We have noted that increasing numbers of physicians provide patient care as employees of large organizations, often hospital systems, sometimes for-profit. Since in these settings physicians must answer to generic management which may be more concerned with short-term revenues than patient care, these new arrangements are frought with hazards for physicians and patients.
One set of hazards may be found in the contracts employed physicians must sign.
My fellow blogger, Dr Wally Smith, and I authored an article just published online "How Employed Physicians' Contracts May Threaten Their Patients and Professionalism." Here is the link.
In it we listed multiple contractual provisions that may be found in employed physicians contracts that may threaten professionalism and good patient care:
Confidentiality clauses - which may hide quality and safety problems, medical errors, unethical conduct, other problematic contract clauses, and malfeasance Productivity clauses - which may provide incentives for actions that primarily increase employers' revenues, and thus may encourage overtreatment "Leakage control" clauses - which may discourage referrals outside of the employers' systems and thus discourage appropriate referrals for particular patients, potentially threatening quality Clauses that allow termination without cause - which may reduce access for the terminated physicians' patients, and may discourage complaints by physicians about quality, safety, unethical behavior, or malfeasance Noncompete clauses - which may reduce access and physicians' ability to leave unsatisfactory positions Clauses that restrict outside activites - which may restrict teaching or research, or academic freedom or free speech
We also noted clauses in contracts that employers may sign with third parties that may also threaten professionalism and good patient care:
"Gag" clauses affecting employees - which may hide quality and safety problems, medical errors, unethical conduct and malfeasance "Anti-poaching" clauses - which may reduce patients' access to care, and physicians' ability to leave unsatisfactory positions.
We were able to find cases illustrating all the clauses published in the news media, or publications such as Medscape or Medical Economics. However, they have largely anechoic in the scholarly medical and health services literature, and largely unaddressed by the medical societies that ostensbibly protect physicians' professionalism and patients' and the public's health.
We suggested that such contractual problems may be becoming more frequent in a health care system in which physicians more often are corporate. We suggested that all physicians confronted with new employment contracts should seek competent legal connsel and try to negotiate egregious provisions. However, such actions may now be futile given the increasing market dominance of the hospital systems that are employing increasing numbers of physicians.
We urged medical societies to inform physicians about such employment issues, and better support physicians who struggle with them. However, these contract problems may merely be a reflection of an increasingly commercialized, deregulated health care system run by generic managers who may put revenue generation ahead of supporting physicians' professionalism. So, better enforcement of existing laws, and new laws including bans on the commercial practice of medicine may be the only solutions to this newly recognized plight of corporate physicians and their patients.
We have posted about the plight of the corporate physician. In the US, home of the most commercialized health care system among developed countries, physicians increasingly practice as employees of large organizations, usually hospitals and hospital systems, sometimes for-profit. The leaders of such systems meanwhile are now often generic managers, people trained as managers without specific training or experience in medicine or health care, and "managerialists" who apply generic management theory and dogma to medicine and health care just as it might be applied to building widgets or selling soap.
We have also frequently posted about what we have called generic management, the manager's coup d'etat, and mission-hostile management. Managerialism wraps these concepts up into a single package. The idea is that all organizations, including health care organizations, ought to be run people with generic management training and background, not necessarily by people with specific backgrounds or training in the organizations' areas of operation. Thus, for example, hospitals ought to be run by MBAs, not doctors, nurses, or public health experts. Furthermore, all organizations ought to be run according to the same basic principles of business management. These principles in turn ought to be based on current neoliberal dogma, with the prime directive that short-term revenue is the primary goal.
Now there are a few signs that the physicians are getting fed up with having to answer to generic management and managerialism.
I found two stories, perhaps somewhat related, about physicians unionizing to stand up to their new often managerialist overseers. The most prominent was in the New York Times on January 9, 2016, provocatively titled "Doctors Unionize to Resist the Medical Machine." It tells the story of how the hospitalists at PeaceHealth Sacred Heart Medical Center in Springfield, Oregon, formed a union de novo. The second started with a brief article in the Seattle Times on December 27, 2015, about how housestaff at the University of Washington (UW) revived a housestaff association and turned it into a union.
Managerialism as the Stimulus at PeaceHealth
The long article about PeaceHealth showed that managerialist leadership of the hospital system was the chief stimulus for unionization.
Managerialist Tactics: Outsourcing
The NYT article opened with
in the spring of 2014, when the administration announced it would seek bids to outsource its 36 hospitalists, the hospital doctors who supervise patients’ care, to a management company that would become their employer.
The outsourcing of hospitalists became relatively common in the last decade, driven by a combination of factors. There is the obvious hunger for efficiency gains. But there is also growing pressure on hospitals to measure quality and keep people healthy after they are discharged. This can be a complicated data collection and management challenge that many hospitals, especially smaller ones, are not set up for and that some outsourcing companies excel in.
Outsourcing is a now familiar entry in the managerialists' playbook. It is seen more in manufacturing than in health care. Although touted as improving economic "efficiency," it also may reduce the accountability of the managers of the organization that does the outsourcing.
Pursuit of Economic Efficiency
In this case,
Outsourced hospitalists tend to make as much or more money than those that hospitals employ directly, typically in excess of $200,000 a year. But the catch is that their compensation is often tied more directly to the number of patients they see in a day — which the hospitalists at Sacred Heart worried could be as many as 18 or 20, versus the 15 that they and many other hospitalists contend should be the maximum.
It was the idea that they could end up seeing more patients that prompted outrage among the hospitalists at Sacred Heart, which has two facilities in the area, with a total of nearly 450 beds. 'We’re doctors, we’re professionals,' Dr. [Rajeev] Alexander said. 'Giving me a bonus for seeing two more patients — I’m not sure I should be doing that. It’s not safe.' (A hospital representative said patient safety was 'inviolate.')
A constant theme of managerialism, and the neoliberalism that underlies it, is economic efficiency. The usual narrative is that efficiency means providing better goods and services at lower costs. Instead, managerialism and neliberalism may mean decontenting goods and services so as to lower costs to the organizations providing them, but not necessarily providing more value to consumers. In health care terms, managerialism and neliberalism may lead to less accessible, more mediocre health care that increase revenue to the organizations providing it, as implied by the physicians' comments above. Making the US the most commercialized, managerialist run, and arguably neoliberal health care system among the developed countries has not led to lower costs, better access, or better health care quality.
The backstory for the outsourcing emphasizes that managerialism, and the resulting economic efficiency was indeed the goal of PeaceHealth...
In 2012, Sacred Heart’s parent, PeaceHealth, a nonprofit health care system, installed an executive named John Hill to adapt its Oregon hospitals to the latest trends in health care. Mr. Hill, in an effort to rein in the budget and improve the efficiency of a hospital that administrators said was lagging in key respects, including how long the typical patient stayed, eventually concluded that the hospitalists at Sacred Heart should be outsourced.
Centralization of Control
Furthermore,
The hospitalists also chafe at the way the administration has tried to centralize decisions they used to make for themselves. This might include hiring fellow doctors or the order in which they see patients on any day. They also complain of being loaded down with administrative tasks.
'We’re trained to be leaders, but they treat us like assembly line workers,' said Dr. Brittany Ellison, a hospitalist in the group. 'You need that time with the patient,...'
