healthy4u: Sutter Health

CA Supreme Court upholds "whistleblower" protection for Modesto physician - and on replacing the abuser-favoring connotations of "whistleblower" with "Corporate Integrity Advocate"

"Whistleblower" is a term commonly used to refer to insiders in an organization who do not "go along to get along" or look the other way with regard to corruption and malfeasance. The connotation, of course, is that these individuals are "snitches" and "non-team players", in other words, the "bad guys."  They are then punished for their good deeds. (More on the term "whistleblower" below.) Here's one "whistleblower" who punished back: <blockquote class="tr_bq">California Supreme Court upholds whistleblower protection for Modesto physician By Ken Carlson February 20, 2014 <a href="http://www.modbee.com/2014/02/20/3201156/california-supreme-court-upholds.html">http://www.modbee.com/2014/02/20/3201156/california-supreme-court-upholds.html</a> The California Supreme Court ruled Thursday that a Modesto physician who challenged the termination of his hospital privileges has whistleblower protections. Dr. Mark Fahlen, a kidney specialist, filed a March 2011 whistleblower lawsuit in Stanislaus County Superior Court after Sacramento-based Sutter Health canceled his privileges to care for patients at Memorial Medical Center. Fahlen’s lawsuit claims that Sutter Central Valley Hospitals and Steve Mitchell, then the chief operating officer of Memorial, persuaded the Sutter Gould medical group to fire him and terminated his hospital privileges because of his complaints about insubordination and substandard care by hospital nurses.</blockquote> At least they didn't threaten to plaster his complaints to his forehead as occurred in Ohio (<a href="http://hcrenewal.blogspot.com/2013/07/hows-this-for-patient-rights-affinity.html">http://hcrenewal.blogspot.com/2013/07/hows-this-for-patient-rights-affinity.html</a>). <blockquote class="tr_bq">His attorney said the court decision guarantees that physicians have the same protections as hospital employees if they report problems that threaten to harm patients.</blockquote> That "guarantees protections" and "report problems that threaten to harm patients" have to appear in the same sentence at all is symptomatic of the most severe form of patient-be-damned dysfunction in this industry. <blockquote class="tr_bq">It’s “the biggest victory for patient rights since California’s health care whistleblower law was adopted in 1999,” said attorney Stephen Schear of Oakland. “In a hospital environment dominated by corporate giants too often more focused on protecting their marketing and brand name than patient health, today’s ruling will finally unshackle doctors from fear of retribution so they can protect patients.”</blockquote> Ditto my prior comment. <blockquote class="tr_bq">In a case closely watched by the hospital industry, the American Medical Association supported Fahlen with a “friend of the court” brief. The California Hospital Association and groups such as Kaiser Foundation Hospitals, Scripps Health and Dignity Health filed briefs on behalf of the defendants.</blockquote> That is rather indicative of the mindsets of those who filed briefs on behalf of the defendants. <blockquote class="tr_bq">... After he was given staff privileges at Memorial in 2004, Fahlen complained to administrators that nurses refused or failed to follow his patient care instructions. According to facts in the case, Fahlen had six clashes with nurses about patient care from August 2007 to April 2008. He told supervisors and administrators that nurses were insubordinate and that their care was substandard. One complaint was regarding a nurse’s refusal to transfer a patient to intensive care, delaying for five hours the appropriate level of care for the patient, the doctor said.</blockquote> What if the patient had died, I ask? <blockquote class="tr_bq">Mitchell, the chief operating officer, blamed Fahlen for his conflicts with nursing staff and contacted Sutter Gould’s medical director about Fahlen’s conduct. Sutter Gould cut ties with Fahlen in May 2008, causing his malpractice insurance to be canceled. Fahlen decided to start his own practice and arranged a meeting with Mitchell to talk about his hospital privileges. Mitchell wrote in an email to Memorial’s chief executive officer that Fahlen “does not get it,” meaning that he was going to lose his privileges. The CEO replied that it “looks like we need to have the medical staff take some action on his MedQuals!!! (or medical qualifications). Soon!” According to the lawsuit, Mitchell told Fahlen at the meeting that he should resign and leave town, or the hospital would report him to the Medical Board of California. Fahlen charged that a subsequent in-house investigation, and an executive committee decision not to renew his privileges, occurred in retaliation for his complaints about patient care.</blockquote> In other words, the doctor was a "disruptive physician" - a bad schoolboy who needed to be spanked - which was, of course, more important to the executives than maimed or dead patients. <blockquote class="tr_bq">Fahlen asked for a hearing, resulting in an October 2009 to May 2010 review by a six-physician committee at Memorial. The panel concluded that the evidence did not show he was incompetent or that his behavior had endangered patients. [But] Memorial’s board of trustees overruled the panel in early 2011.  [It's not hard to imagine that few if any on that board were themselves medical professionals - ed.]</blockquote> It's more likely in my view that this physician was ultra-competent. <blockquote class="tr_bq"> Sutter attorneys argued that the doctor first needed to exhaust other legal remedies before bringing the whistleblower lawsuit. The Supreme Court dismissed a previous expectation that doctors exhaust other remedies before filing suit with claims of retaliation. Such conditions would “seriously undermine the Legislature’s purpose to afford a whistleblower on a hospital medical staff the right to sue,” the Supreme Court’s opinion said.</blockquote> Next, a typical circular argument: <blockquote class="tr_bq"> Attorney Lowell Brown, who handles physician disciplinary cases for hospitals, said Thursday’s ruling will “change the rules of the game,” though additional court decisions will be needed to clarify issues. He predicted doctors will be reluctant to serve on hospital panels that review the competency or behavior of physicians. “The doctor can claim the action is being taken because he or she is whistleblowing,” Brown said. “No one ever produces evidence that a sham peer review has taken place. What we will see is sham whistleblower complaints about peer reviews.”</blockquote> Since sham peer review (see more at <a href="http://hcrenewal.blogspot.com/2009/10/sham-peer-review-could-this-bad-faith.html">http://hcrenewal.blogspot.com/2009/10/sham-peer-review-could-this-bad-faith.html</a>) is done secretly and behind closed doors, with protections, it's pretty hard to produce "evidence" of the type required in court. <blockquote class="tr_bq">... Fahlen said the ruling means that “doctors no longer have to choose between speaking out for their patients or continuing with their careers.”</blockquote> Again, this is an absolutely perverse choice foisted upon clinicians by corporatized, financialized medicine and its leadership. ------------ More on the term "whistleblower" itself. My attitude about that term is clear - the people who use it are attempting an ad hominem attack in one word.  It is a bad term, with bad connotations, and does not actually describe what the individual is attempting to accomplish. AHIMA's  Kim Baldwin Stried-Reich has a similar view, and a suggestion for replacement of that term with a more descriptive and non-abusable term: <blockquote class="tr_bq">"Changing Perception of ‘Whistleblowers’"</blockquote><blockquote>From  <a href="http://journal.ahima.org/2014/03/01/hipaa-whistleblower-protections-promote-information-governance/">http://journal.ahima.org/2014/03/01/hipaa-whistleblower-protections-promote-information-governance/</a> ... According to Kim Baldwin Stried-Reich, the former Speaker of the AHIMA House of Delegates, the new amendment to the HITECH-HIPAA Omnibus rule demonstrates both the increasing importance and value HIM professionals have today in ensuring both integrity and compliance with rules, regulations, and laws governing access and disclosure of health information within their organizations. Baldwin Stried-Reich is a privacy and compliance officer with the Lake County Physicians Association, in Waukegan, IL. She notes that while the new provision provides specific protections against disclosures reported to an oversight agency by whistleblowers and workforce members who are victims of a crime, she’s not so sure this new rule will encourage individuals, such as HIM professionals to speak-up and speak-out when or if they see evidence of systematic and ongoing non-compliance with federal mandates. One reason for this is the widespread use of the word “whistleblower,” which often carries negative connotations. She prefers the term “corporate integrity advocate.”</blockquote> "Corporate Integrity Advocate" clearly and unequivocally describes what the individuals - including those who write for blogs such as this one - are trying to accomplish. It is also a term that is rather hard for malfeasance-doers to use as ad hominem.. <blockquote class="tr_bq">“Perhaps if Health and Human Services had utilized another term, such as ‘corporate integrity advocate’ more individuals would understand what the intent of this new law is and that it is meant as an avenue individuals can choose to pursue if their professional integrity and ethics are not in alignment with the corporation’s any longer,” Baldwin Stried-Reich says.</blockquote> "Not in alignment with the lack of the corporation's integrity and ethics" is a more direct, and likely more accurate, way to put it. <blockquote class="tr_bq">A relevant example of this is evident in the settlement that Shasta Regional Medical Center (SRMC) entered into with the Department of Health and Human Services (HHS) following an investigation concerning the breach of PHI after senior-level executives intentionally disclosed protected information to the media on at least three separate occasions. The Shasta case demonstrates how and why corporate integrity advocates or whistleblowers are needed to facilitate change within their organizations when it is warranted, Baldwin Stried-Reich explains.</blockquote> That example is but the tip of the iceberg.  There are many posts on this blog alone dealing with the issues of <s>whistleblowers</s> Corporate Integrity Advocates (see the query link <a href="http://hcrenewal.blogspot.com/search/label/whistle-blowers">http://hcrenewal.blogspot.com/search/label/whistle-blowers</a>). The term "whistleblower" needs to be retired ASAP. -- SS

