So, how do we cut costs? One way is to ensure that when patients are
hospitalized, that it is appropriate to hospitalize them, and they receive the
care in the most efficient way. That means becoming a hospital that provides
service seven days a week, 24 hours a day, versus five days a week, eight hours
a day. A patient doesn't need to sit in a hospital from a Friday to Monday to
have a procedure done--we'll ensure that that procedure is done either Friday
night or Saturday.|
Other cost savings are ensuring that laboratory tests are not duplicated, and
that data is transferred. When a patient registers, they don't need to
register 17 times and give that same information, which means you need 17 entry
people to collect that data. And then, when people try to do the billing, they
get 17 different ways of spelling my last name and then make errors.
So that's waste.
Why do people say that your job is a killer job?
There are at least two things I can think of. One is that we're not talking
about widgets. We're talking about patients, and patients are very, very
complex organisms. You cannot say that a patient should be in a hospital for
three days or two days or four days.
Let's not put the round plug in the square hole. The second thing we're
talking about is physicians, and really what has promoted physicians to live
with the kind of care we're giving now in the US is that innovation. If you
take away that innovation, you've lost what medicine has really brought to the
So there's a complexity of the patients on one hand, and the complexity of
physicians on the other hand. Therefore, there isn't a simple plug that hooks
up those two pieces. Although we want to reduce variation, we don't want to
eliminate variation. If you totally eliminate variation, it's like building a
computer. You will lose the innovative forces that are necessary to improve
care in the future.
How did doctors respond to your "helpful guidance?"
Doctors' first response was to really appreciate the shift from health plans
giving guidance to doctors giving guidance. Over the two years that I've had
this job, now I'm looked at as the health plan was. They are no longer very
They don't want to lose their autonomy, their ability to make decisions their
way. They always know what's in the best interest of their patients. And very
often they're quite right about that, so we need to ensure that they have
I've always described physicians as similar to trying to herd cats--to get
people who are really going in all different directions to read off of the same
sheet of music. It's an impossible job.
Is there a way of saying who the problem is?
I wish it was that simple. I wish there was an easy answer to say, "Of our
3,000 physicians, if we just got rid of these three, our problems would all be
solved." I think there are two problem areas. One is that in any system,
there are some outliers. Those are actually fairly easy to identify, and to
develop tools to educate them, or really exclude them from part of the
Outliers are abusers of the system, people who really don't provide quality
The tougher problem is that, of those 95%-99% of physicians who are really
high-quality physicians, there's great variations in how these physicians
practice their care. How do you get them to reduce the variability? Say I'm a
cardiologist, and I have a patient who had a heart attack three years ago, is
fairly perfectly well, and comes to me for a routine office visit.
The question is, what should I do today when that patient is sitting across the
desk from me? Is there a standard way? There's a fairly simple problem. It's
a person who had an uncomplicated heart attack, is feeling perfectly well.
It's a basic example. But you could talk to ten different cardiologists, and
they would give ten different ways of caring for that patient.
Why is that bad?
None of those are wrong. But the reality is, if there's a variation, there
must be a better way and a worse way. Should we get blood tests on them once a
year, once every two years, or never? Should we all give them the same message
about quitting smoking? I'm sure we do that. I'm sure we all tell our
patients quit smoking.
One doctor will go the next step and say, "Let me set up an appointment for you
with somebody to get you to quit smoking." The next doctor will just say,
"Quit smoking." The next doctor will give you a pamphlet. I assure you that
each of those three different approaches will have a different success rate in
getting a patient to quit smoking.
We need to learn from one another, and figure out which is the best way, and
then ensure next year that we're all giving it that best way.
Medicine is a science-based field. There's a lot of science that everybody
has studied. . . . Why are people just now coming to this discovery that
there's a best way, and we ought to be practicing the best way?
Presumably, that's what medical schools have been about for the last 150 years.
In the past, medicine has been driven by very structured studies, by taking a
very structured environment--given half of the patients one medicine, and half
of the patients some other medicine, and seeing the difference--looking at a
very small population, analyzing them very, very closely, and making some
Because of our access to computers today, practicing medicine is really looking
at populations of patients where there are so many variables, because you can't
control all of those variables. With computers now, we can have access to a
big data set, and then analyze the differences between two populations.
