Physicians in small, independent practices are still in the majority, but the trend continues toward employment at larger practices and health systems. "I wouldn't say the game is over for solo physicians, but it's the bottom of the ninth and you are behind. There is nothing going your way," says a recruiting executive.
More than 60% of physicians work in practices with 10 physicians or fewer, and that practice size didn't change much between 2012 and 2014, the American Medical Association says in a new study.
"These data show that the majority (60.7%) of physicians were in small practices of 10 or fewer physicians, and that practice size changed very little between 2012 and 2014 in the face of profound structural reforms to healthcare delivery," AMA President-elect Andrew W. Gurman, MD, said in prepared remarks.
The findings seem at odds with reports that physicians are flocking towards employed models, either with larger physician groups, hospitals or health systems. Nonetheless, the AMA study shows that the trend toward employment and migration to larger practice is occurring.
Nearly 57% of the physicians worked in practices that were wholly owned by physicians in 2014, which is down from 60.1% in 2012. The percentage of physicians working for hospitals or in practices that had some hospital ownership increased from 29% in 2012 to 32.8% in 2014.
Physicians as practice owners decreased from 53.2% to 50.8%.
Solo practitioners decreased from 18.4% to 17.1%.
Physicians directly employed by a hospital increased from 5.6% to 7.2%
Physicians in practices that had some hospital ownership increased from 23.4% to 25.6%.
Travis Singleton, a senior vice president at Dallas-based physician recruiters Merritt Hawkins, says the AMA findings are largely consistent with Merritt Hawkins' data of physician demand.
"The one number that is probably significantly different from ours is they have 60.7% physicians in practices of 10 or fewer and our number is at around 50%," Singleton says. "The core message of what they are saying is that independent and small practices are alive and well and a large portion of our delivery system."
Singleton says some of the distinctions carved out in the AMA study are more about "semantics."
"They've got 57% working in practices that are wholly owned by physicians as opposed to 33% for hospitals," he says. "Now, it's more about the resources you have at your disposal that shape you practice versus whether you are employed or not, whether it's a hospital or a group that is doing it. Technically, if you work for Kaiser Permanente or Cleveland Clinic you work for a physician wholly owned group. I would argue you operate much closer to a traditional definition of a hospital-employed physician."
Even though a majority of physicians are working in smaller, independent practices, he says the trends are unmistakable. More and more, physicians are gravitating towards employment at larger practices and health systems.
"If you look at our recruitment numbers, 95% this past year were in an employed relationship regardless of the setting they went to. That is staggering," he says. "I would agree with the picture of a landscape that shows relatively smaller independent or group practices as a viable portion of our healthcare delivery system. I don't agree with the fact that that has changed very little since 2012. I don't think that is the case, albeit it has probably changed at a slower pace that people think reading the headlines."
Singleton says that 50% of Merritt Hawkins recruiting searches this year were for hospital-employed direct setting. On the other end of the spectrum, recruiting for solo practitioners represents about 4% of searches.
"I wouldn't say the game is over for solo physicians, but it's the bottom of the ninth and you are behind. There is nothing going your way," Singleton says. "The vast majority of those still in solo settings, about 17% of the marketplace, are your older physicians that never really changed and aren't going to change."
"The health spending rate is slowing. It has been slowing for a long time in a very incremental way, but we are not able to declare victory here," says the director of PwC's Health Research Institute.
The good news is that the projected 6.5% increase in healthcare inflation in 2016 is almost half the cost growth of 11.9% in 2007, when PwC first started making its annual projections. The bad news is that 6.5% cost growth is wildly outpacing wage growth and is unsustainable over the long run in a country that already spends close to 18% of its gross domestic product on healthcare.
To put that growth in perspective, the overall rate of inflation in the larger economy over the past year was 0%. "You can see what I would call a little bit of good news, but not enough good news to celebrate yet," Benjamin Isgur, director of PwC's Health Research Institute, said during webcast detailing the findings.
"The health spending rate is slowing. It has been slowing for a long time in a very incremental way, but we are not able to declare victory here. It is one of those things where we are winning a few battles but the overall war of health growth is still there. In fact, when we compare that to our national health expenditures as a percentage of gross domestic product, over these last several decades you see a larger and larger part of our economy spent on health services."
"Every economy gets to decide what they are going to spend their money on, but as it rises now past 15% of GDP, it does call into question the crowd out effect. Does that mean there are less resources to spend on things like education and transportation? The healthcare growth rate is still rising faster than general economic inflation."
PwC says the key "inflators" for healthcare cost growth in 2016 are expected to include the rising cost of specialty drugs such as Sovaldi, the Hepatitis C therapy from Gilead Sciences; and cybersecurity measures to prevent or mitigate increasingly sophisticated and aggressive large-scale breaches.
Preventive cybersecurity measures are particularly cost effective, PwC says, costing about $8 per patient record, while post-breach measures, including HIPAA fines and customer restitution, can cost about $200 per patient record.
Cost Deflators
The key "deflator" for healthcare cost growth is expected to be the "Cadillac tax" on insurance premiums that will take effect in 2019. To avoid the 40% excise tax, employers are already altering their benefits designs to increase by shifting more of the expense onto employees. The percentage of employers who are only offering high-deductible health plans has grown from 13% in 2012 to 25% in 2015.
"We are starting to see more and more employees share in the cost of their health plans," Isgur says.
Other deflators identified by PwC include the growing use of virtual care, with larger employers relying upon telehealth to provide access to primary care, and hospitals using remote monitoring to improve post-discharge outcomes; and the rising use of health advisors, often in retail settings, to steer customers to lower-cost and more efficient healthcare.
It also appears that the long-awaited return on investment for the billions spent on healthcare information technology over the past decades is materializing.
"We are starting to see, really for the first time, technology which has often been a contributor to trend and all the innovation that comes with that, now is starting to actually take some of the cost out of the system," Isgur says.
Hospital Execs Chime In
I shared the PwC projections with a couple of hospital executives to see if the trends identified are mirrored in the real world.