CA Supreme Court upholds "whistleblower" protection for Modesto physician - and on replacing the abuser-favoring connotations of "whistleblower" with "Corporate Integrity Advocate"

"Whistleblower" is a term commonly used to refer to insiders in an organization who do not "go along to get along" or look the other way with regard to corruption and malfeasance.The connotation, of c…

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19 Mar 2014

EHR Go-Lives Are Often Chaotic; One Area To Be Explored Is If This Go-Live Led To This Tragedy

EHR "go-lives" are particularly chaotic as staff adjusts to the new cybernetic governor of care.  Could the distractions have caused or contributed to the following tragedy? <blockquote class="tr_bq"><a href="http://www.cnn.com/2013/12/17/health/california-girl-brain-dead/" target="_blank">http://www.cnn.com/2013/12/17/health/california-girl-brain-dead/</a> Family wants to keep life support for girl brain dead after tonsil surgery By Tom Watkins and Mayra Cuevas, CNN updated 4:32 PM EST, Wed December 18, 2013 The mother of 13-year-old Jahi McMath, who was declared brain dead Thursday, three days after undergoing surgery to remove her tonsils, said Tuesday that the family should make the call. ... The surgery, which occurred December 9 [at Children's Hospital & Research Center in Oakland, California - ed.], initially appeared to have gone well, said Sandy Chatman, Jahi's grandmother who is herself a nurse and saw the girl in the recovery room. "She was alert and talking, and she was asking for a Popsicle because she said her throat hurt," Chatman said. But Jahi was then moved to the intensive-care unit, and her relatives were denied access to the eighth-grader for 30 minutes; when they finally were allowed to see her, they knew something was wrong. "Upon entry, they saw that there was way too much blood," Chatman said. "We kept asking, 'Is this normal?'" Sealey said. "Some nurses said, 'I don't know,' and some said, 'Yes.' There was a lot of uncertainty and a lack of urgency." Sealey said that when Chatman noticed that her granddaughter's oxygen levels were dangerously low, she called for help. But Jahi went into cardiac arrest. The medical staff performed chest compressions to revive her and gave her clotting medications, but nothing worked.</blockquote> The girl's brain was severely injured by lack of oxygen.  I am not commenting on the reported dispute regarding removing life support. I am commenting on my concern about a possible contributory role of a new EHR. At my Jan. 2, 2014 post "Doctors' Dissatisfaction With EHRs May Be Early Warning of Deeper Quality Problems" (<a href="http://hcrenewal.blogspot.com/2014/01/doctors-dissatisfaction-with-ehrs-may.htm">http://hcrenewal.blogspot.com/2014/01/doctors-dissatisfaction-with-ehrs-may.htm</a>l) I wrote of the distractions that physicians reported were caused by EHR systems such as: <blockquote class="tr_bq">... current EHR technology interferes with face-to-face discussions with patients; requires physicians to spend too much time performing clerical work; and degrades the accuracy of medical records by encouraging template-generated doctors' notes. </blockquote> I had also noted nurse's concerns of "inevitable" patient injury due to EHR distractions, such as at: <ul><li> My July 12, 2013 post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals" (<a href="http://hcrenewal.blogspot.com/2013/07/rns-say-sutters-new-electronic-system.html">http://hcrenewal.blogspot.com/2013/07/rns-say-sutters-new-electronic-system.html</a>),</li></ul><ul><li>my May 30, 2013 post "Marin General Hospital's Nurses are Afraid a Defective EMR Implementation Will Harm or Kill Patients" at <a href="http://hcrenewal.blogspot.com/2013/05/marin-general-hospitals-nurses-are.html">http://hcrenewal.blogspot.com/2013/05/marin-general-hospitals-nurses-are.html</a>, </li></ul><ul><li>my June 19, 2013 post "Affinity RNs Call for Halt to Flawed Electronic Medical Records System Scheduled to Go Live Friday" (<a href="http://hcrenewal.blogspot.com/2013/06/affinity-rns-call-for-halt-to-flawed.html">http://hcrenewal.blogspot.com/2013/06/affinity-rns-call-for-halt-to-flawed.html</a>),  </li></ul><ul><li>and at other posts citing similar nursing complaints. </li></ul> The cases cited above involve the "EPIC" EHR, but similar issues arise will most of the current EHR sellers' products, which are unregulated.   For instance see the ECRI Institute's Deep Dive study of EHR risk at <a href="http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html">http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html</a>. In a volunteer study (i.e., only a fraction of true incidents reported) of 36 ECRI PSO hospitals, 171 EHR-related "events" serious enough to cause harm were voluntarily reported in just 9 weeks.  8 of the "health IT events" were reported to have resulted in patient harm, and 3 were possibly related to patient deaths.   From a press release from nurses at Affinity Medical Center (Ohio) on the nature of the problems: <blockquote class="tr_bq">... The programs are often counterintuitive, cumbersome to use, and sometimes simply malfunction. Nurses are finding that the technology is taking time away from patients and fundamentally changing the nature of nursing.” ... I’m concerned that the manner in which this technology is being implemented may pose serious disruptions in patient care.”</blockquote> <table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbLHw1SqBJZglTMVlAh9MtKitlKiiVpouL8TTAbtNJwQqXGHGwRLj6imsuWMcqjMftyUM4ywqBSJV8uZ5i0Tqa1jrpxoC178PC40kaaNQww_88NhLwDu4E7UjBNzO82rJzxoX72tNs8yVZ/s1600/affinity_page1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbLHw1SqBJZglTMVlAh9MtKitlKiiVpouL8TTAbtNJwQqXGHGwRLj6imsuWMcqjMftyUM4ywqBSJV8uZ5i0Tqa1jrpxoC178PC40kaaNQww_88NhLwDu4E7UjBNzO82rJzxoX72tNs8yVZ/s320/affinity_page1.jpg" width="247" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">An open letter from nurses at an Ohio hospital, Affinity, on EHR "threats to patient safety."  Click to enlarge.</td></tr></tbody></table> The EPIC EHR apparently had just recently "gone live" at Children's Hospital Oakland. From  "Children's Oakland completes Phase 1 of $89 million electronic records system", Nov 20, 2013 (<a href="http://www.bizjournals.com/sanfrancisco/blog/2013/11/childrens-oakland-89m-emr.html">http://www.bizjournals.com/sanfrancisco/blog/2013/11/childrens-oakland-89m-emr.html</a>): <blockquote class="tr_bq">Children's Hospital & Research Center Oakland has completed the first phase of an $89 million Epic Systems Corp. electronic health records system that links inpatient operations and an oncology/hematology clinic. Other outpatient clinics are expected to come online in March or April, spokeswoman Melinda Krigel told the Business Times. ... The project's overall cost, $89 million, includes hardware, software and other implementation costs, including a separate SoftLab system that interfaces with the main electronic medical records system, Krigel said. The official "go-live" date was Nov. 5. </blockquote> See also the Children's Hospital Oakland Annual Report at <a href="http://www.chofoundation.org/assets/files/2012-annual-report.pdf" target="_blank">http://www.chofoundation.org/assets/files/2012-annual-report.pdf</a>.  On page 21:  <blockquote class="tr_bq">... The Epic system will launch in November 2013 at Children’s inpatient facilities as well as in the Operating Room, the Emergency Department, the Day Hospital, and the Oncology/ Hematology Clinic. </blockquote> I believe the possibility of clinicians being so distracted by computer data entry duties, and/or communications being impaired by the system's outputs, that this patient was left anoxic for a crucial period of time needs to be investigated. In my view, in the differential diagnosis of clinical chaos in 2014, the chaos caused by healthcare IT needs to be a consideration. My concerns may be shown unfounded in this case (I hope they are), and the injuries the result of other factors.  In consideration of the reported complaints from other organizations, however, not conducting an impartial investigating of a role of the new EHR in this tragedy would be, in my opinion, cavalier. -- SS  Jan. 5, 2014 Addendum: From a court document cached here:  <a href="http://www.cci.drexel.edu/faculty/ssilverstein/1230rrr.pdf">http://www.cci.drexel.edu/faculty/ssilverstein/1230rrr.pdf </a>, the following is written at p. 11-12: <blockquote class="tr_bq"> ... Originally the surgery was uneventful and MCMATH awoke from sedation in the recovery room speaking with hermother, Petitioner LATASHA WINKFIELD asking for a popsicle.  MCMATH was taken to the ICU and her mother was told to wait several minutes while they fixed her IV. After being told several times that it would be just another 10 minutes, approximately 25-45 minutes after MCMATH was brought into the ICU, WINKFIELD went back and found her daughter sitting up in bed bleeding from her mouth.  It was evident that this had been transpiring for some time.  The nursing staff said “it was normal” and the mother stayed at the bedside as the bleeding grew increasingly worse.  The nurses gave WINKFIELD a cup/catch basin for MCMATH to bleed from her mouth into.  WINKFIELD asked for assistance and was told that this was normal and was given paper towels to clean the blood off herself and MCMATH. The bleeding intensified to where copious amounts of blood were being expelled from MCMATH’s mouth and then nose.  MCMATH’s stepfather was also present and assisted in the attemps to stem/collect the blood. Again, WINKFIELD asked for assistance, and a doctor, and was only given a bigger container to collect the blood and, later, a suction device to suction the increasing volume of blood.  The stepfather continued to suction while the mother went and got her mother, a nurse, to take over for her.  The grandmother saw what was happening and made multiple requests, and then a loud demand, for a doctor. MCMATH shortly thereafter suffered a heart attack and fell into a comatose state.  She later was pronounced “brain dead”… </blockquote> "Heart attack" (i.e., primary myocardial infarction) in a 13-year-old sounds far less likely than exsanguination to the point of hypovolemic shock, severe hypotension, and cardiac arrest.  That such events transpired in an ICU, with family present and calling for help, suggests there were major clinician distractions of some sort at play. A reader wrote me wondering if a new CPOE component could have caused delays in evaluation and treatment. When someone is dying, you simply cannot waste time 'clicking away', they wrote. A reader also wrote me wondering if an EHR crash occurred at the time this patient was left with family to exsanguinate, causing clinical chaos. That is a particularly interesting thought.  See the multiple posts at <a href="http://hcrenewal.blogspot.com/search?q=ehr+crash">http://hcrenewal.blogspot.com/search?q=ehr+crash</a>.  In my opinion, these issues require investigation. -- SS

