On the University Diaries blog, Margaret Soltan posted on the perks afforded to top leaders, including the medical school dean, at the University of South Florida(USF). These included country club memberships, and car allowances at $650/ month. The rationale seemed to be that the administrators need to appear to be rich in order to hob-nob with the sort of rich folk needed as donors. The perks have continued even though the state-supported university is facing budget cuts.
I would comment that these perks might also be based on university executives' sense of entitlement to being at least on the fringe of the power elite, or superclass. This sense might truly be fed by their contact with even more wealthy people who might be prospective donors, and the sorts of masters of the universe who seem to have gravitated to university boards (see our posts about the Dartmouth board here and the Harvard Corporation here). But I would suggest that the perks handed out at USF might be bush-league compared to those found at the more supposedly elite universities.
I am afraid the main effect of such perks is to further isolate academic leaders from the people they are supposed to serve. After all, academic institutions are supposed to serve truth-seekers and learners. (Academic health care is also supposed to serve patients.) Country club memberships, or having a fully-staffed house and a car and driver might tend to make one feel apart from the common folk in the student body, or the patient population.
Saturday, December 6, 2008
BLOGSCAN - Insuring the Right to Buy Health Insurance
On the Covert Rationing Blog, DrRich discussed the latest amazing product from our friends at UnitedHealth. Called Continuity, it allows people who are currently healthy to buy the right to buy health insurance in the future, presumably at a time when they might not be healthy, and hence would not be able to meet the sort of stringent underwriting requirements that most companies now impose on those seeking individual health insurance. Thus, this product is sort of second order insurance, insurance on insurance, or, as DrRich puts it a hedge on the future risk of uninsurability. DrRich's incisive post argued that the offering of such a product suggests that UnitedHealth is betting that it will be out of the health insurance business in the near future, put out of business by some new national health insurance scheme.
BLOGSCAN - Direct-to-Consumer Device Advertising on YouTube Sans Adverse Effects Information
On the PostScript blog, the Prescription Project announced the discovery of direct-to-consumer marketing videos released on YouTube by three device companies. The video from Abbott advertised the XIENCE-V drug eluting stent. That from Medtronic advertised the Prestige cervical disc. That from Stryker advertised its Cormet hip resurfacing technology. Apparently none of these brave new advertisements bothered to put in the discussion about adverse effects mandated by the US Food and Drug Administration (FDA). The new media obviously presents new opportunities for marketing, including marketing that gets around rules usually applied in other media. Kudos to the Prescription Project for blowing the whistle on this one.
According to this post, soon after the three companies pulled these ads. The issue of new media DTC advertising produced quite a bit of internet buzz. Amazingly, among those agreeing with the Prescription Project's position was none other than Mr Peter Pitts of the DrugWonks blog, the Center for Medicine in the Public Interest, and the Manning, Selvage and Lee public relations firm.
According to this post, soon after the three companies pulled these ads. The issue of new media DTC advertising produced quite a bit of internet buzz. Amazingly, among those agreeing with the Prescription Project's position was none other than Mr Peter Pitts of the DrugWonks blog, the Center for Medicine in the Public Interest, and the Manning, Selvage and Lee public relations firm.
Friday, December 5, 2008
What Linked the Parallel Declines of Citigroup and the Harvard University Endowment?
Increasing efforts to understand the global financial collapse, or whatever history will end up calling it, may shed light on what has gone wrong with health care, and, in today's example, the management of academic medicine.
The Collapse of Citigroup
The near-collapse and putative rescue of financial giant Citigroup have raised questions of the responsibilities of one of its most prominent leaders. Two weeks ago, a lengthy investigative report in the New York Times suggested some of the bad decision making and mismanagement that humbled once one of the largest financial corporations in the world. Emphasis on short-term profit trumped concerns about risk. In particular, the risk inherent in exotic derivative investment instruments like "collateralized debt obligations" (CDOs) was underestimated and misunderstood. This may have been enhanced by incentives to leaders based primarily on short term results; and the lax oversight of risk, perhaps due to close personal ties among risk managers and traders. Poor integration after hasty mergers lead to disorganization and miscommunication. But dominant was that, as one anonymous interviewee said, "senior managers got addicted to the revenues and arrogant about the risks they were running."
The Times article highlighted the role of Robert Rubin, former US Secretary of the Treasury.
The Times article charged that Mr Rubin had a particular role in encouraging excess reliance on risky CDOs.
Later, in 2002,
But as the sub-prime mortgage crisis hit, the value of the CDOs plummeted, and it all fell apart.
Soon after the Times story came out, the criticisms of Mr Rubin began.
Steven Pearlstein wrote in the Washington Post,
Thomas Friedman wrote in the NY Times,
Also,
Mr Rubin tried to defend himself in an interview in the Wall Street Journal, but not very successfully
After disclaiming any responsibility for Citigroup's failures, Mr Rubin did not do a good job explaining why he should have been paid $115 million for his time at Citigroup, especially given that he said
This, not unexpectedly, lead to more derision.
