?

A: My entire career has been in health care. This includes more than twenty years in the the field of organ transplantation at the American Red Cross and Mid-America Transplant Services (MTS), here in St. Louis, during which time I also earned an MBA from Washington University. At MTS, I was responsible for everything non-clinical – professional education, PR, marketing, basically everything to do with promoting organ and tissue donations.

Q: It sounds like a strange background for physician recruiting, but I suppose you are in the transplant business.

A: Yes, recruitment definitely involves finding the right match.

Q: Today I would like to talk about the Retention and Recruitment Survey in partnership with AMGA- The American Medical Group Association, the organization representing medical groups . This is the fifth year this survey has been conducted. Let’s talk about the highlights, the insights, and the surprises of this fifth annual survey. I understand you conducted it by sending an email questionnaire to all the members of the AMGA, and you had a response rate of about 12%, which is considered good.

A: Before we got the survey results, I hoped there would be something dramatic in terms of retention, such as turnover really going down. That did not happen. For 2009, overall turnover stayed at 5.9 percent down from 6.1 percent in 2008.

Everything was status quo, which surprised me, considering the state of the economy.

Q: I noticed physician turnover generally peaks in the first three years of a physician’s employment. Why is that?

A: It takes a while for the bloom to come off the rose. I think what happens is that when individuals are hired, they often get sign-on bonuses that are tied to years of service. This is a wise retention tool, but the time you get to year three, you know whether the job is a fit for you or not. Perhaps they want to be closer to their families, or their parents are getting older and they want to move closer to them. By year three, they have identified what’s most important in their lives.

Q: From my vantage point, a couple of things surprised me. One was that for young physicians being recruited, it was important that the group have an electronic medical record platform. That surprised me perhaps because I have been talking to older physicians who are much more skeptical about electronic medical records. Yet that is one of the top issues for young doctors.

A: Yes, that’s because young doctors are very technologically savvy. Having EMRs says something about the organization. They want to work in a practice that is on the cutting edge. And it plays to their strengths.

Q: The other thing that surprised me was the muted response to reform issues. In my world, there is genuine alarm about the implications of reform and how it will negatively impact the practice of medicine. In your survey, there was more uncertainty, but not alarm about reform. Do I read that correctly?

A: I think you read it correctly. They know issues are looming but they don’t know the impact on organizations they may be joining.

Q: On reform, they seemed to be most interested in whether reform would provide bonuses to primary care doctors.

A: This survey was conducted in the fall of 2009, fairly early in the reform process, so it may be the issues were not well-defined at that point. Another issue was the future of Medical Homes, a model still in development.

Q: As I read your survey, another question sprang to mind. From various sources, I keep hearing hospitals are acquiring primary care and specialty groups at an accelerating rate. But I gather from your AMGA constituency, which consists mostly of medium and large sized multispecialty groups, this may not be the case.

A: Well, groups are interested in expanding their reach by acquiring existing practices. . I think both hospital-based and independent groups are growing. Consolidation is occurring because there is a distinct competitive advantage in being larger groups, and acquiring existing practices is t one way to accelerate growth.

Q: That would indicate to me that integrated delivery systems are likely to grow.

A: Yes, I think in many communities you will see hospitals partnering with medical groups in order to grow. In many instances, smaller groups are approaching the big groups and hospitals and saying, “We want to be acquired. We want to work for you because it minimizes our risks”. They want to be paid on salary with a guaranteed income.

Q: In titling this interview, I thought of calling it, ”The Political Transformation of American Medicine, the Re-Making of a Vast Industry,’ after Paul Starr’s 1982 book, “The Social Transformation of American Medicine, The Making of a Vast Industry.” It seems to me what’s happening is a vast consolidation of American Medicine to meet the uncertainties over the next 4 to 10 years.

A: Yes, and in addition, there are other undisputed facts. What physicians want is flexibility and life style practices. This is reflected in our data showing the desire for part-time practices going from 13 percent to 21 percent. One of our recommendations to the membership was: be prepared to address the part-time issue. Don’t be rigid with fixed work hours or how frequently a physician may be required to work a weekend shift.

Q: I notice in your survey, you split doctors into three groups: early career, mid-career, and late career. As physicians approach late career, this need for flexibility grows.

A: Yes, and this is particularly true for male physicians. In early careers, it’s females who want more flexibility. We surmise for females that’s because of family issues. The majority of late career physicians are males – and more and more of them are working on a part-time basis.

Q: I have a blog called Medinnovation, and I have written there several times how women physicians, who now constitute 50 percent of medical graduates, are changing the dynamics of practice. The impact is profound. Dr. Buz Cooper says by 2020, 60 percent of medical graduates will be women.

A: You are right. There are now 24,000 American medical school graduates, and one-half are women. Based on historic and current data, female physicians work fewer hours per week. We are not only going to have a physician shortage, but less fewer physician hours. It’s a reality we have to live with – this desire for a balanced life style.