EHR Go-Lives Are Often Chaotic; One Area To Be Explored Is If This Go-Live Led To This Tragedy

EHR "go-lives" are particularly chaotic as staff adjusts to the new cybernetic governor of care. Could the distractions have caused or contributed to the following tragedy? http://www.cnn.com/2013/12…

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03 Jan 2014

Setback for Sutter after $1B EHR crashes (in followup to post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals")

At my July 12, 2013 post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals" (<a href="http://hcrenewal.blogspot.com/2013/07/rns-say-sutters-new-electronic-system.html">http://hcrenewal.blogspot.com/2013/07/rns-say-sutters-new-electronic-system.html</a>) I reproduced a California Nurses Association warning about rollout of an EHR at Sutter: <blockquote class="tr_bq">RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals Introduction of a new electronic medical records system at Sutter corporation East Bay hospitals has produced multiple problems with safe care delivery that has put patients at risk, charged the California Nurses Association today. Problems with technology are not unique to health care ...  [What is unique to healthcare IT is the complete lack of regulation - ed.] In over 100 reports submitted by RNs at Alta Bates Summit Medical Center facilities in Berkeley and Oakland, nurses cited a variety of serious problems with the new system, known as Epic. The reports are in union forms RNs submit to management documenting assignments they believe to be unsafe. Patient care concerns included computerized delays in timely administration of medications and contact with physicians, ability to properly monitor patients, and other delays in treatment.  Many noted that the excessive amount of time required to interact with the computer system, inputting and accessing data, sharply cuts down on time they can spend with patients with frequent complaints from patients about not seeing their RN.  [Note: patients are not given the opportunity for informed consent about the risks, nor opt-out of EHR use in their care - ed.]</blockquote> In related posts I'd observed such concerns being ignored by hospital management.  See header of the aforementioned post. Now we have this:  a major system crash. <blockquote class="tr_bq">Healthcare IT News <a href="http://www.healthcareitnews.com/news/setback-sutter-after-1b-ehr-system%20crashes">Setback for Sutter after $1B EHR crashes</a> <div class="top">'No access to medication orders, patient allergies and other information puts patients at serious risk'</div><div class="top">SACRAMENTO, CA | August 28, 2013</div><div class="top"></div><div class="top">The nearly $1 billion electronic health record system at Sutter Health in Northern California crashed early this week, leaving nurses and clinical staff unable to access any patient information for a full day. he Epic EHR was down Aug. 23 due to a planned upgrade for eight hours during which nurses and other clinical users could read medication orders and patient histories but had to record new data on paper to then be re-entered into the system later, according to reports from the California Nurses Association, part of National Nurses United, the largest nurses union in the U.S. Then, on the morning of Aug. 26 at approximately 8 a.m., the system crashed completely, at which time nurses, physicians and hospital staff had no access to patient information, including what medications patients were taking or required to take and all vital patient history data.    The Epic EHR went dark at several Sutter Health locations, including Alta Bates Summit Medical Center, Eden Medical Center, Mills-Peninsula Hospital, Sutter Delta, Sutter Tracy, Sutter Modesto and numerous affiliated clinics. "This incident is especially worrisome," said Bonnie Castilla, RN, CNA legislative director, in a news release. "No access to medication orders, patient allergies and other information puts patients at serious risk.  These systems should never be relied upon for protecting patients or assuring the delivery of the safest care."  [This is no exaggeration.  My mother was nearly killed by such a problem when caused by an EHR defect (<a href="http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfmaude/detail.cfm?mdrfoi__id=1729552">link</a>) that I averted at the last minute by happenstance of showing up at the right time, while she recuperating from another EHR-related disaster - ed.]   </div></blockquote><blockquote class="tr_bq"><div class="top">Some RNs also reported that Sutter failed to provide adequate support during the blackout and didn't implement adequate backup planning.   "All information such as medication administration records and patient histories was outdated by two to three days," said Mike Hill, Alta Bates Summit RN, in a news release. "There were no orders that could be seen of any kind through the day so nurses called for what they needed." Kevin Sweat, an emergency room RN at Eden Medical Center, a Sutter affiliate, also weighed in on the blackout, saying that in his 12 years as an RN he has never seen a system crash like this.     </div></blockquote>Worse, clinicians must now serve their Cybernetic Master to perfection, or be whipped (apparently to improve morale): <blockquote class="tr_bq">... "We have been on Epic for 5 months now, and we can no longer have incorrect orders, missing information or incorrect or missing charges. Starting on September 1st, errors made in any of the above will result in progressive discipline," according to another hospital memo sent to staff. </blockquote> In the setting of dire warnings by the nurses of EHR dangers several months back that were likely largely ignored, if any patient was harmed or killed as a result of this latest fiasco, the corporate leadership has literally begged to be sued for negligence, in my view. However I'm sure a press release soon will claim that "<a href="http://hcrenewal.blogspot.com/search/label/Patient%20care%20has%20not%20been%20compromised">patient care has not been compromised</a>." Of course this includes now and moving forward, even with informational gaps all over the place. -- SS Aug. 29, 2013 additional thought: The punishment for not being a 'perfect' user of this EHR is the ultimate "blame the user" (blame the victim?) game, considering the pressures of patient care in hospitals in lean times - partly due to EHR expense! - and EHRs that have not been formally studied for usability and are poorly designed causing "use error" (that is, a poor user experience promotes even careful users to make errors).  Cf. definition of bad health IT: <blockquote class="tr_bq"> Bad Health IT ("BHIT") is defined as IT that is ill-suited to purpose, hard to use, unreliable, loses data or provides incorrect data, causes cognitive overload, slows rather than facilitates users, lacks appropriate alerts, creates the need for hypervigilance (i.e., towards avoiding IT-related mishaps) that increases stress, is lacking in security, compromises patient privacy or otherwise demonstrates suboptimal design and/or implementation.</blockquote> The study of usability is getting underway only now via NIST but will likely be done in an industry-friendly way due to health IT politics. -- SS Aug. 29, 2013 addendum There have been numerous comments over at HisTalk (at <a href="http://histalk2.com/2013/08/27/news-82813/">http://histalk2.com/2013/08/27/news-82813/</a>) defending the outage as not EPIC's fault.   From the point of view of clinicians - and more importantly, patients - it doesn't matter what component of the hospital's entire "EHR" (an anachronistic term used for what is now a complex enterprise clinical resource and clinician command-and-control system) went down.  Aside from all the EPIC issues the nurses have been complaining about (see earlier July 12, 2013 post linked above), the larger problem is that IT malpractice occurred.  The term "malpractice" is used in medical mishaps; I see no reason why it does not apply to major outages of mission critical healthcare information technology systems. IT malpractice in healthcare kills. These are the types of nurses I'd want caring for me and mine.  Letting this kind of snafu go "anechoic" does not promote proper management remedial education on Safety 101 and on health IT risk, two areas of education that management appears to desperately need in hospitals. -- SS