In the Working Life Blog, Jonathan Tasini entitled a post "Robert Rubin: Coward Or Liar - Or Both?" In the Market Movers Blog, Felix Salmon said no one could read the interview "and think of him as anything other than a pompous and out-of-touch plutocrat, puffed up with more self regard than common sense." Jessica Pressler, writing in the Daily Intel Blog for New York Magazine Blog, opined,
An editorial in the Providence Journal concluded,
A major theme on Health Care Renewal has been the bad leadership of health care organizations. We have described how health care policy "experts" urged breaking up of the supposed physicians' "guild," and giving control of health care to bureaucrats, managers and executives. Yet the transformation of health care from a calling to a business occurred during a time of declining business ethics. We have gone from the dot.com bubble to the collapses of Enron, Worldcomm, MCI, etc, to now the global financial meltdown. The leaders of finance were once considered "Masters of the Universe." It is likely that the business-people who now lead health care have done their best to emulate them. In doing so, they may have been emulating over-rated dopes, greedy cynics, and con men.
The Collapse of the Harvard Endowment
There is, however, a somewhat more direct link between the story of Mr Rubin's humbling and the woes of academic medicine. Bear with me for a bit.
At the same time that the fortunes of Citigroup were cratering, the financial fortunes of some of the largest and most elite US academic institutions were likewise tumbling. Particularly striking was the case of Harvard University's endowment (whose medical school and teaching hospitals have lately had their troubles, as noted in these posts here and here.)
This week, the Wall Street Journal reported,
It turns out that Harvard University, like Citigroup, had become enamored of various exotic investments. A report in Bloomberg noted that the University is seeking to quickly sell investments in a variety of private-equity funds, and that the University currently has about $4.5 billion invested in "buyout funds." This seems to be one reason that the University president expected such a large loss. The prices of such illiquid investments are set infrequently. The new prices to be set soon are likely to be much lower than previous ones. A report in the Boston Globe suggested that Harvard had diversified its endowment funds, but mainly into some risky and exotic vehicles, including 22% in foreign stocks, 18% in hedge funds, 13% in private equity, and 26% in commodities, land, and real estate, but only 11% in domestic stocks.
Who Lead Both Citigroup and Harvard?
So who was responsible for the University's risky, and now, in retrospect, unlucky strategy? The ultimate responsibility for the university's leadership resides in the Harvard Corporation, known formally as the President and Fellows of Harvard College. Its six members, according to the Harvard web-site, are:
- James Rothenberg, President and Director, Capital Research and Management Co, (part of the Capital Group Companies, investment managers)
- James R Houghton, Chairman and CEO, (actually Chairman emeritus) Corning Inc
- Nanerl Overholser Keohane, past president of Duke University and Wellesley College
- Robert Reischauer, President, the Urban Institute
- Robert E Rubin, Chair of the Executive Committee, Citigroup
- Patricia A King, Carmack Waterhouse Professor of Law, Medicine, Ethics, and Public Policy, Georgetown Law Center (and member of the board of directors of Golden West Financial from 1994 to 2006, when it was acquired by Wachovia, which failed this year)
So half of the six person Corporation are current or former leaders of financial organizations. Furthermore, its members include none other than Robert Rubin, the previously acclaimed senior leader of Citigroup, now labelled as everything from clueless to a con man for his infatuation with reckless, opaque, and ultimately mainly worthless financial instruments. Maybe that has something to do with why a university endowment, which seemingly ought to be invested conservatively to benefit generations of students and academics, was given over to the tender mercies of hedge fund and private equity managers.
We previously posted on governance issues at Dartmouth, and how the self-appointed members of its board of trustees, the vast majority of whom were also leaders of finance, have increased their own power in the name of diversity (diversity among hedge fund, private equity, and bank executives?) Now we find that half of the Harvard Corporation are also leaders of finance, including one whose own company's decline seemingly has paralleled the decline of the university's endowment.
It seems that the former Masters of the Universe were not content with driving the global finance system into the ground. Their leadership may have also lead to financial crises for American universities. One wonders whether the examples set the presence of "overrated dopes" and "greedy cynics" on university boards of trustees encouraged some of the sorry misbehavior Health Care Renewal has documented at medical schools and academic medical centers?
It seems that we need to completely rethink how we lead academic medical institutions.
Hat tip to posts by Candace de Russy and by Fred Schwarz on the Phi Beta Cons blog.
The Collapse of Citigroup
The near-collapse and putative rescue of financial giant Citigroup have raised questions of the responsibilities of one of its most prominent leaders. Two weeks ago, a lengthy investigative report in the New York Times suggested some of the bad decision making and mismanagement that humbled once one of the largest financial corporations in the world. Emphasis on short-term profit trumped concerns about risk. In particular, the risk inherent in exotic derivative investment instruments like "collateralized debt obligations" (CDOs) was underestimated and misunderstood. This may have been enhanced by incentives to leaders based primarily on short term results; and the lax oversight of risk, perhaps due to close personal ties among risk managers and traders. Poor integration after hasty mergers lead to disorganization and miscommunication. But dominant was that, as one anonymous interviewee said, "senior managers got addicted to the revenues and arrogant about the risks they were running."
The Times article highlighted the role of Robert Rubin, former US Secretary of the Treasury.
The bank’s downfall was years in the making and involved many in its hierarchy, particularly Mr. Prince and Robert E. Rubin, an influential director and senior adviser.
