A Different Future Part II – Looming changes and new aliances

Imagine for a moment that you are a person of means living in England in the early 1700’s. If you wanted to buy, for example, china dinner plates, you went to the shop (and probably home) of a master craftsman and he and his relatively small team made your plates to order. It was a slow and expensive process available to only a few people. One hundred years later plates of similar style and quality were produced in a factory by the hundreds at a much lower cost. The industrial revolution drove those changes and I believe that healthcare is on the verge of a similar revolution. In fact, in many other parts of the country, it has already started. Like the master craftsmen of the early 18^th century, physicians have, for 60 years, been a part of a large cottage industry. Doctors practiced alone or in small groups. That system worked well in an era when physicians had limited therapeutic options and when the basic sciences were far less advanced. Even as science has driven specialization and care has become more fragmented the old system has survived because, until recently, nobody cared much about costs and quality problems were swept under the rug or attributed to the actions of “bad” practitioners rather than poorly constructed systems of care. However, the same kinds of forces that drove the Industrial Revolution of the late 18^th century are going drive drastic changes in healthcare. So what are these changes?

1. There will be less money in the system. Even without increasing the number of people who have health insurance Medicare spending is on an unsustainable trajectory. We will have to pay less for care or the country will spend its entire gross national product on healthcare. There are several ways that we can do this but I am certain that the old fee for service model of care delivery cannot survive.
2. Until now doctors have been paid on a piecework basis. Each thing we do for a patient generates a payment; do more things and earn more money. As one might expect, this drives more procedures and more care. Much of this care is necessary but some is not. One of the easiest ways to reduce costs is to decrease the amount of unnecessary care rendered.
3. Care will become more uniform. Some of the care patients receive is unproven and perhaps counter-productive. At present, the physician chooses what to do in each case and, with the exception of blatantly elective procedures or very controversial treatments, the patient’s insurance company pays. However, for many procedures and treatments there is clear evidence that one way is more effective than another. In the new world of healthcare, when research has demonstrated the superiority of a particular treatment, that treatment will be covered by insurers and other treatments will not be covered.
4. Physicians and hospitals will become partners. In many cases, physicians will become employees of healthcare systems. Certainly, employment of doctors is nothing new. Academic medical centers have usually employed their faculty physicians and at places like the Mayo Clinic and the Cleveland Clinic physicians have long been salaried. However, the predominant model of American medical practice has been private practice. Private physicians and hospitals that accept payments from federal payers (Medicare and Medicaid) have, for many years, had significant constraints upon their relationships. Federal anti-kickback statutes were designed to insure that hospitals do not pay doctors for admissions but they also limit other financial relationships. In a future post, I will discuss the reasons that I think these regulations might be relaxed or eliminated but they do not apply to employed physicians.  As it becomes increasingly difficult for private practitioners to make a living, more and more of them will become employed by hospitals or, in the case of states (like Texas) that prohibit direct employment of physicians by hospitals, by hospital managed physician corporations.
5. The future will belong to the streamlined, the integrated, and the efficient.

In the next few weeks, I will elaborate on these concepts and, since these are my opinions (but opinions based upon experience and education), I would be happy to hear feedback, arguments, and comments.