Chris Van Gorder, president and CEO of Scripps Health, says the San Diego-based health system is feeling the effects of higher drug and implant costs.
"Our current estimates for inflation for the next year is 5% for pharmaceutical expenses in the hospitals, 10% in the ambulatory environment, and 5% for high cost implants," Van Gorder says.
"The increasing costs in pharmaceuticals also impact readmissions, since a study by AHRQ found that 19% of Medicare discharges are readmitted, and two-thirds are due to drug events that are mostly caused by non-compliance with meds."
Tim Putnam, president and CEO of Margaret Mary Community Hospital in Batesville, IN, says the projected rise in medical inflation "seems like it ought to be lower."
"It always surprises me that the rate increase is that high," he says. "Community hospitals probably have a different mindset on this. I guess a lot of it has to do with stuff I am not involved with, the pharmaceutical industry and things like that."
Putnam says Margaret Mary has been working for years to minimize its rate increases.
"I can't say we are doing it a whole lot differently than five or 10 years ago," he says. "For years our board would look at a rate increase for basic services and the discussion was always around what kind of rate increase they need to stay viable. It wasn't about how much can we get. We went several years without a price increase."
Van Gorder says the lack of affordability is the biggest reason why patients don't comply with their post-discharge meds.
"We are working on new transition programs, including providing medications to patients' bedside prior to discharge, to assist patients in obtaining their discharge medications," he says. "We are also in the process of implementing a drug use management program that will focus on disease management across the care continuum to improve the value to our patients by providing high quality care in a cost effective manner."
Margaret Mary is also contending with the cost-shift to consumers.
"The physician is giving best practice for treating a disease and the patient is asking if there's a way we can do it cheaper," Putnam says. "The docs try to accommodate the needs of the patients. They understand the affordability. If they put the patient on a medication that they have no ability to pay for, then that is not going them any good."
Strip Mall Scans
Putnam says Margaret Mary is also starting to see the arrival of niche players who can undercut hospital prices.
"The classic example is the strip mall CT scanner of who knows what caliber or quality, but from the insurance company's perspective and the patients' perspective it is a CT scan," he says.
"Now a CT scan that wasn't shot well with poor equipment and wasn't read well comes back to my physicians and they are supposed to figure out what to do with the patients based on all of that, which can really be daunting," Putnam says. "The best diagnostic facility you have is now taken away, insurance has already paid for it so they won't pay for another one to be done that's good quality. We are starting to see a lot of that."
Van Gorder says ROI on HIT won't be fully realized until there is greater connectivity between providers. "We are very close to achieving that in the San Diego community with the Regional Beacon HIE (San Diego Health Connect)," he says.
"This will both provide great information to care providers to treat patients and assist in the elimination of duplicate tests. Scripps will be exchanging information later this month followed by Sharp. As we replace our best-of-breed systems with a best-of-suite system, we will be leveraging Epic's Community Connect offerings and achieve greater levels of connectivity and data exchange tailored to varying degrees of affiliation.
Putnam says Margaret Mary is not there yet, either.
"It seems like my bill for IT keeps getting higher and higher every year," he says. "What I do see, when a patient comes in the ER and they've gone to a physician who has an electronic record and all their labs and imaging for what happened over the past few years is available to the ER physician electronically, they are starting to look at that information and having a better understanding that they rule out a lot of possibilities that could be going on with the patient."
"They are able to get a quicker diagnosis without running the full gamut. I see positive benefits for that. It just still costs a lot to get all of that information down."
Market consolidation by health insurers is raising the specter of anti-competitive behavior and fears of patient harm among physicians, hospitals, and health systems.
Under the deal announced last Friday, Aetna said the combined company would cover more than 33 million people, and would vie with Anthem to be the nation's second-largest health insurance company, with annual operating revenues of approximately $115 billion.
News of the Aetna/Humana merger came one day after Centene announced that it would buy HealthNet for $6.3 billion. In addition, Anthem and Cigna are reportedly in merger discussions which, if completed, would make that combined company the second-largest in the nation.
Payer consolidation has long been a source of concern for providers. American Medical Association President Steven J. Stack, MD, says AMA analyses of health insurance markets that predate the Aetna/Humana merger show that many markets across the country are dominated by one or two insurers.
"Seventeen states have a single health insurer with a commercial market share of 50% or more," Stacks says. "The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients as health insurers substitute corporate policy over good clinical decisions."
Robert L. Wergin, MD
Robert L. Wergin, MD, president of the American Academy of Family Physicians, and the owner of Milford (NE) Family Practice, says the "onesie and twosie" and other smaller practices such as his would be hit hard by an even more consolidated payer sector.
"You see what size does. It's like the bully on the playground," Wergin says. "If you are a bully, you aren't going to take on a big healthcare system. You'll take on Milford Family Practice and beat the crap out of me. You're not going to take on the University of Nebraska Medical Center because they have lawyers on retainer and they swing back."
The American Hospital Association wants a robust government review of the Aetna acquisition.
"It's difficult to determine how anti-competitive any further consolidation will be in the already consolidated insurance industry without knowing the details of any proposed deal," says Alicia Mitchell, AHA's senior vice president of communications. "However, any potential deal of this magnitude needs rigorous scrutiny. That's why the AHA will call upon the [Department of Justice] and Congress to exercise a significant level of scrutiny over this potential deal."
Pot v. Kettle?
Suzanne F. Delbanco, executive director of the Catalyst for Payment Reform, says the consolidation among insurers is a response to a number of market forces "including the unprecedented consolidation among healthcare providers that has been occurring over the past five to 10 years."
Suzanne F. Delbanco
"It's important in a market to try to balance the negotiating of the buy side and the supply side, but I worry on both sides that these mergers will not at the end of the day serve the interests of consumers or patients," Delbanco says.
Regardless of who's consolidating, Delbanco says consumers will bear the cost.
"The schemes here are remarkably similar," she says. "They all argue, whether hospitals or insurers, that with all the changes in the healthcare system brought about by the Affordable Care Act and other trends, that the only way they can succeed at providing high-quality affordable care is to get larger."
