2011 Physician Compensation Report- An Interesting Picture

Whenever we start talking about the increase in health care costs we invariably start to think about the amount of money made by the providers. The costs of paying the providers make up 30% of the cost of care so it’s pretty easy to make them a target.

Medscape WebMD recently published their Physician Compensation Report for 2011. It paints a pretty interesting picture of the current economics of the general provider community.

Overall, the average “salary” for the 15,794 physicians across 22 specialty areas averaged somewhere around $250,000 a year. Orthopedic Surgery and Radiology did the best at around $350,000 and Primary Care and Pediatrics received the least at slightly under $200,000 per year.

About half of the respondents indicated their income “remained the same” between the years 2009-2010, but more indicated their incomes increased than decreased during this time.

Those in the North Central U.S. averaged the most ($225,000) and those in the Southwest and Northeast averaged the least ($190,000).

All respondents felt they should be earning more and less than half of the Primary Care practitioners felt they are currently fairly compensated for their efforts.

They all work a lot of hours and spend way too much time on paperwork and non-patient administration.

Almost a third are not so sure they would choose medicine as a career if they had to do it all again. They would either go into business, law, or teach.

When looking at the pure numbers we need to remember these amounts don’t include the general costs of education, general overhead, malpractice insurance, staffing, and all the other costs that we require providers to assume as a part of participating in the health care system we have created.

The question isn’t really “how much” but what is the value? That is the challenge we just haven’t been able to determine very well.

So, before we look only to putting some arbitrary limits on the fees paid to providers as the sole way to control costs we should first look at the ways we can measure and improve the value of the dollars that are being spent; more electronic technology, accessing best-practices, reducing administrative nonsense, and creating more informed consumers come to mind. And, providers need to be accountable for the value they provide, just like we’re expecting other stakeholders to be accountable in their new roles as well. Providers can’t just do whatever they want any more and expect someone else to pick up the tab.

Princeton economist Uwe Reinheardt estimated that if you cut physician income across the board by 20% you would only shave 2% off national health spending. That’s not a very big dent.

While health care spending is a problem, how we’re spending the money is an even bigger one.

Just Wind The Clock- It's Going To Happen Again

Last Friday the leadership in Congress and the Executive branch finally came to a last-minute agreement to narrowly avert a government shutdown. As expected, everyone waited until the last minute before finally showing their hand.

A soldier in Afghanistan (supporting a family back home) wondered if he was going to be paid. Some of these heroes literally live paycheck-to-paycheck. So, while dodging Taliban snipers and trying to avoid IEDs planted in the road, he now had to worry if his wife and children would have the money they needed for support while he was gone.

It's inexcusable- unfortunately this is the world of politics, partisanship, and debt we live in today.

Congress will likely pass the $38 billion in "reductions" that were part of the final agreement to create the FY2011 budget (many months late). Just to add to the confusion surrounding what was actually accomplished, the CBO posted their analysis of the deal the day before the vote stating the number isn't really $38 billion but somewhere around $350 million for FY2011 due to the maze of IOUs, transfer accounts, and other accounting gimmicks included in our federal accounting process. To add more fuel, they posted their projections indicating our deficit for the first six months of the year will be about $800 billion- over $110 billion more than the same time last year. We aren't making much progress.

The politics are getting uglier- and Americans have no idea who to believe.

While the lights remain turned on for now, these last-minute agreements are unfortunately going to be the norm. The fiasco that occurred last week is a drop in the bucket compared to what we're going to experience when the votes to raise the debt ceiling and the 2012 budget debates really get underway. Quite honestly, the stability of our economy is at stake.

Republicans want to use the scorched-earth approach, Democrats want to protect self-interests. Most of us know the right answer is somewhere in between. It's now a game of chicken- and we're all on the receiving end.

We'd better brace ourselves. The coming months are not going to be pretty. Whether we want to accept reality or not- addressing health care and entitlements (Medicare, Medicaid, and Social Security) will be or should be central to the discussion.

The world has changed and America has changed and now is the time we'll really see what we're made of. We had just better be sure we don't ask those who are already sacrificing so much while they are protecting our freedoms in hostile environments to sacrifice more just because we can't get our act together here at home.

We're better than that.

The New Proposed Rules for ACOs- Can We Make 429 Pages Understandable?

The Department of Health and Human Services just released the “proposed rules” for creating Accountable Care Organizations. Accountable Care Organizations (ACOs) were legitimized in the Affordable Care Act as a way to try to curb the unsustainable Medicare costs occurring today by organizing the way beneficiaries receive care in a different way. I believe the idea could be simplified by simply saying they change the way providers are paid by working together better than they do today. These proposed rules (requesting comment from the public) are 429 pages and will be a field day of billable hours for policy consultants, actuaries, financial analysts, and statisticians. With all of the data requirements included, technology companies and the IT departments at health care organizations are going to have some great opportunities (and a lot of work) if they play it right. You can grab the proposed rules by clicking HERE (it’s a big PDF file so hopefully your computer won’t choke).

