Friday, November 05, 2010

Alignments between hospitals and physicians: where are things headed?

Patrice Villemure, Vice President of the Heart and Vascular Institute at St. Joseph's Hospital of Atlanta, gave a talk on the ever changing relationships between physicians and hospitals at the 36th Annual Tutorials in the Tetons Update in Cardiovascular Disease.

I'm late blogging about this talk (it was given last August) and we've since had a midterm election which is likely to impact the future of health care reform. Some of the talk was premised on the consequences of the Affordable Care Act (AKA Obamacare), the future of which is now uncertain.

If Obamacare survives the lawsuits, the state initiatives, the new congress and the 2012 election it may emerge beaten down and barely recognizable. Even so, the external pressures and the conversation surrounding health care reform will continue to shape the relationships between physicians and hospitals. The premise of her talk remains true no matter what happens with health care legislation: that hospitals and clinics, once able to function as separate entities, have since been forced into changing relationships under various tensions, not all of which are healthy.

So here's the time line. In the 60s, 70s and early 80s things were simple. The hospital was the “doctor's workshop.” There were no conflicting financial incentives as a cause of tension. Even with the advent of Medicare in 1965 things didn't change too much, at least at first. Medicare paid the bills and otherwise didn't intrude.

When rising costs became an increasing concern Medicare implemented the PSROs in the early 70s to monitor utilization and try and contain costs. For the first time doctors began to feel the pressure of government intrusion and administrative push back. PSROs, while intrusive, ultimately proved a failure and were discontinued in the early 80s.

Then in 1984 Medicare's implementation of the Prospective Payment System pitted doctors against hospitals by eliminating fee-for-service payments for inpatients and creating negative cost incentives.

Managed care was not a new idea but it gained traction in the 1990s as a result of the conversation surrounding the health care reform proposal of the day (often referred to as Hillarycare) which was based on a model of nationally regulated managed care. In anticipation of passage, insurance companies shifted toward the model. By the time of the bill's defeat in 1994 the wave of managed care was already well underway. This fueled many trends aimed at increased efficiency including integrated medical groups (in which hospitals purchased physician practices) and quite possibly the hospitalist movement.

Heavy managed care turned out to be a public relations disaster and only a temporary financial success. Its influence began to wane within a decade. While non-economic factors continued to drive the hospitalist movement the push for integration went on hiatus. Easing of the economic pressure of managed care was just one reason. Doctors and hospital administrators were at odds. Administrators didn't understand the ingredients of professional satisfaction. Docs valued autonomy and administrators didn't get it. And the economic advantages of integration were less than anticipated. Health care systems gave up on the model. Some ran from it.

But the retreat from integration may only be a hiatus. Since the conversation about health care reform has resurfaced 15 years after the defeat of HillaryCare there's been a renewed interest. Dartmouth Atlas data, talk of accountable care organizations and Atul Gawande's profoundly influential article on health care variation have sparked renewed enthusiasm for integration. Most importantly, the economic pressures are back with a vengeance in the form of threats, such as bundling, to fee-for-service medicine. (One of the health care wonks at SHM 2010 declared that private practice is dead).

Whether Obamacare survives, is decimated or goes down in flames the push toward integration of healh care services will likely continue. If it happens without more government intrusion it might be a good thing.

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