Quality or Qualities?

I’m all for high reliability and continuous impovement in medicine and health care delivery, but I am concerned about the ROI on quality improvement initiatives. With all the strategy, effort and science involved in Quality & Safety measures it seems like we should be seeing a massive improvement in our outcomes. Yet we are barely moving the needle.

I wonder if we spent half the resources on developing optimal character qualities among our colleagues if we might see a greater jump in outcomes? And wouldn’t that improve employee satisfaction? And surely that would lead to a better patient experience.

That reminds me of a quote from our friend, Dr. George Beauchamp…

Next to patients, cherish colleagues.

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Some Big Things That Keep A Physician Awake At Night …

The essence of Torah: “Do unto others as you would have them do unto you.” Rabbi Hillel explains that “all the rest is merely clarification.”  Hence, moral actions assume primacy in important human endeavors such as the practice of medicine. Agency, discernment, caring and healing relationships—those are elemental to “medicine befitting free men” (Plato, the Laws, ca. 350 BCE).

And the wisdom of a West Texas cotton farmer covers most of the rest: “I invest in people and land, because that which God creates appreciates, and that which man creates depreciates.” See what follows about engineering, monetization, and rhetoric of control; there are consequences when transactions (exchanges) replace or subordinate medical relationships.

The importance of a child’s developing brain to the future of the world cannot be overstated. The child’s brain is the perfect example of and laboratory for a complex adaptive system. From it will emerge the two determinants dominating the future of mankind: 1) healthy brains, which 2) can think. From these two fonts will pour innovation, productivity, and demand freeing humans to craft a humane society through caring and healing.  It will never be free of risk and fear, but it will be more fulfilling. No greater good exists than getting this right.

A funny thing happened on my journey as a physician… healthcare. Forty years ago, the word did not exist, nor did its assumptions, metaphors, and conceits. It assumes disorder and chaos can be controlled, that variation is bad, and that experts can take charge of and fix all of that. In my fewest possible words: “Tell it to the disease; tell it to that patient.” Then ask yourself: What is the intellectual discipline of healthcare? Healthology? Does it function like an ecosystem or a social construction? What is its core competence? Transaction management or consolidation (deal making)? Did anyone ever go to Provider School? How about Stakeholder School (and what is the nature of the “stake” they hold)? Who and what gives these words their power? Or has it been assumed…? Is anyone concerned that ecosystems have predators and parasites as well as symbiots? Is anyone asking if and how the conceits and complicated mechanics of command and control are helpful? Do they ever work in complex adaptive systems? Do they almost always cause more harm than good, if only because they amplify entropy? What is really going on here, and why? One answer: healthcare concerns itself almost exclusively with structure and process for gain, because it never seems to influence outcomes (i.e., actual medical ones).  Another: “Healing is an art, medicine is a profession, and healthcare is a business.”

In the past 50 years, there have been major culture shifts in America, from: opportunity to entitlement; liberty to security; individual responsibility to institutional rights; virtue to protocol; productivity to distribution; relationships to transactions; competence to conformity; message to medium; and good to fair. So, American citizen, consider John F. Kennedy’s phrase from his inaugural address, January 20, 1961: “Ask not what your country can do for you, ask what you can do for your country” Now ask yourself how are we doing in American “healthcare” some fifty years later?

Why does quality in healthcare resemble an industrial plan? Why are “science” and “results” presented like Kabuki theatre? Why do we not insist on ‘Metrics of the Moment”, including narrative (the actual experience of being ill, chronicled by the person)? Other than family and physician who can help guide, who else’s opinion has relevance? Somebody needed to create a Medical Model for Quality… and somebody did.  Now some others need to field test it for some important medical conditions… and somebody wants to do just that… for children.

The value of health is enormous, and financiers, industrialists, and politicians (FIPs) know this. And patients know it as well. Consider a dilemma put this way: If you were to receive news that you will die tomorrow but for the application of a “perfect technology” that will extend your life for one year of perfect health (at which time you then will die), what would you pay for that? Answer: for most persons, the number in dollars represents a fair approximation of their net worth. (And by the way, the same answer often applies for loved-ones as well.) The value of extending life is reasonably well established. Quality of life (utility) is an additional bonus. The productive value of raising the quality of life of all Americans by 5% would likely wipe out in excess of $100 trillion of debt in a decade through demand side economic growth.