When you've got the CareGroup losing $50 million to $80 million a year, and
you've got 3,000 doctors, how do you impose financial discipline to get greater
efficiency? What are the steps, and what are the tools?
The first tool we use is education. The second tool is to financially
incentivize physicians no differently than hospitals are financially
incentivized. . . . For instance, the price for us to hospitalize a patient
within our system is less expensive than hospitalizing a patient outside the
system for managed care. That directs business to the system.
How is a physician financially incentivized to keep patients inside your
system? Are they penalized, or fined, or what?
There is not a one-to-one penalty from a patient's care to a physician, but
there are group penalties. The physicians have a pot of money from which they
provide care. If they overspend that pot of money, they need to go into their
back pockets to fill up that pot. If they don't spend that full pot of money,
they get to fill up their back pockets.
How do you impose that kind of mentality that you've got to work together to
hold costs down?
In this world of managed care and capitation, we have developed a methodology.
You have two physicians who are independent physicians, with their own totally
separate practices. But for the managed care business, they become virtual
partners. Money is provided to this group of physicians, and they share in the
risk of that care.
And so, for example, this group of ten physicians will be given money to
provide care for a population of patients, say, for 1,000 patients. They will
work together to manage the care of those patients. . . . They have a budget.
At the end of the year, they will either end up in surplus or deficit in that
When one tries to set a methodology to incentivize physicians, you have this
spectrum of incentivizing the individual physician and individual patient care
at one end. At the other end of the spectrum, we incentivize 3,000 physicians
for 400,000 patients. First, there are concerns that a physician may make
inappropriate decisions when they're really thinking about direct cost
accountability for the care of an individual patient.
There's variability in patients. The first patient that comes in to see you is
perfectly healthy, and the next patient has some serious illness. You can't
ask that physician to bear the risk of that patient population. On the other
hand, if you're sharing this between 3,000 physicians and 400,000 lives,
there's no local accountability.
So we needed to develop a system which was somewhere in the middle. What we
have used here is what we call the pod system, which is getting groups of
physicians that work together--typically a size of ten to 20 physicians--who
really share in their care of patients. They become a virtual group.
They really work together financially. They are incentivized together. At the
end of the year, if they're in surplus, they share in that surplus. If they're
in deficit, they share in that deficit.
So the pods are really organized as a system of local financial
Absolutely correct. That's exactly what it is. There's financial
accountability, and there's also quality accountability. We look at the data,
and look at it at the pod level.
What does your operation take to the pod that's going to improve their
We take them physicians' report cards, generated semi-annually, which do the
following things. We have collected the data from multiple plans and
aggregated that. We really have enough patients in the system so that we can
really analyze how a physician or a pod of physicians is performing.
The second thing that we have done is to say that we don't expect the same
number of tests to be done on a perfectly healthy patient as one would expect
for someone who's quite ill. So we've adjusted our expectations, based on the
health status of the patients that they are caring for.
If one doctor is a specialist taking care of everybody with heart disease, and
another doctor is taking care of young, healthy 20-year-olds, we would not
expect their utilization to be the same. We make that adjustment. We then
analyze that data on multiple levels--use of hospitals, use of radiology, use
of laboratories, use of certain testing, use of primary care physicians and the
use of specialists.
What we looked for are those physicians who are either in the top five percent
of over-utilizers, but just as importantly, the bottom five percent of
under-utilizers. There are certain physicians who would say, "We have kept our
costs really down with primary care physicians," and we found that, indeed,
they were correct.
They were in this bottom five percent. They were under-utilizers. They saw
their patients less often every year or charged lower bills. And, they said,
"We're saving the system money." We then looked at their use of the emergency
room. And there, the use of the emergency room was in the top five percent.
. . .
These report cards are presented as part of a pod meeting?
So it's done semi-publicly?
It is done semi-publicly, because really more often than not, there's a group
learning experience as part of this.
How do doctors respond?
More often than not, the doctors are not aware of what they are doing. Every
doctor, in their heart, believes that they are providing the best quality care.
