Incremental change will not cure our health care system

Earlier this year I discussed (The denominator matters: we only have a quality health care system if everyone can access it!, February 16, 2020) an article from the New York Times by Elisabeth Rosenthal, the editor of the Kaiser Health News and an emergency physician, called “Where the frauds are all legal.” One of those “frauds” I focused on was “surprise” medical bills. “Even though you went to a hospital that was in your insurance network and saw a surgeon who was in your network,” I wrote, “it turns out that the ER group or the anesthesiology group contracted by the hospital, or the assistant surgeon your surgeon picked, is not in network. Boom! $10,000, $100,000 bills! No one is “satisfied” by this.”

In fact, this is not entirely correct. Yes, your insurance company is not happy about this if they have to pay the bill. Yes, you, the patient, are certainly not happy about it if the insurance company doesn’t pay the bill, or only pays a part of it, and you are stuck with the rest. Very likely, the hospital itself doesn’t like this if they themselves are indeed in your network, because it makes them look bad, and they know that you, and your insurance company, are going to hold them in large part responsible. So who likes it? Well, as you might guess, those doctors who are getting the big payments. In fact, probably even if the hospital tried to hire its own, say, anesthesiologists or emergency physicians, they’d have a hard time paying as much as those independent groups do.

But the other stakeholders who are happy with this arrangement are the owners of these physician practices, who are not always the physicians themselves but increasingly private equity funds, which have been buying out physician groups for a few years (‘Specialty physician groups attracting private equity investment’, Modern Healthcare, August 31, 2019). Expanding upon a “research letter” published in JAMA, JM Zhu from the Leonard Davis Institute of Health Economics at the University of Pennsylvania writes:

Of approximately 18,000 group medical practices, we found 355 physician practice acquisitions across a number of specialties, most commonly anesthesiology (19.4%), multi-specialty (19.4%), emergency medicine (12.1%), family practice (11.1%), and dermatology (9.9%). From 2015 to 2016, there was also an increase in the number of acquired cardiology, ophthalmology, radiology, and obstetrics/gynecology practices. Acquired practices had an average of 16.3 physicians, 4 sites, and 6.2 physicians affiliated with each site. About 44% of acquired practices were in the South. (‘Private Equity Investment in Physician Practices’, February 18, 2020).

Of course, it doesn’t take great acumen to realize that the reason that private equity investors are attracted to buy these practices is exactly the opportunity to profit handsomely from this “loophole”, by what Rosenthal calls “legal fraud”.  In essentially all areas, the whole strategy of private equity funds is exactly this sort of “gaming the system”, finding the margin where the income far exceeds the cost because of some loophole in the law.

This demonstrates several flaws in our current healthcare “system”. The most obvious is the specific problem created by “surprise” bills, one that has been even recognized (although not addressed) by Congress. For example, HR 3502, “Protecting people from surprise medical bills”, introduced in this congress by Rep. Raul Ruiz (D-CA). It could pass the House, and if both the Senate and White House flip, it could even become law. Of course, it would have considerable opposition from the very equity firms that are making money from the current situation. This is the second flaw – legislation to regulate the system often fails because those who make big money from the very problems such regulation is intended to correct have – big money. They can give contributions to legislators.

Every inequity in health care, every exploitation of the system, results in (and usually from) someone making money, and those “someones” are very interested in preventing the issue from being corrected. This holds true, as I have previously discussed, for hospitals (“health systems”), long term care companies, pharmaceutical and device companies, and insurance companies, as well as equity-owned physician groups. Kansas Congressman and GOP Senate candidate Roger Marshall, according to a recent article in the Kansas City Star by Shorman and Lowry, pushed for aid to physician-owned hospitals (ones not yet bought up by for-profit equity companies) while his wife, as a partner in real estate ventures that owned the land that they were on, profited greatly! In this case it didn’t even require contributions to politicians; the politician was in it for himself.  You can be sure that if there is a buck to be made, someone will be making it. You can just be certain that it isn’t you, the patient, particularly if you are uninsured, poorly insured, or poor. Of course, if you are, you’ve probably figured out by now that the system overall is not designed for you!

