In this study, Dr. Ashraf A. Hilmy, with a surgeon's objective, no-nonsense precision and an unabashed lack of political correctness, dissects the current state of health-care delivery in America. In practice since 1979, he is board certified in surgery, anesthesiology, critical-care medicine, and health-care administration. He received an MBA from the University of Texas, Pan Am with an emphasis on health-care administration. He has served as both chief of surgery and staff at several institutions and has practiced in every scale of facility-solo, partnership, and group practice. Dr. Hilmy is uniquely qualified to render an informed opinion about health care in the United States. In his professional judgment, there is no question that the current system is faltering and in need of radical reform. No other country in the world spends so much on health care and has so little to show for it. Written with the layperson in mind, Health-Care Reform offers insightful, well-researched, supported arguments. Though it does not set out to offend anyone, people will be offended-as a portion of the drivers of escalating health-care costs are laid squarely on their shoulders. Health-Care Reform addresses how health care is delivered in America. By comparing our delivery system to those used around the world, Dr. Hilmy breaks down different cost drivers with anonymous case examples, and finally, offers suggestions for realistic reform.

Health-Care Reform

A Surgeon's PerspectiveBy Ashraf A. Hilmy

iUniverse, Inc.

Copyright © 2012 Ashraf A Hilmy, Hilmy, MD, MBA, FACS, FACHE
All right reserved.
ISBN: 978-1-4759-5230-8

Contents

Introduction...................................................................viiChapter 1: Health-Care Delivery in the United States...........................1Chapter 2: Comparative Health-Care Delivery Model Analysis.....................11Chapter 3: Drivers of Health-Care Costs........................................19Chapter 4: Specific Examples of Anonymous Cases................................39Chapter 5: Meaningful Reform...................................................57Chapter 6: Postscript/Obamacare................................................95Conclusion.....................................................................99Bibliography...................................................................101

Chapter One

Health-Care Delivery in the United States

About half of the health care delivered in the United States is done by private, physician-owned practices, down from 70 percent in 2002 to 50 percent in 2008. This statistic does not differentiate between independent hospitals hiring physicians and integrated healthcare systems hiring physicians. It also does not differentiate between physicians employed by the government (Veterans Administration, National Health Service) and large, integrated health-care systems. Indeed, the overall number of employed physicians is increasing and is projected to grow by 24 percent between 2010 and 2020, according to the Bureau of Labor Statistics.

But that does not mean that they are being employed by large, integrated multispecialty group practice organizations such as the Mayo Clinic. These statistics pool all employed physicians into one big pot. There is a big difference between being employed by a standalone hospital as a hospitalist (a primary care physician who practices at the hospital without an outpatient practice) and being employed by a large, integrated, multispecialty health-care system. Though the physician is employed, and thus will be a statistical number adding to the pool of employed physicians, that employment model does not offer the advantages of a comprehensive health-care system, as will be illustrated.

With the exception of a few large multispecialty group practices—Mayo Clinic, Scott and White, Kaiser Permanente, and Marshfield Clinic, to name a few—the majority of health care is delivered through small, mom-and-pop or cottage industry practices on a fee-for-service basis. The introduction of the group practice model occurred around the turn of the twentieth century. It was pioneered by the Mayo brothers in Minnesota and by Garfield and Kaiser around the Great Depression at a time when that concept was unheard of.

Under the current model, payment flows from the payer source—private insurance, Medicaid, Medicare, and private pay—separately to providers, which include hospitals, medical practices, and ancillary providers (labs, outside radiology centers, etc.). There is no integration of services or resources between these providers. It's a free-for-all model with everyone billing separately for their services (fee-for-service).

The cottage industry model consists of multiple independent practices—family practice, internal medicine, surgeon, cardiologist, gastroenterologist, etc.—that are all geographically and otherwise independent of each other. Each practice has its own record keeping. Some have paper charts and others electronic medical records of varying types that do not communicate with each other or with hospital medical records. Without the pooling of resources, the cost of advanced information technology that would allow for all physicians to have access to a common electronic medical record is out of reach. Consequently, each practitioner does not have immediate access to information contained in other medical records. Each practice has its own billing and administrative staff, all of which could be pooled together to serve a larger group practice for a fraction of the cost.