The universe of humanity lives in a loop of complexity (as in an ecology), quality (as primary empirical reality), and communication (our “oaths” by which we represent, reflect, organize, plan, respond, and adapt). We often are shunted to more simplistic and complicated mechanical places through programs to engineer disorder, monetize precious things, and pre-format acceptable responses (political correctness comes to medicine, retarding civilization). These structures and processes are large consumers of resources, with little if any value added. No debtor ever gets better by taking on more debt. Productivity is the ultimate medical outcome, and without it no social construction is sustainable. Stein’s Law—“If something cannot go on forever, it won’t”—applies.  When (not if) intermediations result in waste, dependency, and debt, “we have a problem Houston.” A good place to start with disintermediation would be with children; we are not doing right by them, as dependency and debt will crush their future.

The outcomes of disease—across the full spectrum of all disease in all people—may be represented in the 40/30/20/10 approximation. Forty percent of the outcome is determined by patient behaviors, 30 percent by patient genetics, 20% by environment, and 10% by medical interventions (Brent James, MD, Intermountain Healthcare; and the Institute of Medicine). So, if we want to cut the healthcare budget, we should first trim the “stakehold”of “providers,” right? My universal epiphany (there is one and only one constant to every problem I have ever had…and it is I) comes to mind. By that standard (to use a phrase common in Texas): “That ain’t right!”

About the cost of things: Canadian citizens receiving care at U.S. facilities will pay about 40% of what insured Americans will pay for the same service in the same places. They come to America, for example, to have knee replacement surgery and pay cash (presumably because they are intelligent enough to understand the value of time and utility). This is an example of the understanding that in America at least 60% of the money is spent before anybody sees a patient. The system feeds itself first (and “every system is perfectly designed to get the results it gets” [Deming]). So assume you are sick and you have $1,000 to spend, which “stakeholder”/ intermediary would you hire first? In such a system, the most vulnerable (including children) are at high risk. As before, perhaps it will be a child who sees through the new clothes of today’s Healthcare Emperors.

Finally, Aristotle distinguished between goods of primary intention—family, faith, health, and community included—from those of secondary intention—power, money, prestige, and property, for example. The challenge of a life well lived is to form connections for the goods of secondary intention to primary ones. Fulfillment will only be achieved when we do so. The ship we call healthcare is lost at sea, so that some now call it the “Brigantine Hellthcare.”

George R. Beauchamp, MD

July 4, 2012

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Disinformation Compliments Of The New York Times

Stanley Feld M.D., FACP, MACE

If you want to have an accurate opinion you should have accurate facts.

Lately, the New York Times has been publishing opinion articles, in the name of truth, by experts who give opinions based on inaccurate facts.

The danger is that government policy based on those opinions is wrong and will lead to unintended consequences.

Ezekiel Emanuel M.D. published such an article in his weekly opinionator blog on November 3rd,2011.

I will review the facts used by Dr. Emanuel to form his opinion.

“Everyone — conservative and liberal — agrees that $2.6 trillion a year is too much to spend on health care, and that we have to cut costs. But they don’t agree on who is to blame or what is to be done.”

I agree.

He proposes an artificial threshold of significant costs saving in order to form a policy.

“ A useful threshold for savings is 1 percent of costs, which comes to $26 billion a year. Anything less is simply not meaningful.”

This number is random. It permits him to dismiss problems that cost the healthcare system less than $26 billion dollars a year.

Health care spending in the United States typically increases by about $100 billion per year. Cutting a billion here or there from something that large is undetectable is meaningless. In health care, you have to be talking about tens of billions of dollars before you are talking about real money.

He defines the divide between conservatives’ and liberals’ opinions.

He states that conservatives are concerned about the cost of tort reform. Liberals are concerned about the profits of the healthcare insurance industry and drug industry.  Using the wrong data to prove his point he concludes that these issues are simply a distraction from the real efforts of controlling healthcare costs.

Nothing could be further from the truth.

Today, I will concentrate on examining his evidence against the need for tort reform.

“ Conservatives favorite fix is to reform medical malpractice by limiting noneconomic damages, statutes of limitation and lawyers’ fees. In its favor is the fact that doctors’ fear of medical malpractice lawsuits is legitimate.

According to a recent study in the New England Journal of Medicine, about 7.4 percent of doctors get sued each year. By age 65, even those in “low risk specialties” like pediatrics and dermatology face a 75 percent chance of being sued.