A major feature of managerialism is the concentration of power within (generic) management. To quote Komesaroff(1),
In the workplace, the authority of management is intensified, and behaviour that previously might have been regarded as bullying becomes accepted good practice. The autonomous discretion of the professional is undermined, and cuts in staff and increases in caseload occur without democratic consultation of staff. Loyal long-term staff are dismissed and often humiliated, and rigorous monitoring of the performance of the remaining employees focuses on narrowly defined criteria relating to attainment of financial targets, efficiency and effectiveness.
We're Only In It for the Money
Also, the negotiations that started once the PeaceHealth physicians formed their union demonstrated a central tenet of managerialism
Even starker than the divide over these questions are the differences in worldview represented on opposite sides of the table. During a bargaining session last fall, the administration proposed increasing the number of shifts a year. Hospitalists now earn about $223,000 a year for 173 shifts and are paid extra for working more. The hospital offered $260,000 for a mandatory 182 shifts, and up to $20,000 in bonus pay for hitting certain medical performance targets. The hospitalists work seven days on and seven days off, so this would have effectively eliminated any time off for sick days or vacation.
When the doctors pointed this out, the administration responded that if they missed a few days, it would make sure they got extra days to hit the required number of shifts for full pay.
The hospitalists assured the administration negotiators that their concern had nothing to do with money — that none of this had ever been about money. They preferred to work less and make less to avoid burnout, which was bad for them and worse for patients. At which point the administration responded that money was always the issue, according to several people in the room. (The hospital declined to comment.)
Suddenly it dawned on the doctors why they had failed to break through, Dr. Alexander said. 'Imagine Mr. Burns,' the cartoonishly evil capitalist from 'The Simpsons,' 'sitting across the table,' he said. 'There’s no way we can say, 'This isn’t what we’re talking about. We’re not trying to get the bonus.''
Again, managerialism is based on neoliberalism, and neoliberal view is that the market rules. The market is the arbiter of success, and money is the only outcome that matters. As Komesaroff put it(1),
The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market.
We carry on the healing mission of Jesus Christ by promoting personal and community health, relieving pain and suffering, and treating each person in a loving and caring way.
Ostensibly, this is accompanied by core values, such as,
Stewardship We choose to serve the community and hold ourselves accountable to exercise ethical and responsible stewardship in the allocation and utilization of human, financial, and environmental resources. and,
Social Justice We build and evaluate the structures of our organization and those of society to promote the just distribution of health care resources.
We have frequently discussed how leadership of contemporary health care organizations often seem to act contrary to the organizations' stated mission, that is, mission-hostile management.
Value Extraction
Finally, while managerialism is ostensibly concerned with economic efficiency, whose efficiency matters. When managers address physicians' efficiency, they seem to look at amount of work done divided by the cost to the hospital of paying physicians. However, they never seem to look at their own costs, the costs of management, as being a negative.
The PeaceHealth 2014 form 990, the latest available, states that the then CEO, Mr Alan Yordy (whose highest academic degree was an MBA, according to his LinkedIn page) had total compensation in 2013 of $1,366,742, and 11 other managers had total compensation greater than $250,000, with 9 having total compensation greater than $500,000. Those figures should be compared to the highest compensation offered the hospitalists, a maximum of $280,000 for 182 shifts a year, eliminating all vacation and sick leave. So if it is all about the money, the managers are making the most of it.
We have discussed ad nauseum the ridiculous compensation of the leaders of health care organization, even non-profit organizations. Value extraction by top management has become a central feature of the US and global economy (look here).
The NYT article did not discuss whether the upset hospitalists knew about their bosses' compensation. I suspect they did.
Forming a Functioning Union at the University of Washington
The media coverage of the UW housestaff unionization was less detailed. It does appear, though, that a stimulus was the pursuit of economic efficiency by UW management through squeezing the pay of housestaff, as described in the December article in the Seattle Times. In it the house staff said,
they account for about one-fifth of King County’s doctors and they want higher pay, new child-care benefits and free parking. Some UW residents and fellows earn so little that they qualify for welfare programs like Temporary Assistance for Needy Families and the Seattle City Light Utility Discount Program, according to the UWHA [University of Washington Housestaff Association.]
The association has proposed that residents and fellows earn at least the same salary as the UW’s lowest-paid physician assistants. Because the doctors in training work very long hours, they sometimes earn less than Seattle’s minimum hourly wage, the UWHA has said.
The council members, in their letter to Cauce, called the situation shocking. And based on information from the UWHA, they wrote that some residents and fellows qualify for welfare programs like Temporary Assistance for Needy Families (TANF).
The Seattle articles noted that the UW housestaff may earn from just over $53,000 to just under $70,000 a year. Keep in mind, however, that under current rules, house staff may work up to 80 hours a week. So $53,000 for someone working those hours translates into $13.25/ hour, under what many people now claim is the living wage. That could be considered exploitation of workers with doctoral degrees working in often highly stressful situations where lives may be on the line. Whether there were issues other than money (and the respect it implies) involved at UW was not apparent based on the minimal press coverage.
So it appeared that the hospitalist physicians working for PeaceHealth, and most likely the housestaff of the University of Washington were pushed to unionize to counteract the managerialism of their hospital leaders.
The Results of Unionization So Far
In my humble opinion, similar stories to those at the PeaceHealth hospital about managers pushing physicians to increase productivity and efficiency, seemingly with little regard for the effect that might have on patient care and physicians' professionalism can be found at many hospitals and health systems. Housestaff may be paid at little more than minimum wage rates at many training institutions. However, employed physicians have rarely effectively resisted up to now. Perhaps one reason is that at many institutions, each employed physician has his or her own contract, and may feel little power to negotiate his or her working conditions independently. Housestaff physicians obviously might feel they have even less leverage. But at PeaceHealth Sacred Heart, the physicians had other ideas:
Amid the groaning, a relatively new member of the group named Dr. David Schwartz observed, 'They can’t fire all of us — there are unions.' This was a bit of a stretch: While there are hospitals around the country whose doctors are unionized, there did not appear to be a union anywhere composed of a single group of specialists. But Dr. Schwartz, a barrel-chested man with close-cropped hair and a bushy beard who would not look out of place at a graduate English seminar, thought unionizing might be worth a try.
At the time, it was only one of several options the doctors considered. They talked of forming an independent hospitalists group, of forming an alliance with an outsourcing firm of their choosing. But the alternatives gradually fell away for a variety of practical reasons, and the doctors were growing increasingly bitter.
Dr. Littell developed a riff, which the other hospitalists appropriated, about how the situation was like having your spouse of several decades announce he or she was going to play the field. 'You’ve been great, you’ve always been there,' he would joke. 'I just heard there could be better spouses out there.' The kicker: 'The good news is, you’re in the running, too!'
Amazingly, the unionization at PeaceHealth Sacred Heart was at least partially successful,
By March 2015, the PeaceHealth leadership, whatever its interest in efficiency gains, was apparently not pleased that one of its hospitals had a white-collar labor insurrection on its hands. The company announced that it would not outsource the hospitalists, a move it later said was always a possibility. Mr. Hill, who declined to comment, left in May.
The union did defeat the outsourcing tactic. But otherwise results have not been so quick to appear,
Noting that the negotiations with the hospital administration have dragged on for roughly a year, Dr. Schwartz said, 'It’s pretty obvious that they don’t want to get a contract done.' He says the administration worries that if it essentially rewards the hospitalists with a contract, it encourages other hospital workers to unionize too.
The housestaff at UW used a slightly different set of tactics, but still managed to form a real union. Per the earlier Seattle Times article,
Established in 1964, the UWHA was mostly dormant during the 1980s and 1990s, according to the association’s website. It became active again starting in 1999. In 2013, members proposed making it a state-recognized collective-bargaining unit.