"Unfortunately, at least on the provider side where we have a fair amount of research and evidence, prices always go up as a result of consolidation and there is no evidence that quality gets better. In fact, there is a little bit of evidence that it gets worse."
"On the insurers' side, there is some evidence that in markets where insurers have strong market share they are able to get better prices for the consumer, but ultimately if there is no need to compete in that space the question is will they bother."
Delbanco says that efficiencies gained with the merger of Aetna and Humana could come at a cost.
"There will be a diminishing incentive to innovate," she says. "I worry for the large employers and for individual consumers. If there aren't choices it is going to be very hard to inspire insures to innovate around how they are paying for care or creating contracts for providers to deliver care and what impetus they feel to make their business be patient-centered."
Chip Kahn, CEO and president of the Federation of American Hospitals, says hospital consolidation and payer consolidation are not two sides of the same coin.
"Let's separate the issues," he says. "On the insurers' side there are limited combinations because the big classic commercial companies that 25 years ago formed the bigger part of commercial industry are narrowed down now to a handful—basically, Aetna, Humana, Cigna, Anthem, and United. There are some smaller companies, but those tend to be niche players or HMOs in certain markets. It terms of the big companies, we are getting close to whatever the end of that process is."
"At the hospital level, it is still so much market-to-market so it's hard to talk about hospitals generally," he says. "The biggest hospital company is HCA, but they're no more than a few percentage points of what happens nationally. You don't have the same kind of organizations nationally with the size and breadth of these insurance companies on the provider side at all."
Leemore S. Dafny, a professor of management & strategy and the Herman Smith Research Professor in Hospital and Health Services at the Kellogg School of Management at Northwestern University, says Aetna's decision to acquire Humana makes perfect sense.
"Insurers don't want to be left out of the opportunity to potentially snatch someone up because they figure that either scale is going to reduce their cost, or increase their market power, or both. And why not go for it, if there is an opening," she says.
Dafny says it's hard to predict what will happen as the payer sector consolidates because every market is different.
"I have written papers that show that in commercial insurance markets, larger group markets, consolidation leads to increases in premiums," she says. "What happens in other markets, particularly with Medicare Advantage, is less studied. There, the competition is going to be a little more on quality which is everything from access to outcome measures."
Delbanco says she'll be interested in seeing what new players emerge as the traditional payers consolidate. "In every situation where a marketplace consolidates, what is fascinating is to see the new entrants that come into the space to stimulate more innovation," she says.
"For example, in the provider space you have massive growth of telehealth and retail and on-site clinics at workplaces, which maybe are not a direct response to consolidation, but which create lower-cost alternative sources of care than overpriced dominant systems. It will be fascinating to see what opportunities arise from these very big companies getting even bigger and they're not going to be as agile as newer upstarts."
"What this variation [in stroke treatment regimens] screams to me is that it is unexplained by the variables that we are able to measure in aggregate across everything," says a neurology researcher.
Every four minutes, someone in the United States dies from a stroke, the fifth-leading cause of death in the United States. About 800,000 people suffer a stroke in varying degrees of severity each year, and it kills nearly 130,000 people, according to the Centers from Disease Control and Prevention.
When the costs of hospital care, medication, rehabilitation and lost productivity are factored in, CDC, estimates that stroke costs about $34 billion a year.
Even with so much at stake, there appear to be wild geographic variations across the nation in how often stroke is treated with the intravenous blood clot dissolving drug tPA (tissue plasminogen activator), a study by University of Michigan researchers in the July issue of Stroke shows.
If, given within a few hours after the stroke, tPA has been shown to restore blood flow to the brain and reduce or prevent damage that can cause long-term disability. Yet, researchers at the UM—examining stroke treatment records of Medicare enrollees from 2007 to 2010 in 3,436 hospital markets across the United States—found that only 4.2% of the more than 844,000 stroke victims received tPA or other urgent stroke treatments.
In the bottom one-fifth of the hospital markets patients received no tPA. In the top one-fifth of markets 9% of patients received clot-busting drugs. In Asheville, NC and Stanford, CA as many as 14% of patients received IV tPA or an intra-arterial treatment using tPA or another drugs.
Baffling Variations
There were only minor improvements in treatment levels for patients in regions with certified primary stroke centers, or where emergency medical services drove patients further to get stroke treatment. Older patients, minorities, and women were less likely to get tPA regardless of where they lived, the study showed.
James Burke, MD, senior author of the study and an assistant professor of neurology at UM, says he's hard pressed to explain these disparities in treatment regimens.
"My honest answer is I don't know. It's a whole bunch of different things. My guess is that this is probably a very complicated nut to crack," he says.
Burke says different hospital markets may have differing strengths and weaknesses when it comes to treating stroke.
Variations 'Unexplained' by Variables
"You might have a market with a hospital that is fantastic at delivering tPA, but has a patient population that is only average at identifying stroke symptoms, or you might have fantastic EMS but they are delivering patients to a hospital that is inefficient about identifying tPA candidates and getting people treated quickly," he says. "My guess is it's all of these factors coming together and not any one thing."
"The biggest message is that this is telling us we need to figure out that question," he says. "What this variation screams to me is that it is unexplained by the variables that we are able to measure in aggregate across everything."
The cost of tPA does not appear to be a factor in its limited use, Burke says. A separate study from Michigan State University in 2012 put the per dose cost of tPA at $2,200, but estimated that it provided a "net savings to society of $6,074."
"I don't think the financial barrier is huge because, in part, Medicare amongst others reimburses at higher rates when you treat with this drug," Burke says. "A lot of the drug cost is defrayed by having higher reimbursements rates to incentivize hospitals to use this drug."
He says the "comfort level" of attending clinicians diagnosing stroke is likely a key reason why stroke treatment is so uneven.