His argument continues by saying,

It’s no wonder doctors order M.R.I.’s for routine headaches and monthly ultrasounds for normal pregnancies, despite these procedures not being required or recommended by professional guidelines.

His second argument against tort reform is the Congressional Budget Office 2009 scoring of the cost impact of tort reform.

“In 2009, the Congressional Budget Office did a comprehensive assessment of the potential cost savings from medical malpractice reforms.

Its conclusions: A package that included a $250,000 cap on noneconomic damages, a $500,000 cap on punitive damages and a one-year statute of limitations for claims by adults would save about $11 billion a year — 40 percent from reduced malpractice premiums and the rest in the form of fewer defensive procedures like M.R.I.’s.

Dr. Emanuel concluded that $11 billion dollars a year savings is insignificant because it is a cost saving below $26 billion dollars a year. He contends tort reform is a distraction from real efforts to control healthcare costs and should be ignored. The CBO scoring information has lead Dr. Emanuel to an inaccurate opinion.

The CBO did not score all the necessary data to arrive at the accurate cost savings from tort reform.


A full accounting of medical malpractice reforms shows the benefits would be $242 billion a year.”


The CBO assessment is a gross underestimate of the potential cost savings. President Obama and the Democrats provided the CBO with scoring data. The data given was intended to give cover to congressional Democrats who say malpractice-liability costs are trifling.

The truth is a full accounting reveals that more than 10 percent of America’s health expenditures per year are spend on tort liability and defensive medicine.

The percentage of healthcare costs is even greater when the Massachusetts Medical Society survey is taken into account. The amount spent for defensive medicine can be extrapolated to actual costs from this survey.

I have written a series of blogs analyzing the impact Massachusetts Medical Society’s survey. The extrapolated costs turn out to be about $700 billion dollars a year. The real cost of defensive medicine is somewhere between $242 and $700 billion dollars a year.

In 2008 damage awards alone for medical malpractice claims reached $5.9 billion dollars. The total of medical tort costs was $16 billion for legal costs, underwriting costs and administrative expenses. From 1986 the average jury award was $100,000. In 2006 the average award increased to $637,000. No one knows what the award value is for cases settled out of court.

Each year, 25% of practicing physicians are sued. 90% of physician sued are found innocent. The average defense cost is $100,000. This cost is not included in the CBO scoring

The fear of lawsuits causes most doctors to practice “defensive medicine” as the interviews of Massachusetts physicians points out.  The result is unnecessary testing, referrals, and procedures to protect themselves from allegations of medical negligence.

A recent survey of doctors published in the Journal of the American Medical Association found that 93% of physicians admit to practicing defensive medicine. A 2008 survey by the Massachusetts Medical Society found that about 25 % of medical procedures are defensive in nature.

This waste results in increased healthcare insurance premiums. The premium increases result in an increase of at least 3 million uninsured people per year. When these uninsured people get sick they avoid going to a physician. This results in a decrease in  work productivity. It is estimated that the annual decrease in productivity is more than $40 billion dollars a year.

In states where tort reform has been instituted by placing caps on so-called non-economic damages, the malpractice costs have decreased 39%. This drop in costs is a result of decreased malpractice suits. The decrease is economically bad for the plaintiff attorneys. Annual malpractice premiums have gone down at least 13%. In fact, the medical malpractice business for plaintiff attorneys has about dried up in Texas.

As a result of tort reform in Texas, more than 16,500 physicians have moved to the state from non-tort reform states. More than 430,000 additional Texas have healthcare insurance as a result of the tort reforms according to the Perryman group.

Senate Majority Leader Harry Reid, a Nevada Democrat, claims: “The whole premise of a medical malpractice ‘crisis’ is unfounded.” Harry Reid listens to Dr. Ezekiel Emanuel’s opinion.

The influence of the disinformation is terrifying. Inaccurate opinions by influential people will never lead to a functional, affordable healthcare system.

The disinformation concerning healthcare insurance company profits and drug company profits will be discussed shortly.

The New York Times needs a fact checker.

In my view it is irresponsible of President Obama and his advisors to distort the truth with disinformation.

The opinions expressed in this post ar, mine and mine alone.

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President Obama; More On Effectively Reform The Medical Malpractice Tort System

Stanley Feld M.D., FACP, MACE

President Obama, the details of the Massachusetts Medical Society Defensive Medicine survey have profound importance in explaining trends in the delivery of medical care. Unfortunately, only meaningless sound bites have been given by the media. The survey’s significance has not had the impact on policy it should.