The UW petitioned the state Public Employment Relations Commissionto block the move, arguing that the residents and fellows were students paid stipends rather than employees paid salaries. But the commission sided with the residents and fellows, who last year voted to unionize.
The housestaff association has succeeded in negotiating. But as did the PeaceHealth doctors, they have not yet been able to secure their positions, per the later article.
University of Washington brass say they’re committed to providing the UW’s medical residents and fellows with decent compensation and benefits, but they insist the newly unionized doctors in training are asking too much in contract negotiations.
So,
Talks have been stalled for some time but are set to resume this month with a mediator assigned by the state Public Employment Relations Commission.
The two sides 'remain far apart in the area of compensation,' Joyner wrote in his letter.
Parenthetically, unexplored in any of the press coverage is whether the parallels between what is going on at PeaceHealth and the University of Washington have to do with explicit ties between the organizations. In 2013, per Beckers' Hospital Review, the news broke that the two institutions signed a letter of intent to create a "strategic alliance." In 2014, an article in the Seattle Times noted the ongoing concerns of housestaff and students at UW that the alliance could be diminishing their educational opportunities.
Summary
In one sense, it is amazing that physicians are now starting to unionize as a response to the managerialism of their leaders. It was not all that long ago when the majority of physicians worked as solo practitioners or in small group practices, and fiercely defended their autonomy. The last thing they would have thought about was unionization. Since physicians were their own bosses, with whom could their unions have negotiated? In addition, in the US, independent physicians and physician practices could not legally unionize. Practices that discussed such issues as fees were liable to anti-trust prosecution. And with what bosses could they have conceivably negotiated.
Yet now physicians are increasingly corporate employees, hence corporate physicians. At the moment, unionizing may be one of the few effective tactics health care professionals can use to halt the march of managerialism/ generic management and partially relieve the plight of the corporate physician (and health care professional.) However, in the long run, as long as people who care more about money than about patients' and the public's health run health care, even unions will not be able to make that much progress, and not without adverse effects.
It would take true health care reform to address the larger problems with health care and society that is now leading to physicians unionizing. In my humble opinion, hospitals, health care systems, and other "provider organizations" should seek better patient care, not growth. Should they not voluntarily downsize (an almost comical idea in the current context), anti-trust enforcement, and probably new legislation would be needed to stop their pursuit of market dominance and return them to responsible community organizations. The now much smaller hospitals, and provider organizations should not be run for profit, and the commercial practice of medicine should again be illegal. Most physicians should go back to being private practitioners as individuals or within small groups. Leaders of hospitals and provider organizations should be accountable for putting patients' and the public's health first, upholding professional values, and should not expect to get rich doing so. But I dream on....
Musical Interlude
To lighten things up, if only a little, here is the YouTube video version of the full third album by the Mothers of Invention, led by the incomparable Frank Zappa, "We're Only In It for the Money."
ADDENDUM (21 January, 2016) - This post was republished on the Naked Capitalism blog.
Reference
1. Komesaroff PA, Kerridge IH, Isaacs D, Brooks PM. The scourge of managerialism and the Royal Australasian College of Physicians. Med J Aust 2015; 202: 519- 521. Link here.
Physicians are sworn to provide the best possible care to each individual patient. Yet in the US, physicians increasingly practice as employees of large organizations, sometime for-profit corporations. Physicians may be in a bind when their bosses pressure them to make patient level decisions so as to increase revenue, regardless of their effects on the patients.
In particular, physicians' oaths may suggest that patients who require referrals for consultation, diagnosis or treatment should go to the professionals and facilities best suited to their particular problems. However, physicians bosses may want physicians to refer patients within their organizations.
Three recent cases illustrate this sort of bind for corporate physicians. All cases involved large monetary settlements by hospital systems of allegations that they paid physicians incentives to refer patients within the system, apparently without regard to patients' needs. They are discussed in roughly chronological order of media coverage.
Broward Health (North Broward Hospital District)
The reports of the settlement appeared in mid-September, 2015.
Broward Health, the taxpayer-financed system of hospitals and health care facilities, will pay $69.5 million to settle federal charges that it made illegal payments to staff physicians, using a secret compensation system that rewarded doctors for patient referrals and penalized them for accepting charity cases.
Broward Health Chief Executive Dr. Nabil El Sanadi signed a 46-page Corporate Integrity Agreement with the Department of Health and Human Services (HHS) that requires the district to establish a compliance program. Among other things, the agreement imposes new duties on both commissioners and staff to monitor, report and certify that its financial arrangements with physicians and vendors meet federal requirements.
Note, however, that the Adventist system admitted only to "oversights."
Physicians' Incentives
According to the Sun-Sentinel, the filing by whistle-blower Dr Michael Reilly stated,
the hospital district maintained secret compensation records called Contribution Margin Reports for cardiologists, oncologists and orthopedic surgeons, who collected salaries of $1 million and higher. These records rewarded physicians for referrals to hospital services, such as radiology and physical therapy, and penalized them for taking on low-paying charity cases. Tying compensation to referrals could raise medical costs by generating unnecessary work and could compromise patient care, the lawsuit stated.
In one case, the lawsuit stated, orthopedic surgeons expressed concern about the quality of the hospital district's radiology and MRI services and tried to refer patients to outside providers. But they were pressured by the district's financial officials to keep the referrals within the district.
'Broward Health's scheme to overcompensate physicians in exchange for referrals over the last eight years has been a deliberate strategic plan to boost hospital admissions and outpatient visits for all paying patients, including patients with Medicare and Medicaid coverage,' the lawsuit states. 'Broward Health's financial strategists have personally profited from bonus payments based in part on hospital revenues.'
The title of medical director brought salary increases to several cardiologists at Broward Health, topping off pay packages that often went north of $1 million.
But according to a whistleblower's lawsuit that led to a $69.5 million settlement with the federal government this week, these doctors did little work for their extra compensation from the tax-supported hospital system.
The medical directors' contracts provided hourly compensation for work done in that position and required them to submit time records. One physician counted his personal exercise routine as his medical director's time, according to the lawsuit. Another double-dipped by counting time spent performing medical procedures that would have been performed anyway. Such 'medical director' jobs, the lawsuit said, were 'largely sham arrangements designed to boost physician compensation with little or no substantive work required in return.'
Failure of Oversight
Also according to the Sun-Sentinel,
Reilly said he first learned of the compensation agreements when he considered taking a job with the district. When his lawyer saw the proposed contract, he told him to tear it up and stay away from such compensation schemes.
He said he brought up the issue in two public meetings and in a private conversation with the district's then-CEO, and was brushed off. He blamed 'the ignorance that made them interpret the law to fit their financial interests and the arrogance to think they could get away with it.'
In what's considered one of the largest health-care-fraud settlements involving physician referrals to hospitals, Adventist Health System is paying the U.S. government and four states, including Florida, a $118.7 million settlement.
A large portion of the settlement amount — $47 million — is based on allegations involving Florida Hospital Medical Group, which is owned by Adventist, and nearly three dozen Florida Hospitals in the state. That includes the Florida Hospitals in Orlando, Altamonte, Apopka, Celebration, east Orlando, Kissimmee and Winter Park.
Physicians' Incentives
Again from the Orlando Sentinel,
The complaints allege that Adventist initiated a corporate policy that directed its hospitals to purchase physician practices and group practices or employ physicians in their surrounding areas in order to control all patient referrals in those locations.
