By Hal Scherz and Richard Armstrong
In 1883, a tornado struck Rochester, Minnesota, leaving 37 dead and 200 injured. William Worrell Mayo, already a prominent surgeon in the community, volunteered to oversee medical relief efforts along with son Will, a new medical school graduate, working with Mother Alfred Moes and her Sisters of Saint Francis to care for these unfortunates. In 1888, Mother Moes approached W.W. about opening a hospital, on the condition that he would run the medical practice, to which he agreed and the Mayo Clinic was created. Younger son, Charles was brought into the group to join W.W. and Will, and they recruited the best physicians in the region to form an integrated, private practice- the first of its kind.
Long ago, the raison d'être for hospitals was to provide a venue for doctors to bring their patients to assist in their care. Hospitals were either private institutions, or were supported by charities (Freemasons, Shriners), municipalities (Cook County Hospital- Chicago, Charity Hospital of New Orleans), religious orders, or by doctors themselves. Physicians were the sole arbiter of medical decisions and their involvement in hospital affairs typically extended into board rooms where they were intimately involved in critical decisions involving hospital policy and strategy. Unfortunately, that is generally no longer the case.
With healthcare becoming more complex, doctors found it increasingly difficult to manage a medical practice and at the same time participate in hospital operations. These responsibilities gradually were assumed by hospital administrators; business professionals often less focused on the medical mission of the hospital, than the financial aspects of operating a successful business. These goals have often, but not always, been aligned.
Government involvement in hospitals and medical practice was rare prior to 1965. However, with the passage of Medicare and Medicaid, large amounts of money began to flow to hospitals.
Hospital administration expanded exponentially. Rising Medicare expenditures was blamed on physicians and they became the target of regulators and legislators, facilitated by effective lobbying efforts of the American Hospital Association(AHA) who moved to limit payment to doctors and the ability of doctors to organize, while at the same time ensuring that hospitals maintained their powerful position in the reimbursement “scheme”. In 1983 the AMA made a corporate decision to abandon physician advocacy in favor of “guaranteed” profit by signing an exclusive contract with HCFA (now CMS) for providing their licensed coding system used in all medical billing in the nation. American physicians lost their strong advocacy organization overnight, but failed to realize the ramifications for another two decades.
The Affordable Care Act (ACA) ends local-regional physician and patient control of medical decision making by shifting them to bureaucrats in Washington while fundamentally changing healthcare delivery models and reimbursement. Hospitals are the major beneficiaries of these changes- a requirement necessary for the American Hospital Association to support this law.
The law stipulates that physicians can no longer own hospitals. It also creates a new payment model for medical services which favors hospitals. The Accountable Care Organization (ACO), is an integrated healthcare delivery model devised to control costs by issuing a single payment for an episode of care for a patient. The ACO then divides the payment “fairly’ among those involved in this episode. This payment model was unsuccessful in recent trials, but was so well supported by non-clinical health care planners who had the ear of the administration, that it was included in the law. Hospitals will typically be in charge of these ACO arrangements, because they already have the infrastructure required by the government for implementation.
In anticipation of this sea change, hospitals are engaged in a "feeding frenzy", buying up predominantly primary care practices, but specialty practices too. In many cities, hospitals compete for these practices, vying for control of as many patients as possible in a community. Once achieving "critical mass", with enough primary care practices, hospitals can approach a specialty group with a Mafia style “offer that they can't refuse". They make it clear to the specialty practice that the doctors who previously sent them patients are now controlled by them. They can either take the hospital’s offer for their practice or go out of business.
The end of private practice is imminent in an ACO world. Small practices will be unable to survive. What is not advertised is that in such a system, doctors become employees. Their allegiance is no longer to their patients, but to their boss, who is interested not in treating infections, or replacing hips, but in balance sheets, and return on investment.
There will never be another Mayo Clinic, a Cleveland Clinic or a Geisinger Clinic. The creative innovation born from the minds of compassionate physicians is squelched by this law. The Federal Government has artificially manipulated the healthcare economy and marketplace, picking winners and losers. Hospitals are winners. Doctors are the losers, but, in the final analysis, it is every American who is the biggest losers in this Brave New World.
Hal C. Scherz, MD is the Founder and President of Docs4PatientCare, VP of Georgia Urology, and Associate Clinical Professor Urology- Emory University.
Richard A. Armstrong, MD is the Chief Operating Officer of Docs4PatientCare, an organization of concerned physicians committed to the establishment of a health care system that preserves the sanctity of the doctor-patient relationship.