The authors state that the dollar estimates do not include the diagnostic procedures, hospital admissions, specialty referrals and consultations or unnecessary prescription by physicians in specialties not included in the study.

The eight specialties surveyed represent only 46% of the physicians in the Massachusetts. The real costs to the healthcare system from the practice defensive medicine in the state of Massachusetts are much higher. The authors estimate the real costs could be twice the $1.4 billion dollars per year they estimated.

I believe the costs of defensive medicine in many other states are much higher because the cost of litigation in many states is lower and the malpractice awards are higher encouraging litigation.

“This survey clearly shows that the fear of medical liability is a serious burden on health care,” said Dr. Sethi. “The fear of being sued is driving physicians to defensive medicine and dramatically increasing health care costs. This poses a critical issue, as soaring costs are the biggest threat to the success of Massachusetts health reform efforts.”

Defensive medicine is definitely a threat to the success of the Massachusetts healthcare reform efforts. President Obama, defensive medicine is a big burden nationally to the healthcare system. Its costs will undermine any attempt at healthcare reform unless you take medical malpractice liability reform seriously. There has to be a fundamental change in the structure of adjudication.

The survey’s findings must be studied carefully. The physicians surveyed estimated their percentages for defensive medicine testing to avoid law suit. I think their estimates are low. The real percentages must be studied objectively using data mining techniques. Nonetheless the current estimates reveal unsustainable waste in our dysfunctional healthcare system.

Radiological imaging is one tool overused by physicians defensively to avoid litigation. Physicians feel they must test everything even if the probability of a positive result is insignificant.

“Plain Film X-Rays: An average of 22% of X-rays were ordered for defensive reasons.”

“CT Scans: An average of 28% of CT scans were motivated by liability concerns, with major differences among specialties.”

About 33% of scans ordered by obstetricians/ gynecologists, emergency physicians, and family practitioners were done for defensive reasons.

The total number of unnecessary CT scans needs to be calculated along with its costs in order to understand the significance of the percentage presented. The health policy solution should not be to lower the reimbursement for CT scans. The solution is to fix the medical malpractice liability system.

MRI Studies: An average of 27% of MRIs were ordered for defensive reasons, with significant differences by specialty.

The highest rates were reported by obstetricians/ gynecologists, general surgeons, and family practitioners, with the lowest rates by neurosurgeons and emergency physicians.

Ultrasound Studies: An average of 24% of Ultrasounds were ordered for defensive reasons. Orthopedic surgeons (33%) and obstetricians/gynecologists (28%) reported the highest rates, with neurosurgeons (6%) and anesthesiologists (9%) the lowest.

I believe neurosurgeons are underestimating their use of radiologic procedures in order to look good. Neurosurgery is one of the specialties with the highest malpractice rates. Please note that obstetricians/gynecologists take no chances and order the most procedures for defensive purposes.

Laboratory Testing:

An average of 18% of laboratory tests were ordered for defensive reasons, with emergency physicians (25%) reporting the highest rates and neurosurgeons (7%) the lowest.

Specialty referrals, consultations and hospitalizations are overused the most for defensive reasons. No one wants to take a chance and send the patient home even if the indication for hospitalization is small. Hospitalization is also the most costly overused element in defensive medicine.

Specialty Referrals and Consultations:

“An average of 28% of specialty referrals and consultations were motivated by liability concerns, with significant differences by specialty. Obstetricians/gynecologists reported that 40% of their referrals and consultations were done for defensive reasons, and anesthesiologists and family practitioners said that 33% of their referrals and consultations were done for the same reasons.”

Hospital Admissions:

An average of 13% of hospital admissions were motivated by liability concerns, with surgical specialties reporting lower rates than the other specialties.

The percentages of defensive procedures are admitted by practicing physicians. The cost of defensive medicine is high and wasteful. President Obama, defensive medicine is not the minor problem that the malpractice attorneys want you to believe it is. It is time for definitive action now.


The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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President Obama; If You Really Want To Reduce Healthcare Costs, Effectively Reform The Medical Malpractice Tort System

Stanley Feld M.D., FACP, MACE

President Obama, as you know the real truth is elusive. Every vested interest has an agenda to protect. My agenda as a long time practicing Clinical Endocrinologist, now retired from active practice, has been to preserve the value of the profession of medicine and permit the delivery of the best clinical care possible to patients. Society has strayed from these goals. There are multiple problems with the healthcare system. They are interrelated and must be solved simultaneously.