Citigroup insiders and analysts say that Mr. Prince and Mr. Rubin played pivotal roles in the bank’s current woes, by drafting and blessing a strategy that involved taking greater trading risks to expand its business and reap higher profits. Mr. Prince and Mr. Rubin both declined to comment for this article.
When he was Treasury secretary during the Clinton administration, Mr. Rubin helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent.
The Times article charged that Mr Rubin had a particular role in encouraging excess reliance on risky CDOs.
[Former Citigroup CEO Charles O] 'Chuck Prince going down to the corporate investment bank in late 2002 was the start of that process,' a former Citigroup executive said of the bank’s big C.D.O. push. 'Chuck was totally new to the job. He didn’t know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin. And Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, ‘You have to take more risk if you want to earn more.’ '
Later, in 2002,
Mr. Prince and his board of directors decided to push even more aggressively into trading and other business that would allow Citigroup to continue expanding the bank internally.
One person who helped push Citigroup along this new path was Mr. Rubin.
Robert Rubin has moved seamlessly between Wall Street and Washington. After making his millions as a trader and an executive at Goldman Sachs, he joined the Clinton administration.
Mr. Weill, as Citigroup’s chief, wooed Mr. Rubin to join the bank after Mr. Rubin left Washington. Mr. Weill had been involved in the financial services industry’s lobbying to persuade Washington to loosen its regulatory hold on Wall Street.
As chairman of Citigroup’s executive committee, Mr. Rubin was the bank’s resident sage, advising top executives and serving on the board while, he insisted repeatedly, steering clear of daily management issues.
But while Mr. Rubin certainly did not have direct responsibility for a Citigroup unit, he was an architect of the bank’s strategy.
Former colleagues said Mr. Rubin also encouraged Mr. Prince to broaden the bank’s appetite for risk, provided that it also upgraded oversight — though the Federal Reserve later would conclude that the bank’s oversight remained inadequate.
Once the strategy was outlined, Mr. Rubin helped Mr. Prince gain the board’s confidence that it would work.
After that, the bank moved even more aggressively into C.D.O.’s. It added to its trading operations and snagged crucial people from competitors. Bonuses doubled and tripled for C.D.O. traders.
But as the sub-prime mortgage crisis hit, the value of the CDOs plummeted, and it all fell apart.
Soon after the Times story came out, the criticisms of Mr Rubin began.
Steven Pearlstein wrote in the Washington Post,
What is indisputable is that all of the decisions that have led to Citi's recent troubles were taken while Rubin was chairman of the executive committee, and made by executives with whom he worked closely. He defended them repeatedly and unequivocally, and as a director, he approved compensation packages that rewarded them (and himself) handsomely for judgments that proved disastrous.
Thomas Friedman wrote in the NY Times,
[The NY Times report above] exposed — using Citigroup as Exhibit A — how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye.
Also,
the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.
Mr Rubin tried to defend himself in an interview in the Wall Street Journal, but not very successfully
Robert Rubin said ... [Citigroup's] problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials.
After disclaiming any responsibility for Citigroup's failures, Mr Rubin did not do a good job explaining why he should have been paid $115 million for his time at Citigroup, especially given that he said
From the time Mr. Rubin joined Citigroup in October 1999, shortly after leaving the Treasury, the former Goldman Sachs Group Inc. co-chairman said he didn't want to run any of Citigroup's businesses. At the time, he told colleagues he wanted more time for activities such as fly fishing. In the recent interview, he said his task was to meet with clients and have an advisory role as an 'experienced senior person who has no ax to grind.'
This, not unexpectedly, lead to more derision.
In the Working Life Blog, Jonathan Tasini entitled a post "Robert Rubin: Coward Or Liar - Or Both?" In the Market Movers Blog, Felix Salmon said no one could read the interview "and think of him as anything other than a pompous and out-of-touch plutocrat, puffed up with more self regard than common sense." Jessica Pressler, writing in the Daily Intel Blog for New York Magazine Blog, opined,
Like a cocky serial killer on Law & Order: Criminal Intent, his determination to prove he was smarter than his investigators outweighed his common sense, and the former Treasury secretary decided to give two interviews, to The Wall Street Journal and Newsweek, to set things right. Naturally, they only made him look even guiltier.
An editorial in the Providence Journal concluded,
What a con man.
A major theme on Health Care Renewal has been the bad leadership of health care organizations. We have described how health care policy "experts" urged breaking up of the supposed physicians' "guild," and giving control of health care to bureaucrats, managers and executives. Yet the transformation of health care from a calling to a business occurred during a time of declining business ethics. We have gone from the dot.com bubble to the collapses of Enron, Worldcomm, MCI, etc, to now the global financial meltdown. The leaders of finance were once considered "Masters of the Universe." It is likely that the business-people who now lead health care have done their best to emulate them. In doing so, they may have been emulating over-rated dopes, greedy cynics, and con men.
The Collapse of the Harvard Endowment
There is, however, a somewhat more direct link between the story of Mr Rubin's humbling and the woes of academic medicine. Bear with me for a bit.
At the same time that the fortunes of Citigroup were cratering, the financial fortunes of some of the largest and most elite US academic institutions were likewise tumbling. Particularly striking was the case of Harvard University's endowment (whose medical school and teaching hospitals have lately had their troubles, as noted in these posts here and here.)
