‘Death by a thousand pinpricks’

Travis Singleton, senior vice president at physician recruiting firm Merritt Hawkins, said it is hard to finger one or two culprits for the declining number of physician practices.

“It’s death by a thousand pinpricks. It’s the movement to accountable care organizations and patient-centered medical homes. It’s the changes in the delivery of care. It’s compliance pressures. You have to hire consultants for electronic medical records (implementation). That costs money,” he said.

Singleton said the pressures and difficult economics of solo physician practices foreclose that option for medical students, most of whom face large student-loan debts when they are looking for jobs.

“It’s easy to say they (medical students) don’t want to be a solo practitioner. That’s not reality. They may like the autonomy and generational medicine. But they will never have the chance to do it. There are so many challenges facing that delivery model. And that’s a shame,” he said.

Consider:

  • The percentage of U.S. physicians who practice outside a hospital, clinic or large group fell to 39 percent in 2012, down from 57 percent in 2000. Of those who abandoned their independent practice, 87 percent cited the cost of doing business, 61 percent blamed managed care and more than half mentioned electronic health records. Of those who expect to remain independent, 1 out of 3 said they plan to turn to a subscription-based care model, such as concierge and direct-pay practices. Accenture, which conducted the survey, predicted that subscription-based models would double annually for the next three years.
  • According to a poll by Sermo, a website for physicians, more than 1 out of 4 physicians admitted they had been forced to close, or were considering closing, their solo practices. They cited high overhead costs, high malpractice-insurance costs and low reimbursement rates.
  • According to QuantiaMD, another website for physicians, more than 1 out of 4 primary-care physicians reported poor financial health. Among those feeling financial pressure, 81 percent saw profits fall in 2011 and nearly half had trouble covering costs. Like Jordan, most cited falling reimbursement and the rising costs of practice.
  • One out of 3 physicians say they plan to quit their practice in the next decade, according to a survey by Atlanta-based physician recruiter Jackson Healthcare. Of those who said they plan to quit, a majority cited economic factors and health reform as major reasons.
  • More than 75 percent of newly hired physicians will be hospital employees within two years, compared with 11 percent eight years ago, according to Merritt Hawkins. Of its 2,700 searches in 2011 and early 2012, only 2 percent were to fill positions in solo practices, compared with 42 percent in 2004.
  • The share of physicians who own their firms dropped from 57 percent in 2000 to 43 percent in 2009, and was expected to fall to 33 percent by 2013, according to Accenture.

Only 1 out of 4 physicians say they plan to continue practicing as they are, while half said they plan to exit the traditional full-time independent private-practice model. One of the demographic imperatives driving this is the fact that 1 out of 4 U.S. physicians are 60 or older.

However, more than half of physicians said they changed their retirement plans since the 2007-09 recession. About 7 out of 10 of that group said they planned to work longer than they had anticipated because of decimated personal savings. Conversely, some said they were leaving full-time practice for other reasons: the uncertainty of health reform, the rising cost of doing business or that they simply no longer enjoyed their life’s work.

The percentage of physicians in independent practice has been declining by 2 percentage points annually, a reduction that was expected to accelerate to 5 percentage points annually by 2013, according to the AMA. In a 2011 survey of health-care organization executives, 2 out of 3 said they were receiving more employment requests from physicians and they planned to increase their physician hiring over the next three years.

Moreover, third-year medical residents increasingly are bypassing independent physician practices to work as salaried employees in hospitals and larger medical organizations. About half said they were ill prepared to handle the business side of medicine because they received no formal instruction in medical school on how to negotiate contracts or manage reimbursement. It is especially disheartening that 3 out of 10 third-year medical residents said they would choose another career if they had the opportunity – compared with about 1 out of 10 in 2008.

Insurance reimbursements are inadequate to cover rising practice expenses. According to the Medical Group Management Association (MGMA), practice expenses per physician have risen more than 50 percent in the past decade, compared with a 28 percent rise in the Consumer Price Index and a 3 percent increase in Medicare reimbursement.

Physicians’ search for safe harbor is not the only factor driving consolidation in health care. A weak U.S. economy, capital investment needs and the desire for more market power fueled and acquisitions (M&A).

There were more than 1,000 M&A deals in health care in 2012. That year was one of the most active in the past decade. On the other hand, the aggregate dollar value of those transactions was nearly the lowest in a decade, suggesting that smaller organizations were likelier acquisition targets.

Physician practices were among those with the largest growth in mergers from 2011 to 2012, with transactions valued at $4.4 billion in 2012.

 

Physicians selling their practices

In 1994, when Dr. Louis McIntyre joined Westchester Orthopedic Associates in Westchester County, N.Y., the 3,000-square-foot office had nine employees, including four orthopedic surgeons. The following year, the practice spent $500,000 to move into an office that was twice as big, to accommodate workers newly hired to handle the clerical demands of managed-care insurance plans, such as insurance verification and pre-authorizations.