The present malpractice liability problem leading to the practice of defensive medicine is a huge problem for the healthcare system. It is essential that this problem be solved before meaningful cost savings and increased quality of care are realized

Malpractice attorneys dismiss the system of adjudicating malpractice liability as the cause of significant defensive medicine costs. They claim that they are the protectors of mistreated patients. You will soon receive a 29 page document defending their claim and dismissing the significance of defensive medicine.

“Trial lawyers are preparing for a fight, starting with a 29-page research document they will send to Capitol Hill in an attempt to convince lawmakers that lawsuits have very little to do with healthcare costs.”

The malpractice attorneys will attempt to make a compelling argument. I suspect they will have little real scientific evidence to prove their point in the 29 page document.

Donald Berwick Professor in the Department of Health Policy and Management Department of Health Policy and Management has never been a friend of practicing physicians. He has frequently pointed out the defects in the practice of medicine. Recently Don Berwick made the following off the cuff comment in response to a question after he addressed the American Medical Association (AMA) meeting.

What about malpractice reform?” the first questioner asked when Berwick opened up the discussion to attendees. He was a physician, and murmurs of approval rippled through the crowd.”

Berwick’s answer didn’t please the questioner and many of his colleagues. “The data just doesn’t back up the claim that malpractice lawsuits are one of the top drivers of healthcare costs, he replied.”

No one was brave enough to ask Dr. Berwick to show them the data for this conclusion. I have read Fooled By Randomness twice. I am starting to understand that all expert opinions are noise unless they are confirmed scientifically. Even then conclusions can change as the knowledge base changes.

In November 2008, the Massachusetts Medical Society published a survey of practicing physicians. The purpose of the survey was to get a sense of what practicing physicians (the generators of defensive medicine) thought the incidence of defensive medicine was in their practice. I was surprised it was not published in the New England Journal of Medicine.

“A first-of-its-kind survey of physicians by the Massachusetts Medical Society on the practice of “defensive medicine” – tests, procedures, referrals, hospitalizations, or prescriptions ordered by physicians out of the fear of being sued – has shown that the practice is widespread and adds billions of dollars to the cost of health care in the Commonwealth.”

The devil is usually in the details. The details found were the details at ground level. It was not speculations by experts or secondary measurement. The defect in the survey was the fact that was a survey (surveys have its scientific defects) even though 900 practicing physicians in eight specialties in Massachusetts completed the survey. Its strength is the survey links practice to costs.

“The Investigation of Defensive Medicine in Massachusetts” is the first study of its kind to specifically quantify defensive practices across a wide spectrum and among a number of specialties. The study is also the first of its kind to link such data directly with Medicare cost data.”

Physicians self reported on seven tests that might be used in defensive medicine. They were plain film X-rays, CT Scans, Magnetic Resonance Imaging (MRIs), ultrasounds, laboratory testing, specialty referrals and consultations.

Based on Medicare reimbursements rates in Massachusetts for 2005-2006 the eight specialties surveyed generated 281 million dollars in defensive medicine costs in outpatient clinics. Their practice of defensive medicine also generated $1.1 billion in unnecessary costs for hospital admissions. The big winner here was the hospitals. Hospitals might not be motivated to fight as hard as physicians to eliminate defensive medicine because defensive medicine serves its revenue generating agenda well.

The estimate of a total of $1.4 billion only includes 7 tests and 8 specialties in a 900 physician sample. Massachusetts is a small state. If we assume all the states are the same size and multiple by 50 states we are talking about $70 billion dollars wasted on defensive medicine.

If the survey included all specialties, all physicians, and all costs including the cost of malpractice premiums and physician practice time lost in litigation in all states, my guess would be the cost of defensive medicine would be ten times the 70 billion dollars. A $700 billion dollar cost for defensive medicine is an unnecessary cost to the healthcare system. This cost can be dismissed lightly or yield to unscientific expert opinion. The result does not include the emotional toll on physicians being sued and the lawsuits effect on their ability to practice medicine.

The legal system for handling malpractice claim is very costly. A more logical and cost effective system for adjudicating patients harmed by medical error needs to be instituted.

The opinions expressed in this post, mine and mine alone.

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Why Will Accountable Care Organizations (ACOs) Fail?

