This article appeared in the May 2013 Issue of Reason.
I am a
general surgeon with more than three decades in private clinical practice. And
I am fed up. Since the late 1970s, I have witnessed remarkable technological
revolutions in medicine, from CT scans to robot-assisted surgery. But I have
also watched as medicine slowly evolved into the domain of technicians,
bookkeepers, and clerks.
Government
interventions over the past four decades have yielded a cascade of perverse
incentives, bureaucratic diktats, and economic pressures that together are
forcing doctors to sacrifice their independent professional medical judgment,
and their integrity. The consequence is clear: Many doctors from my generation
are exiting the field. Others are seeing their private practices threatened
with bankruptcy, or are giving up their autonomy for the life of a
shift-working hospital employee. Governments and hospital administrators hold
all the power, while doctors—and worse still, patients—hold none.
The Coding Revolution
At
first, the decay was subtle. In the 1980s, Medicare imposed price controls upon
physicians who treated anyone over 65. Any provider wishing to get compensated
was required to use International Statistical Classification of Diseases (ICD)
and Current Procedural Terminology (CPT) codes to describe the service when
submitting a bill. The designers of these systems believed that standardized
classifications would lead to more accurate adjudication of Medicare claims.
What it
actually did was force doctors to wedge their patients and their services into
predetermined, ill-fitting categories. This approach resembled the
command-and-control models used in the Soviet bloc and the People’s Republic of
China, models that were already failing spectacularly by the end of the 1980s.
Before
long, these codes were attached to a fee schedule based upon the amount of time
a medical professional had to devote to each patient, a concept perilously
close to another Marxist relic: the labor theory of value. Named the
Resource-Based Relative Value System (RBRVS), each procedure code was assigned
a specific value, by a panel of experts, based supposedly upon the amount of
time and labor it required. It didn’t matter if an operation was being
performed by a renowned surgical expert—perhaps the inventor of the
procedure—or by a doctor just out of residency doing the operation for the
first time. They both got paid the same.
Hospitals’
reimbursements for their Medicare-patient treatments were based on another
coding system: the Diagnosis Related Group (DRG). Each diagnostic code is
assigned a specific monetary value, and the hospital is paid based on one or a
combination of diagnostic codes used to describe the reason for a patient’s
hospitalization. If, say, the diagnosis is pneumonia, then the hospital is
given a flat amount for that diagnosis, regardless of the amount of equipment,
staffing, and days used to treat a particular patient.
As a
result, the hospital is incentivized to attach as many adjunct diagnostic codes
as possible to try to increase the Medicare payday. It is common for hospital
coders to contact the attending physicians and try to coax them into adding a
few more diagnoses into the hospital record.
Medicare
has used these two price-setting systems (RBRVS for doctors, DRG for hospitals)
to maintain its price control system for more than 20 years. Doctors and their
advocacy associations cooperated, trading their professional latitude for the
lure of maintaining monopoly control of the ICD and CPT codes that determine
their payday. The goal of setting their own prices has proved elusive,
though—every year the industry’s biggest trade group, the American Medical
Association, squabbles with various medical specialty associations and the
Centers for Medicare and Medicaid Services (CMS) over fees.
As goes
Medicare, so goes the private insurance industry. Insurers, starting in the
late 1980s, began the practice of using the Medicare fee schedule to serve as
the basis for negotiation of compensation with the doctors and hospitals on
their preferred provider lists. An insurance company might offer a hospital 130
percent of Medicare’s reimbursement for a specific procedure code, for
instance.
The
coding system was supposed to improve the accuracy of adjudicating claims
submitted by doctors and hospitals to Medicare, and later to non-Medicare
insurance companies. Instead, it gave doctors and hospitals an incentive to
find ways of describing procedures and services with the cluster of codes that
would yield the biggest payment. Sometimes this required the assistance of
consulting firms. A cottage industry of fee-maximizing advisors and seminars
bloomed.