There isn't an overseeing body that could implement best-practice guidelines and insist on evidence-based medicine as the gold standard to be emulated. Each practitioner is independent and answers to no one. There is no accountability because there isn't a physician employer. There is no group organizational culture. There is also no economic credentialing. For example, when comparing the cost of health-care delivery among different physicians for similar outcomes, if it costs the system twice as much for me to remove an appendix than it does my colleague and the outcomes are similar, then I'm costing the system too much money compared to my colleague, and I should be counseled accordingly.

At the end of the day, the cottage-industry physician answers to no one. He is not held accountable for the cost of care that is being delivered or for the best practice guidelines that are to be emulated. His compensation is dependent upon how many procedures he does. His financial rapport with his colleagues depends upon referring patients to them for further testing, and the "scratch my back, I'll scratch yours" principle takes hold. Also consider this in light of the "cover my ass" medicine that is practiced in fear of medico-legal retribution. Everyone is scared of being sued, so many times multiple experts are called in to manage cases. There is an old saying in medicine: "It is easier for six people to carry the coffin."

In cottage-industry medicine, physicians have no allegiance to any particular hospital, laboratory, or imaging center, so patients are sent to various facilities for fragmented portions of their care depending on the preference of the treating physician. There is no pooling of resources, so each medical encounter is a new one for the patient. There is no common medical record, so needless documents are generated and regenerated. Diagnostic tests are repeated over and over at the discretion of the treating physician. There is no medical home for the patient.

Frank, a sixty-seven-year-old man with a history of diabetes, high blood pressure, and heart failure, presents to the emergency department of hospital X at 10:00 p.m. with complaints of abdominal pain, nausea, and vomiting. The emergency medicine doctor on duty evaluates the patient. A decision is made that the patient needs to be admitted to the hospital for further evaluation and treatment of his abdominal pain, which is believed due to acute cholecystitis—an inflammation of the gall bladder—and for management of his diabetes and heart failure, both of which are out of control.

Frank's primary medical provider does not practice at hospital X and so does not come to take care of Frank's medical needs. The emergency department does not have access to Frank's medical records from his primary provider. There is no way to know what has been done for Frank's diabetes and heart failure, like what medicines he has been given, what tests have been done, and what treatment strategies have been implemented. Similarly, the treating physician does not have access to the evaluation that was done for Frank at another hospital, hospital Y, a couple of days earlier for the same complaints.

Another barrage of tests is ordered—blood work, an echocardiogram, a CAT scan of the abdomen, and an abdominal ultrasound, all of which have been done at another facility just days before. The same conclusion is reached: Frank has a bad gall bladder that needs to be surgically removed. The previous hospital evaluation led to a recommendation that Frank should follow up with a surgeon for a cholecystectomy—an operation to remove his gall bladder. Frank needed a referral from his primary doctor to see a surgeon, and his primary physician made an appointment for him a week later, but his symptoms increased, prompting his visit to the emergency department. Though his doctor referred him to hospital Y, Frank preferred hospital X because it was closer to his home and had a friendlier staff.

So Frank is admitted to hospital X, where a team of the hospital's doctors—internal medicine doctors who limit their practice to the hospital setting—a surgeon, and a cardiologist are caring for Frank. He is medically optimized and undergoes a cholecystectomy. His medications are adjusted to manage his diabetes and his heart failure, and he is discharged home. The medical doctors who adjusted his medications do not have any follow-up arrangements for Frank because they are not his primary care team, and his primary doctor has no idea that his medications have been changed.

Frank is confused by his new medication schedule because it conflicts with what his doctor had prescribed, so he doesn't stick to the schedule that was arranged for him at the hospital. Within a week, he is readmitted to the hospital with worsening heart failure. Though Frank's case is fictional, used it to display the shortcomings of our system, it is historical fiction that I have conjured from multiple similar cases from my practice. This really happens day in and day out.