Setback for Sutter after $1B EHR crashes (in followup to post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals")

At my July 12, 2013 post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals" (http://hcrenewal.blogspot.com/2013/07/rns-say-sutters-new-elec…

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28 Aug 2013

Should We Cry for Non-Profit Hospital System CEOs Paid Less than For-Profit CEOs?

Two recent articles (<a href="http://www.modernhealthcare.com/article/20130810/MAGAZINE/308109991">here</a> and <a href="http://www.modernhealthcare.com/article/20130810/MAGAZINE/308109954/pay-for-value">here</a>) in Modern Healthcare providing an update on the compensation of CEOs of non-profit hospital systems raised new questions. The CEOs' Compensation <a href="http://www.modernhealthcare.com/article/20130810/MAGAZINE/308109991">The first article</a> documented the rich compensation of the top paid CEOs of non-profit US hospital systems.  A summary of their total compensation: -  Donald Faulk (now retired), Central Georgia Health System - $8 million -  George Halvorson, Kaiser Permanente - $7.9 million -  Jeffrey Romoff, UPMC - $6.1 million  -  Pat Fry, Sutter Health - $5.2 million -  Gregory Beier (retired), Novant Health  - $5.1 million -  Dr Steve Safyer, Montefiore Medical Center - $5 million -  David Bernd, Sentara - $4.6 million The Usual Talking Points The articles in combination provided the usual talking points as justification for this compensation.   We have noted that nearly every attempt made to defend the outsize compensation given hospital and health system executives involves the same talking points.   We first listed the talking points <a href="http://hcrenewal.blogspot.com/2011/09/talking-points-sans-original-thought-to.html">here</a>, and then provided additional examples of their use <a href="http://hcrenewal.blogspot.com/2011/09/more-repeats-of-talking-points.html">here</a>, <a href="http://hcrenewal.blogspot.com/2012/03/example-of-how-complex-takes-control.html">here</a> <a href="http://hcrenewal.blogspot.com/2012/12/health-care-hired-managers-not-playing.html">here,</a> <a href="http://hcrenewal.blogspot.com/2013/05/executive-compensation-as-legal.html">here</a> and <a href="http://hcrenewal.blogspot.com/2013/06/no-blues-but-lots-of-green-for-st-louis.html">here</a>.   They are: - We have to pay competitive rates - We have to pay enough to retain at least competent executives, given how hard it is to be an executive - Our executives are not merely competitive, but brilliant. So true to form, we found in the Modern Healthcare articles these justifications of the executives multimillion dollar pay. Competition In general, <blockquote class="tr_bq">In interviews, health system directors and executives at the systems where these top-paid executives work defended the compensation packages as necessary to remain competitive....</blockquote> Re UPMC <blockquote class="tr_bq">UPMC spokeswoman Susan Manko described his [that is, Romoff's] pay as competitive for an institution of UPMC's size and complexity.  </blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> Re Novant</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq">Novant spokeswoman Kati Everett said Novant follows IRS rules that call for pay to be compared against the market.... </blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> Re Sutter</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><blockquote class="tr_bq"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">[Sutter Health board of trustees member and chair of the compensation committee Andy] Pansini said the Sutter board set the CEO's salary halfway between the lowest and the highest amount he could earn elsewhere.</div></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Also,</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><blockquote class="tr_bq"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">He said Sutter's board relies heavily on consultants to compare Fry's compensation against the market. </div></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div></div></div> Retention  Re Sentara <blockquote class="tr_bq">'Mr Bernd's compensation takes into account his 40-year tenure of leadership at Sentara, with nearly 20 serving as the organization's top executives.</blockquote> Brilliance Re Novant <blockquote class="tr_bq">[Novant spokeswoman Kati Everett said] 'At Novant Health, we recognize (that) our responsibility to serve our community depends on the caliber of talent in our workforce, our leadership group....'</blockquote> Re Sentara <blockquote class="tr_bq">[CEO Bernd's] 'pay reflects his experience, expertise....'</blockquote> Re Sutter <blockquote class="tr_bq">[Pansini] defended [CEO] Fry's compensation as reasonable and necessary to meet Sutter's strategic goals by hiring a skilled executive team.  </blockquote> Explicit Comparison to For-Profit Corporations The articles also introduced one new element.  Some defenders of non-profit hospital CEO compensation explicitly argued that should take into account compensation of for-profit CEOs. This argument was made by "Jill Horwitz, a law professor at the University of California at Los Angeles,' who had "defended paying not-for-profit healthcare executives market rates." <blockquote class="tr_bq">She also noted that not-for-profit systems have to compete with the for-profit sector for top talent. 'This idea that people should be donating their labor is a misunderstanding of charity.'</blockquote> Defenders of CEO compensation at specific health systems also made similar points.  For example, a Kaiser Permanente spokesman explicitly compared his CEO's pay to that given to CEOs of for-profit health plans, <blockquote class="tr_bq">Kaiser spokesman Won Ha, in a written statement, said Halvorson's pay falls short of the average compensation of $14 million, not including option exercises, earned by CEOs of the 12 largest for-profit healthcare systems, which had average 2011 revenue of $37 billion. 'Compensation paid to senior management is substantially less than that of many for-profit health (plans),...'</blockquote> Also, re Sutter, <blockquote class="tr_bq">[board committee chair Pansini noted that when comparing his CEO's pay against the market] That comparison includes other executives of similar not-for-profit health systems, and to a lesser degree, of for-profit systems.</blockquote>  Summary: An Extension, but Still no Clear Justification for the Talking Points The talking points to explain executive compensation in health care are used again and again.  They never seem to be publicly challenged.  However, they should raise some obvious questions. The argument about competition raises several obvious questions.  Why should the top hired managers' pay be only compared to other top managers, and not explicitly to other employees?  Even if the comparison is restricted to other top managers, how can they be used for those at the top of the pay scale for non-profit hospital system CEOs?  