This week, the Wall Street Journal reported,
Harvard University's endowment suffered investment losses of at least 22% in the first four months of the school's fiscal year, the latest evidence of the financial woes facing higher education.
The Harvard endowment, the biggest of any university, stood at $36.9 billion as of June 30, meaning the loss amounts to about $8 billion. That's more than the entire endowments of all but six colleges, according to the latest official tally.
Harvard said the actual loss could be even higher, once it factors in declines in hard-to-value assets such as real estate and private equity -- investments that have become increasingly popular among colleges. The university is planning for a 30% decline for the fiscal year ending in June 2009.
It turns out that Harvard University, like Citigroup, had become enamored of various exotic investments. A report in Bloomberg noted that the University is seeking to quickly sell investments in a variety of private-equity funds, and that the University currently has about $4.5 billion invested in "buyout funds." This seems to be one reason that the University president expected such a large loss. The prices of such illiquid investments are set infrequently. The new prices to be set soon are likely to be much lower than previous ones. A report in the Boston Globe suggested that Harvard had diversified its endowment funds, but mainly into some risky and exotic vehicles, including 22% in foreign stocks, 18% in hedge funds, 13% in private equity, and 26% in commodities, land, and real estate, but only 11% in domestic stocks.
Who Lead Both Citigroup and Harvard?
So who was responsible for the University's risky, and now, in retrospect, unlucky strategy? The ultimate responsibility for the university's leadership resides in the Harvard Corporation, known formally as the President and Fellows of Harvard College. Its six members, according to the Harvard web-site, are:
- James Rothenberg, President and Director, Capital Research and Management Co, (part of the Capital Group Companies, investment managers)
- James R Houghton, Chairman and CEO, (actually Chairman emeritus) Corning Inc
- Nanerl Overholser Keohane, past president of Duke University and Wellesley College
- Robert Reischauer, President, the Urban Institute
- Robert E Rubin, Chair of the Executive Committee, Citigroup
- Patricia A King, Carmack Waterhouse Professor of Law, Medicine, Ethics, and Public Policy, Georgetown Law Center (and member of the board of directors of Golden West Financial from 1994 to 2006, when it was acquired by Wachovia, which failed this year)
So half of the six person Corporation are current or former leaders of financial organizations. Furthermore, its members include none other than Robert Rubin, the previously acclaimed senior leader of Citigroup, now labelled as everything from clueless to a con man for his infatuation with reckless, opaque, and ultimately mainly worthless financial instruments. Maybe that has something to do with why a university endowment, which seemingly ought to be invested conservatively to benefit generations of students and academics, was given over to the tender mercies of hedge fund and private equity managers.
We previously posted on governance issues at Dartmouth, and how the self-appointed members of its board of trustees, the vast majority of whom were also leaders of finance, have increased their own power in the name of diversity (diversity among hedge fund, private equity, and bank executives?) Now we find that half of the Harvard Corporation are also leaders of finance, including one whose own company's decline seemingly has paralleled the decline of the university's endowment.
It seems that the former Masters of the Universe were not content with driving the global finance system into the ground. Their leadership may have also lead to financial crises for American universities. One wonders whether the examples set the presence of "overrated dopes" and "greedy cynics" on university boards of trustees encouraged some of the sorry misbehavior Health Care Renewal has documented at medical schools and academic medical centers?
It seems that we need to completely rethink how we lead academic medical institutions.
Hat tip to posts by Candace de Russy and by Fred Schwarz on the Phi Beta Cons blog.
Wednesday, December 3, 2008
No Such RUC - The New England Journal Takes on the Primary Care Crisis, Sort Of
The vast amounts spent globally on health care do not seem to translate into access for many patients, quality care, and improved outcomes. The US, in particular, spends huge amounts, now more than $2 trillion a year, without getting universal access, or superb quality and outcomes. While we spend all this money, the primary care and generalist practitioners on the front lines of care are paid less and less, are increasingly embattled and disgruntled, and their numbers are rapidly thinning.
Although these problems are huge, there is not much clear discussion of them.
Thus, it was encouraging to see the vaunted New England Journal of Medicine, the premier US journal of medicine, take up the issue of the "future of primary care." A few weeks ago, the journal published a series of commentaries on the issue,(1-6) and the transcript of a round table discussion among their authors.(7) It was touted as the views of experts on "the crisis in U.S. primary care."
Unfortunately, although the series acknowledged some surface characteristics of the US health care system that have lead to this crisis, it did not delve further into its causes.
On the surface, a major cause of the crisis is that payments to primary care physicians are so limited that we are driving them out of business, while we pay lavishly for new, high-technology, often risky and invasive procedures.
However, understanding how and why this happens requires dissecting layer after layer of complex details. Doing so can be frustrating, if not eye glazing, and this may be one reason why the discussion of this pivotal issue has been so limited.
The first layer of complexity was implicitly acknowledged, but not discussed in the NEJM series. Bear with me through it.
The First Layer of Causation: Low Payments for Face-to-Face Visits, Rising Overhead
Physicians are paid for each encounter with a patient. Their pay only covers what they do in the presence of the patient, and not other efforts on patients' behalf, e.g., communicating with patients when they are not in the office, communicating with other professionals, paperwork required by insurance companies, etc, etc. Furthermore, pay for office visits is available only in a very small number of categories, and the pay for more complex visits is not commensurate with the increase in time and effort that they require, so that physicians who spend a lot of time trying to deal with complex problems will not be paid commensurate with their work. Pay for office visits has not increased as fast as inflation, and certainly not as fast as the expenses of running physicians' offices, i.e., office overhead, has increased. Thus, to try to maintain income, and to support increasingly complex office operations and overhead, primary care physicians must limit the time they spend with any one patient.
