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HOSPITALS AND PHYSICIANS: Bob Berenson, Elliott Fisher And Gail Wilensky Debate Policy Proposals



December 19th, 2006

On Wednesday, Dec. 6, Health Affairs hosted a conference call among the authors of the primary papers in its Dec. 5 Web Exclusive package on hospital-physician relations:

Chris Fleming (communications manager, Health Affairs): You all wrote very interesting papers for our package on hospital-physician relations, and I thought I would start things out by just asking, when you read each other’s papers, whether you all thought you were essentially diagnosing the same problem, or whether you saw areas where you had diagnosed the problem differently, and then how, if there were any such differences, that led you to the different solutions that you put forward in your papers.

Gail Wilensky (senior fellow at Project HOPE and a former HCFA administrator under President George H.W. Bush): I guess by chance (in the sense that I was not aware of the survey that Bob Berenson was reporting on) he and I had a direct overlap in that I was responding to a strategy that attempted to bring together, in a voluntary way, physicians and hospitals with incentives to work together and play nicely more than they had been. So it struck me that that was directly on target to responding to an increasing sense of conflict.

When I read Elliott’s paper on the extended hospital medical staff, I was struck that unless the arrangements that he spoke about were entered into on a voluntary basis — which of course is what gain sharing, as and I and my colleagues have proposed it, would be all about — it might solve some problems, but it would exacerbate the issues of conflict between hospitals and physicians because of the change in power structure implied by moving to this model. So I was struck that they fit together with regard to looking at similar sets of concerns and issues. But my take on it is that in the short term this could make matters even more in conflict between hospitals and physicians than they already were, and I was wondering how Bob Berenson thought about it and also obviously how Elliott saw it, although I’ve heard Elliott discuss this concept with regard to . . . federal accountability and controlling supply-side extension, rather than as a reduction in conflict.

Disconnect Between Policy And Reality

Bob Berenson (senior fellow at the Urban Institute, senior consulting researcher at the Center for Studying Health System Change, and former acting deputy HCFA administrator under President Clinton): Well, let me jump in. . . . Reading all three papers and then reading the Perspectives — which I thought were very helpful as well — I was struck by the disconnect between what makes perfect policy sense for those of us hanging out in DC or by extension in Hanover, and what’s going on on the ground, which is sort of another world of entrepreneurialship and, according to Jeff Goldsmith, behavior on the physician side that is quite disturbing in seeking revenues from many sources.

Elliott’s proposal and the robustness of the clustering of physicians to medical staffs is encouraging, and yet the medical staff organization as an organization is a dysfunctional organization. So the question I would have for Elliott is, How do you lodge accountability without control? There would be many members of the medical staff who simply don’t have any common business relationship to each other and would not want to participate. They’re balkanizing along service lines, specialty, etc. So to me the challenge there is to somehow figure out how to make a perfectly reasonable organization into something that actually could do something.

And, with Gail, I’m very sympathetic and I actually like the fact that she’s talking about gain sharing with the big “G,” not the narrow thing of deciding which device a hospital and its orthopedists or its cardiologists are going to use, but real shared savings for an overall joint activity. That makes me happier. I’m actually worried, based on Jeff Goldsmith’s views about ‘consulting fees’ — as he puts in quotes — from device manufacturers to use their products exclusively, whether some forms of gain sharing might actually just exacerbate that kind of behavior, of physicians and hospitals being bought off by device manufacturers.

The bottom line is there’s a lot of behavior out there that is very worrisome, and we’re sort of coming up with policy alternatives for the good guys. Maybe really what we need to be doing is offering opportunities for hospitals and medical staff to do activities jointly to promote improved quality and cost containment and figure out how to promote that, but understand that not everybody out there is going to do that correctly, and then we need sort of a different system of payment and regulation for not the good guys.