'To convince doctors to sell their practices to Adventist hospitals or to become hospital employees, Adventist hospitals allegedly provided excessive compensation, perks and benefits to the physicians,' according to the Phillips & Cohen complaint. 'The hospitals were willing to pay doctors more compensation than considered fair market value and absorb persistent losses in those deals because of the revenue the doctors' stream of referrals generated for Adventist from government healthcare programs and elsewhere.'
The complaint listed a number of ways Adventist allegedly rewarded doctors, including leasing a BMW and a Mustang for a surgeon; a $366,000 base salary for a family physician because of his high level of referrals for X-rays and blood tests; and a bonus of $368,000 for a dermatologist who worked only three days a week.
To conceal this and avoid refunding payments, the health system then falsely said that the services identified in its annual cost reports were in compliance with the federal law, the lawsuits allege.
Failure of Oversight
Sherry Dorsey, who joined Adventist in 2012, was a corporate vice president whose responsibilities included oversight of physician compensation, and she found widespread problems with how the nonprofit health system compensated doctors who referred patients to Adventist hospitals, according to a statement by Marlan Wilbanks of Wilbanks & Gouinlock in Atlanta who represented Dorsey.
She complained to top health-system officials 'to no avail,' said Wilbanks.
Hospital executives knew about serious billing and miscoding problems on Medicare and Medicaid cases, as well as overcompensation of doctors, and one executive even expressed concerns about possible jail time, terming as 'insane' the amount of money Park Ridge would owe the federal government if overbilling came to light.
Tuomey Healthcare System
This case has been in the works for years, but an apparently final outcome was announced in October, 2015.
The Justice Department said it has resolved a $237 million judgment against Sumter-based Tuomey Healthcare System for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.
Under the terms of the agreement, the United States will receive $72.4 million....
Unlike the other two cases, this one involved a jury finding of guilt,
On May 8, 2013, after a month-long trial, a South Carolina jury determined that the [hospital's contracts with physicians] ... violated the Stark Law. The jury also concluded that between 2005 and 2009 Tuomey had submitted 21,730 false claims to Medicare with a total value of $39,313,065.
On Oct. 2, 2013, the district court trebled the actual damages and assessed an additional civil penalty under the False Claims Act in favor of the United States for a total of $237 million.
The United States Court of Appeals for the Fourth Circuit affirmed the judgment on July 2.
Having to pay the $237 million fine would force it to file for bankruptcy, Tuomey officials said.
The Physicians' Incentives
The case arose from a lawsuit filed on Oct. 4, 2005, by Michael K. Drakeford, an orthopedic surgeon who was offered, but refused to sign, one of the illegal contracts.
So,
The government argued that Tuomey, fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures.
Failure of Oversight
The government argued that Tuomey ignored and suppressed warnings from one of its attorneys that the physician contracts were 'risky' and raised 'red flags.'
Summary
In the US, physicians increasingly practice medicine as employees, often of large organizations, rather than as individual professionals or within professional groups. Such employed practitioners must answer to leaders who are now usually generic managers rather than health care professionals.
In three recent legal cases, there was evidence that a hospital system provided financial incentives for employed physicians to refer patients within the system, apparently without regard to the appropriateness of such referrals to individual patients. In several cases, hospital management ignored physicians' protests, or lawyers' or even their own middle managements' warnings. In one case, hospital middle managers seemed to acknowledge the problematic nature of physician's incentives, but seemed powerless to protest to higher managers. In one case, there was a jury finding of violation of US law.
These three cases, all announced within a few weeks, suggest that US hospital system management may frequently push employed physicians to keep referrals within the system , regardless of individual patients' conditions or needs. The reason may be to increase system revenue, and sometimes to increase the managers' own compensation.
This is another reason to think that the corporate practice of medicine, which was once banned in the US, is an increasing threat to physicians' values and an increasing cause of health care dysfunction.
Dr Arnold Relman reminded us that physicians used to shun the commercial practice of medicine (look here). Physicians and other health professionals who sign on as full-time employees of large corporate entities have to realize that they are now beholden to managers and executives who may be hostile to their professional values, and who are subject to perverse incentives that support such hostility, including the potential for huge executive compensation.
Neoliberals promised us that treating health care like a business, and an unregulated one at that, would lead to a new golden age. The age has been golden, but mainly for the top managers of corporate medicine.
The recent flurry of cases alleging that corporate physicians may be pushed by management into inappropriate referrals to make more money for their employees is another reason to rethink whether corporate practice of medicine should again be banned
We have intermittently discussed the worsening plight of physicians trying to provide clinical care as employees of large organizations. Such corporate physicians are likely to be squeezed between professional values that put the patient first, and management that puts revenue first. Physicians employed by large corporations may find their values increasingly at risk as these organizations adapt the tactics of the robber barons.
Now it appears that even ostensibly genteel academic medical institutions may be adapting these tactics.
Allegations of Anti-Competitive Faculty Employment Practices at Duke and University of North Carolina Medical Schools
The story first appeared with little fanfare in the (Duke) Chronicle in June. An assistant professor at the UNC School of Medicine was interested in a position, also at the assistant professor level, at nearby Duke.
[Dr Danielle] Seaman had been in email communication with UNC’s Chief of Cardiothoracic Imaging beginning in 2011, when she expressed interest in a radiology position at the UNC School of Medicine, and the chief of the division encouraged her to apply, the case file describes. In 2012, Seaman was invited to visit the campus and toured the radiology department at UNC.
However,
When Seaman expressed interest in the assistant professor position again in early 2015, however, the chief responded in an email by saying he had just received confirmation that 'lateral moves of faculty between Duke and UNC are not permitted' as per a 'guideline' set by the schools’ deans.
In a later email, the chief also described to Seaman the reason the agreement was created—Duke had tried several years ago to recruit the entire bone marrow transplant team from UNC, and UNC was forced to pay them a large retention package to keep them.
Imagine the nerve of medical faculty thinking they should be paid more by the current employer because another institution was willling to recruit them and pay them that much.
An Agreement Comfortable for the Deans, but Disadvantageous for Their Faculty
An August article in the Chronicle suggested that the top leaders of the two medical schools felt that the "no-poaching" agreement was mutually beneficial.
According to the case file, Seaman became aware of the policy earlier this year, but the UNC chief of cardiothoracic imaging—who is unnamed in the file—believed the policy had been in place for several years after Duke had previously tried to recruit the entire bone marrow transplant team from UNC.
'The general rule was that we didn’t recruit there and they didn’t recruit at Duke—it certainly was in the years I was in the administration,' said John Burness, former senior vice president for public affairs and government relations from 1991 to 2008. 'I don’t know if it’s ever been a formal agreement, but it’s certainly been a practice over a long period of time.'
Burness—now a visiting professor of the practice in the Sanford School of Public Policy—noted that he could not recall an instance in which a faculty member from UNC was recruited to Duke during Nannerl Keohane’s tenure as president of the University from 1993 to 2004. Keohane also confirmed that during her time as president the University avoided poaching of UNC faculty.
Also,
'The question of whether Duke and UNC [or N.C. State] should attempt to recruit faculty from the other campus was always somewhat delicate,' Keohane, now Laurance S. Rockefeller distinguished visiting professor of public affairs at Princeton University, wrote in an email.
The Chronicle found a Duke Law professor who provided a comfortable rationale for the agreement between the two schools,
Despite the case file’s claims that such a policy is detrimental to faculty from both schools, Clark Havighurst—a former professor in the Duke University School of Law who taught healthcare policy and antitrust law for more than 40 years—also believes that this agreement would be beneficial to both institutions in the long run.