"Diagnosing stroke is a tricky enterprise," he says. "There are a handful of very severe strokes that are clear cut diagnostically, but a whole lot of them are less clear cut. Then, you need to have a system in place for all the things that need to happen before you give somebody the drugs. Unless you have a pharmacist ready to reconstitute the drug, a CT scanner ready to go, and physicians and nursing and triage, all those pieces working together, you are going to lose a lot of time and people are going to slide out of time windows."
A Credible Treatment Stroke Regimen
Another problem, he says, is the lingering suspicion in "the emergency medicine community" about the efficacy of tPA, the only Food and Drug Administration-approved drug for ischemic strokes, which account for nearly 90% of all strokes.
"Those sorts of doubts wash out of clinical experience very slowly," Burke says. "I don't think there are a lot of people who would still say, 'I don't use this medicine because it doesn't work,' but it does lead to a reticence about using it. It is one of the factors that needs to improve treatment rates over time."
For community and rural hospitals with limited resources, Burke says, the quickest way to find out if they've got a "credible" stroke treatment regimen is to "determine if you can deliver IV tPA within 60 minutes of someone hitting the door."
"If you have the pieces in place you are probably doing as reasonable a job as you can under the circumstances," Burke says. "If you're a critical access hospital you can ask yourself 'can we provide this service, and if not, what do we need to do to make it happen?' Should we find a hospital to partner with and we can treat them here and ship them there? Do we use telemedicine? Should we pick up the phone, or can we do this all on our own?'"
These pressing questions need to be answered, Burke says, because we can expect to see stroke cases rise over the next decade and beyond as the demographic ages in all parts of the country.
"Stroke is one of the things that should be at the top of the list from an emergency perspective," Burke says. "We have medication that clearly reduces disability by substantial margins, and this is a relatively common diagnosis, and there is clearly substantial room for improvement."
"These hospitals conspired to deprive consumers and physicians of important health information and education, "says the Assistant Attorney General of the Justice Department's Antitrust Division.
The U.S. Department of Justice has filed civil suits levied against four health systems in Michigan that prosecutors have claimed for years unlawfully stifled competition by creating agreed-upon marketing territories.
Assistant Attorney General Bill Baer of the Justice Department's Antitrust Division said in remarks accompanying the announcements that "these hospitals conspired to deprive consumers and physicians of important health information and education."
"Instead of putting patients first, these hospitals secretly agreed not to compete," Baer said. "This action will terminate the agreements limiting marketing and make sure the citizens of south-central Michigan will have access to the facts they need to make informed healthcare choices."
Allegiance Health CEO: 'Facts are on our Side'
Allegiance Health President and CEO Georgia Fojtasek, RN, said she was "disappointed" with the DOJ's decision to file suit while talks were ongoing and that "these regulators have misinterpreted Allegiance's conduct."
"These facts will show that despite the regulators' contention that Allegiance agreed with Hillsdale Community Health Center to reduce competition by limiting its advertising in Hillsdale County, the number of patients from Hillsdale County seen at Allegiance has significantly increased over time across our entire spectrum of services," Fojtasek said.
"Additionally, Allegiance's approach to Hillsdale has also made critical services not available in Hillsdale County, including Allegiance's open heart program, much more accessible for those citizens. Ultimately, Allegiance's marketing strategy has greatly benefitted consumers."
"For this and other reasons, Allegiance firmly believes that the facts are on our side and we look forward to presenting our evidence to the court," she said.
Promedica Confident in Preventive Actions
Toledo, OH-based ProMedica issued a statement claiming it didn't do anything wrong, but "we have agreed to settle this case so that we can move forward."
"We have cooperated with the Michigan Attorney General and U.S. Department of Justice and are committed to complying with the terms of this settlement," the ProMedica statement read.
"We are confident that with the action items we are putting in place—for example, training for board members, leadership, and marketing communications staff—we will be able to prevent a similar situation from happening again.
CHC Responds
In a media statement, Community Health Center of Branch County said it agreed to the settlement because it is "a small community hospital facing increasing financial challenges, [and lacks] the time and resources needed to continue to devote to this government inquiry."
CHC added that it is "taking steps beyond those specified in the DOJ/MAG's consent decree to ensure that none of our employees violate, or create the appearance of violating, the antitrust laws."
Hillsdale Community Health Center did not respond to requests for comment .
According to DOJ complaints, Hillsdale stifled competition for years by entering into agreements with Allegiance, Branch, and ProMedica to limit the marketing of competing healthcare services. Prosecutors allege the hospitals' pacts deprived patients and physicians of information needed to make informed healthcare decisions.
Patients in Hillsdale County, MI, were also prevented from receiving free medical services—such as health screenings and physician seminars—that they would have received from Allegiance in the absence of its unlawful agreement with Hillsdale, the federal complaints allege.
The proposed settlement prohibits Hillsdale, Branch, and ProMedica from working with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory. The proposed settlement also prohibits communications among the defendants about their marketing activities. The hospitals will also start compliance measures to prevent anticompetitive practices.
DOJs Antitrust Division was joined by the Michigan Attorney General's Office in the suit, which was filed the civil antitrust lawsuit in the U.S. District Court for the Eastern District of Michigan.
Prosecutors have also filed a proposed settlement that, if approved by the court, would resolve the lawsuit with respect to the three settling systems.
"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Chief Justice John G. Roberts wrote for the majority.
In a decisive 6-3 ruling, the U.S. Supreme Court on Thursday turned back the latest legal challenge to the Patient Protection and Affordable Care Act.
The ruling handed down in King v. Burwell rejects the plaintiffs' assertion that the ACA does not statutorily authorize the federal government to provide premium subsidies for people buying health insurance in 34 states that rely upon the federal HealthCare.govexchange.
The plaintiffs in the case had challenged the specific wording "through an Exchange established by the state," located in Section 36B of the 974-page law.
Chief Justice John G. Roberts
The Obama Administration and Democrats in Congress had argued that the phrase was simply an error in wording in a massive piece of legislation, and that the clear intent of the bill was to expand health insurance coverage to as many people as possible.
The high court agreed.
"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Chief Justice John G. Roberts wrote for the majority.
"If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress's plan, and that is the reading we adopt."