The result is the 15 minute visit for nearly all patients. But it is ridiculous to try to manage complex problems in 15 minute visits. Furthermore, primary care physicians spend hours of unpaid time doing paperwork, communications, etc.
The NEJM special articles dealt briefly with the contrast between how primary care physicians and proceduralists are paid, and the adverse effects of the 15-minute visit. The series coordinator, Dr Thomas Lee, noted that "procedure-oriented specialties offer higher potential incomes."(1) Dr Allan H Goroll decried the "current volume-driven, fee-for-service approaches," the "piecework payment system that perpetuates our 'hamster-wheel' environment."(4) Dr Thomas Bodenheimer asserted that primary care physicians are"overstressed by large patient panels." He blamed this on "the over-burdened 15-minute clinician visit."(3) He mentioned the 15-minute visit three other times in his commentary. In the round table discussion that accompanied the articles, he protested, "it's the tyranny of the 15-minute visit. If you come in to your practice in the morning and you see that you have 12 to 15 15-minute visits in the morning and another 12 to 15 15-minute visits in the afternoon, and you know you can't do it all in 15 minutes...."(7) Finally, in the round table discussion that accompanied the series, Dr Katherine Treadway offered the longest and most impassioned discussion, first explaining the problem,
However, none of the commentaries addressed how we got to this pass, or, to continue the analogy above, none dissected the next layer. At best, they seemed to imply that this came about due to the forces of nature or an act of God. For example, in the round table discussion, Dr Lee said,
Actually, one can find the next layer of explanations in one place. The current bizarrely distorted manner in which physicians are paid was the act of people, a few people operating largely in the shadows.
The US Medicare system determines what it pays physicians using the Resource Based Relative Value System (RBRVS). This system determines the pay for every kind of medical encounter according to a complex formula that is supposed to account for physicians' time and effort, physicians' practice expense, and the cost of malpractice insurance. The components of physicians' effort assessed are, in turn, technical skill and physical effort; the required mental effort and judgment; and stress due to the potential risk to the patient.
To keep the system, which was started in 1990, current, requires addition of new kinds of encounters, which means encounters involving new kinds of procedures, and updating of the estimates of various components, including physicians' time and effort. To do so, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee (RUC). The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments. However, the identities of RUC members are secret, as are the proceedings of the group.
This opaque and unaccountable process has resulted in increases outstripping inflation in fees paid for procedures, while fees paid for "cognitive"medicine, i.e., for primary care, and for services that involve diagnosis, management of acute and chronic disease, counseling, coordination of care, etc, but not procedures, have lagged inflation. The effects of the RUC have been amplified by the unexplained tendency of commercial managed care and health insurance to track the RBRVS system when making their own payments to physicians.
For further details about the RUC, see these posts on Health Care Renewal (here, here, here, and here) and important articles by Bodenheimer et al,(8) and Goodson.(9)
The Unanswered Questions
Understanding this layer of the process raises some major questions, whose answers could help dissect the next layers.
However, failing to understand, or even address the causes of the collapse of primary care will make it all the more difficult to find a way to revive it.
"Those who cannot remember the past are condemned to repeat it." attributed to George Santayana
References
1. Lee TH. The future of primary care: the need for reinvention. N Engl J Med 2008; 359: 2085-2086. Link here.
2. Treadway K. The future of primary care: sustaining relationships. N Engl J Med 2008; 359: 2086, 2088. Link here.
3. Bodenheimer T. The future of primary care: transforming practice. N Engl J Med 2008; 359: 2086, 2089. Link here.
4. Goroll AH. The future of primary care: reforming physician payment. N Engl J Med 2008; 359: 2087, 2090. Link here.
5. Starfield B. The future of primary care: refocusing the system. N Engl J Med 2008; 359: 2087, 2091. Link here.
6. Roland M. The future of primary care: lessons from the U.K. N Engl J Med 2008; 359: 2087, 2092. Link here.
7. Lee TH, Treadway K, Bodenheimer T, Starfield B, Goroll A. The future of primary care: perspective roundtable: redesigning primary care. Link here.
8. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. Link here.
9. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. Link here.
Although these problems are huge, there is not much clear discussion of them.
Thus, it was encouraging to see the vaunted New England Journal of Medicine, the premier US journal of medicine, take up the issue of the "future of primary care." A few weeks ago, the journal published a series of commentaries on the issue,(1-6) and the transcript of a round table discussion among their authors.(7) It was touted as the views of experts on "the crisis in U.S. primary care."
Unfortunately, although the series acknowledged some surface characteristics of the US health care system that have lead to this crisis, it did not delve further into its causes.
On the surface, a major cause of the crisis is that payments to primary care physicians are so limited that we are driving them out of business, while we pay lavishly for new, high-technology, often risky and invasive procedures.
However, understanding how and why this happens requires dissecting layer after layer of complex details. Doing so can be frustrating, if not eye glazing, and this may be one reason why the discussion of this pivotal issue has been so limited.