There is absolutely no incentive for physicians to limit the cost of patient encounters. In fact, it is quite the contrary. A physician is financially rewarded for doing more. That is how the fee-for-service reimbursement system works. A doctor is compensated based on the number of encounters, the complexity of the encounter, and the interventions done. As Atul Gawande pointed out in his 2009 New Yorker article, "The Cost Conundrum" (Gawande, 2009), patients are ATM machines for doctors. They are passed on from one practitioner to the next, and all the practitioners do countless procedures in a fee-for-service model with no accountability whatsoever.

According to the Center for Medicaid and Medicare Services, there is tremendous variability in the cost of delivering health care. Medicare expenditures per enrolled patient in Miami, Florida, are twice the amount spent in Minneapolis, Minnesota, for similar patients (Dartmouth Atlas of Health Care, 2012). There is no economic credentialing or accountability.

There are numerous legal and societal pressures on physicians to do more and more. I can absolutely tell you without a fraction of a doubt that a large percentage of what we do is called "CYA"—cover your ass! With the current malpractice system, physicians are terrified of being sued. We order all sorts of unnecessary tests to make sure we don't miss that one-in-a-million chance of a rare disease or presentation to protect ourselves from malpractice attorneys. We provide services that most of the world would deem unnecessary. We have nursing home patients who are in their eighties and nineties in a vegetative state, with no meaningful quality of life, who are subjected to numerous interventions. There is no cost accountability for families because the family members are not financially responsible for the cost of health care delivered to Medicaid and Medicare recipients. The indigent family members of an eighty-nine-year-old, demented, vegetative state nursing home patient whose dialysis funding comes from Medicare have no financial obligation. They don't have a dog in the financial fight. They say, "Let's keep dialyzing Grandma; it's costing us nothing." I will get into cost drivers later in the book, but first I will give you an introduction to the practice of medicine in our country.

Let's begin by examining how we pay for health care in the United States. The payment pool is divided into private insurance, private pay (which is frequently equivalent to no pay) health maintenance organizations, and military insurance. In 2004, a study conducted by the US Department of Health and Human Services found that the sources of insurance coverage for the US population are distributed as follows: employer-provided (60 percent), Medicare (14 percent), and Medicaid/SCHIP (State Children's Health Insurance Program) (13 percent). Slightly smaller percentages are covered either by insurance purchased directly (9 percent) or military insurance (4 percent). That leaves a remaining 16 percent of the total population—50 million Americans—who are classified as uninsured. So that means that the other 84 percent are fine and dandy, right? Not! Insurance premiums are outrageously high, so many people raise their deductibles to make their monthly payments more affordable. And let's not forget about the 20 percent co-pay on major medical expenses. Just because you have insurance doesn't mean you're off the hook.

Imagine that you are a gainfully employed father of three working for "the man." You live in the suburbs making a salary of $125,000 a year. Your oldest kid has a paper route, and your wife pulls in a cool $60,000 managing a medical practice. All of this makes you one of the lucky well-to-do employed Americans with a stable job and health insurance. Many people would love to have that kind of income and have insurance to boot.

Now let's say your luck happens to change, and you are afflicted with a form of leukemia! You are told that a bone marrow transplant is needed at a cost of $50,000 to $200,000. That doesn't include the other hospital and doctors' bills on top of that. For starters, your out-of-pocket expenses are usually 20 percent of the total cost, and then you can look forward to the grind of spending thousands of dollars a month on maintenance meds (Erbitux, an anticancer drug, costs about $10,000 a month). Imagine that you are told all of this, only to learn that your insurance company will not cover you any longer because you have maxed out your lifetime benefit allowance. Things are not so rosy anymore, are they?

Actually, you are fine if you fall below the poverty line or are disabled because you automatically qualify for Medicaid or Medicare coverage. You can't get turned down by any emergency room, and you will have no worries about co-pays or deductibles because you will have no resources to pay for them, and your credit score will be the least of your worries. You're also fine if you're in the upper echelon of society and can afford insurance, deductibles, and co-pays.

According to a recent Time Magazine article, a Pew Research Center survey found that half of all Americans self-identify as middle class (Suddath, 2009). These are the folks who hurt—people who are employed in small businesses, teachers, and nurses. The cost of providing or supporting health insurance becomes prohibitive and cuts into the economic stability of the business or individual. This in turn cuts into consumers' discretionary income and decreases national economic activity.