Joining Roberts in the majority where Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor, Stephen G. Breyer and Elena Kagan.
Justices Antonin Scalia, Clarence Thomas, and Samuel A. Alito, Jr. ruled for the plaintiffs.
In a blistering dissent, Scalia sarcastically suggested that "we should start calling this law SCOTUScare" because Thursday's ruling marks the second time in three years that the high court has intervened to save the ACA.
Scalia accused his colleagues in the majority of "interpretive jiggery-pokery" in attempting to ascertain the intent of Congress.
"Let us not forget that the term 'Exchange established by the State' appears twice in 36B and five more times in other parts of the Act that mention tax credits," Scalia wrote. "What are the odds, do you think, that the same slip of the pen occurred in seven separate places? No provision of the Act—none at all—contradicts the limitation of tax credits to state Exchanges. And as I have already explained, uses of the term 'Exchange established by the State' beyond the context of tax credits look anything but accidental. If there was a mistake here, context suggests it was a substantive mistake in designing this part of the law, not a technical mistake in transcribing it."
Reaction
President Obama had maintained over the past several months that the plaintiffs' argument in King v. Burwell was frivolous. Earlier this month he told reporters that the case never should have made it to the U.S. Supreme Court.
Frivolous or not, the stakes in the case were high.
Had the high court ruled for the plaintiffs, more than 6.4 million lower- and middle-income Americans living in the 34 states that relied upon the federal exchanges could have lost their subsidies, which for many of them would have made the premiums unaffordable.
President Obama praised the ruling Thursday morning in a brief meeting with reporters at the White House. He suggested that it was time for partisan opponents of the ACA to accept defeat and move on. "After more than 50 votes in Congress to repeal or weaken this law, after a presidential election based in part on preserving or repealing this law, after multiple challenges to this law in the Supreme Court, the Affordable Care Act is here to stay," Obama said.
The President added that the ACA "is in many ways… working better than we expected it to," with 16 million Americans gaining health insurance coverage and uninsured rate that is the lowest "since we began to take records."
"For all the misinformation campaigns, all the doomsday predictions, all the talk of death panels, [and] job disruptions, for all the repeal attempts, this law is now helping tens of millions of Americans."
Despite the high court's decisive ruling, Republicans remained unanimous in their public avowals to repeal the ACA.
"ObamaCare is fundamentally broken, increasing health care costs for millions of Americans. Today's ruling doesn't change that fact," House Speaker John Boehner, (R-Ohio), said in prepared remarks. "Republicans will continue to listen to American families and work to protect them from the consequences of ObamaCare. And we will continue our efforts to repeal the law and replace it with patient-centered solutions that meet the needs of seniors, small business owners, and middle-class families."
At last count, the 13 or more Republican candidates for president blasted the ruling and most pledged to repeal the law if elected.
Democratic frontrunner Hillary Clinton Tweeted:
Healthcare Sector Praises Ruling
The high court's ruling was greeted enthusiastically in the healthcare sector.
Joel Allison, CEO of Dallas, TX-based Baylor Health Care System and Baylor Scott & White Health, told HealthLeaders Media that "all of the hospitals and health systems in Texas and across the nation were relieved by the ruling and pleased to see it."
"This is a big win for Texans who have gone on the exchanges and received the subsidies," Allison says. "To have lost that would have been significant. We would have had more than 800,000 Texans who would not have been able to keep their subsidies and that equals about $2.5 billion so you can see the financial impact. We have more than 1.2 million Texans who made health plan selections through the marketplace. It is very positive for the hospitals and health systems in Texas, particularly in that we are the state with the highest rate of uninsured."
"We continue to occupy that No. 1 position," Allison says. "However, we have seen the rate of Texans without health insurance fall eight percentage points over the last couple of years due to the federal exchanges. If these folks had lost their subsidies, it would have been very challenging for the health system and the health insurance industry.
The Texas Hospital Association has estimated that the state's hospitals spend $5.5 billion annually in uncompensated care, and that an adverse ruling for the plaintiffs in King v. Burwell could have added another $1 billion to $1.5 billion in uncompensated care costs.
"That would have hit us as well," Allison says, "because we have a mission of serving all people and we are a large healthcare system, this would have had a very negative financial impact on us because these people now would be totally without insurance again."
Nationally, the leading hospital, physician, and health insurance lobbies, all of which had a key role in passing the PPACA in 2010, praised the Supreme Court's ruling.
American Medical Association President Steven J. Stack, MD, said in prepared remarks that "physicians know that the uninsured live sicker and die younger, so the AMA has been a leading voice in support of expanding health insurance access to ensure patients can get the care they require."
"The subsidies upheld today help patients afford health insurance so they can see a doctor when they need one and not have to wait until a small health problem becomes a crisis. The subsidies provide patients with peace of mind that they will not risk bankruptcy should they become seriously ill or injured and experience catastrophic health care costs," Stack said.
Rich Umbdenstock, president and CEO of the American Hospital Association, said in a statement released by his office that the ruling "ensures continued access to health insurance subsidies for so many Americans. In the short time the subsidies have been available, hard-working people who are sick, need care for chronic conditions, or want preventive care have been able to seek care more easily. Most significantly, providing access to primary and preventive care helps improve the health and well-being of individuals, family and communities."
Dan Durham, interim CEO of America' Health Insurance Plans, said that "with the certainty provided by the Supreme Court's decision, now is the time to focus on what matters most to consumers—ensuring access to affordable coverage and high-quality healthcare."
"This is a real cry for cost transparency and for the billing departments of our hospitals and clinics and insurance companies to be more open," says a researcher with the American College of Physicians.
Only about 25% of internal medicine residents say they know where to find costs estimates for tests and treatments and that they can share those estimates with patients, according to a survey by the American College of Physicians.
"I was surprised that so few of the residents knew where to find costs of tests and treatments and that so few of them incorporated costs into any clinical decision-making," says study co-author Cynthia Smith, MD, ACP's Senior Physician Educator. "Patients are picking up more of those costs out of pocket and so they start to ask 'what are the relative costs?'"