The first layer of complexity was implicitly acknowledged, but not discussed in the NEJM series. Bear with me through it.
The First Layer of Causation: Low Payments for Face-to-Face Visits, Rising Overhead
Physicians are paid for each encounter with a patient. Their pay only covers what they do in the presence of the patient, and not other efforts on patients' behalf, e.g., communicating with patients when they are not in the office, communicating with other professionals, paperwork required by insurance companies, etc, etc. Furthermore, pay for office visits is available only in a very small number of categories, and the pay for more complex visits is not commensurate with the increase in time and effort that they require, so that physicians who spend a lot of time trying to deal with complex problems will not be paid commensurate with their work. Pay for office visits has not increased as fast as inflation, and certainly not as fast as the expenses of running physicians' offices, i.e., office overhead, has increased. Thus, to try to maintain income, and to support increasingly complex office operations and overhead, primary care physicians must limit the time they spend with any one patient.
The result is the 15 minute visit for nearly all patients. But it is ridiculous to try to manage complex problems in 15 minute visits. Furthermore, primary care physicians spend hours of unpaid time doing paperwork, communications, etc.
The NEJM special articles dealt briefly with the contrast between how primary care physicians and proceduralists are paid, and the adverse effects of the 15-minute visit. The series coordinator, Dr Thomas Lee, noted that "procedure-oriented specialties offer higher potential incomes."(1) Dr Allan H Goroll decried the "current volume-driven, fee-for-service approaches," the "piecework payment system that perpetuates our 'hamster-wheel' environment."(4) Dr Thomas Bodenheimer asserted that primary care physicians are"overstressed by large patient panels." He blamed this on "the over-burdened 15-minute clinician visit."(3) He mentioned the 15-minute visit three other times in his commentary. In the round table discussion that accompanied the articles, he protested, "it's the tyranny of the 15-minute visit. If you come in to your practice in the morning and you see that you have 12 to 15 15-minute visits in the morning and another 12 to 15 15-minute visits in the afternoon, and you know you can't do it all in 15 minutes...."(7) Finally, in the round table discussion that accompanied the series, Dr Katherine Treadway offered the longest and most impassioned discussion, first explaining the problem,
Since I’ve been in practice a long time and I have an elderly, sick population, that for every hour of face-to-face time, I have another hour, at least, of time that I spend that’s unreimbursed. So, if I’m there for 13 hours, I’m getting paid for about 6 of the hours I’m spending.and
The RVU system is ...designed for specialty care and single problems. There is nothing in the RVU system that allows you to take into account the fact that you’ve just seen somebody with congestive heart failure, hypertension, hyperlipidemia, coronary disease, renal insufficiency, and diabetes.Why Are Payments Low for Face-to-Face Visits?
However, none of the commentaries addressed how we got to this pass, or, to continue the analogy above, none dissected the next layer. At best, they seemed to imply that this came about due to the forces of nature or an act of God. For example, in the round table discussion, Dr Lee said,
And I want to go to the payment system next. But do you think — I mean, which comes first, the chicken or the egg? Is it in the water and in the culture, in the educational values? And then the payment system may just reinforce that? Or is it the other way around, the payment system’s where it begins and that’s why it’s in the water?To which Prof Barabara Starfield could only reply,
Unfortunately, it’s the chicken and the egg cycle. It doesn’t start in any one place.The Role of the RUC
Actually, one can find the next layer of explanations in one place. The current bizarrely distorted manner in which physicians are paid was the act of people, a few people operating largely in the shadows.
The US Medicare system determines what it pays physicians using the Resource Based Relative Value System (RBRVS). This system determines the pay for every kind of medical encounter according to a complex formula that is supposed to account for physicians' time and effort, physicians' practice expense, and the cost of malpractice insurance. The components of physicians' effort assessed are, in turn, technical skill and physical effort; the required mental effort and judgment; and stress due to the potential risk to the patient.
To keep the system, which was started in 1990, current, requires addition of new kinds of encounters, which means encounters involving new kinds of procedures, and updating of the estimates of various components, including physicians' time and effort. To do so, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee (RUC). The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments. However, the identities of RUC members are secret, as are the proceedings of the group.
This opaque and unaccountable process has resulted in increases outstripping inflation in fees paid for procedures, while fees paid for "cognitive"medicine, i.e., for primary care, and for services that involve diagnosis, management of acute and chronic disease, counseling, coordination of care, etc, but not procedures, have lagged inflation. The effects of the RUC have been amplified by the unexplained tendency of commercial managed care and health insurance to track the RBRVS system when making their own payments to physicians.
For further details about the RUC, see these posts on Health Care Renewal (here, here, here, and here) and important articles by Bodenheimer et al,(8) and Goodson.(9)
The Unanswered Questions
Understanding this layer of the process raises some major questions, whose answers could help dissect the next layers.
- How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry.
- Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than the RUC?
- How did the RUC become de facto in charge of this process?
- Why does the AMA keep the membership on the RUC secret, and give no input into the RUC process to its general membership?
- Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers?
- Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures?
However, failing to understand, or even address the causes of the collapse of primary care will make it all the more difficult to find a way to revive it.