'You’d probably find relatively few instances where Duke and Carolina have poached each other’s faculty,' Havighurst wrote in an email. 'This is probably a matter of mutual restraint as much as explicit agreement, however, as each school or department would hesitate to irritate the faculty at the neighboring institution, thus undermining collegial and personal relations that are undoubtedly beneficial to each.'
What the soothing words about mutual benefit and collegiality leave out is that while the school administrations benefit from less disruption, they also likely benefited by being able to pay their faculty, especially junior faculty less. As Dr Seaman argued in her filing, as per the June Chronicle article,
The suit—filed June 9 in the United States District Court for the Middle District of North Carolina—contends that the no-hire agreement had the “intended and actual effect” of suppressing competition and employee wages, therefore violating federal and state anti-trust laws.
An Aside, the Non-Poaching Agreement Defended by One of the Key Advocates for Market Fundamentalism in Medicine
As an aside, Professor Havinghurst turns out to be one of key architects of the transformation of the US health care from a regulated system emphasizing health care provided by individual professionals and small non-profit institutions to our current laissez faire commercialized system. It is more than ironic that while Prof Havinghurst now scoffs at applying anti-trust law to alleged collusion by big employers, per M Gregg Bloche in the Stanford Law Review(1),
Since the mid- 1970s, market-oriented scholars have challenged a broad range of legal principles previously assumed to sustain the trustworthiness of physicians and health systems. Doctrines shielding physicians from antitrust law, insulating them from insurers' and hospitals' influence over clinical practice, and reinforcing the precept of undivided clinical loyalty to patients came under attack as protection for the medical profession at consumers' expense. These scholars, including Clark Havighurst, Richard Epstein, and Mark Hall, urge contractual ordering of clinical standards of care; relationships among physicians, hospitals, and health care payers; and physicians' conflicting obligations to patients, payers, and other third parties.
Again, Havinghurst appears to have been one of the principal, if not the principal advocate to use anti-trust law against small groups of physicians, and against the notion that physicians can promulgate their own codes of ethical conduct. In an introduction to an article by Havinghurst in Health Affairs in 1983.(2)
For a decade or more, Clark Havighurst has been a philosophical thorn in the side of organized medicine, preaching a view of the health sphere that rejects decision making by professional self-regulation in favor of a system based on marketplace principles.
Note that in retrospect, this article seemed to stake out Health Affair's position as an important organ to promote market fundamentalism in health care.
How convenient that Prof Havinghurst is still affiliated with Duke and in a position to defend his university's treatment of other faculty.
I urge you to scan Health Care Renewal to see how the change from professional self-regulation of ethics to the free rein of the laissez faire marketplace turned out. Look here for our first reporting on the late Dr Arnold Relman's discussion of how medicine was pressured to accept commercialization, and how that acceptance has since decimated our core values. Look here for our discussion of the fallacy of the perfect market in health care. Look here for a rebuttal from an authority we do not often quote of the concept of health care as a commodity versus a calling.
Summary
Note that the outcome of the lawsuit against Duke and UNC is unknown. The allegations it makes are not proven. However, I chose to discuss it because the evidence, particularly the emails reproduced in the court filing, seems pretty strong that the two schools did have an actual agreement not to compete in the hiring of faculty, and the argument that his suppressed faculty wages and opportunity is prety strong and obvious.
Academic physicians, particularly at elite institutions, may feel they are in a rarefied atmosphere separate from the hurley burley or everyday health care. They may feel they are protected from, and can even ignore the health care dysfunction we discuss on Health Care Renewal. They certainly may not think of themselves as "wage slaves" from the era of trusts, monopolies, and robber barons.
But this case exhibits that academic medical institutions are getting closer to the ruthless world of poorly regulated, commercialized, market fundamentalist health care. Talk about collegiality is nice, but it seems pretty clear that the "non-poaching" agreement between Duke and UNC may have reflected collegiality among top medical school leadership, but limited their faculty salaries and individual faculty members' choices and opportunities. This seems like another example, however soft spoken and genteel, of the leaders of health care organizations putting the interests of their own ingroup ahead of the interests of the larger organizations and the mission they are supposed to serve.
It is time for even academic physicians to realize that they are not protected from the troubles of the larger world. If they truly believe in their professional values, if they really care about patients' and the public's health, and about medical and health care science and education, they will have to start speaking up, or they will end up wage slaves of the new health care robber barons along with nearly everyone else.
To lighten things up at the end, the Eagles doing Hotel California live in 1977 -
"We are all prisoners here, of our own device"
References 1. Bloche MG. Trust and betrayal in the medical marketplace. Stanford Law Review 2002; 55: 919-954. Link here. 2. Havinghurst C. The doctors' trust. self-regulation and the law. Health Affairs 1983; 2: 64-76. Link here.
There are still some idealistic physicians who enter primary care practice as a calling.
The usual informal definition of primary care is care which is continuous, coordinated, comprehensive and compassionate. The official definition used by the American Academy of Family Physicians (AAFP) is:
Primary care is that care provided by physicians specifically trained for and skilled in comprehensive first contact and continuing care for persons with any undiagnosed sign, symptom, or health concern (the 'undifferentiated' patient) not limited by problem origin (biological, behavioral, or social), organ system, or diagnosis.
Primary care includes health promotion, disease prevention, health maintenance, counseling, patient education, diagnosis and treatment of acute and chronic illnesses in a variety of health care settings (e.g., office, inpatient, critical care, long-term care, home care, day care, etc.). Primary care is performed and managed by a personal physician often collaborating with other health professionals, and utilizing consultation or referral as appropriate.Primary care provides patient advocacy in the health care system to accomplish cost-effective care by coordination of health care services. Primary care promotes effective communication with patients and encourages the role of the patient as a partner in health care.
Private Equity Firms are Buying Out Primary Care Practices
However, an article this week in Modern Healthcare described how primary care in the US is getting a rude surprise. Apparently, primary care practices are now "in play," (using the terminology for the classic 1987 movie Wall Street, in which Gordon Gekko declared that greed is good).
The argument was that there is
a small but growing number of investments that private-equity firms are making in primary-care physician practices that are ahead of the curve in offering new care delivery and payment models. Investors see an opportunity in being early participants in value-based care, even as the business case is still unclear given mixed results in Medicare's payment and delivery reform demonstrations so far.
But the niche is well-suited for private-equity firms, which feed on uncertainty, said Todd Spaanstra, a partner at Crowe Horwath, an accounting and consulting firm.
This is not about quality of care, it is about the idea that business people think that "value-based care" and "risk-based contracting" are the current rages, and so there is money to be made investing in entities that seem to fit in with these fashions.
said Slava Girzhel, managing director at KeyBanc Capital Markets. 'There's a lot of discussion about private-equity investing in risk-based models, and I do think we'll see more of that.'
Continuous, coordinated, comprehensive and compassionate care may suffer when the time horizons are not that long, and the owners of the practice are ultimately looking to sell it.
The long-term opportunity for private-equity firms is the ability to sell these managed-care-savvy medical groups to insurers or health systems, which may pay a premium for the care-coordination expertise and data analytics these practices offer.
Also,
The typical private-equity investment timetable is short—about five years. At that point, the firm would probably look to sell the practice, ideally to an insurance company or a health system, said Dan Hosler, a principal at private-equity firm Sterling Partners.