How these CEOs' compensation could be dubbed merely competitive, much less "halfway between the lowest and highest amount he could earn elsewhere," is not clear. The retention argument begs the questions of whether any of these managers is really likely to leave, whether they really would be attractive to other organizations at the same or even higher pay, and whether it would really be difficult to find replacements. The brilliance argument raises the question of how brilliance is defined.  Given that it is almost unheard of for a fan of current compensation practices to dub any top manager anything less than brilliant, the obvious question is how can CEOs, like the children of Lake Woebegone, all be above average?   Furthermore, the talking points seem to be in the process of extension, which should raise even more questions. Defenders of CEO pay, usually "spokespeople" or members of boards of trustees, often cite the need for "competitive" pay.  They usually are not clear about with whom they are competing.  Now it seems to be more popular to say that non-profit health care organizations are competing with for-profit corporations, despite the ostensible difference in their natures.  Non-profits are supposed to have a charitable nature and function, to have some sort of mission that serves the greater good.  To support that apparently benevolent purpose, in the US they are exempt from certain taxes, are are able to receive charitable contributions which in turn earn deductions for their givers.  For-profit corporations are in business ostensibly for their owners.  In addition, by now asserting that the non-profit CEOs should be likened to the CEOs of for-profit corporations, the expanded talking points highlight questions that have been raised about how these hired managers are paid. We have previously discussed some pithy critiques of American practices of executive compensation (look <a href="http://hcrenewal.blogspot.com/2013/05/executive-compensation-as-legal.html">here</a> and <a href="http://hcrenewal.blogspot.com/2012/10/more-reasons-to-doubt-how-ceos-are.html">here</a>.) CEO compensation as a multiple of the pay of the average worker has risen 10-fold since the 1960s (see <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4-ceo-worker-compensation/">this chart</a>). As a consequence, the top 1% and 0.1% of the US income distribution is increasingly and disproportionately made up of executives, that is hired managers, (see the <a href="http://www.epi.org/publication/pay-corporate-executives-financial-professionals/">recent article</a> by Bivens and Mishel[1] for a summary).  Per the article, the income of top corporate executives has grown even faster than that of other members of the top 0.1%.  It seems evident that these rates of growth cannot be explained by increases in the financial performance of their companies.  Furthermore, while it appears that compensation of US health care corporate executives has grown as fast as their brethren, there is no data that US health care has improved at anything like a similar rate.  It may have hardly improved at all.  A recent JAMA article is just the latest example of studies showing that US health is lagging that of other developed countries, although the US spends far more per capita on health care.(2)      Furthermore, there is more and more criticism about how the compensation of top hired managers is set.  Steve Denning's <a href="http://www.forbes.com/sites/stevedenning/2012/02/22/hbr-blows-the-lid-off-c-suite-over-compensation/">blog  post</a> in Forbes summarized a 2012 Harvard Business Review article(3) suggesting that "market-based" compensation schemes mistake top managers for innovative entrepreneurs, when they are mainly simply "bureaucrats"; reward managers for luck rather than skill; and is "inversely related to shareholder returns." Finally, Elson and Ferrere <a href="http://www.thefreelibrary.com/What+is+a+CEO+worth%3F+Don%27t+look+to+peers%3A+peer+group+comparisons+skew...-a0272184752">critiqued </a>the mechanics of how compensation is set.  In particular, while boards of directors may attend to data on compensation of CEOs at other, supposedly comparable corporations, they almost always "choose a package that is in the 50th, 75th, or 90th percentile of their target peer group.  Targeting levels below the 50th percentile is rarely, if ever done."  Thus, boards nearly always act as if their CEO is above average, while by definition, most CEOs cannot be above average.  Why do boards commit this folly?  The authors postulated that suggesting the CEO is less than average "may raise concerns over the executive's position within the company...."  Perhaps boards also fear that labeling the CEO below average may be an admission of below average governance.  Desai suggested that the perverse incentives created by current schemes to compensate managers were a major cause of the 2008 financial meltdown.  As Dennings wrote, <blockquote class="tr_bq">despite the constraints to change, the overcompensation of the C-suite and the financial sector is not sustainable. It causes serious misallocation of capital and talent, repeated governance crises, rising income inequality and an overall decline of the US economy. It obviously cannot continue, if only because, as Margaret Thatcher used to say in a different context, 'Sooner or later you run out of other people’s money'</blockquote> Clearly, in the health care context, the results could be even worse.  Perverse executive compensation could not only lead to misallocation of capital and talent in health care, it could lead to bad health care decisions that could harm patients' and the public's health.  However, there seems to be almost no discussion of, much less research about, much less policy changes addressing perverse incentives for health care managers and their likely ruinously bad effects on people and patients. Such discussion and research is a prerequisite to true health care reform, which would require such policy changes. Meanwhile, I hope at least the next time huge compensation of some health care managers is announced, someone asks the next set of questions after the usual talking points are made.   Roy M. Poses MD in Health Care Renewal References 1.  Bivens J, Mishel L. The pay of corporate executives and financial professionals as evidence of rents in top 1 percent incomes.  J Econ Perspect 2013; 27: 57-78. 2. US Burden of Disease Collaborative.  The state of US health, 1990-2010 burden of diseases, injuries, and risk factors.  JAMA 2013; 310: 591-608.  Link <a href="http://jama.jamanetwork.com/article.aspx?articleid=1710486">here</a>. 3. Desai M. The incentive bubble.  Harvard Business Review, March 2012.

Should We Cry for Non-Profit Hospital System CEOs Paid Less than For-Profit CEOs?

Two recent articles (here and here) in Modern Healthcare providing an update on the compensation of CEOs of non-profit hospital systems raised new questions.The CEOs' Compensation The first article do…