According to studies, 13 to 17 percent of Americans (45 million) live below the US government's defined poverty line. Poverty is defined by the US Department of Health and Human Services (2011) as an annual household income below $22,350 for a family of four. According to the US Census Bureau, 40 percent of Americans will dip below the poverty line over a ten-year period, and 58 percent will spend one year living below the poverty line.

As a small business owner, I write off approximately 15 to 20 percent of my work as charity. I am obliged to care for uninsured patients who come into the hospital. I also care for private patients for humanitarian reasons. I am not about to turn away a patient with breast cancer because she or he can't afford my bill—and yes, breast cancer does occur in males.

I am forced to participate in Medicare's fee program if I want to be paid directly by Medicare. I can opt out of Medicare, which allows me to bill the patient directly at my nondiscounted fee. However, Medicare will pay the patient at their discounted fee, and then it's up to me to collect the the remaining fee from the patient. The majority of my Medicare patients are not sitting in a pretty place financially, so there is no guarantee the patient will actually pay my fee. As a result, it is much better for me to accept Medicare's rates and get paid directly by the government. This program means I cannot balance-bill patients for the difference between my fee schedule and Medicare's allowed charge.

For example, I may charge $3,000 to perform a gall bladder operation, but Medicare only allows $700, and Medicaid allows $560. I can opt out of the program, which means I can bill the patient directly for $3,000 and hope to get paid. The patient will submit paperwork to CMS (Centers for Medicare & Medicaid Services) and collect the allowable amount from CMS and owe me the balance. My other choice is to opt in, which allows me to bill CMS for the discounted amount, which will come straight to me. Similarly, insurance companies force physicians to accept a negotiated fee for their services so they can become preferred providers. Refusing to accept the negotiated fee results in physicians being classified as out-of-network, which places significant limitations on the eligible patient pool for that physician.

Actually, relative to inflation, Medicare's reimbursment has dropped about 25 percent over the last decade ending in 2008. I am earning 25 to 30 percent less for the same procedures that I do now than I did ten years ago! This steady drop in reimbursement, coupled with the increasing complexity of managing a medical practice, has taken its toll. More manpower hours are required as my office staff jump through hoops to deal with appeals for denials and more administrative bureaucracy than ever before. The cost and complexity of doing business continues to rise steadily as the rate of reimbursment by Medicare continues to drop for the same services. As a result, my fee schedule cannot even keep up with the consumer price index for health care.

Now consider a retail store (Dillards, for example) that has lost inventory in a warehouse fire or theft or has lost revenue to bad debt. According to accepted US accounting standards, the loss can be written off as a business loss or bad debt. This means that the company can deduct that amount off its total annual revenue so it will not be taxed.

Well, guess what? I can't do that. If I spend four hours operating in the middle of the night to save a patient involved in a car wreck or lose office productivity because I had to cancel my elective patients to take care of an uninsured patient with acute appendicitis, I can't write that loss off as bad debt. I also cannot write off any of the mandatory negotiated fee schedule variances between what is allowed and what I typically charge private-pay patients. All lost revenue to bad debt on insurance co-pays and deductibles is also out the window, and I cannot write it off as bad debt. This seems like a double standard, doesn't it? It is!

0After all, we live by the golden rule: he who has the gold makes the rules! Well, doctors surely don't have the legislative gold; lawyers do. Lawyers make the rules. Lawyers comprise the backbone of American government. Doctors really don't have a say in government. The American Medical Association is rivaled by numerous other organizations with lobbying powers—the American Civil Liberties Union, chambers of commerce, the National Rifle Association, and the National Trial Lawyers Association, to cite a few. All of these may have more influence than the AMA because there are more vested interests politically holding hands with them than with the AMA.

(Continues...)

Excerpted from Health-Care Reformby Ashraf A. Hilmy Copyright © 2012 by Ashraf A Hilmy, Hilmy, MD, MBA, FACS, FACHE. Excerpted by permission of iUniverse, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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