Furthermore, why private equity may be interested in primary care now, continuing interest will depend on the numbers, not on the benefits to patients
'This is an area where there are winners and losers,' said Dr. Andrei Gonzales, director for value-based reimbursement initiatives at McKesson Health Solutions. 'It's everyone trying to get a slice of the pie that's getting smaller.'
What Happens When the Barbarians are at the Gate
Conspicuously absent from this article was discussion of aspects of the private equity modus operandi which are even more at odds with primary care values than the short time horizon noted above. We previously warned about the perils of private equity employing physicians (look here.) The main points were:
- Private equity is just the new name for leveraged buyout firms (the type of firm described the book, Barbarians at the Gate.)
- Therefore, when they buy out firms (e.g., the primary care practices discussed above), they use borrowed money.
- But they leverage in two senses. Once firms are bought, the private equity owners makes the firms take out further loans, and the money from them may go back to the owners, usually in the form of a special dividend, to pay down the debt originally incurred by the private equity owners. This leaves the bought out firms heavily in debt, but frees the private equity firm from its original debt. If the firm is eventually sold, the new buyers take over the debt. In a worst case scenario, however, the bought out firm goes bankrupt, the private equity's firm stock in it becomes worthless, but the private equity firm need not be responsible for its financial obligations.
- If the private equity firm desires more money while it still owns the acquired firm, it may sell parts of it off.
- To make the finances of the acquired firm look more attractive to the next buyer, the private equity firms often undertakes short term cost cutting measures that may involve layoffs, increased workload on remaining workers, etc.
Other dark aspects of private equity are discussed on the Naked Capitalism blog here.
Summary
Primary care physicians thinking about selling their practices to private equity ought to think at least twice before doing so, assuming the physicians are serious about upholding the values of primary care. Private equity firms are in it for the money, and in the relatively short term. Private equity firms are unlikely to care about the mission of primary distinct from the ability of primary care practices to make the firms richer. Therefore, practices owned by private equity may well not provide the best possible care for their patients. In any case, the physicians working for such practices may be answering to owners who are very explicitly only in it for the money. They will have become corporate physicians, possibly in the most pessimistic sense of the term.
In general, Dr Arnold Relman reminded us that physicians used to shun the commercial practice of medicine (look here). Physicians and other health professionals who sign on as full-time employees of large corporate entities have to realize that they are now beholden to managers and executives who may be hostile to their professional values, and who are subject to perverse incentives that support such hostility, including the potential for huge executive compensation. It is not clear why physicians seem to be willing to sign contracts that underline their new subservience to their corporate overlords, and likely trap them within confidentiality clauses that make blowing the whistle likely to lead to extreme unpleasantness.
Things are likely to be even worse for corporate physicians who are employed by firms owned by private equity. Because of the way private equity operates, primary care practices owned by such firms are liable to be very unstable. At best, they are liable to be sold to totally new owners in a relatively short time frame, and those owners are likely to be those who will pay the highest price, not necessarily those who will provide the best stewardship for the practices.
Furthermore, primary care practices owned by private equity are likely to end up heavily indebted and subject to strict cost cutting measures that may decrease care quality, decrease access, increase patients' out of pocket costs, and demoralize providers. Practices acquired by private equity may be broken up and sold as separate pieces. Should the debt be too high, and the cost cutting not be sufficient, such practices could end up bankrupt and possible completely defunct.
Do not say I did not warn you.
Physicians need to realize that to fulfill their oaths to put patients first, they have to reduce the influence of rich and powerful organizations with other agendas, like health care corporations, and especially corporations owned by private equity. The metastasis of private equity into primary care should make us all rethink the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.
A recent Wall Street Journal article that focused on a quirk in US Medicare payment rules that may be gamed by long-term hospitals also revealed the plight of physicians employed by such hospitals, and worse, the danger posed by such gaming to patients.
Discharging Patients at Particular Times Maximizes Hospital Revenue
Here is how the rule works:
Under Medicare rules, long-term acute-care hospitals like Kindred’s typically receive smaller payments for what is considered a short stay, until a patient hits a threshold. After that threshold, payment jumps to a lump sum meant to cover the full course of long-term treatment.
That leaves a narrow window of maximum profitability in caring for patients at the nation’s about 435 long-term hospitals, which specialize in treating people with serious conditions who require prolonged care.
Systemic Evidence that Discharges are More Likely to Occur at Times that Maximize Revenue
Thus the Medicare rules provides financial incentives for discharging patients at particular times during their admissions. The reporters found some systemic evidence that patients were more likely to be discharged at those times:
The Journal analysis of claims Medicare paid from 2008 through 2013 found long-term hospitals discharged 25% of patients during the three days after crossing thresholds for higher, lump-sum payments. That is five times as many patients as were released the three days before the thresholds.
The issue here is that the decision to discharge a patient from any kind of hospital should be made by health care professionals and their patients, sometimes with the input of the patients' families. The decision should depend on the patients' medical status, the availability of follow-up care, and the patients' wishes and values. Hospital managers should have no direct influence on these decisions. So why would patient discharges occur more often at the times when they are most financially advantageous for the hospitals?
An Illustrative Case
The Wall Street Journal article opened with an illustrative anecdote.
A Kindred Healthcare Inc. hospital in Houston discharged 79-year-old Ronald Beard to a nursing home after 23 days of treatment for complications of knee surgery.
The timing of his release didn’t appear to correspond with any improvement in his condition, according to family members. But it did boost how much money the hospital got.
Kindred collected $35,887.79 from the federal Medicare agency for his stay, according to a billing document, the maximum amount it could earn for treating most patients with Mr. Beard’s condition.
If he had left just one day earlier, Kindred would have received only about $20,000 under Medicare rules. If he had stayed longer than the 23 days, the hospital likely wouldn’t have received any additional Medicare money.
Furthermore,
Between mid-2011 and the end of 2013, the Kindred hospital that treated Mr. Beard discharged eight times as many Medicare patients on the day they reached their threshold as on the day before. In the days immediately after the lucrative three-day window, discharges plummeted. Kindred acquired the hospital, which has two campuses, in the summer of 2011.
Mr. Beard, a retired drilling-equipment salesman, was discharged from Kindred’s facility on Nov. 12, 2011. His family says his condition had deteriorated at the hospital and they wish he had been released sooner.
Mr. Beard was admitted to Kindred Hospital Town and Country in Houston in late October 2011 after surgeons found the site of an earlier knee surgery had become infected with drug-resistant bacteria called MRSA. He was sent to the Kindred facility that Oct. 20 for a course of antibiotics, according to the records and Ms. Beard.
On his fourth day at the Kindred hospital, nurses administered the drug Remeron to treat sleeplessness. Mr. Beard’s wife says he had an allergy to that drug—documented at the time on a wristband provided by another hospital—and he went into a coma for a time.
'I wished then that I could take him somewhere else,' says Ms. Beard, now 77 years old.
Over the next two weeks, Mr. Beard’s condition deteriorated as he received treatments from a dozen doctors. A Medicare document provided by his wife shows he received an hour and a half of 'critical care' services on Nov. 9, three days before Kindred discharged him.
When he left the facility in a transport van on Nov. 12, bound for a nursing home, he complained of nausea, his wife says. The van driver called for an ambulance from a gas station. The ambulance took him to the emergency room at a general hospital in Katy, Texas.
Ms. Beard says doctors determined that, aside from low blood pressure, he was stable. She drove him to the nursing facility herself, but because Kindred’s discharge papers had been left behind in the van, the nursing facility declined to accept him. He wound up back at the Katy hospital to begin an additional three-day hospitalization, where doctors performed tests to monitor an existing heart condition, the billing documents show.