 In 1995, the practice needed only one employee to verify and authorize treatment. It quickly grew to one employee for every doctor to complete those tasks. The annual cost of malpractice insurance for each doctor rose from $40,000 in 1994 to $110,000 in 2010. The practice unsuccessfully tried to negotiate increased insurance reimbursement rates to offset the rising costs. It formed a network of orthopedic surgeons to attempt to improve the economic power of private practices, but was stymied by antitrust laws.

Westchester Orthopedic decided to meet these challenges head-on with aggressive expansion. It added more physicians and ancillary services to boost revenue. It bought a Magnetic Resonance Imaging (MRI) machine. It spent $500,000 for an electronic medical records (EMR) system. It spent $5 million to build an ambulatory surgery center adjacent to its office.

All told, Westchester Orthopedic spent $6.5 million. It grew revenue from $2 million in 1994 to $5.4 million in 2007, and employed nearly 50 people by that year. The surgeons did this despite the fact that reimbursement rates were falling. The American Academy of Orthopaedic Surgeons (AAOS) estimated that orthopedic surgeons’ Medicare reimbursement decreased 28 percent from 1992 to 2007. Commercial insurance reimbursement fell similarly. Then came the American Recovery and Reinvestment Act of 2009, which required an EMR upgrade to satisfy “meaningful use” criteria. The following year brought the Affordable Care Act (ACA), with its quality-reporting requirements and risk-based reimbursement.

 In 2012, Westchester Orthopedic threw in the towel and sold its practice to White Plains Hospital. According to the AAOS, hospital employment of orthopedic surgeons tripled from 2004 to 2010.

A study by the Medical Society for the State of New York in 2009 showed that the private practice of medicine was the fifth-largest employer in Westchester County, second among business establishments, third in paying personal income tax, and seventh in paying corporate sales taxes. With the acquisition by a nonprofit hospital, the federal and state corporate and sales taxes paid by Westchester Orthopedic vanished.

 McIntyre said, “The combination of decreased reimbursement, increased reporting requirements, the need for huge outlays for technology improvements and uncertainty about future earning potential is driving private-practice physicians to seek employed positions.”

 Dallas family physician Darrel Jordan, who closed his practice in July 2012, wrote a letter to his patients saying, “… the changes by the Affordable Care Act (i.e. Obamacare) are designed to add additional stressors and expenses to small doctor practices. This will make small physician offices unlikely to remain open past 2015.”

Jordan said the economics of a solo physician practice simply do not work anymore. He said his reimbursement had declined 30 to 40 percent from 3 to 5 years ago as practice expenses continued to rise. He said two physicians in neighboring offices were quitting their practices as well.

“I am on the cutting edge of change for all of us (solo physicians),” he said. “We are in one of three stages: those of us who are changing our careers now, those planning to change their careers, or those who are in denial.”

 

ACOs: Putting health care on a budget

Payers are eager to put health care on a budget.

Accountable care organizations (ACOs) are groups of doctors, hospitals, and other health-care providers that come together voluntarily to give coordinated, high-quality care to the Medicare patients they serve. Coordinated care helps ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending health-care dollars more wisely, it shares in the savings it achieves for the Medicare program.

ACOs spread swiftly. In spring 2013, 52 percent of U.S. patients lived in primary-care service areas served by ACOs, compared with 45 percent just six months earlier. About 30 percent lived in areas served by two or more ACOs, which was double the rate six months earlier.

However, ACO expansion seems to have lost some steam. After the Centers for Medicare and Medicaid Services announced 106 new Medicare ACOs in January 2013 alone, only 35 new commercial ACOs were announced in the subsequent 10 months.

David Muhlestein of Leavitt Partners, which tracks ACO formation, said there were several reasons for the slowdown. He said there is a lack of widespread acceptance of the model by commercial insurers, and there is no clear model for success. He said many organizations are waiting to see if ACOs renew their contracts with commercial payers, which would signal whether they are succeeding.

Nonetheless, ACOs are expected to be the most prevalent value-based model for health plans, according to Availity Health Information Network.

The report surveyed respondents on their strategy for adopting value-based models such as ACOs, PCMHs, payment-for-coordination, pay-for-performance for physicians and hospitals, and bundled payments. Nearly 9 out of 10 health-plan executives said they either had implemented or were planning to implement an ACO in the next 12 to 18 months. They also planned to automate information exchange with physicians in the same time period to implement or expand VBP.

More than half of physicians say they are skittish about entering into Medicare-based ACO agreements with the ever-looming SGR, according to a survey by MGMA. However, most said they would be much more likely-–or somewhat more likely—to consider new payment models if Congress passed legislation that would stabilize Medicare reimbursement for five years.