I'm a firm believer in that. I think they're not aware of the variation in how
they deliver care versus the person sitting in the next office to them.
So, actually, what I expected when we came out with these media report cards,
was a great push back from physicians saying, "These are the worst things in
the world." Think back to when you were in grade school. You never wanted to
get a report card. But the reality is that the feedback thus far has been
Doctors are looking for this. They're looking for help in terms of how they
can improve the way they deliver care. Yes, there are some doctors who really
object and fight us every step of the way. But the majority of doctors
actually appreciate these report cards.
We have some doctors saying that, ten years ago . . . they could send a
patient anywhere in the city, to the best specialist, no matter what
institution they're in. Today these same doctors are saying to us, "I've got
to keep them in our group, and that hurts me. I don't feel as though I'm
serving my patient." You hear that.
Absolutely. I do hear that.
What do they tell you, and what do you say back?
There is a heated dialogue regarding trying to keep patients within the system,
versus sending patients outside of the system. Two things need to occur. One
is education of what services can be provided within the system, to make sure
that our doctors are most knowledgeable about the quality of the services we
The second is, if we have holes in our system, fill those holes. I don't think
that, long-term, doctors will be told, "No, you must keep your patients in
this system," if there's a better doctor outside the system. That's not going
But what is the short-run answer today?
The short-run answer today is that those discussions do occur. More often than
not, the patients continue to receive their care outside the system if the
better care is outside the system.
In your old physician's association at Mt. Auburn, there was recently a move
to impose financial penalties on doctors--something like $250 a day--for each
"extra day" that patient stayed in the hospital. What was that all
We tried to figure out the right way to incentivize the physicians to provide
quality care. One of our units looked at a methodology, which was to ensure
local accountability. A patient in the hospital needs an operation tomorrow.
The doctor has an office full of patients tomorrow. That doctor says, "I'm not
going to change my office. That patient should sit in the hospital for an
extra day and get the operation done the next day." There's a cost incurred to
have that patient sit in the hospital. There are quality issues. What's the
risk of that patient getting infections, or illness, or something in the
This group decided that we needed to have the appropriate accountability, to
have that doctor accountable for that day. We are not talking about medically
necessary days. We're talking about medically unnecessary days. We were not
talking about the gray areas of medicine, which is, "Should Mom go home today,
or go home tomorrow?"
These were very, very black-and-white issues, where clearly a service should
have been provided on a given day, and for some reason, the doctor elected to
not provide that service on that day. This represents far less than one
percent of hospital days, and far less than one percent of the physicians that
we are talking about.
The problems again become, "Do you have that incentive given right back to the
individual physician?" This was a lot of what the concern was about.
What is the most important thing that patients don't understand about the
new system? If you could say something to patients, what would you tell them
you've got to understand?
One: the way the care was given in the past was really not the best way to
deliver care. Two: we need to work together to develop a better way to deliver
care. We need to make sure that we are delivering to you what you are looking
for from a health care system.
My belief is that, quite often, the individual patient feels they are getting
the best care from their individual doctor. What they don't feel is that
they're getting the best care from this system. They are far more concerned
about this system than they are about the individual doctor. Individual
patient satisfaction of their doctor is actually quite high.
It's distrust in the system, but the reality is that the system is really a
combination of all of these individual physicians. I think there really is a
disconnect--a distrust of this system--when in reality, physicians, and
hospitals, have a simple mission, which is to provide the best quality care for
patients at a reasonable cost.
It's the cost factor that's got patients worried.
The cost factor absolutely does have patients worried, and this concept of
rationalizing health care. We are rationalizing health care. I'm not sure patients want
to hear that. I'm not sure doctors want to hear that. But we need to make a
decision. We don't have an open checkbook. The government does not have an
enormous war chest of money to provide care.
So need to make some decisions. Is it more important for us to care for a
young child that has not been vaccinated, or to care for someone for the last
five days for the end of their life? . . . Regardless of age, there are
certain patients that we know have terminal diseases, yet decisions are made on
an irrational basis. What we're asking for is some rationality for that
What are the implications for senior citizens in your health-group system in
a severely cost-limited or capitated system?