Ms. Beard says she doesn’t regret that her husband left Kindred’s hospital when he did, despite the chaos of those days. 'I think if he had stayed at Kindred, he would have laid there and died,' she says.
Note that Mr Beard was apparently discharged during the window of maximum revenue for the hospital, but there was no obvious medical reason for his discharge on that particular day.
Evidence that Hospital Managers Pressure Health Care Professionals to Discharge Patients at Times that Maximize Revenue
The WSJ statistical analysis suggested that Kindred and other for-profit long-term hospital corporations are particularly prone to discharge patients at times that maximize revenue.
For-profit companies such as Kindred and Select were more likely to discharge patients during the most-lucrative window than nonprofit competitors, the Journal’s analysis shows. Nonprofits discharged 16% of people during the window, compared with 27% at for-profits.
The WSJ also found evidence that managers at two for-profit long-term hospital systems pushed health care professionals to discharge patients at the most profitable times.
Former long-term-hospital executives say they sometimes called the threshold the 'normal low' or 'five-sixth date,' referring to the Medicare formula. The Journal interviewed 16 people who have worked at facilities operated by Kindred or rival for-profit system Select Medical Corp. in 10 states, including former hospital administrators, doctors and case managers who oversaw discharges. Those two publicly traded companies billed Medicare for 42% of all long-term-hospital claims it processed during the period the Journal studied.
The former administrators say their corporate bosses exerted pressure to discharge as often as possible during the most lucrative days, rewarding managers who succeeded and questioning those who didn't.
'You’d hear from the powers that be if your hospital was not…hitting a pretty high percentage of your patients for Medicare' soon after the payment threshold, says Karen Shammas, who was chief executive of a Kindred hospital in Peoria, Ariz., until late 2013, when she retired.
Ms. Shammas, like some other long-term-hospital administrators who were interviewed, described meetings in which hospital staffers would discuss plans for each patient at the facility—armed with printouts from a computer tracking system that included, for each patient, the date at which reimbursement would shift to a higher, lump-sum payout.
Ms. Shammas says she never kept patients hospitalized for financial reasons if they were medically ready to leave.
Kindred declined to comment in detail on discharge patterns or corporate policies.
Former executives at both Kindred and Select say doctors, pressured by hospital administrators, sometimes ordered extra care or services intended in part to retain patients until they reached their thresholds, or discharged those who were costing the hospitals money regardless of whether their medical conditions had improved.
Former executives at hospitals run by each chain say their bonuses depended in part on maintaining a high share of patients discharged at or near the threshold dates to meet earnings goals.
In some cases, their bosses gave them specific targets for discharge rates during the most lucrative days, the former hospital executives say. When they missed their targets, some of the executives say, their bosses asked for explanations as to why individual patients weren’t released during the target window. \ Select said in a written statement that its long-term hospitals discharge patients 'based on their medical condition and not on the Medicare reimbursement system' and 'do not manipulate discharge timing based on financial considerations.' The company said bonuses are based on 'overall financial performance,' among other factors, and not the share of patients discharged near the threshold.
Select’s corporate managers were 'very intense about managing that length of stay really effectively to maximize the profit potential for any particular patient, says Robert Marquardt, former CEO of a Select hospital in Fort Wayne, Ind.
If a patient was two days from the threshold, 'you were incentivized to see if you couldn’t find a reason to keep them for two more days,' says Mr. Marquardt, who left the company in December to work as a consultant.
Mr. Marquardt says he didn’t believe the efforts caused harm. 'You might play the game a bit, but you would never put a patient at risk,' he says.
Select said while it monitors discharge dates and other metrics and seeks to understand deviations from norms, it doesn’t set discharge targets. It said efforts to prolong a patient’s stay or discharge a patient early would be a violation of Select’s policies.'
So the WSJ article presented statistical analysis that patients are more likely to be discharged on the days that are most advantageous from the standpoint of hospital revenue than on other days. The WSJ article also presented narratives by several people that suggest that top managers gave incentives to lower level managers to maximize the number of discharge on the most financially advantageous days, and that managers tried to directly influence physicians, presumably those employed by the hospital systems, to discharge patients on the most financially advantageous days.
The Private Gain of Mangers of Long-Term Corporate Hospital Systems
I do not know a way to determine how much money Kindred and Select may have made from the practice of timing long-term hospital discharges for maximum revenue, but there is certainly evidence that the top managers of these corporations do very well.
Based on the most recent available (2014) proxy statement from Kindred, its CEO, Paul J Diaz, received $4,303,072 in 2013, and all listed managers received more than $1 million that year. Based on the most recent available (2014) proxy statement from Select Medical Holdings Inc, its CEO, Robert A. Ortenzio, received $3,557,860 in 2013, and its executive chairman, Rocco A Ortenzio, received $2,701,916 in 2013, and all listed managers more than $1.5 million that year
Revenue Maximization as "Corruption"
The WSJ reporters interpreted their findings as "a sign that financial incentives in the Medicare system may shape patient care." It thus implied that a reasonable policy response to this problem would be to change the Medicare rules for paying for long-term care. However, left unwritten was that only in a health care system in which managers feel that short-term revenue may trump the best interests of patients, and in which managers are empowered to influence, if not override physicians' decision-making would such financial incentives have any major effect.
The WSJ article did include an expert's opinion that it was unethical, or worse, for hospital managers to pressure physicians to discharge patients at times that maximized revenue, rather than times that were optimal for the patients' medical care and well being.
The pattern of discharging patients at the most lucrative juncture is 'troubling and disturbing,' says Tom Finucane, a doctor and professor at Johns Hopkins University School of Medicine, after learning of the Journal’s findings. 'The health-care system should serve the patients and try to improve their health, and any step away from that is a corruption.'
Dr. Finucane and other medical experts say longer-than-necessary hospital stays increase risks for medical errors, infection and unnecessary care. Discharges that come too early can mean patients don’t get care they need.
Recall that the Transparency International (ethical, not necessarily legal) definition of corruption is abuse of entrusted power for private gain. Physicians are entrusted to make decisions on behalf of their individual patients, so as best to improve their patients' health and health care outcomes. Hospitals are entrusted to provide the settings in which physicians can act in the best interests of their patients. So it seems clear that pressuring physicians to discharge patients so as to maximize hospital revenue regardless of the effect of such discharges on patients is corruption in this sense, health care corruption.
Note that health care corruption has generally been a taboo topic, especially when the corruption occurs in developed countries. It is notable that the WSJ article made that topic slightly less anechoic.
Furthermore, framing this problem as health care corruption that endangers patients suggests that the issue goes far beyond a Medicare policy that is easy to game, and that another policy response, such as an investigation to see if such actions were legal, might be more to the point than adjusting the Medicare payment formula.
Beyond that, there are lessons for doctors and more globally for policy makers. We have previously discussed the plight of the corporate physician, caught between his or her oath to put care of individual patients above all other concerns, and effective subservience to managers who may well put short-term corporate revenue, and growing their own incomes, ahead of all other concerns, including patients' and the public's health. Health care professionals should not hold any illusions that they can take jobs with corporate health care providers and uphold their own values.