Nearly 2 out of 3 physicians surveyed by athenahealth and physician social website Sermo said the shift to ACOs would diminish quality of care, and that such quality generally will deteriorate over the next five years.

Physicians who said they were willing to participate preferred a pay-for-performance model to bundled payments and shared savings agreements. Of the specialties, nearly 3 out of 4 anesthesiologists said they were willing to participate, compared with less than half of emergency-medicine physicians. Pay-for-performance is an umbrella term for financial incentives to improve quality and efficiency of care and patient outcomes.

The number of physicians participating in ACOs or planning to do so has tripled between 2012 and 2013, according to Medscape’s 2013 Physician Compensation Report.

In 2012, 8 percent of the nation’s physicians were either in an ACO or planned to be in one within the year, according to the 2012 survey. This year, 24 percent of respondents are in an ACO or plan to join one within the year.

About 4 out of 10 physicians are unwilling to participate in an accountable care arrangement, according to a survey by LocumTenens.com, a physician-staffing firm.

Paul Ginsburg, president of the Washington-based Center for Studying Health System Change, said physician-led ACOs could have more opportunities to create savings in patient care if health insurers cooperate.

“I think physician-led ACOs inherently make markets more competitive because they have an opportunity to shift patients toward higher-value hospitals,” Ginsburg said. “It means that a hospital market that might not have large competition going, all of a sudden, if there’s a physician-led ACO, those hospitals have to compete on price for the allegiance of those physician-led ACOs.”

Ginsberg pointed out that doctor-led ACOs are not compromised financially by reducing hospital admissions and emergency department visits.

Physician-led ACOs dominate

The number of physician-led ACOs has surpassed the number led by hospitals.

Of those choosing to start ACOs, physicians—and specifically independent practice associations—are increasingly taking the lead. The reason is incentives. Physicians can increase their incomes under shared-savings programs. Hospitals lose money when they strive to keep patients healthy and out of the hospital.

Regardless of whether physicians participate in ACOs, they should prepare for the changes ACOs could bring to practice patterns. According to medical publisher DecisionHealth.com, there are five ways ACOs will affect nonparticipating physicians:

  • Expect a reduction in referrals at specialty practices.
  • Get ready to deal with an ACO if you are a primary-care provider, because many specialists will be part of ACOs.
  • Prepare to compete for patients based on customer service, because ACOs will be motivated to keep patients within their networks.

The end of fee-for-service

Regardless of all the payment reform talk, fee-for-service is not going away soon.

Only 11 percent of commercial health-care payments to doctors and hospitals is tied to performance or designed to cut waste, according to a new National Scorecard on Payment Reform by Catalyst for Payment Reform (CPR). That means 89 percent of payments are made on the traditional fee-for-service basis, without quality or other performance components.

Among payments tied to value, just 60 percent involve providers’ taking on a share of the risk, meaning they stand to lose money if they do not meet certain quality and efficiency measures or if they exceed a budget. The rest are in programs such as pay-for-performance, which offer incentives for providing high-quality care, but do little to discourage overuse or inappropriate care.

CPR, an employer-founded nonprofit focused on creating greater value in health care, is aiming to have at least 20 percent of health-care payments be value-oriented by 2020. However, UnitedHealthcare says as much as 60 percent of its business could be value-based by 2022.

The risk of compensation exposure is tied to what roles physicians occupy in the health-care system. About 50 percent of surveyed medical directors say their compensation are tied to patient stays, safety and satisfaction, according to the MGMA, while only 4 percent of physician pay is linked to quality metrics.

Value-based purchasing (VBP) links information on the quality of health care, including patient outcomes and health status, with financial data. It focuses on managing the use of the health-care system to reduce inappropriate care by rewarding the best-quality providers.

A UnitedHealth Group report estimates payment reform could save anywhere from $200 billion to $600 billion over 10 years. However, physicians clearly are not on board.

According to a Harris Interactive survey, 6 out of 10 physicians believe the fee-for-service system encourages them to deliver “an appropriate amount of care” and that capitation puts too much risk on the provider. Only about 1 out of 3 believe fee-for-service encourages excessive or expensive care.

Physician engagement is critical in the process. However, 9 out of 10 physicians say their greatest financial concerns about VBP are receiving inadequate reimbursement and being penalized for circumstances out of their control.

According to an MGMA survey, physician practice executives said working with payers to implement new payment models was an intense challenge in 2013. That concern ranked only behind rising practice expenses.

Most practices said they wanted to explore new Medicare payment models, but were reluctant to do so because of the ever-present threat of the SGR cuts.