ACP and the Alliance for Academic Internal Medicine designed the survey to determine U.S. internal medicine residents' knowledge of, attitudes toward, and self-reported practice of High Value Care, or care that balances the benefits, harms, and costs of tests and treatments. The IM-ITE helps residents prepare for the specialty certification exam.
Source: American College of Physicians
Smith says many of the problems identifying costs stem from a sector-wide lack of transparency in healthcare billing. "This is a real cry for cost transparency and for the billing departments of our hospitals and clinics and insurance companies to be more open," she says.
"A lot has been written about the variation of charges for various medical procedures and therapies and the lack of transparency. So it's very hard, particularly within your own clinical microenvironment to find out exactly what patients will be charged for what and combine that with insurance and the variability in insurance coverage, estimating what folks will pay out-of-pocket," Smith adds.
The survey also found that:
88% said they "incorporate patients' values and concerns into clinical decisions."
42% said that balancing the benefits, harms, and costs of treatments with faculty during patient care was discussed at least a few times a week.
Training hospitals' care intensity was inversely associated with self-reported incorporation of costs and patient values into clinical decisions but not with other self-reported behaviors.
46% said they "incorporate the cost of tests and treatments into clinical decisions."
More than 66% reported adequate knowledge of the benefits and harms of tests and treatments, offering patients alternatives, considering patients' values and concerns, and avoiding unnecessary care.
59% said they worked to reduce healthcare waste in their hospital or clinic.
85% said overuse was driven by defensive medicine, followed by diagnostic uncertainty (60.9%), patient demands (54.8%), and concerns about patient follow-up (47.1%).
ACP has an HVC initiative, which includes a curriculum for residents co-developed with the AAIM, designed to help doctors and patients understand the benefits, harms, and costs of tests and treatment options for common clinical issues so they can pursue care together that improves health, avoids harms, and eliminates wasteful practices.
"This is really important because physicians need to make informed decisions in collaboration with the patient sitting in front of them. Ideally, it would nice if we could create tools so this would be a synchronous process," Smith says.
"It's not just about saving the U.S. economy because we are spending too much on healthcare. It's really about the harm we are inflicting on individual patients when we don't talk about what the medication is potentially going to costs or if we don't understand the logistical or financial barriers to care that have a real impact on outcomes."
A hardship exemption is needed for physicians who've tried in good faith to meet the Oct. 1 implementation deadline, but who've been hamstrung by issues beyond their control, says the president of the American Medical Association.
Less than 100 days before the federally mandated switch to the ICD-10 diagnostic code, the American Medical Association is renewing its call for contingency plans to ensure that physicians struggling to meet the Oct. 1 implementation are not unfairly penalized, nor care disrupted.
"This transition to ICD-10, if it goes forward on Oct. 1, and that appears to be the current trajectory, [means] it is absolutely imperative that there is better end-to-end testing, a grace period, and hardship exemptions in place," says recently elected AMA President Steven J. Stack, MD.
Steven J. Stack, MD
Stack says the AMA has also called on Health and Human Services Secretary Silvia M. Burwell to exercise her prepayment authority "to ensure that claims get paid on a timely basis in those first weeks and months, and then as we navigate those early days of the transition so that the care system is not brought to a halt as hundreds of thousands of claims per day could potentially get disrupted."
Stack says physicians are not necessarily assuaged by assurances from the Centers for Medicare & Medicaid Services and ICD-10 advocates that sufficient testing is underway for the diagnostic code set that will replace ICD-9.
"Our major concern is that it is a 400% or so explosion in the number of codes," he says. "It's being treated like a flip-the-switch activity, where on Sept. 30 we use ICD-9 and on Oct. 1 one-fifth of the nation's economy is supposed to just on one day switch to an entirely new coding set that is over a 400% increase in the total number of codes."
"This fails to take into consideration that physicians are being compelled to do this at the same time that they are being compelled to do multiple different quality reporting programs, let alone all the private payer quality reporting programs," Stack says.
A survey of more than 800 providers released in March by the Workgroup for Electronic Data Interchange, found that only 25% of respondents had begun external testing of their ICD-10 capacity, a decrease from the 35% of providers who'd begun external testing in August, 2014.
However, the WEDI survey also found that the biggest hurdle was not so much the complexity of the implementation, but more the uncertainty around the Oct. 1 implementation date, which has already been delayed three times at the behest of the AMA and other provider associations.
"While the delay provided more time for the transition to ICD-10, many organizations did not take full advantage of this additional time and many providers are falling further behind," WEDI ICD-10 Workgroup Co-Chair Jim Daley said in remarks accompanying the survey.
The AMA has called for delays of the implementation, and even skipping ICD-10 and awaiting ICD-11, which by some estimates could become operable by 2020. However, Stack says the nation's largest physicians' society has also "moved forward in parallel to our advocacy because we have an obligation to ensure that physicians are as ready as possible so they can be there to take care of patients."
"We have encouraged physicians to follow guidance given by their organizations and by others that tell them to run the code set, compare their practices, make sure they prepare for what we are fearful will be significant disruption, where we could have physicians facing substantial disruptions with 10% to 20% of their claims starting Oct. 1," he says.
Stack says the AMA's call for a two-year grace period for physicians transitioning to the new code has been mischaracterized by some critics as foot-dragging.
"Our assertion for a two-year grace period does not very clearly assert that a person can code for a heart attack when in fact it was an ankle sprain," he says. "We are asserting that if we properly diagnose somebody with hypertension and say it's a new diagnosis, then the payers should not be able to deny a claim because we're unable to say that it was hypertension new diagnosis, secondary to renal disease, secondary to diabetes, secondary to poverty or some other things."
Lynne Thomas Gordon
"When we get to these layers of specificity that ICD-10 permits, it is very important that payers not deny payment for lack of some falsely perceived level of specificity that the physician may not be able to provide, particularly as we learn the new code set and find a new equilibrium with all of those who are using it," he says.