Furthermore, the plight of the physicians, and more importantly, the patients at corporate long-term hospitals raises a bigger policy question. In my humble opinion, is it now time to end our badly conceived experiment with gilded age health care. In the US, we have decided that the "free market" can solve all of our health care problems, disregarding the near impossibility of maintaining a real free market in health care. Instead, we now have health care dominated by poorly regulated large corporations in an era when top managers believe they have a mandate to do anything to improve short-term revenue, and often conveniently increase their own wealth. It appears to be time to bring back the old laws against the corporate practice of health care, and consider whether we should allow hospitals and other health care organizations that provide direct patient care to be for-profit enterprises.
Meanwhile, patients and health care professionals, you should realize that you approach corporate hospitals and other corporate health care providers at your own risk.
A few news media outlets in California have reported on what has been up to now a very rare event - a strike by physicians. An initial summary was in an article in the San Diego Union - Tribune, whose title was
First U.S. Doctors' Strike in Decades
A handful of doctors providing medical services to students at UC San Diego — and their colleagues at nine other University of California campuses — went on strike Tuesday.
It's the first time in 25 years that fully licensed doctors are picketing a U.S. employer, according to the Union of American Physicians and Dentists, which represents the physicians at the UC schools.
The work stoppage began at 7:30 a.m. and is scheduled to last one day. It involves 150 health center doctors who manage the primary care and mental health needs of students.
A second article in the Union-Tribune suggested that the point of contention between the union and the University of California administration was not primarily wages,
Collective bargaining has not gone smoothly for UC student services doctors who voted to join the Union of American Physicians and Dentists in November 2013. The two sides have not been able to agree on a contract. Union members voted for the one-day strike after accusing the university system of refusing to provide key financial information that would aid their negotiations.
An article in the East Bay Express clarified that,
The central unfair labor practice complaint centers on the university's refusal to disclose basic financial data to doctors as part of the negotiations, according to Dr. Jeff Nelson, a UC Berkeley physician and a member of the bargaining team.
'We have asked UC for financial information as to where their funding sources are and what kind of finding they have, and they're not giving that, even though as a public institution, they're required to,' Nelson told me this morning at a rally outside the Tang Center where UC Berkeley students receive health services. Citing the $3.1 billion fundraising campaign UC Berkeley completed last year, he added: 'They have an awful lot of money.'
Without the financial statistics the union has requested, UAPD can't fairly negotiate and settle a contract, said Sue Wilson, a UAPD spokesperson. 'We have a right to certain information that we need in order to bargain a contract.' For example, she said, the union has sought information about the recently approved 20 percent salary increases for chancellors, but hasn't had any luck getting the details it requested. Wilson said the union has also filed an unfair labor practice charge regarding UC's recent decision to require UAPD doctors to contribute more money to their pensions, despite the fact that university officials originally said they would make those changes through the contract negotiations. 'It shows a lack of respect,' she said.
Apparently, the striking doctors want more money not for salaries, but to improve services to patients, as discussed in the second Union-Tribune article,
Dr. Amol Doshi, one of the staff physicians who didn’t report to work Tuesday, said his decision to join the union and to strike came down to disagreements with management over how student health services is run.
He said only about 15 minutes is provided for each patient, regardless of whether that student has one or several medical issues that need to be addressed.
'We feel like our professional autonomy is being compromised in how we can take care of our patients. We feel that the number of patients that we’re asked to see, many of whom have mental health concerns, require more time and more staffing,' Doshi said.
The East Bay Express noted the UC administration's response did not deal with the substance of these issues,
Reached for comment today, a UC Berkeley spokesperson referred me to the UC Office of the President. Shelly Meron, a spokesperson for that office, dismissed the union's complaints in a phone interview this morning.'"They say this is about unfair labor practice charges. We believe this is simply a negotiation tool.' Meron said the president's office does not comment on the specifics of unfair labor practice charges and declined to answer questions about the union's claims regarding financial disclosures and the pension policy.
Note that so far this story has been reported nationally only in one small item by Reuters.
Unions as One Method to Address the Plight of the Corporate Physician
So, to summarize, a small group of unionized physicians employed by the student health services of the University of California called a one day strike to protest infringements of their autonomy, particularly requirements that they see patients too quickly for what they believe to be the patients' good, and failure to provide budgetary information relevant to the university's financial capacity to provide better services. The physicians suspect the university has sufficient money to do so, especially given generous raises given to university managers.
The issues these physicians seem to be facing are familiar aspects of the plight of the American corporate physician. To recap the background, decades ago, most US physicians worked as solo entrepreneurs, or for small, physician owned groups. Those few who were employed worked for small non-profits, like the local teaching hospital, or local or US government. That has all changed.
Now increasing numbers of physicians are employed by increasingly large non-profits, such as hospital systems, or for-profit corporations. A 2013 Medscape article reported that the then current rate of employment was over 50%.
As such these physicians often report ultimately to managers, administrators, bureaucrats, and executives (MABEs). Many of the people they report do may not be physicians or health care professionals. Instead, they are likely to be generic managers, trained in business and management schools, with no direct experience in health care, and unclear commitment to its value. (The 2013 Medscape article cited above included results of survey suggesting the top complaint of employed physicians was being "bossed around by less-educated admins.")
Worse, many generic managers have bought into the primacy of short-term revenue over all other considerations, including patients' and the public's health. Examples of mission hostile management in health care thus now abound.
In parallel, most top corporate leaders have received increasingly generous compensation, far more generous than non-management employees, including health care professionals get, and that compensation seems to rise regardless of the quality of health care their organizations provide, or even their organizations' financial performance. (For example, see this post.)
In the media, and even the medical and health care literature, the rise of the employed, corporate physician has been celebrated, or at least accepted as inevitable. For example, see this post on a Forbes blog by a non-physician pundit with the title, "Physicians want employment, not Marcus Welby MD," implying that choice was completely voluntary. This attitude may be a product of the long domination of market fundamentalism in the US, in which markets are seen as the solution to all social problems, so neither the outcomes of the "free market" or corporate management are to be questioned.
However, one would think that contemporary employed physicians are increasingly in a predicament, caught between their professional oaths to put individual patients first, and their generic manager bosses pushing to increase revenue no matter what. Yet for the corporate physician, protest might jeopardize their livelihood, or worse. Such physicians may feel captive of the restrictive clauses, such as confidentiality agreements and non-disparagement clauses, in the contracts they signed, possibly often under pressure and without adequate legal counsel. For example, a 2013 Medscape article was entitled, "Can you speak out without getting fired or being labeled a troublemaker?" The answer was at best, only sometimes.
Even in the limited coverage of the California student health doctors' strike, there were references to some of these issues. These included what could be mission-hostile management (shrinking visit times regardless of patient needs), and excess compensation to top management (particularly, the Chancellors' pay raises.) The anechoic nature of the strike, that is, the lack of media coverage so far, seems to reflect the now prevailing market fundamentalist dogma that is generally hostile to workers' rights and organization.
Nonetheless, the doctors of the University of California student health services did organize, and now they have taken the unheard of step of calling a strike. That this did not happen sooner is a testament to the enormous power, enforced by billions in public relations and marketing, of the dogma of market fundamentalism. However, given that most physicians are now employees, and have not been having an easy time of it, this strike may be just the beginning.
In any case, organization of employed workers, collective bargaining, and even strikes, while being anathema to market fundamentalists, may be much better for society than even more radical responses to the ongoing plight of workers. Remember, it was robber baron capitalism not much different from today's market fundamentalism, that inspired not only the rise of trade unions, but unfortunately, the rise of Marxism and ultimately Communism.
So maybe we should start looking for the "union label" more often in health care.
ADDENDUM (2 February, 2015) - See also post entitled, "Why Physicians Must Unionize" on the On Health Care Technology blog.
