Wednesday, April 09, 2014

The quarterbacks of the health care system

Here's a great article in Commonwealth Magazine about the buying and selling of physician practices in Massachusetts.  Author Bruce Mohl notes:

In many respects, primary care doctors are the quarterbacks of the new health care system, the marquee players that every team is scrambling to sign. Some work under contract, others under lease arrangements, and more and more are becoming employees of the teams. The financial details of these employment arrangements are tightly held secrets, but rumors abound of signing bonuses, lavish incentives, and big paydays. The health networks—the teams—scoff at such reports, but many of them quietly whisper that their competitors are offering physicians outlandish deals.

As the state’s health care industry consolidates, regulators and the media have focused most of their attention on high-profile hospital mergers and acquisitions. But the pursuit of primary care physicians may eventually have a more profound impact on health care. Those networks that control the most doctors will control the most patients, and with them will come more revenue, more referrals, and more leverage in negotiating reimbursement rates with insurers. 


Barry Carol said...

I think the long term trend toward accountable care and / or bundled payments and away from fee for service is a good thing. Consolidation, though, has the potential to drive up healthcare prices even further. There are several ways this could all play out over time, in my opinion.

First, we might see large insurance companies acquire hospital systems and replicate the Kaiser Permanente model. At a minimum, though, this requires sufficient critical mass in terms of the size of the provider network to inspire confidence among patients and access to a lot of capital.

Second, the point in the article about hospitals needing more and more patients to keep their beds full as more care can and will be delivered in a non-hospital or outpatient setting suggests that many hospitals across the country will have to downsize or close over the next ten years or so. Dr. Ezekiel Emanuel has made this point in his recent book.

Third, we could see more medical tourism within the U.S. in search of good care for a competitive price. Large employers including Boeing and Lowe’s already have contracts with the Cleveland Clinic to provide heart surgery for employees and their families from around the country. If the price difference to insurers and patients is high enough, patients may be willing to travel 100 miles or more for relatively minor procedures like a colonoscopy or sophisticated imaging. Insurers could pay for round trip car service and lunch and still come out well ahead. For minor surgical procedures, the insurer could also pay for a hotel room and meals for both the patient and a companion.

I don’t think hospital systems like Partners should be too smug about their market power. As more patients become less insulated from the cost of care and better understand why their health insurance premiums are expensive, they are likely to be more amenable to market based alternatives.

Anonymous said...

Paul - Agreed that this is a very well written article and nails the fact that PCPs and their patient base are the key to these networks surviving and thriving financially. Strangely no mention of the Children's Pediatric Physician Organization (PPOC) which has gobbled up hundreds of PCPs with a HUGE population of children being fed in to their facility (at very high cost for mostly community level care). In fact, a group like Steward still has many Pediatricians in their PCP count that send practically nothing to their hospitals as a place like St. Elizabeth's has no inpatient Pediatric service. Many of these Pediatric PCPs will end up with Children's as Steward has no interest in Pediatrics other than covered lives to go to the insurers with. Further, a patient with any Steward PCP (more on the Internal Medicine PCP side) will end up spending over fifty percent of their medical dollars at providers outside the Steward network which is not the case with a network like Partners. Partners clearly is the 800 pound gorilla in terms of PCPs and funneling care into their high cost facilities but the Children's PPOC is doing the exact same thing with the Pediatric population. Maybe the author will comment on why he did not address the Children's monopoly on PCPs like the way he did with the Internal Medicine PCPs.

Anonymous said...

The large networks are assuming they have only each other to compete with in this arena, but other modalities of primary care delivery may arise, or resurrect themselves, such as the in-house employer clinic, etc.

Along with more care being driven outside the hospital as Barry indicates, those networks should not be breathing easy.

nonlocal MD

bruce mohl said...

To anonymous and others, thanks for your comments. I fully acknowledge there may be some holes in my reporting because few people like to talk about the deals between doctors and health networks. I'm interested in learning more and can be reached at Again, thanks.

Anonymous said...

This is an on going battle for PCPs.... Steward just lost a huge Internal Medicine practice based right on the St. Elizabeth's campus to BIDMC and a huge Pediatric group left Steward for Children's at the beginning of this year. Thousands of covered lives and hundreds of admissions walking away from that network. Also, CeltiCare and Minuteman Health are total flops that were supposed to keep care at "low cost" facilities like NEMC and Steward. I would predict NEMC and Steward will end up on the losing end of these battles.... loss of PCPs, lousy commercial contracts and too many beds for their PCP referral base. Add in old facilities and the fact they are going up against networks like Partners with tons of money and it will not end well for the Steward network or NEMC. Steward will be worse as the management there continues to sell off their assets like their Medical Office Buildings, their lab service and their Hospitalist service. There will be nothing left but a lot of former employees, a mountain of debt and old facilities.... going to be ugly.

bruce mohl said...

Anonymous: Do you know the name of the Internal Medicine group on the St. Elizabeth's campus that defected and the name of the pediatric group that left to Children's?