The whole concept of pay-for-performance incentives has been called into question. There is some evidence that such incentives reduce creativity and motivation in tasks as complex as practicing medicine, and that they may redirect attention away from tasks that are not being measured. A Robert Wood Johnson Foundation essay argued that pay-for-performance schemes need to capitalize on the inherent desire by most physicians to provide excellent care while striving for a mastery of skills, professional purpose and autonomy.

A Cochrane Collaboration review of studies found no evidence that pay-for-performance financial incentives improved patient outcomes or quality of primary care.

Remarkably, about 1 out of 4 physicians said they did not know whether they were participating in any pay-for-performance programs.

Health-care executives sense the obvious resistance.

Paul R. Goldberg, CFO of Jersey City, N.J.-based LibertyHealth: “The medical staff is always the hard part of the process. Doctors aren’t seeing anything (economic) on their side related to this (VBP).”

Peter J. Holden, president and CEO of Jordan Hospital in Plymouth, Mass.: “I told (the physicians) front and center that if you don’t learn and you don’t embrace and you don’t exert influence on what’s coming, you could be one class away from painting houses.”

John Hensing, Phoenix-based Banner Health’s executive vice president and chief medical officer, said that a physician’s age often influences his or her reaction to VBP. “If you’re 60 years old, ride it out. If you’re 50 years old, fight it. If you’re in your early 40s, you say, ‘What does the future hold for me, and what am I going to do about it?’ And if you’re just starting out, you may say, ‘That’s the way things have always been.’”

Passing the baton: Will patients take it?

In the public areas and examination rooms of the Southeast Texas Medical Associates (SETMA) offices in Beaumont, there is a poster of a baton being handed off.

The caption reads:Firmly in the provider’s hand, the baton – the care and treatment plan – must be confidently and securely grasped by the patient, if change is to make a difference, 8,760 hours a year.”

SETMA chief executive officer Dr. James Holly points out that the health-care provider carries the baton just 0.68 percent of the time while the patient does so the other 99.22 percent of the time.

“Coordination of care between health-care providers is important, but the coordination of the patient’s care between the health-care provider and the patient is imperative,” he says.

The baton represents the treatment plan. Holly describes the treatment plan as “the engine through which the knowledge and power of the health-care team is transmitted and sustained.”

Holly says the baton must be transferred to the patient by ensuring that she or her caregiver is equipped and empowered to carry out the care plan successfully.

That is the essence of patient engagement.

However, patients are not doing such a great job with that baton.

Consider:

  • About 7 out of 10 Americans die of chronic disease.
  • Nearly 2 out of 3 personal bankruptcies involve medical costs.
  • More than half of Americans delay medical care because of cost.
  • More than half fail to get an annual flu shot.
  • Nearly 1 out of 4 statin users thought they would be cured after a 30-day prescription.
  • Only 1 out of 8 Americans have proficient health literacy.

According to a 2013 Centers for Disease Control survey on lifestyle choices, 6 out of 10 are overweight; 1 out of 5 smoke and fewer than half of them tried to quit in the past year; and 1 out of 3 get virtually not exercise.

Physicians can improve their patients’ health only if the patients do their part. Physicians need engaged patients to succeed. Too many patients are not holding up their end of the bargain.

Do not smoke. Eat at least five daily servings of fruits and vegetables combined. Drink moderately at most. Exercise at least 30 minutes a day. Sounds easy enough. But only 3 percent of Americans do all four.

Those who fit the American Heart Association’s ideal cardiovascular profile are even rarer. According to University of Pittsburgh researchers, the profile included seven factors: body mass index of less than 25; untreated cholesterol under 200; blood pressure below 120/80; fasting blood sugar level below 100; exceeds the government-recommended physical activity guidelines; does not smoke; and follows a heart-healthy diet. Of 1,933 people between the ages of 45 and 75, only one person met all seven conditions. Fewer than 10 percent met five or more of the criteria.

The federal government’s Healthy People 2010 initiative tracked 733 objectives. Americans had achieved 172 of them – or fewer than 1 out of 4. There was important progress on heart disease since 2000, but obesity and diabetes went in the wrong direction. Rates of smoking and healthy eating rates essentially stayed the same.

Lifestyles of many older Americans have become increasingly unhealthy in the past 20 years. The percentage of those ages 40 to 74 who say they have at least five daily servings of fruits and vegetables combined declined by nearly half. The percentage who worked out 12 times a month was 43 percent, compared with 53 percent in 1988. Even those who had acquired heart disease, high blood pressure or diabetes were no more likely to change their bad habits than those without the conditions.

 

Health care’s Holy Grail: Patient engagement

Consultant Leonard Kish likened the effect of patient engagement to that of a blockbuster drug. He cited a 2009 Kaiser study showing that coordinated cardiac care reduced the risk of dying of a cardiac-related cause by 88 percent within the first three months after a heart attack and overall mortality by 76 percent during the same time period.

