In 1970, U.S. health care spending was about 7.2% of GDP, now, it is approximately 18% and predicted to be 20-21% of GDP in 2018. About 10% of people account for 63% of spending on health services. This bleak fact has collided with a country that is now the world’s largest debtor nation substantially worsened by the recent recession. Politicians can no longer procrastinate and evade confronting our serious fiscal problems since the future economic health and standard of living of the U.S. hangs in the balance. Most economists do not believe that this country can prosper while sustaining an ever greater share of GDP being consumed by health care considering are other priorities. In addition, Medicare and Medicaid both entitlement programs will need to have their relentless cost increases controlled. To further add to the incentive to control health care expenditures is the pressure corporations confront with globalization in which they must remain competitive by clamping down on payroll and medical coverage costs. This trend has already been occurring and is now accelerating with workers not being offered medical coverage to paying more for their health plans with greater deductibles, restrictive caveats and higher co-payments. Whatever is legislated out of the present spectacle in Washington DC, assuming Congress is able to push through a bill, costs must be better controlled. Some politicians and health care economist have recommended paying physicians for results instead of procedures as a way to curb the ever upward spiraling outlays for medical care. The justification for this is to remove the perverse system in place in which there is no financial incentive to eliminate waste. Some Wall Street analysts have predicted a wave of mergers and acquisitions in the health care market for 2010 as one way to presently deal with the numerous financial strains being encountered.
Under the radar of the contentious infighting in Congress as it tries to hammer out a comprehensive health care bill and the adversity of quite a few unfavorable trends, many hospitals, insurance companies, medical groups and employers have taken the initiative to solve some of the more intractable problems which result in higher expenditures. As an example, Thomas Jefferson University Hospital is revamping its approach to patient care with a philosophical change that treats all conditions by easy access to every physician and service needed. Jefferson will establish five “service lines” focusing on cardiovascular diseases, cancer, neurological conditions, musculoskeletal problems and GI/transplant. All professionals involved in the service line’s specialty, from surgeons to radiologists and nurses, will work closely together, sharing resources and decision-making. In the past, many of the players had different incentives such as a surgeon whose main goal was to increase procedures. With this new concept, all the clinicians will meet and discuss the best way to treat a particular disease pooling all the resources to optimize the treatment of patients. “Service lines will profoundly change Jefferson”, said University President Robert L. Barchi, MD, PhD. At the heart of the strategy lies a simple truth, according to Rebecca O’Shea, senior vice president of clinical services that patients suffering from a serious condition need a system of care, not just a coterie of specialists. This system will guide the patient through what can be a confusing experience ensuring complete reasonable care and guaranteeing that the patient remains within the Jefferson system. It is felt that this new approach will reduce waste and foster greater collaboration providing more coordinated, integrated clinical services. David McQuaid, executive vice president and chief operating officer explained that these initiatives stemmed from economic changes, increased competition in the marketplace and limited capital in which the hospital needed to maximize its services while enhancing its reputation and becoming more cost conscious.
Another telling example is the decision of Harvard Vanguard Medical Associates to now send all its patients to Beth Israel Deaconess Medical Center instead of Brigham and Women’s Hospital where it had previously referred 100% of their Boston patients unless the patient had a prior relationship with a doctor at Brigham. Dr. Gene Lindsey, chief executive of Harvard Vanguard’s parent organization, Atrius Health with 800 doctors, said he felt the organization could better coordinate care at Beth Israel Deaconess, partly because the hospital has agreed to send patients back to their primary care doctor or specialist at Harvard Vanguard after their inpatient stay, rather than keep
them in the more expensive hospital system. Atrius is also shifting many of its orthopedic referrals to New England Baptist Hospital from Faulkner Hospital, which is part of the Brigham system. A move driven in part by Baptist’s success in reducing surgical infections. Health care analysts say that this move is a harbinger of more changes for patients in Massachusetts, as pressure grows on doctors to improve care, specifically the coordination of care and control of soaring health care costs. Dr. Amy
Boutwell, director of health policy strategy at the Institute for Healthcare Improvement, hospital and patient safety consultants based in Cambridge, feels that this is just the beginning of such radical changes since our fragmented fee-for-service system is yielding high costs and poor outcomes overall. The state is considering dramatically changing how providers are paid by largely scrapping the current fee-for-service system. Instead, the state would pay groups of providers a per-patient annual fee to cover all of a patient’s medical care. This will push primary care doctors, specialists and hospitals to form tight, efficient networks in which they are in constant communication about patients. It would be similar to the arrangement Atrius is forming with Beth Israel Deaconess. It will be more difficult for looser networks of doctors to compete effectively with more structured groups like Atrius in this present economic environment. Another key issue for changing according to Dr. Lindsey is that Beth Israel Deaconess is allowing Atrius physicians real-time access to the hospital’s medical records, meaning that doctors can track their patients inpatient or emergency room care helping to reduce unnecessary and costly duplication of tests.
Medicine is definitely in flux and only the most uninformed would be unable to appreciate the tremendous economic forces that are not only confronting medicine but altering it. These pressures always present to some degree have become magnified due to this country’s fiscal crisis and need to produce jobs. It will become more difficult for solo and single specialty practices to answer the challenges of controlling costs while maximizing medical care. Large clinics such as Geisenger and others are able to better coordinate treatment due to vertical and horizontal integration. They have the advantage of being positioned to offer a range of medical services, share fixed costs, exchange clinical opinions and pool collections for stable salaries. They are better positioned to make the changes in this present turbulent environment to remain competitive. The unanswered question is can the bulk of private practices respond. It is going to be very difficult for many. If as expected Medicare reduces payments, how will many hospitals survive. 51% of Cleveland Clinic’sadmissions are medicare. Many hospitals will have to seriously consider developing relationships similar to Atrius or contribute to forming a large supporting clinic organization. Many doctors would merely say that the market should be unleashed. If Doctor A charges too much for foot surgery, Dr B can open a clinic across the street and charge less. But this is too simplistic in that many patients may have to go to a hospital for treatment and many conditions require seeing a variety of physicians. This is where costs can be driven up as a patient goes from doctor to doctor in his quest to be cured.
Medicine does not function in a vacuum and must respond to the greater fiscal arena and to the risk of erosion of America’s competitiveness. Winston Churchill said, “The era of procrastination of half measures of soothing and baffling expedients are coming to a close. In its place, we are entering a period of consequences”