West Penn Allegheny Health System's search for a new chief executive officer is down to two candidates--one from Camden, NJ, and another from Cincinnati. The hospital network has been without a permanent CEO since the abrupt July 2007 departure of Jerry Fedele, who left amid internal disagreements about a systemwide consolidation. Board member Keith Smith is now in charge of the network on an interim basis and the goal is to announce a new CEO in the first quarter of 2008.
Transforming the IT staff from dweebs to strategic partners. Plus news on uncompensated care, healthcare spending, and more. [Powered by Trinity Healthforce Learning.]
The root cause of the healthcare industry's spiraling costs is the pen sitting in your white coat. After all, nearly every needless procedure, extravagant device, and useless technology that is ordered requires a doctor's signature.
If only those spendthrift physicians could clamp down on their wasteful ways. And to make matters worse, these well-to-do docs, averaging annual incomes of $200,000 to $300,000, actually get reimbursed more when they order the most inefficient, excessive procedures.
At least that's the rhetoric I hear from more and more hospital administrators, health plan executives, and healthcare consultants. They've taken an unofficial election on who to blame for the industry's downfall--and they voted for you.
All of us suspect that healthcare inflation is unsustainable. As Sg2's Michael Sachs pointed out at our Top Leadership Teams conference last fall, overall inflation and wages are up 20 percent, but the cost to healthcare consumers is up 85 percent. And healthcare spending as a percentage of GDP went from about 5 percent in 1960 to about 15 percent today.
You might have picked up a hint of sarcasm in some of my prose, but I don't get this line of thinking only from the professionals in power suits. A physician administrator told a story to me that has a similar-sounding theme at his hospital.
He had taken over as the surgery service line director and wanted to bring costs down, so he conducted a study to determine the efficiency of each of his 120 staff surgeons for the most common procedure performed at the hospital. It turned out my source was the least cost-effective surgeon at the hospital. So he had to change his ways to become a better example for the rest of the staff, he said.
The message I gleaned from this tale is that when this surgeon didn't have a stake in the bottom line--or know the financial impact of his decisions--he behaved as though he had a blank check. But once he was responsible for the service line, he became more economically responsible--and held others accountable as well.
And that's the trick that some insurers are trying to solve with P4P and other programs--how to align physician incentives with cost effectiveness (of course the payers like to term it quality outcomes). Patients trust their doctors and want to partner with them to improve their health. The idea that a person at the insurance company whom they've never met could deny procedures doesn't sit well with consumers or physicians.
I talked with another MD, board-certified in internal medicine for 11 years, about how a large payer in his region had begun to contract with a radiology management company. The payer was reacting to a 21 percent increase in diagnostic imaging services from 2003 to 2005.
Despite promises from the insurer to limit the administrative burden, the physician was frustrated by what he saw as the latest in a line of changes to the physician-patient relationship. "The physician-patient relationship is becoming more adversarial because we have all of these other people in the room with us. We have these insurers and lawyers in the room with us, and they really shouldn't be there."
But if Sachs' prediction that healthcare is an industry in the crosshairs proves correct, the government will join payers and administrators to change the way care is delivered--so there will be even more "people in the room" with the doctor. Of course, as my editor, Jim Molpus, wrote in a recent Web-exclusive column, Washington has an annoying habit of procrastinating change rather than promoting it.
A Canadian neurosurgeon has pleaded guilty in an Arkansas court to taking kickbacks from medical-device suppliers. The surgeon agreed to pay the U.S. government and a whistleblower $1.5 million in compensation, and could receive five years in jail when he is sentenced.
Washington state is about to become the next battleground in the debate over physician-assisted suicide. Former Washington Gov. Booth Gardner, a Democrat who's battling Parkinson's disease, has filed paperwork for a "Death With Dignity" initiative. Gardner says the initiative largely mimics Oregon's Death With Dignity Act, which was passed by Oregon voters in 1994 and took effect in 1997 after a protracted court battle.
According to a 2006 poll by the American College of Physician Executives, nearly 60 percent of doctors said they had considered getting out of medicine because of low morale, and nearly 70 percent knew someone who already had. In a culture that prizes risk and outsize reward some doctors feel they have slipped a notch in social status. It's not just because the profession has changed, but also because the standards of what makes a prestigious career have changed.
At least one in 12 patients who die has been diagnosed incorrectly, according to a 2003 analysis published in The Journal of the American Medical Association. Yet when trying to figure out difficult cases, doctors rarely use the highly accurate computer systems designed to help with the identification of ailments.
As the physician executive market matures, so do compensation methodologies.
In many cases, this means a greater focus on bonuses tied to performance incentives. More than half of physician executives reported receiving a bonus as part of their compensation package, according to the 2007 Physician Executive Compensation Survey, which was conducted by Cejka Search and the American College of Physician Executives (ACPE). This number is up slightly from the previous year's report.
More emphasis on bonuses typically translates into higher overall compensation for the executive. Median administrative compensation for executives with a bonus of 10 percent or less was $250,000, but administrative compensation levels increased as the bonus percentages rose:
The most common measurement of success is organizational goals--62 percent of respondents reported this bonus component. However, personal objectives, organizational profit, quality measurements, and patient satisfaction are also common measurements of executive performance.
The shift toward more incentive-based compensation is driven in part by the physicians themselves, says Lois Dister, vice president and practice leader with the Cejka Search executive search division. Physicians are more savvy when it comes to compensation packages than they were 10 years ago, and many are eager to tie a greater portion of overall compensation to their performance.
"[Physicians] realize how they can contribute to the clinical outcomes, the financial performance, and the overall goals of the organization. They get very excited by the opportunity . . . and they'll even suggest putting more money at risk," Dister says. "In the last couple of years, I've noticed a marked difference in how they view compensation and how excited they get about the bonus potential."
Physicians enter the C-suite Physician executives aren't just getting paid more; they're filling new roles and taking on true administrative responsibilities. Traditionally, physicians have held "medical director" and "chief medical officer" (CMO) titles, which account for 46 percent of the respondents to the Cejka Search/ACPE physician executive survey. But some are beginning to move beyond those positions, entering the C-suite and focusing solely on administration.
To attain these business administration physicians, some physician executives are obtaining postgraduate business management degrees, the most common being an MBA--one in five physician executives has this degree, according to the survey.
Bombarded by complaints from patients and staffers, Jackson Memorial Hospital in Miami said it may rescind its doubling of its parking fees that began on the first of the year. The hospital cited major capital needs as the main reason for the rate increases. The hospital provided approximately a half-billion dollars' worth of charity care in 2007.