“Can you imagine what the headlines would be if a new cardiac drug showed this kind of effectiveness?” he wrote.

Kish pointed out that patient and family engagement, which is part of Meaningful Use’s (MU) Stage 2, may be the hardest MU goal to achieve.

Defining patient engagement is elusive. The National eHealth Collaborative surveyed health-care organization leaders about it. Nearly all said it was important. But they could not agree on what it meant.

The most common description was offering patients resources to help them learn about their condition. Other descriptions involved face-to-face communication between physician and patient.

Patient activation and patient engagement are not synonymous. Patient activation encompasses the knowledge, skills and willingness to manage one’s own health and care. Patient engagement seeks to increase activation and promote healthy behavior.

One study found that patients with the lowest activation scores cost the health-care system 8 percent more in 2010 and 21 percent more in 2011 than patients who had the highest activation levels.

Being a compliant patient would seem to be a relatively easy task. However, a Kaiser Permanente researcher created a chart for a theoretical 67-year-old patient with diabetes, hypertension and high cholesterol and calculated what it would take to heed all medical recommendations. The final tally was more than 3,000 separate behaviors.

Better health outcomes and more years of healthy life require patient engagement. An activated patient consistently does what needs to be done to gain the greatest benefit from available health resources.

How many do this? Patients can be divided into thirds. One-third are engaged. Another third are tentative and inconsistent. The final third are disengaged. People with more education, income and self-confidence are more likely to be in the first group.

People who do not take charge of their health will fare poorly and be a drag on the performance of their health-care providers under accountable care.

Hospitals will be penalized if they do not provide a high level of patient-centered care. That means they must provide a comfortable, emotionally supportive environment. However, it also means patients will be encouraged to be involved in their own care. They will be asked to participate in decisions about their care and follow treatment plans so they are not readmitted needlessly.

Organized systems of care emerging from health reform, such as accountable care organizations (ACOs) and patient-centered medical homes (PCMHs), will be paid based on the health of their patients. That is a shared responsibility. Access to physicians increasingly will become difficult as the number of insured patients increases. Providers may end up “firing” patients if they are not compliant.

High-deductible health plans will be a central feature of the health-insurance exchanges established by the new law. An increasing number of companies will offer them – in some cases exclusively – as a means of controlling costs. These plans assume that engaged consumers will make wiser personal-health choices to minimize their out-of-pocket costs.

Engaged patients are not deterred by the complexity and fragmentation of the health-care system. They practice good health habits. They manage over-the-counter medications, minor wounds and injuries on their own. They collaborate with their providers and participate in making treatment decisions. They successfully navigate the health-care system, paying attention to provider quality and performance. They seek out reliable information on their own.

Ultimately, personal health requires self-care. Consider that physicians spend about two hours annually with their diabetic patients. Otherwise, those patients log an average of 8,758 hours a year managing the condition on their own.

Research consistently shows that engaged consumers have better health, make better choices and avoid medical errors. Engagement leads to better compliance with treatment, lower health-care costs and better-quality care. Patients do not have the power to change the health-care system. However, they do have the power to change their own care.

The disengaged are overwhelmed. They are less likely to have a usual source of care. They forget 40 to 80 percent of what the physician tells them in the exam room. Six out of 10 with employer-based insurance blame their disengagement on not knowing where to go for information. One in 4 Medicare beneficiaries are disengaged, and would “rather have someone else tell me what I need to do.” One in 3 of those who are uninsured are simply “not interested.”

Researcher Judith Hibbard has developed a way to measure this, called the Patient Activation Measure. The measure includes four stages to becoming a fully competent health-care consumer. She believes activation is constantly changing and subject to a range of flash points that encourage or discourage engagement. She suggests that providers start with the easiest behaviors to instill confidence and break those behaviors down into smaller steps.

The payoff is worth it. Hibbard found that highly activated patients have better care experiences and greater satisfaction than those with lower levels of activation—a critical point under MU rules.

The typical health consumer:

  • is able to perform simpler tasks such as making a list of medications, rather than more complex tasks such as participating in treatment decisions.
  • seeks out information about a provider or health plan but tends not to use it.
  • does not research health information until there is a specific need.
  • is quick to cite barriers to care, such as poor health, insufficient knowledge or lack of external support.
  • uses the Internet to learn about a condition or symptoms, but it is less clear whether the newly gained knowledge changes behavior.

Physicians don’t get paid to counsel patients, with predictable results

Counseling of patients by physicians can have an impact on health behaviors, but it happens infrequently. The average 15-minute doctor-patient encounter does not leave much time for discussion. Doctors also do not think they are very good at it. According to a survey, less than half felt competent prescribing specific diet regimens because they believed they had been inadequately trained.