Accountable Care Organizations are part of the Medicare Shared Savings program included in the ACA and are intended to create organizations to “expand value-based purchasing, broaden quality reporting, improve the level of performance and feedback to suppliers, create incentives to enhance quality, improve beneficiary outcomes, and increase the value of care." The idea is to reward providers for delivering high quality, efficient clinical care for Medicare beneficiaries. The rules themselves sound remarkably similar to the HMOs that everybody hated- but ACOs are supposed to be different. They are going to be primarily run by hospitals and provider groups instead of insurance companies, and supposedly will be less restrictive with the patients and allow for individuals to see providers outside the network if they want. We'll see.

I read that the health care industry tends to operate with “kind of a herd behavior, rushing to implement an idea without working through the detailed business questions of how they’ll work.” ACO’s are the new hot topic in health care and the herd is building. They sound like a good idea (and could be a survival strategy for some provider organizations and hospitals) so many folks are jumping on-board, they just don’t know how it’s all going to work.

HHS estimates 5 million Medicare beneficiaries will be enrolled in ACOs in the next few years. Somewhere between 75 and 150 ACOs are supposed to be operational over the next three years and will cost around $1.75 million each to get set up. The start-up costs are primarily going to be borne by the private market. HHS believes Medicare will save a little over $500 million over the next 3 years (median number). That’s a pretty small portion of overall Medicare spending- but it’s a start.

Once again, I wonder about the patients.

The rules spend quite a bit of time talking about the importance of being “patient centered” but nobody is talking about how to get the patients and individuals ready to be “patient centered.” What will happen when a patient wants to go outside the network impacting any bonus payment the ACO might receive? What will happen when the patient wants every possible test and procedure that the ACO may not believe is necessary? That’s going to determine the real success of ACOs. Can health care finally relate to people on an individual level?

As they are outlined today, the rules acknowledge that public and patient support is going to be required to make all of this work- but doesn’t quite define how. The rules state, “The exercise of free choice, however, can be undermined or even nullified if beneficiaries do not possess adequate information to assess the possible consequences of available choices, or to evaluate which available options are most consistent with their values and preferences concerning their own health care.”

Health care is going to need to connect with people in new ways. Brochures, pamphlets, and marketing materials are not going to cut it any more. Individuals need to be educated and informed about the basics of ACOs to be able to participate like ACOs are going to need them to participate.

Consumer education needs to be a priority and not just an exercise shoved off to the marketing department or handled like health care has handled communication and education in the past. Consumers are having a tough time trusting health care right now- 429 pages of rules may be a billable hour windfall for the consulting companies, but it doesn’t make things any easier for those who are really going to need to know what is expected and are going to be asked to participate in ways they haven’t had to in the past.

Let's hope we can start connecting.

Rep. Bachmann- Is the Tea Party Out of Touch Too?

Minnesota Representative Michele Bachmann certainly stuck to her talking points on Sunday’s Meet the Press.

Despite David Gregory’s persistent attempts, Bachmann danced around almost every question. She had a point to make and that point didn’t include responding to Gregory’s questions. She was sticking to her message and she was going to make it- no matter how embarrassing the outcome might be.

Her new “revelation” focused on the discovery of $105 billion in appropriations funding supporting the Patient Protection and Affordable Care Act passed last year. Her web site comments, “Recently, I read startling information about the funding of ObamaCare. . .” and goes on, “Because now, months after passage, we are discovering an astonishing $105,464,000,000 has already been appropriated to the Health and Human Services Secretary for ObamaCare through FY2019.”

Bachmann even sandwiched her “support card” showing the $105 billion number to all viewers in response to a totally unrelated question thinking it would provide extra emphasis.

She credits her revelation to an article she recently read- and the rest is history. She was off and running- despite the fact that these numbers have been out there since the beginning.

The numbers are true. There were a lot of appropriations made in the ACA for grants and funding in many different areas. These include funding for the health insurance exchanges, school-based health centers, expanded primary care residency programs, health care education at the community levels, and others. There were allocations made for many “oversight” organizations we could probably do without considering where we are from a fiscal perspective.

But unless you simply didn’t read the law, or are totally uninformed of what is included, this should not have been “startling information” especially for someone in Congress.

The Congressional Research Service published a report last October identifying the appropriations included in the law. There is nothing hidden. Representative Bachmann must just be getting to reading it now- or she has been waiting for another source to read it for her.

The costs of our health care system are continuing to increase and will continue to increase if nothing is done. The ACA needs a lot of work to fix if we’re going to fix it, or another approach had better be ready if we’re going to repeal it. Politics aside, we’re at a tipping point in health care.

If Representative Bachmann is going to be speaking for the Tea Party, I would recommend she get her facts straight before talking to a national audience again. If she is “shocked and surprised” at this late stage that is her fault for not being informed.