I
recall more than one occasion when I discovered at such a seminar that I was
“undercoding” for procedures I routinely perform; a small tweak meant a bigger
check for me. That fact encouraged me to keep one eye on the codes at all
times, leaving less attention for my patients. Today, most doctors in private
practice employ coding specialists, a relatively new occupation, to oversee
their billing departments.
Another
goal of the coding system was to provide Medicare, regulatory agencies,
research organizations, and insurance companies with a standardized method of
collecting epidemiological data—the information medical professionals use to
track ailments across different regions and populations. However, the
developers of the coding system did not anticipate the unintended consequence
of linking the laudable goal of epidemiologic data mining with a system of
financial reward.
This
coding system leads inevitably to distortions in epidemiological data. Because
doctors are required to come up with a diagnostic code on each bill submitted
in order to get paid, they pick the code that comes closest to describing the
patient’s problem while yielding maximum remuneration. The same process plays
out when it comes to submitting procedure codes on bills. As a result, the
accuracy of the data collected since the advent of compensation coding is
suspect.
Command and Control
Coding
was one of the earliest manifestations of the cancer consuming the medical
profession, but the disease is much more broad-based and systemic. The root of
the problem is that patients are not payers. Through myriad tax and regulatory
policies adopted on the federal and state level, the system rarely sees a
direct interaction between a consumer and a provider of a health care good or
service. Instead, a third party—either a private insurance company or a
government payer, such as Medicare or Medicaid—covers almost all the costs.
According to the National Center for Policy Analysis, on average, the consumer
pays only 12 percent of the total health care bill directly out of pocket. There
is no incentive, through a market system with transparent prices, for either
the provider or the consumer to be cost-effective.
As the
third party payment system led health care costs to escalate, the people
footing the bill have attempted to rein in costs with yet more
command-and-control solutions. In the 1990s, private insurance carriers did
this through a form of health plan called a health maintenance organization, or
HMO. Strict oversight, rationing, and practice protocols were imposed on both physicians
and patients. Both groups protested loudly. Eventually, most of these top-down
regulations were set aside, and many HMOs were watered down into little more
than expensive prepaid health plans.
Then,
as the 1990s gave way to the 21st century, demographic reality caught up with
Medicare and Medicaid, the two principal drivers of federal health care
spending.
Twenty
years after the fall of the Iron Curtain, protocols and regimentation were
imposed on America’s physicians through a centralized bureaucracy. Using
so-called “evidence-based medicine,” algorithms and protocols were based on
statistically generalized, rather than individualized, outcomes in large
population groups.
While
all physicians appreciate the development of general approaches to the work-up
and treatment of various illnesses and disorders, we also realize that everyone
is an individual—that every protocol or algorithm is based on the average,
typical case. We want to be able to use our knowledge, years of experience, and
sometimes even our intuition to deal with each patient as a unique person while
bearing in mind what the data and research reveal.
Being
pressured into following a pre-determined set of protocols inhibits clinical
judgment, especially when it comes to atypical problems. Some medical educators
are concerned that excessive reliance on these protocols could make students
less likely to recognize and deal with complicated clinical presentations that
don’t follow standard patterns. It is easy to standardize treatment protocols.
But it is difficult to standardize patients.
What
began as guidelines eventually grew into requirements. In order for hospitals
to maintain their Medicare certification, the Centers for Medicare and Medicaid
Services began to require their medical staff to follow these protocols or face
financial retribution.
Once
again, the medical profession cooperated. The American College of Surgeons
helped develop Surgical Care Improvement Project (SCIP) protocols, directing
surgeons as to what antibiotics they may use and the day-to-day post-operative
decisions they must make. If a surgeon deviates from the guidelines, he is
usually required to document in the medical record an acceptable justification
for that decision.