The design of the capitalist US, particularly so in this age of corporate “gangster” capitalism is to make money for the wealthiest and everyone else be damned. The only question that might still be open to discussion is whether people’s health, and health care, should be subjected to the same rules of that system as consumer goods. After all, it is your health, your life! Your family’s health and life! The same could, and should, be said for other basic necessities such as food, shelter, and education, but health has special resonance such that every survey of the American people finds overwhelming support for the idea that everyone should be able to get adequate healthcare, and agreement that profiteers such as insurance companies and pharmaceutical companies are bad guys (there is less awareness of the role of hospital systems, still less of the private-equity-owned physician groups discussed here).

The third key aspect (I keep wanting to say “flaw” until I realize there are strong advocates for these policies) that this illustrates is the fatuousness of trying to solve the problems of our health care system and its exploitation by profiteers one issue at a time. Each scam that has been exposed and addressed by regulations or legislation (more rarely) has generated another; each loophole that is supposedly “closed” contains exceptions. The problem isn’t “bad apples” (although there are many), it is the whole system and the powerful forces that wish to continue it.

While Republicans policies are often targeted at eliminating any regulation, and indeed encouraging overt corruption and exploitation, “mainstream” Democratic policies are about putting in occasional patches, and then saying “there!” until another scam pops up. The Democratic Party, like the GOP, is beholden to rich donors, and a high percentage of theirs are financiers. Their mantra, clearly articulated by Joe Biden, is that we need to keep the private (read: profit-making) sector, and not change everything. Unfortunately, if the goal is actual to make the health system more equitable and increase the nation’s health, it cannot work.  It certainly cannot contain costs; the very profit that these companies make IS the cost!

The only solution is a comprehensive change to our entire health system, one that eliminates the incentive for profit-making altogether. This will work, is a good idea, and is what we should do, starting with Medicare for All.

Government programs should reward hospitals for reducing inequities

Systemic racism is ubiquitous in the United States, despite the denial of its existence by Vice President Mike Pence in the vice-presidential debate. It is different from individual racism, the kind people most often talk about (frequently in the context of the phrase “I’m not a racist, but…”, generally indicating that they are). While it comes from the same roots, a belief that people of non-White races are not equal (and maybe not even people), it has then led to a structure, or set of structures, that continue to disadvantage people of color even when there is no current intent to do so; this is its insidious nature.

Structural racism has a big impact on health care, as this blog has often discussed. The health care system in the US has evolved within a racist structure, and as its inequities create victims, people of color are disproportionately affected. Ironically, often attempts to “solve” problems – of cost and quality in particular – exacerbate the situation and increase the inequities. The reason for this is that they are not comprehensive solutions, but rather compromises that have been arrived at, often after lobbying by hospitals and healthcare corporations, which continue to allow “gaming” of the system in a way that creates losers, and the losers are almost always the poor. And, as a result of structural racism, members of minority groups are overrepresented in the ranks of the poor.

This is not to say that there is never malicious or evil intent. There is, and, as usual, its roots are in money, the desire of institutions involved in health care to maximize their income and profit, and their influence on the policy-making process to allow them to pursue those goals. This is discussed in detail in a recent NY Times Op-Ed by Navathe and Schmidt, “Why a hospital may shun a Black patient” (October 6, 2020). The article identifies a number of ways that programs intended to address existing problems, have a negative impact on the poor and on minorities. The underlying structure is one in which doctors, and more important the health systems in which they work, are oriented to doing procedures that generate the most money in profit. This of course tends to discriminate against the poorly insured and uninsured, as I recently discussed (Hospitals compete for money, not the people's health. We need to stop this, August 31, 2020).