One of the questions we asked in our survey was: how many physicians are married to another physician. Forty-two percent had at least four physician-couples. In recruiting you have to deal with how to place dual career couples.

Q: That reminds me. These days about 80 percent of obstetricians and gynecologists are women. I recently interviewed a female obstetrician/gynecologist in a group of five, and four of the five female partners had a house-husband.

What other impact do you think women physicians have on practices?

A: The disconnect is in what female physicians are looking for and what practices are offering. Women are going to locate where they want to live and raise their families. If I have a highly desirable location, I don’t have to offer as much in compensation as I do if I’m in a more rural setting.

Practices have to align themselves with what candidates are looking for. We have to say to practices, “part-time may be out of your norm, but let’s find a way to make this a win-win. This is a great candidate, and if you don’t find a way to hire her, your competitor will.”

There are many variations on this theme. We had a couple, both physicians, with a baby. Their proposal to the group was to job-share one spot. The group said, that’s OK.

Q: Let’s get back to brass tacks. I see from your survey that the three big recruitment draws, not surprisingly given the state of the economy, are: 1 compensation (65 percent); 2 income guarantees, (61 percent); 3) signing bonuses (42 percent). That makes sense to me.

A: I think that’s very, very accurate and consistent with our experience, too.

Q: It’s got to be. After all, it’s your data.

A: Everybody wants market-based compensation foremost.

Q: I work closely with The Physician’s Foundation, which represents all the state medical societies. We surveyed 300,000 primary care doctors. What was tangible about the survey was the tremendous loss of morale among physicians. Do you see that, or is the impact softened by the security of being in multi-specialty groups?

A: I spoke at AMGA, and I got questions from the audience about how groups were handling physician burnout, which is more prevalent than it used to be. How is that impacting the physician workforce? During the Q and A, the question of sabbaticals to combat burnout came up.

Q: There’s a lot of comment in your survey about the demands of physician leadership and administrative duties. Is that more important than in the past?

A: The desire for physician leadership is growing. The number of physician executives is increasing. The questions are: How do you spot emerging leaders? And how do you develop them? And how do you pay them?

Q: I’m a student of physician culture. One of our tenets is: we all put on our pants, or our girdles, on the same way, and why should we pay colleagues more when they are not doing the clinical grunt work in the trenches. How does one compensate leaders?

A: There is a bigger question than that. What does the organization value? If some one has leadership abilities, you have to compensate them fairly. Are those leadership skills, in combination with clinical knowledge, more valuable than clinical skills alone?

Q; I’ve interviewed Mayo leaders through the years. They want their leaders to keep one foot in the clinical trenches so they can retain their credibility among colleagues.

Earlier in this interview, you said the survey contained few surprises, and it was comparable to findings in previous years. Any second thoughts?

A: The biggest surprise was the spike in number of physicians desiring part-time work. The other surprise, so to speak, was that physicians’ wants and needs vary during their careers, and they are different from individual from individual. The savvy medical groups are going to look at the heterogeneity of physicians, and are not going to try one-size-fits-all solutions. They will ask: “What is important to this individual, and how we can accommodate him or her?” They will tailor packages that are important to that individual.

Q: I am interested in innovation. Three years ago, I wrote a book Innovation-Driven Health Care. There is a pervasive interest in developing innovation strategies within groups. Kaiser, for example, is trying to develop an innovation culture and started a national organization called Innovation Learning Network. There is the feeling we can innovate our way out of some of our problems – through open scheduling, or group meetings with patients with the same disease, or new practice models. Do you hear much about this among AMGA members?

A: They talk a lot about how they can continuously evolve in terms of the use of mid-level providers, hospitalists, the use of electronic medical records, sharing of information to stay on top of a patient’s condition.

Q: So innovation falls under the mantra of continuous improvement of efficiency and care improvement. By the way, your survey mentions the importance of hospitalists, especially to primary care doctors seeking relief from night calls and weekend call. Do you see the hospitalist movement, now about ten years old, continuing to evolve?

A: When we are recruiting primary care physicians, we find they are going one way or the other; I want to be a hospitalist or I want to do outpatient medicine only. Very few want to blend the two and practice medicine the “old-fashion way”, i.e., my patients are my patients and I will follow them from beginning to end - from office visit to hospitalization. Many groups are hiring groups of physicians just to be hospitalists.

Q: Well, the landscape she is a-changing. Do you have any closing comments?

A: We live in interesting times; working with clients across the country – and from big cities to small rural communities, we see how every changing facet of America’s economy, demographics and healthcare system presents new challenges to recruitment and retention. Those factors are outside the control of our clients. But we can help them to control their process to be proactive, competitive, flexible, timely and – above all – to recognize the evolving needs of the physicians they want to hire and keep.

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