These
requirements have consequences. On more than one occasion I have seen patients
develop dramatic postoperative bruising and bleeding because of
protocol-mandated therapies aimed at preventing the development of blood clots
in the legs after surgery. Had these therapies been left up to the clinical
judgment of the surgeon, many of these patients might not have had the
complication.
Operating
room and endoscopy suites now must follow protocols developed by the global
World Health Organization—an even more remote agency. There are protocols for
cardiac catheterization, stenting, and respirator management, just to name a
few.
Patients
should worry about doctors trying to make symptoms fit into a standardized
clinical model and ignoring the vital nuances of their complaints. Even more,
they should be alarmed that the protocols being used don’t provide any
measurable health benefits. Most were designed and implemented before any
objective evidence existed as to their effectiveness.
A large
Veterans Administration study released in March 2011 showed that SCIP protocols
led to no improvement in surgical-site infection rate. If past is prologue, we
should not expect the SCIP protocols to be repealed, just “improved”—or
expanded, adding to the already existing glut.
These
rules are being bred into the system. Young doctors and medical students are
being trained to follow protocol. To them, command and control is normal. But
to older physicians who have lived through the decline of medical culture, this
only contributes to our angst.
One of
my colleagues, a noted pulmonologist with over 30 years’ experience, fears that
teaching young physicians to follow guidelines and practice protocols
discourages creative medical thinking and may lead to a decrease in diagnostic
and therapeutic excellence. He laments that “ ‘evidence-based’ means you are not interested in listening to anyone.” Another colleague, a North Phoenix
orthopedist of many years, decries the “cookie-cutter” approach mandated by
protocols.
A noted
gastroenterologist who has practiced more than 35 years has a more cynical take
on things. He believes that the increased regimentation and regularization of
medicine is a prelude to the replacement of physicians by nurse practitioners
and physician-assistants, and that these people will be even more likely to
follow the directives proclaimed by regulatory bureaus. It is true that, in
many cases, routine medical problems can be handled more cheaply and
efficiently by paraprofessionals. But these practitioners are also limited by
depth of knowledge, understanding, and experience. Patients should be able to
decide for themselves if they want to be seen by a doctor. It is increasingly
rare that patients are given a choice about such things.
The
partners in my practice all believe that protocols and guidelines will
accomplish nothing more than giving us more work to do and more rules to comply
with. But they implore me to keep my mouth shut—rather than risk angering
hospital administrators, insurance company executives, and the other powerful
entities that control our fates.
Electronic Records and Financial Burdens
When
Congress passed the stimulus, a.k.a. the American Reinvestment and Recovery Act
of 2009, it included a requirement that all physicians and hospitals convert to
electronic medical records (EMR) by 2014 or face Medicare reimbursement
penalties. There has never been a peer-reviewed study clearly demonstrating
that requiring all doctors and hospitals to switch to electronic records will
decrease error and increase efficiency, but that didn’t stop Washington
policymakers from repeating that claim over and over again in advance of the
stimulus.
Some
institutions, such as Kaiser Permanente Health Systems, the Mayo Clinic, and
the Veterans Administration Hospitals, have seen big benefits after going
digital voluntarily. But if the same benefits could reasonably be expected to
play out universally, government coercion would not be needed.
Instead,
Congress made that business decision on behalf of thousands of doctors and
hospitals, who must now spend huge sums on the purchase of EMR systems and take
staff off other important jobs to task them with entering thousands of
old-style paper medical records into the new database. For a period of weeks or
months after the new system is in place, doctors must see fewer patients as
they adapt to the demands of the technology.
The
persistence of price controls has coincided with a steady ratcheting down of
fees for doctors. As a result, private insurance payments, which are typically
pegged to Medicare payment schedules, have been ratcheting down as well.
Meanwhile, Medicare’s regulatory burdens on physician practices continue to
increase, adding on compliance costs. Medicare continues to demand that
specific coded services be redefined and subdivided into ever-increasing levels
of complexity. Harsh penalties are imposed on providers who accidentally use
the wrong level code to bill for a service. Sometimes—as in the case of John
Natale of Arlington, Illinois, who began a 10-month sentence in November
because he miscoded bills on five patients upon whom he repaired complicated
abdominal aortic aneurysms—the penalty can even include prison.