Stack says a hardship exemption is needed for physicians who've tried in good faith to meet the Oct. 1 deadline, but who've been hamstrung by software or clearing house snafus and other issues beyond their control.
"All of those things would imperil patient access because the physician has an interruption of their claims paying process and has no reimbursement coming in for claims," he says. "Patients are going to find it more difficult to seek care because the physician is going to struggle just to keep the office open."
Lynne Thomas Gordon, CEO of the American Health Information Management Association, says the AMA's contingency plans would create confusion.
"The end-to-end testing, we know based on the testing that has already taken place that only 2% of the errors in codes in the last testing period were due to ICD-10," she says. "There are always going to be problems. We are taking the time to do the testing and get it right. Will it be perfect on Day One? No, because it's change and everybody will be getting used to it."
Thomas Gordon says most of the survey data indicates that it is the rural and smaller physician practices that are having the most difficulty. "If I were the AMA and I was that concerned I would take a representative sample of my members and get them to test and see what happens," she says. "They want more testing, but why aren't they doing it now?"
"As far as the grace period, what they are looking for is "do the best you can for two years, but don't penalize us,'" she says. "I would hate to be a payer in that situation. I would hate to be a hospital trying to compare things. It would confuse the market. You'd have some people forging ahead with ICD-10. You'd have other people who weren't. I've even heard some people say this grace period is another term for 'delay.'"
As for the hardship exemption, Thomas Gordon says CMS has already said it will not penalize providers who are struggling with the implementation if they can show they've acted in good faith.
"However, if don't do anything and you don't prepare, they aren't going to," she says.
Thomas Gordon says about 50% of the approximately 68,000 new codes under ICD-10 are "lateralities."
"Left or right. Most physicians know that. It's 'did you break the right or left hip,'" she says. "As far as the remainder, physicians are just going to have to know their specialty. Doctors will become familiar with their areas."
Thomas Gordon was asked to predict how the ICD-10 launch will go on Oct. 1.
"For those who've prepared it won't be that hard," she says. "If people are waiting until the last minute and thinking there will be an extension, they will struggle more."
"It would be naïve to say that people shouldn't prepare, but it would also be naïve to say that there won't be a few bumps or that they don't need to monitor after the fact," she says. "It's like when you put in a new computer system. You get used to it, you tweak and adjust and go back and do some retraining. After a while people forget they even changed. Is it overnight? No. It won't be so smooth that people don't have to pay attention."
No money is being exchanged among the four hospitals that have agreed to form an alliance, but the members believe their combined scale will leverage savings and boost physician recruiting while preserving autonomy.
Four rural nonprofit hospitals in Southern Arizona have formed a hub-and-spoke alliance with Tucson Medical Center that they hope will allow them to remain independent while leveraging their combined scale to reduce costs, improve services, and bring more physicians into the desert.
Susan Willis
The nonprofit Southern Arizona Hospital Alliance was launched this week and includes critical access hospitals in Benson and Bisbee, and community hospitals in Safford and Willcox, all are located east of the TMC hub. Combined, the hospitals serve about 70,000 people.
Susan Willis,TMC's executive director for network development, and president of SAHA, says the five hospitals have a longstanding relationship that had never been formalized, until this week. No money is being exchanged among the hospitals, but Willis says the members believe their combined scale will leverage savings and boost physician recruiting.
"There will be greater collaboration around grant applications, and we are using TMC's status with VHA to improve purchasing power," Willis says, "but the greatest benefit to the rural hospitals, and their biggest challenge, is recruiting and retaining physicians in their communities; both primary care, recruited directly to their communities as well as specialty and sub-specialty visiting professionals."
Rich Polheber
"TMC has been successful in crafting unique relationships with specialty physicians and we have put rural outreach as one of the key deliverables of our service line agreement," Willis says. "We think we can leverage the strong building of relationships with our specialists to find creative new ways to get specialists consistently rotating through those communities and helping those patients get their care closer to home."
Rich Polheber, CEO of Benson Hospital, a 22-bed critical-access hospital about 48 miles southeast of Tucson, is board chairman for SAHA. He says the member hospitals want to strike that balance between the scale that comes with a system and the autonomy that comes with independence.
"Our board has made a decision that we don't want to merge with anybody else," Polheber says. "We think healthcare has a local focus and we are going to work to provide pre-eminent and quality care and do so through various alliances."
"In healthcare there are so many unknowns," he says. "This is going to be a bit of a journey, but for us, it is going to provide several things that we can't do by ourselves without this alliance with a larger high-quality delivery system. We are excited about it."
Polheber says much of the resistance in Benson to an outright merger or acquisition comes from a feared loss of local control, which he says is not unwarranted.
"I have worked in two hospitals that have become part of a system," he says. "When you're part of a system, it can happen that you're at the end of the food line and you don't quite get the attention from the organization and some of the support services are looked down upon as the poor mission hospital."
"This alliance clarifies our continuation of our independence and our responsibility to continue to drive revision, to work with our community, to pursue a whole series of initiatives," he says.
SAHA is also non-exclusive, which means that any member hospital is free to work with hospitals outside of the alliance.
"That gets more complicated when you are part of a closed system," Polheber says. "The other problem is the corporate overhead that gets assigned and you see money leave the community for the headquarters. We want that money to stay in the community and the only time it should leave is if we want to buy a service from TMC."
As for metrics, Polheber says it should be relatively easy to determine whether or not SAHA is working.
Recruiting and Managing Physicians
"On the physician side, it's 'do we have more specialty doctors available to patients in the community and do we have primary care?' To me that is our number one agenda item. If we can accomplish that we know this is fruitful," he says.
Benson has only five primary care physicians and needs at least four more to serve a year-round population of about 12,500 people that grows to more than 16,000 in the winter. The service area has no OB-GYN and is in dire need of cardiology and pulmonary services.
"TMC has a very strong relationship with their specialists so they can engage in meaningful dialog to get specialists who for economic reasons have historically said they don't want to spend the energy or time traveling to Benson," Polheber says.