"Those who cannot remember the past are condemned to repeat it." attributed to George Santayana
References
1. Lee TH. The future of primary care: the need for reinvention. N Engl J Med 2008; 359: 2085-2086. Link here.
2. Treadway K. The future of primary care: sustaining relationships. N Engl J Med 2008; 359: 2086, 2088. Link here.
3. Bodenheimer T. The future of primary care: transforming practice. N Engl J Med 2008; 359: 2086, 2089. Link here.
4. Goroll AH. The future of primary care: reforming physician payment. N Engl J Med 2008; 359: 2087, 2090. Link here.
5. Starfield B. The future of primary care: refocusing the system. N Engl J Med 2008; 359: 2087, 2091. Link here.
6. Roland M. The future of primary care: lessons from the U.K. N Engl J Med 2008; 359: 2087, 2092. Link here.
7. Lee TH, Treadway K, Bodenheimer T, Starfield B, Goroll A. The future of primary care: perspective roundtable: redesigning primary care. Link here.
8. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. Link here.
9. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. Link here.
Monday, December 1, 2008
Two Important Resources
Last month, I was fortunate to be able to attend the 13th International Anti-Corruption Conference in Athens, Greece, where I learned about two important additions to our resources relevant to the issues discussed on Health Care Renewal, specifically to improving integrity and transparency to the manufacture, promotion, and use of pharmaceuticals.
The Medicines Transparency Alliance
Formed this year, this group seeks to bring "together at both the international and national levels, a diverse group of people with an interest in the pharmaceutical sector (stakeholders) to find ways to improve information flows, and increase transparency and accountability about the selection, regulation, procurement, sale, distribution and use of medicines in developing countries. By doing so, MeTA will improve how decisions are made about medicines, improve the way they are purchased and supplied, encourage innovative and responsible business practices, and increase the voice of patients and consumers." The Alliance will be focused mainly on developing countries, so that "when a country implements MeTA, it makes a commitment to progressively disclose a standard set of core data covering the quality, availability, price and promotion of medicines. This commitment also includes fully involving civil society, business and other stakeholders to work together to generate, disclose, debate and use these data to help address problems in the pharmaceutical market."
The Alliance has launched programs in Peru and Ghana, and plans to launch programs in Kyrgyzstan and Jordan.
The World Health Organization (WHO) Good Governance for Medicines Programme
This program has been in operation for several years, but seems to have a new and improved web-site. The site notes "Theft, extortion and abuse …the US$ 3 trillion-plus spent on health services worldwide each year are an obvious target for corruption. In fact, Transparency International estimates that 10 to 25 % of global public health procurement spending is siphoned off and stolen. Life-saving resources are being snatched away from the millions of people that need them most. The pharmaceutical sector, with its US$ 600 billion-plus global market value, is vulnerable to fraud." The goal of the programme "is to improve this situation. Guided by WHO’s Medicines Strategy 2004-2007 and launched in late 2004, the programme is raising awareness of abuse in the public pharmaceutical sector and promoting good governance. Its ultimate aim is to ensure that essential medicines reach people - not the black market."
If only there were also programs like this in developed countries.
The Medicines Transparency Alliance
Formed this year, this group seeks to bring "together at both the international and national levels, a diverse group of people with an interest in the pharmaceutical sector (stakeholders) to find ways to improve information flows, and increase transparency and accountability about the selection, regulation, procurement, sale, distribution and use of medicines in developing countries. By doing so, MeTA will improve how decisions are made about medicines, improve the way they are purchased and supplied, encourage innovative and responsible business practices, and increase the voice of patients and consumers." The Alliance will be focused mainly on developing countries, so that "when a country implements MeTA, it makes a commitment to progressively disclose a standard set of core data covering the quality, availability, price and promotion of medicines. This commitment also includes fully involving civil society, business and other stakeholders to work together to generate, disclose, debate and use these data to help address problems in the pharmaceutical market."
The Alliance has launched programs in Peru and Ghana, and plans to launch programs in Kyrgyzstan and Jordan.
The World Health Organization (WHO) Good Governance for Medicines Programme
This program has been in operation for several years, but seems to have a new and improved web-site. The site notes "Theft, extortion and abuse …the US$ 3 trillion-plus spent on health services worldwide each year are an obvious target for corruption. In fact, Transparency International estimates that 10 to 25 % of global public health procurement spending is siphoned off and stolen. Life-saving resources are being snatched away from the millions of people that need them most. The pharmaceutical sector, with its US$ 600 billion-plus global market value, is vulnerable to fraud." The goal of the programme "is to improve this situation. Guided by WHO’s Medicines Strategy 2004-2007 and launched in late 2004, the programme is raising awareness of abuse in the public pharmaceutical sector and promoting good governance. Its ultimate aim is to ensure that essential medicines reach people - not the black market."
If only there were also programs like this in developed countries.
The “Gonzalez Trial” for Pancreatic Cancer: Outcome Revealed
The regimen advocated by Nicholas Gonzalez is a variation of a “detoxification” treatment for cancer that has been around, in one form or another, for more than 50 years ("Gerson Therapy” is another example). Here is the National Cancer Institute’s (NCI) description:
As unlikely as it may seem, in 1999 American taxpayers began paying for people with cancer of the pancreas to be subjected to that regimen, in a trial sponsored by the National Center for Complementary and Alternative Medicine (NCCAM) and the NCI, conducted under the auspices of Columbia University. Gonzalez provided the treatments. A few months ago, on Science-Based Medicine, I presented a multi-part treatise on the “Gonzalez regimen” and the trial. It demonstrated that all evidence, from basic science to clinical, including the case series that had supposedly provided the justification for the trial, failed to support any real promise for the treatment.