For
many physicians in private practice, the EMR requirement is the final straw.
Doctors are increasingly selling their practices to hospitals, thus becoming
hospital employees. This allows them to offload the high costs of regulatory
compliance and converting to EMR.
As
doctors become shift workers, they work less intensely and watch the clock much
more than they did when they were in private practice. Additionally, the
doctor-patient relationship is adversely affected as doctors come to
increasingly view their customers as the hospitals’ patients rather than their
own.
In 2011, The New England Journal of
Medicine reported that fully 50 percent of the nation’s doctors
had become employees—either of hospitals, corporations, insurance companies, or
the government. Just six years earlier, in 2005, more than two-thirds of
doctors were in private practice. As economic pressures on the sustainability
of private clinical practice continue to mount, we can expect this trend to
continue.
Accountable Care Organizations
For the
next 19 years, an average of 10,000 Americans will turn 65 every day,
increasing the fiscal strain on Medicare. Bureaucrats are trying to deal with
this partly by reinstating an old concept under a new name: Accountable Care
Organization, or ACO, which harkens back to the infamous HMO system of the
early 1990s.
In a
nutshell, hospitals, clinics, and health care providers have been given
incentives to organize into teams that will get assigned groups of 5,000 or
more Medicare patients. They will be expected to follow practice guidelines and
protocols approved by Medicare. If they achieve certain benchmarks established
by Medicare with respect to cost, length of hospital stay, re-admissions, and
other measures, they will get to share a portion of Medicare’s savings. If the
reverse happens, there will be economic penalties.
Naturally,
private insurance companies are following suit with non-Medicare versions of
the ACO, intended primarily for new markets created by ObamaCare. In this
model, an ACO is given a lump sum, or bundled payment, by the insurance
company. That chunk of money is intended to cover the cost of all the care for
a large group of insurance beneficiaries. The private ACOs are expected to
follow the same Medicare-approved practice protocols, but all of the financial
risks are assumed by the ACOs. If the ACOs keep costs down, the team of
providers and hospitals reap the financial reward: surplus from the lump sum
payment. If they lose money, the providers and hospitals eat the loss.
In both
the Medicare and non-Medicare varieties of the ACO, cost control and compliance
with centrally planned practice guidelines are the primary goal.
ACOs
are meant to replace a fee-for-service payment model that critics argue encourages
providers to perform more services and procedures on patients than they
otherwise would do. This assumes that all providers are unethical, motivated
only by the desire for money. But the salaried and prepaid models of
provider-reimbursement are also subject to unethical behavior in our current
system. There is no reward for increased productivity with the salary model.
With the prepaid model there is actually an incentive to maximize profit by
withholding services.
Each of
these models has its pros and cons. In a true market-based system, where
competition rewards positive results, the consumer would be free to choose
among the various competing compensation arrangements.
With
increasing numbers of health care providers becoming salaried employees of hospitals,
that’s not likely. Instead, we’ll see greater bureaucratization. Hospitals
might be able to get ACOs to work better than their ancestor HMOs, because
hospital administrators will have more control over their medical staff. If
doctors don’t follow the protocols and guidelines, and desired outcomes are not
reached, hospitals can replace the “problem” doctors.
Doctors Going Galt?
Once
free to be creative and innovative in their own practices, doctors are becoming
more like assembly-line workers, constrained by rules and regulations aimed to
systemize their craft. It’s no surprise that retirement is starting to look
more attractive. The advent of the Affordable Care Act of 2010, which put the
medical profession’s already bad trajectory on steroids, has for many doctors
become the straw that broke the camel’s back.