Gain Sharing: Good Idea Getting A Bad Name

Wilensky: Just to extend on that for a second -– the title “Gain Sharing: A Good Concept Getting a Bad Name” was precisely because of all the focus now with the [Health and Human Services] Inspector General’s office on that narrow kind of gain sharing, which is totally beside the point and trivial. I’m afraid for both the reason you just suggested, Bob, via Jeff Goldsmith, but also because it couldn’t possibly do much good even if it doesn’t do much harm, that you take something that could be an important transitional strategy and give it a bad name because it doesn’t do anything. So that was the reason for the title.

Berenson: I agree with the need to focus on really trying to engage a much broader set of activities and a much broader set of physicians. But I would just make the point if we are going to do the small kind of gain sharing, it should be done in a very transparent way so that the public understands the nature of the decisions the doctors and hospitals are making.

Paths Out Of The Current Fragmentation

Elliott Fisher (professor of medicine and of community and family medicine, Dartmouth Medical School and the Center for the Evaluative Clinical Sciences in Hanover, NH; and senior associate, Veterans Affairs Outcomes Group, White River Junction (VT) VA Hospital): I think all three papers are looking at the same problem, which is the increasing fragmentation — almost atomization — of medical care, and a payment system that rewards commercial behavior on the part of physicians that, from all of my work, looks as if it’s on average certainly wasteful and quite often harmful. And the recognition that the [Institute of Medicine] committees have had and that our work has suggested, that the higher-cost, lower-quality systems are in fact more fragmented, have many more different physicians involved in the given patient’s care, and provide worse care for patients with chronic disease, led me to try to think about what are some possible paths out of this current fragmentation. And thinking about where could one possibly foster shared accountability for the experience of patients across physicians and across settings.

The barriers are eloquently outlined in both of your papers. There are barriers about the current financial relationships and conflict, often competition, between individual physicians and hospitals, and the legal barriers. And then I thought that [the Perspective by Ken Smithson and Stuart Baker at VHA] on medical staff organizations highlighted the dysfunctional nature of most of those organizations.

I think addressing the barriers to gain sharing is very important. I think identifying the fact that most patients still receive their care from these systems which are essentially multispecialty medical groups, though not integrated and though not knowing they are such. If policymakers in Washington start to think about how to promote coordination and collaboration, as opposed to reinforcing the fragmentation that we’re seeing, it would be a good step forward. I think just starting — and I spoke about this a little bit in the paper — starting with performance measurement at this level, and then thinking about how pay-for-performance could reward performance across hospitals and their staffs, would be a logical first step. As I think you spoke about in your paper, Bob, in those areas where such activities or pay-for-performance activities are already ongoing, hospitals and their staffs are starting to collaborate.

Berenson: Well, my question is…now that there has been the Premier demo out for a couple of years, which seems to show an improvement at least on particular quality measures, it would be nice to know whether the hospital — which had the direct financial incentive to do better — engaged the medical staff in its improvement efforts or did it, in a sense, work around the medical staff?

Fisher: I’ve had a few conversations with folks within the participating organizations, and it sounds as though there were different responses, not surprisingly, knowing the size of this country and the number of organizations that were involved, but there was certainly expressed an interest in trying to be able to use financial incentives to engage their staffs. So that one of the barriers they perceived in at least several of the institutions was, “Gosh, we can’t get our physicians to pay attention to this.”

Wilensky: And, indeed, they can’t if they’re not part of an integrated group, without running a very likely risk of violating the [Civil Monetary Penalties law].

Fisher: Exactly. I hear all of us on a very similar page of trying to figure out how to foster coordination and integration in a world of increasing fragmentation.

Extended Medical Staff Model

Wilensky: I think that point is very good, and it’s important to share how we are coming at it from different vantage points but share strong agreement on the need for what ultimately needs to occur.