Repairing The Healthcare System

Stanley Feld M.D.,FACP,MACE

In an ideal world ACOs should work. There is no evidence that  untested and complex organizational structure of ACOs developed by Dr. Don Berwick (head of CMS) will improve quality of care and reduce costs

ACOs are supposed to provide financial incentives to health care organizations to reduce costs and improve quality. There are too many defects in the ACOs infrastructure to improve the financial and medical outcomes.

At a conceptual level, the incentive for ACOs would be to increase efficiency and avoid overuse and duplication of services, resources, and facilities. In this model, ACO members would share the savings resulting from the increased coordination of care.

I have said over and over again that excessive administrative fees and ineffective management of chronic disease is the main source of waste in the healthcare system. ACOs do not deal with these main drivers of costs.

The only stakeholders who can demand that this waste be eliminated are consumers/patients. Patients must control their healthcare dollars.  They will make sure there are competitive prices and will not permit duplication of services.

ACOs are not a market-based system. They do not put patients at the center of their medical care or permit them to choose their medical care. The government controls the healthcare dollars and is at the center of patients’ medical care decisions directly and indirectly.

In order to truly repair the healthcare system a system of incentives for patients and physicians must be created. There is no question that the processes of care for chronic diseases must be improved. More importantly, the medical and financial outcomes must be measured and not the process changes.

In theory, ACOs provide financial incentives to health care organizations to reduce costs and improve quality. In reality, given the complexity of the existing system, ACOs will not only fail; they will most likely exacerbate the very problems they set out to fix.”

ACOs are merely the latest in a long history of unsuccessful health policy innovations. Since the 1970s, Congress and successive administrations have tried a number of tactics to control rising health care costs.  The tactics tried have been:

  1. Payments for diagnostic related groups of services, or DRGs.
  2. Health maintenance organizations (HMOs).
  3. Preferred provider organizations (PPOs).

They all failed. Consumers reacted negatively to the care provided. Healthcare costs continued to rise. ACOs are being promoted as the new structure that will address the lack of success of the past tactics.

Under Obamacare, the Secretary of the Department of Health and Human Services (HHS) is charged with developing a method to assign Medicare beneficiaries to ACOs.”

“ Because the statute is unclear about the resolution of many vital issues, the crucial details will be supplied and refined by federal regulators—as is the case for so many other provisions of the new health law.”

Congress has relinquished its power to the unelected portion of the executive branch of government to construct a system that will reduce the rising costs.

ACOs create a new organizational structure to remedy problems inherent in the existing healthcare system.  The complexity of the structure of ACOs will result in the same or similar types of unintended consequences that led to earlier failures.

There will be consolidation of providers. ACOs will result in increased costs rather than decreased costs.  It might decrease duplication of testing. The resulting savings will be small. There is no evidence that ACOs will provide improved medical and financial outcomes. I believe it is Dr. Berwick’s naïve wish that it will improve medical and financial outcomes.

The are at least 7 key deficiencies with ACOs

  1. ACOs do not empower consumers to be responsible for their own medical care.  Healthcare should be consumer driven with consumers controlling their healthcare dollars. They will then make informed choices about their care and insurance coverage.

2.ACOs create artificial incentives to improve quality and provider performance. Consumer driven healthcare creates real incentives to promote price completion. Competitors are constantly working to improve their products, attract consumers, and ultimately increase market share.

Consumers have no part in driving that competition in an ACO system.

3.Most physicians are reluctant to assume accountability for patient outcomes.  Physicians recognize that much of the outcome is directly under the consumer/patient behavioral control.

4. ACOs remove the patient/consumer from being responsible or accountable for their medical                   care. ACOs undermine any attempt to create a truly accountable healthcare system that can                   drive down costs.

5.ACO do not encourage provider accountability even though it seems that provider buy-in would            be integral to an ACO’s success with its shared savings incentive.  Many physicians believe the                  share savings incentive is bogus.

Providers continue to be paid for each service they perform until the government provided funds run out. There are also grave uncertainties and practical complications of distributing production and savings between the hospital system and physicians.

6. ACOs create an unfair competitive advantage for large organizations that are hospital        centric. Eligibility requirements are vague and ambiguous. The eligibility requirements  suggest that larger organizations have an unspoken eligibility advantage.

This is the reason hospital systems are trying to form ACOs. Hospital systems think they will make money. I think they will fail. Hospital systems will lose a lot of money. They will fight with their physicians over the distribution of government reimbursement. The cost of hospital  care will then increase. The consumer will lose.