A June
2012 survey of 36,000 doctors in active clinical practice by the Doctors and
Patients Medical Association found 90 percent of doctors believe the medical
system is “on the wrong track” and 83 percent are thinking about quitting.
Another 85 percent said “the medical profession is in a tailspin.” 65 percent
say that “government involvement is most to blame for current problems.” In
addition, 2 out of 3 physicians surveyed in private clinical practice stated
they were “just squeaking by or in the red financially.”
A
separate survey of 2,218 physicians, conducted online by the national health
care recruiter Jackson Healthcare, found that 34 percent of physicians plan to
leave the field over the next decade. What’s more, 16 percent said they would
retire or move to part-time in 2012. “Of those physicians who said they plan to
retire or leave medicine this year,” the study noted, “56% cited economic
factors and 51% cited health reform as among the major factors. Of those
physicians who said they are strongly considering leaving medicine in 2012, 55%
or 97 physicians, were under age 55.”
Interestingly, these surveys were completed two years after a
pre-ObamaCare survey reported in The New England Journal of
Medicine found 46.3 percent of primary care physicians stated
passage of the new health law would “either force them out of medicine or make
them want to leave medicine.”
It has
certainly affected my plans. Starting in 2012, I cut back on my general surgery
practice. As co-founder of my private group surgical practice in 1986, I
reached an arrangement with my partners freeing me from taking night calls,
weekend calls, or emergency daytime calls. I now work 40 hours per week, down
from 60 or 70. While I had originally planned to practice at least another 12
to 14 years, I am now heading for an exit—and a career change—in the next four
years. I didn’t sign up for the kind of medical profession that awaits me a few
years from now.
Many of
my generational peers in medicine have made similar arrangements, taken early
retirement, or quit practice and gone to work for hospitals or as consultants
to insurance companies. Some of my colleagues who practice primary care are
starting cash-only “concierge” medical practices, in which they accept no
Medicare, Medicaid, or any private insurance.
As
old-school independent-thinking doctors leave, they are replaced by
protocol-followers. Medicine in just one generation is transforming from a
craft to just another rote occupation.
Medicine in the Future
In the
not-too-distant future, a small but healthy market will arise for cash-only,
personalized, private care. For those who can afford it, there will always be
competitive, market-driven clinics, hospitals, surgicenters, and other
arrangements—including “medical tourism,” whereby health care packages are
offered at competitive rates in overseas medical centers. Similar healthy
markets already exist in areas such as Lasik eye surgery and cosmetic
procedures. The medical profession will survive and even thrive in these small
private niches.
In other
words, we’re about to experience the two-tiered system that already exists in
most parts of the world that provide “universal coverage.” Those who have the
financial means will still be able to get prompt, courteous, personalized,
state-of-the-art health care from providers who consider themselves
professionals. But the majority can expect long lines, mediocre and impersonal
care from shift-working providers, subtle but definite rationing, and slowly
deteriorating outcomes.
We
already see this in Canada, where cash-only clinics are beginning to spring up,
and the United Kingdom, where a small but healthy private system exists
side-by-side with the National Health Service, providing high-end,
fee-for-service, private health care, with little or no waiting.
Ayn Rand’s philosophical novel Atlas Shrugged describes
a dystopian near-future America. One of its characters is Dr. Thomas Hendricks,
a prominent and innovative neurosurgeon who one day just disappears. He could
no longer be a part of a medical system that denied him autonomy and dignity.
Dr. Hendricks’ warning deserves repeating:
Let them discover the kind of doctors that their system will now produce. Let them discover, in their operating rooms and hospital wards, that it is not safe to place their lives in the hands of a man whose life they have throttled. It is not safe, if he is the sort of man who resents it—and still less safe, if he is the sort who doesn’t.
Jeffrey
Singer practices general surgery in Phoenix, Arizona, writes for
Arizona Medicine, the journal of the Arizona Medical Association, is an adjunct
scholar at the Cato Institute, and is treasurer of the U.S. Health Freedom
Coalition.