Anonymous said...

People forget that buying doctors groups was Partners first step after the combination of MGH and Brigham and Womens.

That was when HMO capitated plans were all the rage.

MGH and Partners then broke Tufts Health Plan efforts to control costs, by making them accept a huge cost increase to remain in Tufts Health Plan's network. [This was well documentetd in article in the Globe and the Attorney General's reports delineating the drivers of rising health costs].

Then we basically went back to fee for service and costs sky rocketed again after the lull afforded by capitated plan cost controls.

So things have come full circle.

We are now again moving away from fee for service again towards a more holistic view of patients health and lowering lifetime costs.

The richest organizations [Partners, Childrens] who have gouged consumers with high prices for the last 20 years and accumulated huge surpluses can afford to buy anything they want to maintain their control of the health care market.

If buying hospitals is blocked by Government entities, owning or affiliating with the doctors groups associated with that local hospital works almost as well and at lower cost.

The objective is to funnel patients to academic medical centers.

If Partners crushes its lower cost competition or intimidates it into not fighting based on price, before a "real market" in health care can function, then the government will have to intervene and regulate to ensure that high quality, low cost competitors are not crushed by Partners and Childrens.

Anonymous said...

When looking at Beth Israel Deaconess (BID) don't forget to include all of BID's relationships many of which are not included in the Blue Cross Chart. The same holds for Childrens Hospital to a lesser extent.

Atrius adult primary care doctors as part of BID's referral network for tertiary and quaternary care.

Also include the Atrius Pediatricians and other PCP's who treat children in Boston Children's network

The split between adult and pediatricians at Atrius is approximately 50:50

BID would have 369 plus about 250 from Atrius

Further understand that many of BID's other relationships are not included in the totals above.

[Note the above doesn't include: - all totals are for PCP doctors - cambridge health alliance (about 105), Jordan hospital(BID Plymouth) (about 10), and the Whitter (about 30) the physician network for Anna Jaques. It also doesn't include the doctors groups at Mt Auburn Hospital (about 110) & New England Baptist (about 20) which is part of Caregroup with BID. If all of these were included the total would be close to 900 and a serious competitor for Partners.]

Childrens would have 249 plus approx 250 from Atrius dominating the Pediatric market.

In both cases BID and Childrens get the tertiary and quaternary so not to include them in their respective networks is misleading.

Both BID and Childrens have much more market power than is commonly understood. Partners is not the only network with market power.

Anonymous said...

One item that distinguishes Beth Israel Deaconess (BID) from Partners or Childrens is how they have used their market power.

Partners hospitals - including the academic medical centers, teaching and community hospitals have some of if not the highest prices in their cohorts (academic, teaching, community, DSH) and the regions where they operate.

Childrens is on a par with MGH and Brigham and Womens, the Partners academic medical centers.

While BID has signficant market power that power hasn't been used to drive up prices for its main hospital or its community hospitals, though some of its affiliated doctors groups like Atrius are among the most expensive in Massachusetts. But the high prices at Atrius date from the time when Atrius primarily referred Adult patients to Brigham and Womens and the dcctors referring to Childrens are very expensive.

BID has been a responsible "non-profit".

And I am not saying this because Paul is the former CEO. They are and have been a good citizen.

When non-profits can do what Partners and Childrens have done I wonder what the term non-profit means?

Anonymous said...

I'm not sure of the names of the practices leaving Steward but it is five Internal Medicine PCPs with full member panels leaving the St. Elizabeth's campus and a seven Pediatric PCP practice (with thousands of patients) that was tied into Steward but located at Faulkner Hospital that left Steward and joined the Children's PPOC. Interesting Moody's downgraded Steward's debt rating today.... losing PCPs like this that are based right on your own campus at St. Elizabeth's is a clear example of a failing network. Add in the Whittier IPA leaving and you start to see a trend. The Internal Medicine PCPs leaving St. Elizabeth's will result in a HUGE drop in hospital admissions and referrals to Steward specialists. Let's face it, Carney and Quincy are probably already going to close and the other Steward Hospitals are in real trouble as well if they can't keep their PCP base around to fill up their old facilities. Failed management leading a failed network.

Anonymous said...

Please - if you think that the loss of a group of 5 providers is news, then you haven't been paying attention. That's a small sliver of the PCP base for any one hospital. This kind of churn between networks happens all the time. All of the networks are pulling docs from each other all the time - it isn't news, period. Is it news when St. E's pulls in recruits from HVMA or Tufts - no, because it is positive news for Steward. But it happened this year! Makes no sense unless someone has an axe to grind, especially when the PCP base for most of these networks has been solid or growing.

Seems like someone from BID wants to puff up their chest and make themselves feel big, but in fact BID is Partners-light, finding new ways to drive care downtown so that we all have to pay more for routine care. Uggh.

The article itself is solid, in terms of painting this picture of the fluidity of these affiliations.