Benson and TMC are negotiating now to recruit primary care physicians who would be managed by TMC.
"It's subtle, but it eliminates me having to manage a doctor in Benson who is now seen as competing with the rest of the doctors in the community," Polheber says. "That is strategically important because I want to engage in partnership with all of our physicians. When you start to manage a subset of doctors, unless you manage them all, it can get unhealthy in the way you work cooperatively with the physicians in the community."
Other SAHA metrics will be easy to measure.
"If our costs per patient day begin to go down as a result of lower supply costs that is an easy metric we track now," Polheber says. "We'll also look at employee surveys and satisfaction levels about their opportunities. In about one year from now we'll do a survey to see if there's a buzz in the community that people are appreciative that this alignment exists and that there is a relationship with TMC that gets a good housekeeping seal of approval."
Emergency department visits should increase as the people of Benson learn of the affiliation with TMC for emergency services and admitting.
"If you have a diagnosis and we can't keep you here, we have a guaranteed 15-minute commitment for a bed at TMC," Polheber says. "That is unheard of! That's good because people could end up going to TMC faster than they could by going to the emergency room at TMC."
Willis sees opportunities in the coming years to pool resources on electronic health records and telemedicine. "That could be a longer-term outcome," she says. "In the meantime we are trying to find the most efficient and effective ways to hand off medical information because we do transfer a lot of patients back and forth between these communities and Tucson."
At some point, Willis says, SAHA likely would consider bringing in new members "as long as it's a good fit for us that would make good sense."
"Right now it's important that collectively we deliver on what we are intending to do, which is to make things better for the five of us," she says. "It makes sense to get going with what we have right now."
Many of the health issues that plagued rural America a decade ago are still prevalent today, research finds. "It is very discouraging," says the director of Southwest Rural Health Research Center.
We know the healthcare challenges facing the 60 million Americans living in rural areas, a population that is generally older, less-healthy, and less-affluent than people living in urban areas.
The health issues for rural America are variations on a theme. In one region, the leading health concern might be diabetes and obesity. In another area it might be substance abuse, or mental health, or oral health.
The underlying problem that ties these all together, however, is access. The plain fact is that there aren't enough providers in rural America to cover the people who live there.
A new guidebook out this week from Texas A&M School of Public Health makes this abundantly clear. Rural Healthy People 2020 is a follow-up report coming a decade after the highly successful Rural Healthy People 2010.
Thumb through this reference book, which compiles stats and data from a number of sources, and you get the impression that living in rural America is hazardous to your health.
For example, RHP 2020 notes that people with a health emergency who live more than 30 minutes from a hospital emergency department have a 46% mortality rate, compared to a 21% mortality rate for people living within 30 minutes of an ED.
RHP 2020 notes that while 17% of the U.S. population lives in a rural area, only 9% of primary care physicians practice in rural areas.
Jane Bolin, PhD, JD, BSN, senior editor of Rural Healthy People 2020 and director of the Southwest Rural Health Research Center, says it's difficult to determine if rural healthcare delivery has progressed over the past 10 years.
"I wouldn't say the problems have gotten much worse, but the priorities have remained the same and many of the problems, not for lack of trying, have remained the same," Bolin says. "People are trying to address these issues, but it's difficult."
"The takeaway we found for Rural Healthy People 2020 a decade later is that many of the issues remain the same, many of the goals have not been met. There has been some modest progress in target areas, but there continue to be significant concerns expressed about access to healthcare, either insurance, emergency care services, and primary care services."
The study ranks the top issues facing rural healthcare providers, based on the survey responses of more than 1,200 providers from across the country.
The closure of more than 50 critical access hospitals across the nation in the past five years–and the threat of a nearly 300 hospitals closing in the near future–represents the greatest threat and challenge to rural health.
"It is very discouraging when we are continuing to deal with closures of critical access hospitals and reduced payments to doctors," Bolin says. "These small rural hospitals are doing everything they can, they're operating with no margins. They're losing money. It's really tough for them."
Health Challenges
Nutrition and weight status in rural America moved from No. 10 in RHP 2010 to No. 2 in the latest survey, just ahead of diabetes.
"Many people consider those to be part and parcel of the same issue," Bolin says. "People are becoming more obese, yet they seem to live in food deserts where there is just junk food, and diabetes rates are continuing to climb."
Mental health and access to mental health services climbed to No. 4 on the list. That's not surprising, Bolin says, because more than 85% of mental health professional shortage areas are in rural areas.
"Depression and diabetes go hand in hand. They have high rates of comorbidities," Bolin says.
"There hasn't been the same concern shown for reimbursement for mental healthcare services, although that is beginning to be addressed under the Affordable Care Act. In many rural areas, their only recourse for someone acting out violently or who is causing disturbances with mental health problems is to put them in jail. That is hardly adequate for someone who needs mental healthcare services."
Topping off the Top 5 is substance abuse, tracking right behind mental health issues, which really is no surprise. People who don't have access to proper mental health services likely will self-medicate with whatever may be more readily available. For example, nonmedical prescription opioid abuse is raging in many parts of Appalachia.
Other areas of concern identified in the survey include heart disease and stroke, a lack of physical activity, and tobacco use.
Poverty Pervasive
Many of these problems affecting rural America play out in a backdrop of grinding poverty. The study notes that two-thirds of rural counties in this country have poverty rates at or above the national average. In rural Florida, for example, the poverty rate is at the historically high level of 20.3%.
Related to this poverty is the scarcity of jobs, the relatively low pay of the jobs that do exist, and the higher mortality and injury risks associated with jobs in agriculture, mining, fishing, and other manual labor common in rural areas.
Bolin and the team at A&M who compiled Rural Healthy People 2020 should be commended for providing a valuable resource that doesn't sugarcoat the problems facing rural America.
If you care about rural health, download the study and keep it as a reference. Better yet, make sure that every media source you know, and every elected official from the town selectmen to your U.S. Senator has a copy of this reference.
The problems are right there in front of us, in every state in the union. The job of rural advocates is to make sure people see them.