She shouldn’t assume the rest of the American people are as uninformed as she is.

Finally- A Business Case For Hospital Readmissions

A study in the New England Journal of Medicine concluded 1 in 5 elderly patients are readmitted to the hospital 30 days after leaving. This results in 2.3 million individuals being readmitted at a cost of over $17 billion to Medicare. A significant number of the readmissions are avoidable.We’ve known this has been an issue for a long time, but there was never the ability to develop the “business case” to fix it. Business cases are a big deal in healthcare. Even though we know it’s the right thing to do, if it costs in the short term or you can’t make money at it in the long term, things don’t change.

One part of The Affordable Care Act focuses on reducing avoidable hospital readmissions and will begin to penalize (reduce payment) to hospitals if their readmissions exceed certain targets. Suddenly, there is a business case and hospitals are taking steps to fix the problem and, for the most part, the initial steps to fix the problem are very simple: Make sure patients understand their responsibilities to care for themselves and get the follow-up care that is required. It may take a little more time to educate the patient or their care givers than before, but now the extra time is justified by the potential of lost revenue down the road.

While health care couldn’t make the business case before, I think about the 1 in 5 elderly patients who had to suffer being readmitted and the economic consequences that may go along with it. Somebody has to pay for it. And, I wonder why it takes threatening a reduction in what a hospital is paid to just take a little extra time to educate patients and care givers and do the right thing.

I guess that’s why it took a law to fix it. Our incentives are all screwed up.

My Journey Through The PPACA: Patient-Centered Research

Trying to read the PPACA is brutal. I've skimmed it twice and am now going through in a little more detail- reading the words. I have no intention of being an expert on this- but, I do want to be informed with what it is and what it isn't. So, I'm going to share some thoughts as I go through it on the blog.

As with any legislation (not just health care) the words and the organization (sections, titles, and all the rest) probably makes sense to the lawyers but I doubt even the politicians can explain it. That is a large part of the problem with this- it is just hard to explain what is written. Very few have tried.

I was particularly interested in the "patient-centered" stuff. Section 6301 page 609 creates the "Patient Centered Outcomes Research Institute" and a boatload of money is allocated to it.

Here's the definition/purpose:

"to assist patients, clinicians, purchasers, and policy-makers in making informed he

alth decisions by advancing the quality and relevance of evidence concerning the manner in which

disease, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations and the dissemination of research findings with respect to the relative health outcome, clinical effectiveness, and appropriateness of medical treatments services and items--"

Whew. Take a breath.

While this diatribe probably means something to those in health care- (health care loves to use a lot of words or acronyms to say simple things)- the average person will have no clue what this is and why it may be important. How this definition of purpose even remotely relates to anything "patient centered" is beyond me.

I've found there are some good things in the law and some things that make no sense. Many times I had to work to find them. The lack of education, communication and explanation of this reform approach at a very basic consumer level remains a huge part of the problem as this debate continues.

Beginning to organize the information in the health care system is a good thing. Starting to organize system-wide "best-practices" and prevention methods is a good thing for everyone involved. Unfortunately, the consumer is never going to know why this is important because nobody is telling them and they have to try figure it out on their own with the 77 word definitions provided. Or, they just do the easiest thing and listen to the talking points of cable news or the politicians.

We all know how balanced these sources are.

A Wake-Up Call For Our Country

It’s unfortunate that sometimes it takes a significant event to force us to step back, reflect, and determine where we are. These events occur for us individually as well as collectively as a society and as a nation.

The tragic events in Tucson this past weekend is one of those.

The finger-pointing and accusations were flying within hours of the shootings even before any facts were known. We still don’t know many facts today and we never may know the real reasons for this insane act.

New York Times Nobel Prize winning columnist Paul Krugman quickly jumped to blaming the Tea Party, Glen Beck, Sarah Palin and conservatives in general. He commented, “Violent acts are what happen when you create a climate of hate.” He believes conservatives created this environment of hate.

Florida Democratic Congressman Alan Grayson didn’t help to create an environment of unity when he referred to Tea Party Challenger Daniel Webster as “Taliban Dan” during the mid-term elections. The rhetoric during these elections across-the-board was brutal.

Let’s just call it even. There is enough blame to go around on all sides. Regardless of whether the accused was politically motivated or not, we all know our political process and dialogue has grown toxic and does not help the cause of addressing the challenges we face as a country. We have serious challenges ahead of us. Whether we want to accept it or not- they will not be solved as Republicans, Democrats, or Tea Party; they will be solved as Americans.

Commentator David Gergen states it best, “This is not a moment to point fingers and make accusations. But it is a time to pray for the victims- and pledge to each other that we will struggle for a more civil and decent America.”

To honor the victims, and with prayers for Gabrielle Giffords, let’s come together to at least agree on that.