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16 Aug 2013

RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals

Add the following from Sutter East Bay Hospitals to nurses' and physicians' complaints at Marin General Hospital (<a href="http://hcrenewal.blogspot.com/2013/05/marin-general-hospitals-nurses-are.html">http://hcrenewal.blogspot.com/2013/05/marin-general-hospitals-nurses-are.html</a>), Affinity Medical Center (<a href="http://hcrenewal.blogspot.com/2013/06/affinity-rns-call-for-halt-to-flawed.html">http://hcrenewal.blogspot.com/2013/06/affinity-rns-call-for-halt-to-flawed.html</a>), Contra Costa County (<a href="http://hcrenewal.blogspot.com/2012/08/contra-costas-45-million-computer.html">http://hcrenewal.blogspot.com/2012/08/contra-costas-45-million-computer.html</a>), San Francisco Department of Public Health (<a href="http://hcrenewal.blogspot.com/2010/11/avatar-fails-no-not-cameron-movie-but.html">http://hcrenewal.blogspot.com/2010/11/avatar-fails-no-not-cameron-movie-but.html</a>), and others: <blockquote class="tr_bq">For Immediate Release  July 11, 2013 Contact-  Charles Idelson, 510-273-2246 <h2>RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals</h2>Introduction of a new electronic medical records system at Sutter corporation East Bay hospitals has produced multiple problems with safe care delivery that has put patients at risk, charged the California Nurses Association today. Problems with technology are not unique to health care – pilots of the ill fated Asiana airline that tragically crashed at San Francisco International Airport July 6 told federal investigators that an automatic throttle failed to keep the jetliner at the proper speed for landing, the Los Angeles Times reported July 9.  [What is unique to healthcare IT is the complete lack of regulation - ed.] In over 100 reports submitted by RNs at Alta Bates Summit Medical Center facilities in Berkeley and Oakland, nurses cited a variety of serious problems with the new system, known as Epic. The reports are in union forms RNs submit to management documenting assignments they believe to be unsafe. Patient care concerns included computerized delays in timely administration of medications and contact with physicians, ability to properly monitor patients, and other delays in treatment.  Many noted that the excessive amount of time required to interact with the computer system, inputting and accessing data, sharply cuts down on time they can spend with patients with frequent complaints from patients about not seeing their RN.  [Note: patients are not given the opportunity for informed consent about the risks, nor opt-out of EHR use in their care - ed.] "EPIC is a system that is so cumbersome to use for nurses and physicians, that we often feel as though we are caring for a computer, not a patient,” said Thorild Urdal, an RN at Alta Bates Summit’s hospital in Berkeley. “It delays care and treatment, the program is naturally counter-intuitive and it was clearly not designed in concert with nurses and physicians." [Clinicians end up caring for an "iPatient", as others have noted - ed.] "The Epic program developed and implemented by Sutter is neither nurse or patient friendly,” said Alta Bates Summit Oakland RN Mike Hill. “Epic does not enhance my ability to chart instead it takes time away from the bedside and my patients and preventing me from providing the absolute best care that they and I expect from me as a nurse." Sutter CEO Pat Fry last year told the San Francisco Business Times that Sutter will spend $1 billion on Epic, a system that has sparked controversy at several other hospitals, including a Contra Costa facility where several RNs cited serious medical errors in testimony to county supervisors last August. At Alta Bates Summit specific incidents directly related to Epic problems included: • A patient who had to be transferred to the intensive care unit due to delays in care caused by the computer.  [It's happenstance they did not have to be transferred to the morgue - ed.] • A nurse who was not able to obtain needed blood for an emergent medical emergency. • Insulin orders set erroneously by the software. • Missed orders for lab tests for newborn babies and an inability for RNs to spend time teaching new mothers how to properly breast feed babies before patient discharge. • Lab tests not done in a timely manner. • Frequent short staffing caused by time RNs have to spend with the computers. • Orders incorrectly entered by physicians requiring the RNs to track down the physician before tests can be done or medication ordered. • Discrepancies between the Epic computers and the computers that dispense medications causing errors with medication labels and delays in administering medications. • Patient information, including vital signs, missing in the computer software. • An inability to accurately chart specific patient needs or conditions because of pre-determined responses by the computer software. • Multiple problems with RN fatigue because of time required by the computers and an inability to take rest breaks as a result. • Inadequate RN training and orientation. </blockquote>These "incidents" are certainly capable of causing harms or fatalities.  One wonders if hospital executives are providing the usual refrain that these are just "glitches" (<a href="http://hcrenewal.blogspot.com/search/label/glitch">http://hcrenewal.blogspot.com/search/label/glitch</a>) and that patient care has not been compromised (<a href="http://hcrenewal.blogspot.com/search/label/Patient%20care%20has%20not%20been%20compromised">http://hcrenewal.blogspot.com/search/label/Patient%20care%20has%20not%20been%20compromised</a>). A bit more background follows: <blockquote class="tr_bq">... Hospitals nationally are spending tens of billions of dollars on technology systems, especially on electronic health records (EHR) programs for which they also receive federal financial incentives. EHR programs are paraded as a panacea for reducing medical errors and cutting costs, but in life the promise is falling short in both areas. A RAND corporation analysis earlier this year said visions of savings and improved efficiency in patient care have had what the New York Times called “mixed results, at best.” The U.S. Food and Drug Administration has acknowledged getting hundreds of reports of problems involving health information technology including numerous patient injuries and deaths. Some examples seen at hospitals across the country: • At Marin General Hospital in Northern California, RNs called on the Marin Healthcare District board to delay implementation of their EHR system. "Orders are being inadvertently passed to the wrong patients. People have gotten meds when they've been allergic to them. This is dangerous," Marin RN Barbara Ryan said in comments reported by the Marin Independent Journal. • In Chicago, the Chicago Tribune in 2011 reported on a patient death at Advocate Lutheran General hospital after an automated machine prepared an intravenous solution containing a massive overdose of sodium chloride — more than 60 times the amount ordered by a physician. • At Affinity Medical Center RNs in Massillon, Oh. RNs in June raised multiple objections to the hurried introduction of an EHR system. Subsequently, they have cited medication errors, delays in care, problems with documentation, computers crashing, and other concerns.</blockquote> I am simply the reporter here. -- SS

RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals

Add the following from Sutter East Bay Hospitals to nurses' and physicians' complaints at Marin General Hospital (http://hcrenewal.blogspot.com/2013/05/marin-general-hospitals-nurses-are.html), Affini…

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12 Jul 2013

ACO = Arrogant Clinical or Aggressive Care Oligopoly?