The issue that I guess I’m not sure I understand what’s in your mind, Elliott, is if you were to go forward with the type of extended medical staff models that you’re talking about, and construct them as you’ve suggested they could be constructed, is this something that requires the support and agreement of the physicians, or is this something that is imposed on them by the payers? I think that’s a very serious issue in the same way I had thought that physician [diagnosis-related groups] when they were being discussed in the 1980s had a major problem because of the power shift that was implied in constructing physician DRGs, and that was the one question that was raised in my mind about how you actually make all this happen.

Fisher: I think there are a couple of possible paths forward. Certainly I had a very stimulating discussion with the Medicare Payment Advisory Commission two and a half weeks ago when I presented these ideas, and a general sense among many of the commissioners that this was an interesting thing to pursue — even among the physicians from some of the most fragmented markets in the country — that the notion of moving toward having physicians talk to each other is a good idea. So they were actually on the same page that we all are, around the need to foster coordination and collaboration.

Thinking about a replacement to the [sustainable growth rate physician payment formula] that put the volume constraints, or volume feedback loop if you will, at the level of either hospitals and their medical staff who chose voluntarily to come together to say we’re willing to be accountable for our volume — and the patients that we’re responsible for, because you need to be able to link it to some denominator of care — that would start to change the conversation. There could be a mixed model of voluntary if people want to, or we can assign you to a group if you’re not willing to. Moving volume constraints such as the SGR down to a level where all the physicians can easily know who each other is and then have incentives not to expand further in the future.

The current financial incentives to put in a new MRI or to start a new ambulatory care surgery center would change radically if you went to a SGR formula where if they constrained the growth of their utilization — with appropriate performance measurement as you spoke about in your article, Gail. They would have incentives to provide better care and to slow down the growth. My own sense is the future growth of spending is where we can offer physicians an opportunity to maintain their incomes or improve them if they’re willing not to invest in technologies and entrepreneurial activities that increase cost without promoting benefit.

Wilensky: To give credit where credit is due, the hope that this type of gain sharing could slow down the proliferation of either physician-owned hospitals or imaging centers, etc., is an issue that Nick Wolter is pursuing. I think it’s a possibility that strikes me as a little exaggerated in terms of the likely kind of monetary payoff compared to some of these more direct arrangements. But even if it doesn’t do that, and it’s worth a try, it could change in a dramatic way the behavior of physicians who are not attempting to set up their own entities, and who could drive a lot of spending differences in the hospital if they were rewarded.

So my attitude is, it’s easier to imagine physicians attempting to slow down spending in hospitals if they can participate in some of the savings. Doing that directly, it’s conceivable it could induce some of them not to set up their facilities, but the kind of monetary reward that would be regarded as a trade-off may make it hard for that to happen. But, there aren’t a lot of other great alternatives other than to just attempt to ban them, and that has a whole set of other . . .

Physician Payment

Berenson: Let me jump in there because I am intrigued by the idea that we could find some sort of collective aggregation of physicians in what is now not a very formal organization; it’s sort of association of physicians who come together to work in the hospital. I’m interested to seeing if it can be made into an accountable organization. But I think we have to assume — and this was at the end of our paper — that there’s going to be continued migration of services just due to new technology, and then combined with convenience to the patient, etc., out of the hospital into ambulatory settings, and to try to resist that movement by finding reasons to keep the physicians in the hospital, I think, is fighting momentum

And so we need to also address how we’re paying for these services and the distortions in payment both in the hospital payment system and in the physician payment system that just overly reward certain kinds of activities and under-reward other activities. I just don’t think we’re going to be able to sustain this as a hospital activity. I was struck by your data, Elliott, that as many as 40 percent of doctors actually don’t set foot in a hospital, or at least they don’t bill for a service in two years that takes place in a hospital. I think that’s increasing. Obviously radiologists and certain docs wouldn’t be doing it, but it sounds to me like the hospitalist movement is just completely established, and a lot of the doctors we want to be managing chronic care are not even in the hospital.

Who’s Responsible For Coordinating Care?