The greatest concern that physicians have today, as risk has been shifted from
the health plan's holding the risk for patients to physicians and hospitals
holding the risk for patient care is, are they the ones who provide the care?
As a patient, it's shifted from one doctor group, which has held the risk, to a
different doctor group.
The concern is, where are those patients going to receive that care? If they
continue to receive the care by their prior doctor group, their prior hospital,
there's no way that this doctor group can manage their care. Medicare is now
adjusting the way they reimburse physicians for managed care to a health status
So, for the sicker patients, the doctors are receiving more money up front than
for the healthy patients. Medicare is going through a transition now where, at
this point, all patients are allocated the same funds. Therefore, you're far
better off on a financial basis caring for healthy patients than sick
You're far better off taking care of healthy patients rather than sick
On a financial basis.
Right. On a financial basis. But under the old system, it was the health
plans who had to worry about it. In the new system, it is the doctors who have
to worry about it. Is that a good situation to be in? Doctors then want
healthy patients, not sick patients.
There has to be that balance. Doctors control 80 percent of health care costs
with their pens. Therefore, it is critical that the doctor has some
responsibility for that cost incurred. What we've tried to do in our system is
to ensure that that individual patient's care is not held at the level of the
By really being 400,000 patients, we, in many ways, are like a health plan,
where we can share that risk across the whole system. Some of that risk is
held at that pod level. Some of that risk is held at a larger group level,
which might be associated with only one hospital. Another level of risk is
held at the entire system, so that there are levels of accountability in the
We talked to a pod last night. A pod's got 500 Secured Horizons patients.
Five years ago, ten years ago, patients were younger. They were healthier.
Health bills were lower. As you get older, health bills go up. Is there a
point at which you get a bad balance, where, financially, you get too many sick
Yes. There is that. What we have done, because the health plans and the
government have not yet adjusted reimbursement for the health of the patients,
is that we internally take the health care dollars and redistribute them out.
Part of the methodology by which we redistribute the money back out to
physician groups is based on the health of their patients.
One group would have a sicker patient population, and would receive more funds
than a group that has less sick patients. The problem has been that the tools
we would use to determine what will be the cost of care for population A versus
population B are in their infancy. They are developing.
These doctors in this pod last night were clearly concerned. The phrase
wasn't used, but the concern was clearly there, that we may already have too
many sick patients in this program and could wind up with even more sick
patients. Is that a worry when you're looking at it globally? Do you worry
No. I worry that we will receive patients that we cannot manage ourselves. I
still believe that we can go back to health plans, and if we can convince them
that we are managing our patients well, and that the dollars we receive are
inadequate, they will adjust their premiums accordingly.
What do you say to doctors who say, "This was a bad bargain. We shouldn't
have taken on this financial risk. We have too many sick patients."
When doctors make that statement, half the time they are correct--their
patients are sicker. Half the time, they actually are not managing their
patients as well as some other doctor does. So, one needs to recognize that
there are only certain physicians who are best suited to care for patients in
the managed care environment that we now live in.
Up to this point, in Boston, every physician has had access to every health
plan. . . . What's happening now in Boston is that there is a consolidation,
where every health plan will not be offered to every physician. So some
physicians are not best suited, and there are some physicians who will, indeed,
drop out of a certain health plan.
In today's environment, there are physicians who have not been able to manage
their patient population. Given the financial constraints, they have elected
to no longer offer that health plan. A physician previously would have Secure
Horizons patients that they were caring for, for example, and they would elect
at this point to no longer offer that the following year.
Then the patients would have to either stay with their physician and leave
Secure Horizons, for example, or shift to some other health plan.
Why are doctors doing that?
At this point, doctors are concerned about taking the risk and financial
It's costing them too much. They can't manage it?
Yes. If you look in general, and not in specifics for any one doctor, the
reality is that today the reimbursement that the physicians are receiving from
managed care plans in eastern Massachusetts has been more than adequate to
cover their costs for the delivery of care.
inside the dilemma ·
financial incentives ·
cost v. care
Maybe they're right. You really do have the killer job.
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producer's notebook ·
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