"Cartel" is a word not typically found in the American healthcare lexicon. Yet "cartelization" is the term John Graham uses to describe the impact government legislation could have on healthcare in America.
“I call myself non-partisan, but I’m very free market and I’m very anti-PPACA.” Those too are Graham’s words. And they're why Graham, the director of healthcare studies at Pacific Research Institute and author of the recent report “Bust or Bailout? The Future of Private Health Plans Under Obamacare,” has taken on the Patient Protection and Affordable Care Act (PPACA), the legislation also known as healthcare reform.
He's done so on a number of fronts, including health benefits exchanges, the medical loss ratio, the threat of a single-payer government and, not least, the currently contentious accountable care organization (ACO) model.
Graham spoke with Government Health IT Editor Tom Sullivan about that last one – specifically how ACOs will spark provider consolidation, the impact on patient care and why he expects the government to inadvertently create “reverse incentives."
Q: One of the statements you make is that ACOs will lead to higher costs for care. How?
A: Well, I don’t think we know what ACO is yet. But just the fact of what we’ve seen recently in Pennsylvania, where Highmark, which is a plan making a bid for a hospital system in the Pittsburgh area, and then University of Pittsburgh Medical Center saying, "Since it’s a competing hospital system we’re probably going to bail out of Highmark’s network now.” That’s the kind of consolidation we’re talking about. As providers have to become more integrated to get these ACO payments, we’re going to see more consolidation. Because healthcare is local, which the federal government doesn’t seem to recognize, a little bit of consolidation in a metropolitan area or a rural area can go a long way toward reducing competition and choice.
[Related Q&A: The wide, deep gulf between ACO regs and reality.]
Probably as far as I can describe it at this point – I know you write a lot about ACOs because there's a big health IT part of it there – I think most of the people who are supposed to get involved are not very satisfied with the original guidance that was delivered. It’s still a moving target. The danger here is that if you look at the top ten places delivering care, the places that are really good, like the Mayo Clinic, they’re all doing different things, and we’re now going to try to cram them into one bottle to get the ACO payments. I’m just not confident that’s going to have a positive outcome. It will increase bureaucratic costs, consolidation, it will make for less choice and I don’t see how that increases quality of care.
Q: And that’s the "cartelization" you discuss in the report?
A: I’m in the Bay Area, where either you’re in Kaiser or if you’re in a PBO there’s basically two hospital networks, Sutter Health or Catholic Healthcare West, that’s about it. This is a trend that’s been going for a long time but now they’re buying up all the physician practices. You’re going to have a lot less choice. A lot of people fear that the ACO will look like the 1990’s managed care organizations, just amplified to a greater degree. There will be less choice as a patient, and it will be more frustrating.
Q: And almost every week someone lashes out at the ACO regs. Why?
A: The other alternative is that people will look at how much effort they have to put in to get what’s probably going to be a pretty measly little payment, and they might just say, "Oh, the heck with this," and surveys from the physician groups suggest they are just going to kind of ignore it. Who knows how that will work out for them, because they will get punished for that, too.
Q: When talking about federal, state and local health agencies, what can the IT folks take away from your report?
A: What does the government care about in terms of health IT? It cares about archiving patient data, archiving your medical record, and perhaps having it available for research purposes or whatever. I don’t think patients care about that. When you look at non-government directed consumer-focused health IT efforts, they’re not doing that well. Google Health stopped. But even that’s not the patient population that needs to be tethered to health IT, it’s the chronically ill, the elderly. I’m sure you can get the 25-year old, college-educated expectant mother to use some sort of electronic medical record, but that’s not really where the costs are being carried in the system. What patients want is answers to their questions. They don’t care that their data is archived according to some government standards.
Q: When we look at the larger scope of population health, analysis, trends and outcomes, should patients care about their data being in electronic records?
A: We definitely need to improve the data collection, we need to get the incentives right for things like reporting adverse events and if we could capture data from the prescribers we could get good quality information that could reduce the necessity for clinical trials. But getting the incentive for collecting that kind of data is very difficult. It has to be done in the medical community and they don’t have the right incentives so we do have a dilemma here that we’re not going to solve. And I don’t think the government paying a bounty to satisfy the still-to-be-determined criteria for accountable care organizations – satisfying the needs of the government is not the same as satisfying the needs of the community or the patient – and what is the likelihood that the government will figure out how to pay the ACOs in such a way that the outcomes will become better?
[Q&A: PwC's Bruce Henderson explains why the ACO measures are so steep.]
I would not put that at greater than 50 percent. I’d put that at significantly lower than 50 percent. Maybe they have a 10 percent chance of getting it right, but they have a 90 percent chance that they’ll create reverse incentives that force the ACOs to focus on the wrong things and, even worse, it won’t be a dynamic system but we’ll have a static system where we become a lot less adaptable to learning once we get these ACOs up and running.
Q: If there’s an administration change in 2012, even though a lot of people say health IT is bipartisan, there will certainly be some changes to the funding, no?
A: My guess, and this is just me, I don’t have any skin the game, right now there’s all kinds of conferences, and people trying to figure it out: should we make the investment seeking to become an ACO? As we move along, we’ll see people drop out and say, “It’s not for us. We’ve done a little study and we don’t think we’ll get a return on investment.” Especially given the political risk, and even without the political risk, even if the Democrats get 75 percent of the vote in 2012, Nancy Pelosi becomes speaker again, and they take back the senate – there’s no more money. So whatever is written in the law as ACO bounty payments, that is the best-case scenario. And if you get a massive Democrat takeover of the whole beltway again in the upcoming election, there is not going to be the money there that they say is there. So I don’t believe the ACO model is going to work out very well.
Q: We’re still awaiting the final rule on ACO regulations, and there’s speculation that CMS will soften the 65 measures. Should they become more realistically achievable for a larger number of providers, doesn’t that make the model more attractive?
A: I don’t think so, because there would be less money to go around. I look back at 1996, HIPAA seems to have caused consolidation. Any time there’s an increase in bureaucratic compliance you’re going to have consolidation, cartelization. Even if the ACOs don’t go anywhere, the solo practitioner or the small provider practice, the cost of complying with regulations are just getting completely out of control. So the large medical group affiliated with a hospital is a model that is going to persist. Now, whether that’s good or bad, I’m not very sure. You hear all these stories about people that say, "Well, we did this in the 90’s and the hospital buys up all these practices and the doctor gets a bunch of money for his practice, he gets a salary and then he’s seeing three patients a day and he’s not actually doing his job." So fee-for-services as the worst thing since unsliced bread is overplayed.