The lack of reimbursement by insurers for weight-loss counseling and confidence yields predictable results. Only about one-third of obese patients are advised by their doctors to lose weight. That proportion rises to about one-half only if the obesity has created some other medical conditions. Physicians offer to help about 1 out of 4 smokers with tobacco-cessation strategies.

Doctors also lack faith that patients will change their habits. Who could blame them? Barely 1 in 10 diabetics follow dietary guidelines limiting saturated fat. About 18 percent of heart-disease patients continue to smoke, which is not much better than the overall smoking rate.

A doctor’s pep talk at the end of the visit does not accomplish much. Success requires a joint action plan and a commitment to follow up. In one study, physicians counseled inactive patients to exercise and had a staff member call two weeks later to monitor progress. Those patients walked five times more than those who were not counseled and monitored.

The American Heart Association advises physicians to use this sort of approach to lower the risk of heart disease. The organization reviewed a decade of research to determine what works best. Joint goal setting, physician feedback and monitoring topped the list. Self-monitoring, such as food diaries, also helps. However, clinical initiatives are employed infrequently because they are time-consuming and insurance companies generally will not pay for them.

It does not help matters that Americans are in denial about their health. In a poll by The Atlantic, 9 out of 10 Americans said they were in “very good” or “somewhat good” health. Only 1 percent said they were unsure about their health status.

Yet more than 1 out of 3 Americans are obese, and about 1 out of 10 have a chronic condition such as high blood pressure or diabetes.

Baby boomers are in worse health than their parents were at the same age. They are more obese; have more diabetes, high blood pressure and high cholesterol; get less exercise; and are more likely to use a cane or walker.

A 2009 poll of 2,000 Americans by GE Healthcare, the Cleveland Clinic and Ochsner Health System captured the gap between belief and reality. More than half the respondents said the population’s health “was going in the wrong direction,” compared with 17 percent who characterized their own health that way.

Only one-quarter to one-third knew their personal basic health numbers – body-mass index, blood pressure, cholesterol, blood glucose level – yet the majority said keeping those numbers in a good range was important to good health.

About 95 percent said regular physician checkups were important, but 70 percent admitted avoiding their doctors by hoping health problems would go away or asking a friend for medical advice.

Pollsters asked respondents to grade their health behaviors, and asked doctors to do the same for their patients. One out of three gave themselves an “A” for nutrition, exercise and personal health management. More than 90 percent graded patients “C” or worse on these.

High-deductible health plan patients use less health care

Physician visits and prescription drug use dropped among workers who had high-deductible health plans with health savings accounts, according to a Health Affairs study.

The study compared health-care costs for two Midwestern companies between 2006 and 2010. One of the companies converted its workforce to a HDHP with a health savings option in January 2007. The other company did not.

Routine cancer screening among those on the HDHP initially fell, and then rebounded by the third year. However, emergency-department visits rose during the third year. Hospitalizations remained the same.

The decline in preventive care suggests that health insurers must “design plans to incentivize primary care and prevention and educate members about what the plan covers,” the authors said.

Access to care is hindered either by the inability to afford care or the lack of opportunity for timely care. Regardless of the reason, 1 out of 5 Americans had unmet medical needs in 2010, compared with 1 out of 6 in 2000.

 For several years, the Kaiser Family Foundation has been tracking Americans’ health–care utilization. In a 2012 survey, more than 1 out of 3 relied on self-help remedies and over-the-counter drops, and cut back dental care.

People with HDHPs generally use less health care. They usually use self-diagnosis, followed by self-rationing. They generally cut back equally on unnecessary and necessary care. Patients tend to give less weight to future health than to present costs.

A 2011 RAND study showed that most HDHP enrollees cut back on care regardless of their income or health.

People on Medicare are especially sensitive to greater cost-sharing, even to increases of just a few dollars. One study of health plans that raised copayments by less than $10 for physician visits showed a dramatic impact – which ultimately led to more costly care later on. For every 100 people who had to pay more, there were 20 fewer doctor visits, two additional hospitalizations and 13 more days in the hospital the following year. Unlike the younger participants in the 1970s RAND study, Medicare beneficiaries have far more chronic conditions that can flare up without consistent care.

The long-term effects of cutting back are unknown. However, forgone care can lead to greater complications. For example, high cost-sharing causes those with newly diagnosed chronic conditions to delay filling their prescriptions.

Some companies are employing a strategy called value-based insurance design. The format varies the degree of cost-sharing with employees based on the scientific evidence of a drug’s or procedure’s effectiveness. For example, Pitney Bowes reduced the copayments for several medications that treat conditions such as diabetes, high blood pressure and asthma. The company’s higher pharmacy costs were offset by fewer emergency department visits and avoidable hospitalizations.