In the 1970s, it was managed care organizations.  In the 1990s, it was vertically integrated health care systems.  In the 2010s, the fashionable concept for improving health care, apparently beloved by left-wing policy wonks and right-wing health care executives is the "accountable care organization." (ACO).  Development of the ACO is funded by the recently passed US health care reform legislation.  The <a href="https://www.cms.gov/OfficeofLegislation/Downloads/AccountableCareOrganization.pdf">official definition </a>of ACO from the US Center for Medicare and Medicaid Services is:  <blockquote>An Accountable Care Organization, also called an 'ACO' for short, is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.</blockquote> Oddly enough, that seems like it could also describe a 1970s managed care organization, or a 1990s vertically integrated health care system. The only real difference is the idea that the ACO would be paid fees for service. All these similar concepts embody the notion that health care needs to be highly organized into big, bureaucratic organizations to improve quality and access while controlling costs. Back in August, we <a href="http://hcrenewal.blogspot.com/2010/08/how-oligopolists-rationalize-their.html">warned</a>: <blockquote>There seems to be a strange and increasing alliance between politically- correct academic theorists and proponents of raw economic power. The theorists' notion of "accountable care organizations" seems to have become a great foil for would-be monopolists, yet the theorists have done nothing to show how their creation would really bring "power to the people." Meanwhile, maybe 'ACO' should stand for 'aggressive care oligopoly.' Meanwhile, be extremely skeptical of the latest health care fad, especially when it is supported both by academics and CEOs. </blockquote> I am not sure you really heard it here first, but you did hear it here early. Now, three months later, our doubts have become main-stream. Revisiting Sutter Health n California, National Public Radio continued to <a href="http://www.npr.org/2010/11/18/131413075/as-hospital-system-expands-patient-advocates-worry">document</a> the increasing market dominance of the Sutter Health system (which we discussed in August <a href="http://hcrenewal.blogspot.com/2010/08/how-oligopolists-rationalize-their.html">here</a>) as it marches toward becoming an ACO: <blockquote>Through new construction and expanding its doctors' groups, Sutter Health is enhancing its position as one of the most dominant hospital systems in California. In addition, Sutter is further ahead of many competitors in fashioning itself into a so-called accountable care organization, responsible for coordinating care between hospitals, specialists and primary doctors.</blockquote> A <a href="http://www.npr.org/2010/11/18/131410569/big-hospital-chains-use-clout-to-dictate-premiums">companion article </a>gave examples of how this emerging ACO is becoming increasingly oligoplistic: <blockquote>Hospital prices in the Sacramento region are among the highest in California, driven in large part by the negotiating clout of the hospital chain Sutter Health. Over the last decade and a half, Sutter has gradually accumulated hospitals and amassed a roster of doctors who contract exclusively with the company. Sutter is now one of the largest hospital chains in California with 24 acute care hospitals. 'In this Roseville market, which is a big suburban area, the hospital is Sutter,' says John Murray, a veteran insurance broker. 'It's a lock right now. Because Sutter dominates the market, major insurance companies, like Blue Cross and Aetna, can't sell policies that exclude Sutter hospitals and doctors. That dependence means the hospital chain can dictate high prices.'</blockquote>Concerns about Sutter's market dominance are also increasing: <blockquote>'As Sutter gets bigger,' says Anthony Wright, executive director of Health Access California, a nonprofit advocacy group based in Sacramento, 'it can dictate higher prices and is less accountable for ensuring good quality because it has a lock on certain markets.'</blockquote>Doubts in the New York Times In the New York Times, Robert Pear <a href="http://www.nytimes.com/2010/11/21/health/policy/21health.html">reported</a>: <blockquote>When Congress passed the health care law, it envisioned doctors and hospitals joining forces, coordinating care and holding down costs, with the prospect of earning government bonuses for controlling costs. Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups eager to share costs and savings, and cash in on the incentives. They, in turn, have deployed a small army of lawyers and lobbyists trying to persuade the Obama administration to relax or waive a body of older laws intended to thwart health care monopolies, and to protect against shoddy care and fraudulent billing of patients or Medicare. Consumer advocates fear that the health care law could worsen some of the very problems it was meant to solve — by reducing competition, driving up costs and creating incentives for doctors and hospitals to stint on care, in order to retain their cost-saving bonuses. 'The new law is already encouraging a wave of mergers, joint ventures and alliances in the health care industry,' said Prof. Thomas L. Greaney, an expert on health and antitrust law at St. Louis University. 'The risk that dominant providers and dominant insurers may exercise their market power, individually or jointly, has never been greater.' </blockquote> Skeptical Liberals and Libertarians Amazingly, while ACOs seem to be supported by many left-wing policy wonks and right-wing health care executives, they have also rapidly engendered skepticism from both liberals on the left and libertarians on the right, and from within government and the private sector. For example, at the end of the NY Times article we find: <blockquote>Dr. Donald M. Berwick, the administrator of the Centers for Medicare and Medicaid Services, hails the benefits of 'integrated care.' But, Dr. Berwick said, “we need to assure both patients and society at large that destructive, exploitative and costly forms of collusion and monopolistic behaviors do not emerge and thrive, disguised as cooperation.” </blockquote> Dr Berwick is a well-known advocate of innovative approaches to improve the quality of care, but was tarred as a raving left-winger when he was nominated to his current position. On the other hand, in the New York Post was an <a href="http://www.nypost.com/p/news/opinion/opedcolumnists/health_reform_competition_crushers_f2dIEwqEdJYvA3tsNH37wM">op-ed </a>by Dr Scott Gottlieb: <blockquote>I warned that the creation of 'accountable care organizations,' which put hospitals in control of all the doctors in their outlying areas, would lead to concentrated power over the provision of medical care -- turning physicians into salaried employees and reducing consumer choices.</blockquote> Furthermore, he wrote: <blockquote>Since the ACOs will have local monopolies, they'll also have little incentive to compete for more patients in an open marketplace. Yet this is the only incentive that would spur an ACO to truly innovate and improve its delivery of medical care and offer better services. Private health plans vie to contract with the best doctors and hospitals, creating market prices for services and competition to improve outcomes. If the ACOs squeeze out this competition, the result will be a de facto 'single payer': Every market will be controlled by a single ACO,....</blockquote> Dr Gottlieb writes frequently about health care and policy issues, and is a "resident fellow at the American Enterprise Institute." Missing the Main Point: Doctors vs Business Executives as Leaders At least it did not take long this time for the fundamental flaws in the latest fashionable health care reform effort to get attention. It is really striking that this time around, skepticism is coming from both liberals and libertarians.  Maybe we all have learned something from the failures of managed care and of vertically integrated hospital systems. A Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/11/23/AR2010112306194.html">op-ed </a>by Steven Pearlstein hinted at one fundamental problem with the ACO concept. <blockquote>Most reformers believe ...that the best way to deliver affordable quality care is through organizations such as the Mayo Clinic, which coordinate physician and hospital services under one roof and are paid not on the basis of how many procedures they do but on the quality of the care they provide. These organizations tend to rely on salaried doctors, make extensive use of electronic medical records and evidence-based 'best practices,' and, in effect, take on much of the risk traditionally borne by insurers. Several provisions of the new health-care reform law encourage the formation of such 'accountable care organizations.' </blockquote> Somehow, however, the supposed health care reformers seemed to have overlooked a crucial fact about the Mayo Clinic they are using as a model. The Mayo Clinic traditionally was basically a large physician group practice. It was run by physicians. Even <a href="http://www.mayoclinic.org/governance/leadership.html">now</a>, the Mayo Clinic's CEO is a physician (Dr John H. Noseworthy) who had a substantial clinical and academic career. The CAO is a nurse, and the three top Vice Presidents are physicians.  I submit the fact that the organization was run by physicians, physicians who once swore to put their patients' clinical care ahead of all other considerations, was crucial to the Clinic's success in taking care of patients as well as maintaining its finances. However, nearly all of the would-be ACOs we hear about now are centered on big hospital systems, run by business executives who have never taken care of patients, and never swore to put patient care ahead of anything. For example, the most advanced degree possessed by the CEO of Sutter Health is a Master's in Health Administration (see <a href="http://www.sutterhealth.org/about/ourteam/index.html">here</a>). Sutter Health does not make biographical information about its top executives particularly easy to find, but according to the most recent (2008) 990 form <a href="http://www.guidestar.org/FinDocuments/2008/942/788/2008-942788907-05747304-9.pdf">posted on Guidestar</a>, of its 19 top executives, only 2 had MD degrees. As we have <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">seen</a> time and again on Health Care Renewal, such executives have become extremely good at becoming rich in their jobs. (For example, according to the 2008 990 form, of those 19 executives, all had total compensation greater than $200,000, 16 had compensation greater than $500,000, and 9 had compensation greater than $1 million.) When things go wrong, these royally paid executives may take their golden parachutes and open the exit door, and jump on the slide. The advent of ACOs reminds me of the advent of managed care. The original managed care organizations, exemplified by Kaiser - Permanante, were also not-for-profit large group practices run by physicians. However, the "managed care organizations" that evolved out of the 1970s law, favored by our glorious former President Nixon, were for-profit corporations run by business executives. Somehow, when legislators seek to promote better health care, the legislation they right often get the crucial details wrong. The one good thing about ACOs seems to be that they have galvanized liberals and libertarians alike to worry about big, collective, bureaucratic health care organizations run by executives with no clear commitment to putting care of individual patients first. ADDENDUM (26 November, 2010) - See also comments <a href="http://www.healthbusinessblog.com/?p=4044">by David Williams</a> on the Health Business Blog.

ACO = Arrogant Clinical or Aggressive Care Oligopoly?