Fisher: But Bob, I certainly agree with you — for anyone that becomes seriously ill or acutely ill and has any chance of a stay in the hospital, the major problem we’re facing in American medicine is that there’s no responsibility for coordination across the sites of care. So I’m anxious to think about the mechanisms that lead to multispecialty medical group practice that have some degree of integration and capacity to coordinate, and in many communities the hospital and the docs around it are actually still kind of talking to each other and feel pretty good.

You know, it was interesting reading your article that there certainly were differences across the communities that you site-visited. And when I presented these ideas in rural hospitals in two states now, there’s been great enthusiasm.

Berenson: Oh, I think rural hospitals, that’s where doctors are oriented. There’s not this kind of thing — we only go to big urban or metropolitan areas.

Fisher: I think for all of us, the struggle is around, gosh, we know where we ought to go to improve the care for the American public, and then let’s try to at least think about how policies that we adopt over the next four years…can foster coordination. One of the standards I’d like them to be judged by is, “Is this likely to promote improved coordination among physicians and hospitals so that those transitions are more effectively managed?”

Berenson: I agree completely. What we want to do is try to find policy levers to promote multispecialty group practices.

Wilensky: I agree.

Berenson: Then the question is, for those places where…that’s unlikely, can a medical staff/hospital type organization be the second best?

Fisher: Ralph Muller made a very interesting comment at the MedPAC meeting….He said that for fifty years we’ve tried to create organizations in metropolitan areas where they haven’t existed before, when we’ve had state and city governments but nothing between them -– a few county governments — and all those efforts have fundamentally failed because it’s hard to create new organizations.

That both raises a challenge to the medical staff organizations, that, well, this isn’t going to work….At the same time, he thought that the hospitals, because they’re incorporated, have the capacity to engage physicians, that with modest changes in incentives, that there really could be a nidus of organizations that could be more responsible for the health of the populations they serve…

Wilensky: I think the need to find strategies to allow for these virtual groups, however you define them, to come into being and to try to find incentives that will incent individuals that practice together in some way is very important. In my mind, the only thing that we need to be careful about is to make sure that we drive these changes by carrots, not sticks, because these are powerful groups politically that will reach out and bite you…

Fisher: I absolutely agree with you, Gail. I thought [the Perspective written by Denny Cortese and Robert Smoldt of the Mayo Clinic] was interesting, enthusiastic, but of course he’s speaking from an organization that’s been there for a hundred and what, twenty years?

Wilensky: It’s terrific, but the rest of the world does not look like them or behave like them.

Berenson: Yes,…I think we should be looking at the incentives within hospital payment systems to try to get hospitals more interested in ambulatory care management, to be worried not only about what’s happening within their walls with the patient in the hospital but also what’s happening when the patient goes home. I actually see that as an opportunity to try to repair some of the divisions between hospitals and staff, and in particular to have a reason for bringing primary care physicians back within the ambit of the hospital, because a lot of them just have no reason to be concerned about the hospital anymore. Again, the question is, Do we try to base it around a real organization that has a common business interest and meets the criteria that I think Smithson laid out for what a real organization – which, you know, are [physician-hospital organizations or independent practice organizations] — versus this medical staff entity?

What’s In A Name?

Fisher: You know, I have been regretting ever since we let it go — calling it the extended medical staff implies that we mean it should be the medical staff organization.

Berenson: Yup.

Fisher: What it is is the group of physicians clustered around a hospital who work within and around it. I think there’s a conceptual leap that we need to take beyond thinking about it as only the medical staff organization. But I couldn’t call them physician-hospital organizations because they really aren’t, right?
Wilensky: And also because that term has now gotten to be a bad name, so you shouldn’t do it anyway.

Fisher: So that’s why I think the new title suggested by [MedPAC chair] Glenn Hackbarth was “accountable care organizations.”