A 2007 study concluded that the optimal copayment for cholesterol-lowering medication was $0 or even negative – meaning patients should be paid to take the drugs, in order to lower overall costs.

Health-insurance companies have enjoyed record profits, because patients are seeking less care than anticipated as premiums and deductibles have continued to rise. It is hard to know whether this is a temporary lull or the new normal in health-care use.

What is puzzling is that HDHPs also prompt patients to cut back on preventive care, even when it is free. This suggests either they did not understand that their policies paid for the services completely, or they are leery of the health-care system generally.  They also may fear that the doctor will find something wrong that will result in costly treatment.

HDHPs work well for a significant percentage of the population. However, they will do little to hold down national health costs, because a small percentage of consumers account for a large percentage of those costs. The healthiest 50 percent of Americans each spend about $250 a year on health care. Treating the sickest 5 percent costs more than $43,000 a year apiece.  Even an HDHP would not make a dent in costs for these patients. Once the deductible has been met, the incentive to minimize health-care costs often subsidies.

The harsh reality of HDHPs is that 8 out of 10 families earning about $52,000 do not save enough to cover the deductible. More than 40 percent of adults with HDHPs spent 10 percent or more of their income on household medical expenses – a threshold many consider a financial burden on the average family.

Health savings accounts are meant to be an incentive to set aside money to pay for future medical expenses. However, many have difficulty saving for retirement or even vacations – both more pleasant prospects and worthy goals. If people cannot do that, it is unlikely they will save for an unpleasant circumstance such as an unforeseen bout with cancer.

A 2008 consumer survey delivered one of the most depressing commentaries on the American health-care system: People were more concerned about the prospect of paying for the treatment of an illness than about the illness itself.

Cutting Medicare rates to physicians could doom the program

Commercial health plans are difficult to deal with, but at least they represent revenue that is not subject to annual legislated reduction.

The average physician practice relies on Medicare for about 25 percent of its revenue. That revenue source is at risk every year because of the Sustainable Growth Rate (SGR), established in 1997 to keep Medicare from growing faster than the overall economy. The SGR formula factored in the rising number of people on Medicare. However, the per-beneficiary costs charged by providers rose at a faster rate than the economy. When that happens, the federal government is supposed to cut payments across the board to control costs. Every year since 2002, Congress has blocked these cuts. The proposed cumulative rate cut to satisfy the SGR was scheduled to be 24.7 percent in January 2014 if Congress did not step in again.

According to CMS actuaries, that cut would drop Medicare pay rates to 61 percent of what private insurers pay for the same services, and even drop below those of Medicaid. Rates are scheduled to drop further until, in 2050, Medicare falls below 40 percent of what private insurers pay. The actuaries  acknowledge it is unlikely that Congress would allow this scenario to play out. The annual threat of a proposed rate cut will continue until Congress fixes the formula.

Congress has overridden the SGR-mandated cuts a dozen times, substituting either pay freezes or small pay increases. The price tag for freezing physician rates has dropped significantly because of declines in health-care spending growth. According to a 2013 CBO report, the estimated 10-year cost  of repealing the SGR and freezing Medicare payments to physicians would be $116.5 billion, compared with the previous estimate of $244 billion.

Nevertheless, four former Medicare administrators told a Senate committee hearing in May 2012 that the SGR must be replaced.

The American Medical Association (AMA) and more than 100 state and specialty medical societies issued a set of principles in October 2012 that they said could support a transition from the SGR to “a higher-performing Medicare program.” They urged a plan that would allow physicians to choose their own payment models, eschewed penalties and allowed physicians to demonstrate that they are taking accountability for quality and cost control.

In October 2013, the Medicare Payment Advisory Commission (MedPAC) recommended eliminating the SGR formula by cutting fees for some specialists and imposing a 10-year freeze on rates for primary-care physicians. Predictably, the proposal was strongly opposed by health industry groups and the AMA.

Reps. Allyson Schwartz, D-Pa., and Joe Heck, R-Nev., an osteopathic physician, reintroduced legislation in February 2013 to repeal the SGR, increase payments to physicians for four years and test new payment and delivery models.

Alternatively, House Republican leaders have urged an SGR repeal plan that would freeze physician payment rates for the next decade, with future increases based on physicians’ quality and efficiency of care.

Health-care industry groups urged Congress to use projected Iraqi and Afghanistan war savings to repeal the SGR.

In its 2013 annual report, MedPAC said, “The SGR formula may have resulted in lower (reimbursement updates, but it has failed to restrain volume growth; in fact, for some specialties the formula may have exacerbated growth. In addition, the temporary increases, or ‘fixes,’ to override the SGR formula are undermining the credibility of Medicare by engendering uncertainty and frustration among providers, which may be causing anxiety among beneficiaries.”