7. Groups of independent practitioners as well as other types of small and mid-sized practices may lack the infrastructure, Internet technology, or other resources needed to qualify for  ACO eligibility. They will be forced to join hospital systems. Hospital systems have a history of taking advantage of physicians and their skills and intellectual property. More  tensions will be created. Hospital systems’ ACOs will crumble. The cost of medical care will continue to increase further.

I have presented some common sense observations. Common sense does not seem to prevail in the difficult world of repairing the healthcare system.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.



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Accountable Care Organizations Will Fail !

Repairing The Healthcare System

Stanley Feld M.D.,FACP,MACE

The more I study ACOs the worse they look. Dr. Berwick’s goal is redistribution of wealth. This is exactly what ACOs are going to do. Patients, taxpayers and physicians are going to get the short end of the distribution.

Hospital systems are spending a ton of money trying to form ACOs. They are going to lose big. I have concentrated on the obvious defects and difficulties in forming ACOs in the past. Here are some more traps.

I don’t think anyone has considered the following,

  1. Which consumers will ACOs treat?

Only Medicare patients are included in the ACO program for now. Medicaid and private insurance patients are not included. Medicaid will have a severe physician shortage with increasing enrollees. The result will be greater cost shifting in the private sector. The private sector will disappear.

2. How many Medicare patients will be covered?

“ACOs will only care for 1.5-4 million beneficiaries” As of 2001 there were 35 million Medicare seniors and 5 million persons on Medicare disability. The number is estimated to grow the 72 million by 2030.

3. How will the government decide on reimbursement to the individual ACOs?

Unknown. There have already been indications that the government will individualize ACO reimbursement.

4. What are the criteria to determine under utilizing or over utilizing ACOs?

Unknown. Under utilizers are supposed to share the difference 50 /50 or 60/40 with the government and over utilizers will pay the government the difference.

Different ACOs approved can develop different models of organization and payment structures for care as long as it meets the budget and quality goals the government determines.

The government’s thinking is that decentralized accountability and leadership with (monetary) sticks and carrots are likely to produce better results for the whole country than central government rules without the ability to enforce the rules.

ACOs which incur too high a utilization or which do not meet the quality targets, may have to forgo reimbursements completely (see patients for nothing) or even pay CMS money back. CMS has placed its emphasis on ACOs beating the reimbursement goals. The government would then share the savings with the ACO. In either case the government wins.

A frightening thought is ACOs can become too big to fail. It would necessitate another government bailout. You can be sure within 456 pages of the rules there are many unintended consequences. There are also ways to beat the system that will be discovered in the future.

Once again, CMS, HHS and President Obama are trying to fool us with numbers.

CMS hopes that ACOs could save it $170-960 million over three years.” The Medicare and Medicaid budget for three years is $1.8 trillion with Medicare consuming most of the money. The “cost savings” represent only 0.01%- 0.05% of the Medicare budget.  This is a tiny savings.

Can anyone be impressed with the potential cost savings? One should be impressed with how the savings is presented by the administration and how much bureaucracy it will take to set up and implement the system.

The performance measurements (or standardized “metrics”) have not been defined for ACOs. Performance measurements discussed so far have been process measurements. Process measurements do not necessarily lead to better medical or financial outcomes. These process measurements are just a surrogate that assumes better outcomes.

The fact that if an ACO or its physicians do four HbA1c tests per year for the management of Diabetes Mellitus, it does not mean that the medical and financial outcomes will improve. This defect in process measurements applies to many chronic diseases.  The management of chronic diseases and their complication account for 80% of the healthcare dollars spent.

ACOs must have a minimum size of 5,000 “ Medicare ensured lives”. This is not possible with small practices. The net margin is too small for Medicare to overload a small group practice with 5,00 Medicare patients at present rates of reimbursement. Reimbursement is projected to become even smaller.

CMS has already picked the groups (identified by Dr. Don Berwick’s Institute for Healthcare Improvement) who will qualify for ACOs. They are supposedly low cost/high quality groups. The goal is to create ACOs with integrated healthcare systems who salary physicians. Physicians in those organizations are supposedly used to working closely together. There should be an emphasis on primary care physicians.  The government will then let the hospital systems and physicians fight over dividing the government reimbursement.