Berenson: And the problem there is, I think, that at AMGA Jay Crosson heads up some committee called the “accountable health organization” which is like a surrogate for a multispecialty practice.

Fisher: We certainly can’t use “HMO,” can we?

Aligning Physician And Hospital Interests

Berenson: Well, we’ll worry about the name, but the concept of having some alignment of interests, and we all agree on this one, should liberalize payment, as Gail’s paper called for.

Probably the stupidest thing I ever said, now that I’ve been doing this for a lot of years, was I remember at a conference about twenty years ago, just after DRGs came in, in which I talked about the desirability of having physicians paid on a different basis than hospitals. I described it as a creative tension. Well, that was glib and wrong.

Wilensky: I think many of us have if not regarded it as positive, at least said the fact that they didn’t have the same incentives might be useful for patients to have that kind of attention, but I think none of us really thought through what it was going to mean.

Berenson: So as we go forward, and I think we’re agreeing in the general direction, I do think we need to emphasize the real importance of transparency in this whole thing, that what physicians and hospitals are off doing together should be very visible; that we have quality metrics and use them, and patients’ experience and satisfaction measures. So this is where I go back to what we found, and what Jeff Goldsmith points out, if we just trust that we set up the incentives right and that physicians and hospitals will be out there doing the right thing, I think we may get burned. And so, I think, we try to promote aligning incentives, try to promote new organizations, but be very careful about how in the name of doing something right, we’re actually creating even more problems.

Fisher: I certainly agree. I think the notion of fostering accountability for both cost and broadly defined quality is the major thing that we should be pushing for. And all of my work says it can’t be done at the individual physician level. It’s too narrow a scope of clinical practice. There’s too much judgment, too much opportunity to expand costs and provide unnecessary care if you only focus on technical quality. And when you focus on larger groups, it’s possible to move to kinds of performance measures that are going to be much more compelling and much more persuasive to the public, about outcomes of care, about the total cost of care for serious and prolonged episodes of illness. I think that group measurement — defining a group of physicians who are responsible for a set of patients and measuring the aggregate performance on those patients — will provide incentive for physicians to actually pay attention and talk to each other, and to the hospital in order to improve their care.

Changing The Sustainable Growth Rate

Rob Cunningham (deputy editor, Health Affairs): Can I ask Bob and Gail to respond to Elliott’s suggestion that the need to change the sustainable growth rate (SGR) might provide a unique opportunity to move in this direction and should be looked at as a specific opening?

Wilensky: I think it’s possible, but I’m skeptical, and the reason is that unless the SGR is talking about getting down to the entity level — which might be possible for a Kaiser or even a Mayo Clinic, but hardly likely for most community hospitals with their extended physician staff — I think there’s a mismatch between the incentives between the physician and hospital and anything attached to the SGR. If there’s a way to work it out so that you get that direct relationship, I’m all for looking at it. It’s not clear you can go that micro to me.

That’s really the problem and what the kind of gain sharing that we’ve all been talking about tries to deal with: rewarding the groups of physicians directly that are involved in savings and improving quality and having them work in a more integrated way with the hospitals. So I am a little dubious you can jump down to that level.

Berenson: My sense is this is too ambitious for the current politics of the SGR, but the idea that I’ve had is if you as an organization — and the easiest is to think of the kind of organization that populates the physician group practice demonstration, organizations of 200 or more physicians that meet lots of criteria that we would call organizational, large group practices, essentially — in a sense they get to opt out. If they’re going to be held accountable for cost through a different mechanism, and that mechanism is a shared savings review, then they opt out of the SGR, and the SGR is the default that the physicians who haven’t opted out are left in.

Now, there are problems with SGR in and of itself, tying it to the [gross domestic product] and some of the other things that need to be fixed. But perhaps we have a way in which if you’re going to be held accountable, you’re going to be measured separately, and you’re not in the same boat with the SGR docs. I have some notion of proceeding down that kind of line.

Cunningham: Thank you.

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