It showed that the impetus for the trial, as has been true for other regrettable trials of implausible health claims, can be traced not to science but to the reactionary politics of anti-intellectual populism: initially to Laetrile and to the “Harkinites,” and more recently to the Honorable Dan Burton (R-IN). It reported that there had been major problems with the Gonzalez trial from the outset, and that for at least one subject the regimen had been more torture than therapy. It reported that for unclear reasons the trial had come to a halt a couple of years ago, and that it appeared that there would never be a report of its findings.
That series of posts also argued what was later summarized here: that, for good reasons, the New York State Board for Professional Medical Conduct had nearly revoked Dr. Gonzalez’s medical license during the 1990s—only to retreat from that position after two misguided academics had testified that his regimen might benefit cancer patients.
The apparent non-outcome of the Gonzalez trial would be the final insult among its numerous, serious ethical violations. These were discussed, at some length, here and here; they include the fallacy of 'popularity,' which has been the NCCAM's primary rationale for human trials of implausible health claims. On June 2, 2008, one month after the last posting of the series, new information about the Gonzalez trial became available in the form of a determination letter from the federal Office of Human Research Protections (OHRP). In part, it stated:
What this means, in summary, is that the trial must have found the Gonzalez regimen to be either much better or much worse than standard treatment for cancer of the pancreas. It is certain that it was much worse, of course, because otherwise we would have heard about it years ago. I have offered additional evidence for that conclusion, and an explanation for why this information has not been reported by the responsible investigators, in a longer version of this posting.
Patients receive pancreatic enzymes orally every 4 hours and at meals daily on days 1-16, followed by 5 days of rest. Patients receive magnesium citrate and Papaya Plus with the pancreatic enzymes. Additionally, patients receive nutritional supplementation with vitamins, minerals, trace elements, and animal glandular products 4 times per day on days 1-16, followed by 5 days of rest. Courses repeat every 21 days until death despite relapse. Patients consume a moderate vegetarian metabolizer diet during the course of therapy, which excludes red meat, poultry, and white sugar. Coffee enemas are performed twice a day, along with skin brushing daily, skin cleansing once a week with castor oil during the first 6 months of therapy, and a salt and soda bath each week. Patients also undergo a complete liver flush and a clean sweep and purge on a rotating basis each month during the 5 days of rest.
As unlikely as it may seem, in 1999 American taxpayers began paying for people with cancer of the pancreas to be subjected to that regimen, in a trial sponsored by the National Center for Complementary and Alternative Medicine (NCCAM) and the NCI, conducted under the auspices of Columbia University. Gonzalez provided the treatments. A few months ago, on Science-Based Medicine, I presented a multi-part treatise on the “Gonzalez regimen” and the trial. It demonstrated that all evidence, from basic science to clinical, including the case series that had supposedly provided the justification for the trial, failed to support any real promise for the treatment.
It showed that the impetus for the trial, as has been true for other regrettable trials of implausible health claims, can be traced not to science but to the reactionary politics of anti-intellectual populism: initially to Laetrile and to the “Harkinites,” and more recently to the Honorable Dan Burton (R-IN). It reported that there had been major problems with the Gonzalez trial from the outset, and that for at least one subject the regimen had been more torture than therapy. It reported that for unclear reasons the trial had come to a halt a couple of years ago, and that it appeared that there would never be a report of its findings.
That series of posts also argued what was later summarized here: that, for good reasons, the New York State Board for Professional Medical Conduct had nearly revoked Dr. Gonzalez’s medical license during the 1990s—only to retreat from that position after two misguided academics had testified that his regimen might benefit cancer patients.
The apparent non-outcome of the Gonzalez trial would be the final insult among its numerous, serious ethical violations. These were discussed, at some length, here and here; they include the fallacy of 'popularity,' which has been the NCCAM's primary rationale for human trials of implausible health claims. On June 2, 2008, one month after the last posting of the series, new information about the Gonzalez trial became available in the form of a determination letter from the federal Office of Human Research Protections (OHRP). In part, it stated:
The complainant alleged that a minimum of 72 subjects were to be enrolled under the IRB-approved protocol, but that the study was terminated with only 62 enrolled subjects, in violation of HHS regulations… CUMC [Columbia University Medical Center] reported that the Data Safety and Monitoring Committee (DSMC) for this protocol recommended that the study be terminated before it reached its full enrollment of 72 subjects. At its September 30, 2005 meeting, the DSMC recommended that the study be terminated due to predetermined stopping criteria. This information was submitted to the CUMC IRB on October 17, 2005, and the study termination was approved by the IRB.
What this means, in summary, is that the trial must have found the Gonzalez regimen to be either much better or much worse than standard treatment for cancer of the pancreas. It is certain that it was much worse, of course, because otherwise we would have heard about it years ago. I have offered additional evidence for that conclusion, and an explanation for why this information has not been reported by the responsible investigators, in a longer version of this posting.
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