ACOs are not for everyone. If the ACO is fragmented, with weak physician leadership and high usage of independent specialists, it will difficult to have a high-performing ACO. Even if an ACO is low cost and high quality it will be difficult to be profitable as reimbursement is decreased. If Medicaid is added to the scheme hospital systems will fail

The only advantage is that the ACO might be too big to fail. The government will be forced to bail them out.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.


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Keeping an eye on…Who Made Up “Healthcare”?

That “healthcare” is a new word, and probably a new notion is indisputable. Fifty years ago, the word was not spoken or written. The word was not in the dictionary. And there were no “healthcare specialists” in law, accounting, consulting, government, or administration. This troubling word (it combines an end with means) flows so easily off tongues it wants exploration. Here is a graphical representation from the Google Ngram search tool. Note there was no use of the word in millions of books prior to the 1960’s, and it only began to be discernible in the 1970’s. (See Figure “Follow the Words”)

 Rise is use of the word "healthcare"

 In contrast, the words “medical care” have been present, though now decreasingly, across the recorded time span (arguably for millennia). If current trends continue, “healthcare” may consume medical care, turning the tables on Regina Herzlinger’s book title (“Who Killed Healthcare?”). Maybe “healthcare” itself is the predator. Ask yourself who is doing this, and why?

Words have power and meaning, and they rarely pop up by accident. Was there something about medical care that was insufficient, requiring a new notion? Were patients, physicians, nurses, and others caring for patients demanding something? It might seem so, but let’s use the first rule of forensic accounting—“Follow the Money”—to see what’s really happening. (See Figure “Follow the Money”)

Note the percentage of out of pocket expenses paid by patients (they are now called consumers by “healthcare” specialists) is flat to declining (at just over 2% of “healthcare” expenditures) over sixty years. And the percentage paid to physicians (after a small blip following passage of Medicare in 1965) is also essentially flat and gradually declining (at around 20% of expenditures). On the other hand, the really big number is the percentage of GDP allocated to “healthcare.” Who is getting all this money?

Structurally enabled by the Medicare Act (1965) and the HMO Act (1973), it appears that financial, industrial, and political (FIP) intermediaries discerned an opportunity to intermediate the “processes,” recasting them as “healthcare transactions.” Systemizing patient care required fundamental restructuring the practice of medicine: monetizing its value and consolidating the myriad new transactions. Portrayed as an attempt to bring order to the presumed chaos of a “cottage industry,” the non-accidental capture of the value created by clinical medicine increasingly inures to the to the benefit of FIPs in currencies meaningful to them—power and money.  For this to occur required some radical changes, since they were not actually providing medically useful services as competent medical professionals. Why not create a new big tent, or umbrella, subsuming the medical professions as a subordinate component of the new construct, of course under their control?

First step: change the terms of engagement, literally. Make patients “consumers” (or “beneficiaries” if we are trying to sell them something); make physicians and nurses “healthcare providers”; and portray the new, improved “healthcare system” as a just, efficient, omniscient apparatus administered by intelligent agents who wisely and fairly allocate resources. We’ve come to call this “healthcare”—a financial sector, a group of industries (e.g., pharmaceutical, insurance, hospital, technology, etc.), and reformed political entitlement.

As with all such complicated mechanical constructions, there are always consequences. We are now learning about how this “healthcare” thing is working out for us.

There is more to it than meets the eye…


Google Ngram search
Regina Herzlinger, “Who Killed Healthcare?”
National Health Data

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A Physician Leader’s Looking Glass

Physician leaders are challenged to identify, implement and report on elaborate quality/safety systems that strive for systematic perfection with the expectation to be  paid for this high performance. This effort is certainly worthy on the surface but could move us significantly further away from the heart of medicine – a personal patient/physician partnership toward health and productivity.  More command and control will likely lead to more costs and less caring.

ACPE has been helping train physician leaders in quality and safety for nearly three decades and all that is good, really good.  However, perhaps there is something better we could teach.  A higher road.  A longer view.

“If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea”.  Antoine de Saint-Exupery quotes (French Pilot, Writer and Author of ‘The Little Prince’, 1900-1944)

What if ACPE could teach physician leaders an approach toward improved and affordable patient care that was entirely different.  Upside down.  Inside out.  Unexpected even.  What “endless immensity of the sea” do you see in your looking glass that we might teach physicians to long for?

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A New PhysiciansLeading.com Blog

PhysiciansLeading.com has implemented a blog so that physicaisn leaders can post articles or editorials, and receive comments from the public. The site and blog will be introduced and tested within the DFW Physician Leader Network during May and June.

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