Navathe and Schmidt note several programs aimed at improving quality and lowering cost, all of which have the (presumably) unintended consequence of making hospitals and doctors less interested in providing care for higher-risk, poor, and minority patients. These include programs that pay for “quality” without taking into account the populations the hospital cares for; people who are healthier (and less poor) to start with have better outcomes. Other programs “rank” – and more important pay -- doctors and hospitals based upon their outcomes for surgical procedures; this provides strong motivation to not care for high risk patients. And

consider the Hospital Readmissions Reduction Program, which penalizes hospitals for excessive re-hospitalization. Again, the intention is noble: to discourage hospitals from skimping on care in a patients’ initial hospitalization such that the patient returns to the hospital soon after being discharged. But since people with worse living and working conditions are readmitted more frequently, hospitals that serve more worse-off racial and ethnic minorities were more frequently penalized.

The results are in. Those hospitals (especially public hospitals) that provide care for a much higher percent of poor and complex patients do much worse on these “quality” rankings, and thus get less money from these programs. Not only do richer patients get better care, but rich hospitals get more “bonus” money.

The COVID-19 pandemic has further exacerbated these inequities, creating a syndemic (Freeman J, “Something Old, Something New: The Syndemic of Racism and COVID-19 and ItsImplications for Medical Education”, Fam Med. 2020;52(9):623-5) that penalizes both poor and minority patients, who are more likely to get infected and get sicker, and the hospitals that care for them. Hospitals tend to serve the communities in which they are located, and the neighborhoods with higher concentrations of poor and minority people have been far worse hit, as documented by Feldman and Bassett in an article which looked at neighborhood poverty and mortality from COVID-19 in Cook County, IL (“The relationship between neighborhood poverty and COVID-19 mortality within racial/ethnic groups,” medRxiv preprint doi: https://doi.org/10.1101/2020.10.04.20206318, posted October 6, 2020). This is the first study looking at mortality among minority (Black and Latinx people) and neighborhoods relative to income. They looked at 3 kinds of difference: age (<65 vs >65), race/ethnicity, and income level (divided into 4 quartiles by neighborhood). For the younger (<65) population, the most important determinant of mortality was income, with those in the lowest income group having a mortality rate of 13.5 times that of the highest, but there was not a significant difference in mortality by race in this lowest income group. For the older group (>65), however race was an enormous predictor, with minorities having 3x the death rate of Whites, and  Whites in the lowest-income group having a lower mortality rate than minorities in the highest income group.

This table summarized age-and-gender adjusted mortality per 100,000 people:

The two articles tie together. The worst disparity in mortality is in the over-65 group, which has Medicare and are thus not uninsured; however, they have the accumulated deficit of a lifetime of negative social determinants of health (SDH) with a much higher rate of pre-existing chronic disease. They also access hospitals that are overburdened with low income people which have, as described above, benefited less from “quality” and “value” payments. This, then, exacerbates the existing inequities of the system.

 

What to do? Navathe and Schmidt have a number of suggestions, focused on making reducing disparities a criteria for any “quality” or “value” based payments. They specifically suggest that this be an explicit goal for any program, that all such programs be subject to “disparity impact monitoring”, and that “we need a complete and detailed picture of the full extent to which payment reforms are conduits, or barriers, in reducing health disparities and structural racism.” These are good ideas, in fact are necessary to prevent unintended consequences from hospitals “gaming” the system.

 

But there is more that we can, and should, do. Navathe and Schmidt note that one relative success has been in programs that provided fixed funding to hospitals for all the services that they provide, rather than paying per patient or per procedure. This should eliminate any incentive to pick patients with better insurance or “better” (i.e, more profitable) diseases.  The example that they use is the Pennsylvania Rural Health Model, a collaborative effort by Medicare, Medicaid and private health insurers. Because these are rural hospitals which presumably provide care to everyone in the area, it can work. In an urban area, however, fixed funding can be susceptible to a third kind of “gaming”: selecting (by marketing to) people who are less sick and thus cost less to care for (“Oh, you have this [high cost] disease? Why don’t you try St. Elsewhere? They do a great job with patients like you!”) What we need is a system that combines strategies to prevent all three forms of gaming, by providing a fixed budget to hospitals that is not dependent upon the individual services they provide, but does take into account the cost of taking care of the population that they do, and is re-negotiated annually.

There actually is a system nearby that does this. In Canada. That is how hospitals are reimbursed under their single-payer Medicare system. That is what we need here too.