Nearly all lawmakers want to repeal the SGR, but no one is willing to add to the federal deficit to accomplish that. The result is zombie public policy that annually creates anxiety in the provider community and offers another opportunity to heap scorn on Congress for burying its head in the sand.

The indecisiveness over the SGR has cost physicians dearly. Over the past decade, the cost of providing care has increased five times faster than Medicare reimbursement. Medicare patients require far more complex and time-consuming care for about 60 percent less reimbursement, compared with commercial insurance rates.

Forty-five percent of physicians say they would stop seeing Medicare patients if Congress enacts the Medicare physician rate cuts.

Despite current challenges, 82 percent of respondents said they would be willing to explore new payment and delivery models if a level of stability were restored to the Medicare physician-payment system, according to a Medical Group Management Association (MGMA) survey.

About 60 percent said they have delayed buying new facilities and equipment in the past decade because of the annual SGR uncertainty.

The uncertainty over that looming SGR rate cut was the No. 1 concern for physician practice managers, according to an MGMA survey.

Each time SGR cuts are scheduled for a congressional vote, the nation’s physicians become nervous and threaten to pull out of the program. According to the Texas Medical Association (TMA) website: “This decade-long and continued uncertainty is forcing some physicians to make a difficult decision to either opt out of Medicare, limit the number of patients they treat, or retire early. A TMA survey (from August 2011) indicates 50 percent of Texas physicians are considering opting out of the Medicare program altogether.”

So far, only about 1 percent of the nation’s physicians have opted out of Medicare, according to a Department of Health and Human Services Office of Inspector General (OIG) report. The OIG said it could not determine why these physicians are leaving the program and urged CMS to strengthen its data requirements to track opt-outs.

 

Patients seeing physicians less often

Census data bear out what physicians already know: Patients were visiting them less frequently than 10 years ago. In 2010, adults age 18 to 64 made an average of 3.9 visits per person, compared with 4.8 visits in 2001. The U.S. uninsured rate rose during that period, from 17 percent to nearly 22 percent. Only 1 out of 4 uninsured people went to the doctor in 2010, compared with nearly 3 out of 4 of the general population of working adults.

However, physician visits rose 4.8 percent in the second quarter of 2012 compared with the same quarter in 2011, which reversed a two-year decline. Nearly every health insurer reported lower earnings during that quarter. Humana said in its quarterly report that more of its members were seeking care—and more of it—because they had put off going to the doctor during the economic downturn. It said wellness visits were up 200 percent over the previous year, and routine physician visits were up by 22 percent. The first-dollar coverage of preventive care also was a fueling factor.

Rising insurance premium costs for 2014 because of the ACA’s ban on pre-existing condition underwriting and more comprehensive policies—combined with rapidly growing high-deductible insurance plans—may short-circuit the rebound in physician visits.

Even so, any rebound is welcome. Physician-office visits had declined 4.7 percent in 2011 and 4.2 percent in 2010, and had declined in four of the previous five years.

A Stanford University analysis for the Kaiser Family Foundation found a 17 percent decline in office visits between 2009 and 2011. Office visits had risen from 140 million to 160 million between 2000 and 2005 and held at that rate until the start of the recession in late 2007.  The rate dropped below 130 million visits in the second quarter of 2011.

More than 9 million people lost health insurance coverage during the recession. Fewer than half of unemployed adults had health insurance, compared with more than 81 percent of employed adults. Unemployed adults have poorer mental and physical health, yet they are less likely to receive needed medical care, because of cost.

Even people with private insurance have been cutting back on routine care. Rising deductibles and copayments make people more reluctant to seek care, even if they have chronic conditions. Employees with high-deductible health plans are 3 to 4 times more likely to delay or forgo care, compared with those in more traditional plans.

The share of employees with an annual deductible of at least $1,000 grew from 18 percent in 2008 to 31 percent to 2011.

Fewer office visits also helped slow prescription drug spending. The number of prescriptions filled grew only 1.2 percent in 2012.

Employers held health-benefit cost growth to 4.1 percent in 2012, which was the lowest in 15 years. They have stepped up cost management in anticipation of added cost pressures from health reform. Many health-reform opponents expected more businesses to stop offering  health insurance. According to business consultant Mercer, that number actually rose slightly in 2012.

Experts say there are too little data to determine whether the slower increase in health-care spending is permanent or a temporary function of the weak economy.

Harvard economist David Cutler told The New York Times, “The recession just doesn’t account for the numbers we’re seeing. I think there’s much more going on.”

Economist Gail Wilensky, who headed the CMS under President George W. Bush, said, “If there’s something else going on, we don’t know what it is yet. The most honest thing to say is that, one, the reduction in use is greater than the recession predicts; two, we don’t understand why yet; and three,  you’d be foolhardy to say that we can understand it.”