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26 Nov 2010

More on Hospital Market Dominance, Enabled by Secret Pricing

This week two more articles appeared describing how large hospital systems use market dominance to charge more.  Naturally, both were in news publications, not scholarly health services research journals. San Francisco Kaiser Health News (<a href="http://www.contracostatimes.com/top-stories/ci_16357914?nclick_check=1">via the Contra Costa [CA] Times</a>) discussed hospital market dominance in the San Francisco area.  The article documented how particular systems can command higher prices. Consider the example of John Muir Health vs San Ramon Medical Center: <blockquote>Often, a hospital's dominance in an area helps determine how much it can charge, experts say. Consider John Muir Health, a two-hospital nonprofit system in the East Bay. With campuses in Concord and Walnut Creek, John Muir has the biggest footprint in the local hospital market, accounting for 54 percent of all the acute care inpatient stays in 2009, more than any other hospital group, according to state data. The hospital with the weakest market penetration is San Ramon Medical Center, a Tenet-owned, for-profit hospital, with 10 percent of the acute care inpatients. The least the insurer Aetna paid John Muir for an outpatient colonoscopy was $3,185, according to Aetna's website, which tracks two years of payments. Aetna paid $1,483 to San Ramon Regional Medical Center for the same service. The least Aetna paid John Muir for an uncomplicated birth was $7,722, while its lowest price for a birth at San Ramon was $5,278. Yet on broad quality measures, John Muir's hospitals generally score no better than San Ramon's, according to the California Hospitals and Reporting Taskforce, a nonprofit that produces hospital report cards published at Calhospitalcompare.org. San Ramon ranks equal to John Muir's Walnut Creek campus in most major measures, including mortality rates in the intensive care units, overall patient satisfaction and maternity care. John Muir's Concord campus ranks below San Ramon on several measures, including mortality rate and patient experience, though John Muir was rated better in avoiding complications for patients on ventilators. </blockquote> Then there is Sutter Health: <blockquote>[Stanford University associate vice president for Benefits Les] Schlaegel says so many employees like to see doctors at the Palo Alto Medical Foundation, a doctors' organization affiliated with Sutter with a clinic near the Stanford campus, that the university feels obliged to keep offering insurance networks that include Sutter. 'Sutter basically has a stranglehold on Northern California,' says Schlaegel. 'They are strategically situated, both for hospitals and medical groups. They know purchasers need them. When you are strategically located, you can say 'this is our price and you can pay it.'' </blockquote> Secret Pricing The ability of dominant hospitals to charge higher prices is facilitated by secrecy in which hospital pricing is cloaked <blockquote>The hospitals haven't made it easy for consumers to comparison shop. State law requires hospitals to reveal their charges for specific services. But those charges don't reflect the lower negotiated rates insurers actually pay - rates hospitals usually insist be kept secret. The California Hospital Association has opposed legislation to ban such 'gag clauses'; the most recent of these bills died in the state Assembly in August. Hospitals have also resisted a four-year campaign by the Pacific Business Group on Health, an employer coalition, and CalPERS to create a 'hospital value initiative' that would allow hospital comparison based on cost and quality of care. </blockquote> Summary <blockquote>In many cases, hospitals are able to keep raising prices beyond inflation because their sizes or reputations give them clout in negotiating rates with insurers, researchers say. Yet high prices don't always equate with superior care. Quality measures for some of the Bay Area's most prestigious hospitals, including Stanford and John Muir, show that in some instances, less expensive competitors perform as well or better in their basic responsibilities, such as avoiding infections and high death rates for patients in intensive care. 'Some hospitals are able to charge higher prices than the market normally would bear, even without providing higher quality,' says Dr. R. Adams Dudley, a professor of medicine and health policy at the University of California, San Francisco. 'That means they're getting those higher prices without really offering more to patients or the rest of society.'</blockquote>New York City Meanwhile, a long feature story <a href="http://nymag.com/news/features/68991/">in New York magazine </a>about the demise of St Vincent's hospital (see our post <a href="http://hcrenewal.blogspot.com/2010/08/st-vincents-goes-bankrupt-executives.html">here</a>) also discussed the market power of its competitors as one factor in its decline: <blockquote>The city’s largest and most powerful hospitals, which are crucial to an insurer’s customers, exert their leverage to secure deals that are believed to pay well above the average margin; smaller hospitals, which are often located in low-income neighborhoods, have little choice but to accept the dismal rates dictated by insurers if they want to remain in the insurers’ plans. 'When the big players take their cut, there are only scraps left for everyone else,' says the CEO of an outer-borough hospital. “'United HealthCare couldn’t care less about having my hospital in their network. They tell me to take it or leave it. </blockquote>Secret Prices Like in California, market dominance is enabled by secret pricing: <blockquote>the rates negotiated between hospitals and insurance providers are withheld from public scrutiny—even state health and insurance regulators are denied the information</blockquote>Free Markets? Secret prices determined by market power hardly sound like characteristics of a free market. Yet in New York, at least, they seem partially to be the result of the free market ideology of previous political leaders: <blockquote>Then George Pataki took office in 1995, determined to allow hospitals to test their mettle in the free market by negotiating their own terms with insurers. It turned out to be an exercise in shock-therapy capitalism. Inexperienced at the bargaining table, hospitals engaged in intramural rivalry with each other, cutting unfavorable deals with insurers in order to hold on to patients in the short term. With their already thin margins pared down further by deregulation, many hospitals soon built up paralyzing debt loads. Even the largest and seemingly least vulnerable facilities decided that their best hope for survival was to get bigger. A flurry of mergers and buyouts ensued, and by the end of the nineties, the hospital system began to assume its current bewildering patchwork of partnerships and affiliations. Columbia Presbyterian and New York Hospital, both attached to elite medical schools, joined forces. NYU and Mount Sinai forged a deal (it later came undone). On the eastern edge of the city, North Shore hospitals merged with nearby Long Island Jewish, staking out an enormous swath of the hospital market on Long Island, Queens, and Staten Island. Beth Israel and St. Luke’s–Roosevelt, debt-ridden and left on the sidelines by the major academic hospitals, decided to try making a go of it together. It was unclear if bigger was actually better—for patients or the bottom line—but size seemed to offer hospitals a buffer against collapse. By 2005, less than a decade into its dalliance with free enterprise, the city’s hospital system had taken on something of a post-Soviet tinge, with winners ruling the roost like oligarchs and losers reduced to a state of grim dependency. A pecking order emerged, with elite academic centers at the top, well-regarded independent hospitals like Lenox Hill in the middle, and community hospitals on the bottom. </blockquote>Summary We have previously written (for example, <a href="http://hcrenewal.blogspot.com/2010/08/more-examples-of-us-hospital-market.html">here</a> and <a href="http://hcrenewal.blogspot.com/2010/01/price-is-what.html">here</a>) about how increasing market dominance by large, sometimes strategically located, and sometimes politically well-connected (e.g., see <a href="http://hcrenewal.blogspot.com/2009/01/scorpions-in-bottle-shook-hands-secret.html">here</a>) hospital systems run by conflicted leaders. This seems like another unintended consequence of the "free markets solve all problems" ideology, possibly fueled by conflicts of interest that has done so badly in our financial arena (see <a href="http://hcrenewal.blogspot.com/2010/10/what-conflicted-web-we-weave-academic.html">here</a>). What some of these free market enthusiasts seem to forget, their forgetfulness perhaps fueled by payments received from the large corporations that have profited from this movement, are that true free markets are hard to maintain. This is particularly so in health care, in which knowledge is asymetric, outcomes are uncertain, and sick and anxious patients have trouble making cool, rational choices (as per Arrow, see <a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">this post</a>.) But if the free market enthusiasts really believe in free markets, why have they not been out campaigning to prevent the "unfree" characteristics, like secret pricing, of current health care markets?  Of course, ending secret pricing might compromise the ability of their financial sponsors to keep earning their millions

More on Hospital Market Dominance, Enabled by Secret Pricing

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18 Oct 2010

How Oligopolists Rationalize Their Market Domination: the Examples of Sutter Health and the Carilion Clinic

Advocates of laissez faire commercialized health care often trumpet the advantages of competitive markets as a rationale for deregulation.  While there are theoretic, and possibly empiric reasons to think that competitive markets are the optimal way to distribute goods and services, we recently <a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">discussed</a> aspects of health care that make it extremely hard for health care markets to be ideally competitive.  Meanwhile, two news articles gave some case-based evidence about how current health care markets are hardly competitive.   Sutter Health A Bloomberg <a href="http://www.bloomberg.com/news/2010-08-20/hospital-monopolies-ruin-mri-bill-as-sutter-gets-price-it-wants.html">article</a> focused on Sutter Health in northern and central California. Sutter Health commands a substantial part of a very large market: <blockquote>Sutter Health Co., the nonprofit that owns Sutter Davis, has market power that commands prices 40 to 70 percent higher than its rivals per typical procedure -- and pacts with insurers that keep those prices secret. Sutter can charge these prices because it has acquired more than a third of the market in the San Francisco-to-Sacramento region through more than 20 hospital takeovers in the last 30 years, according to executives of Aetna Inc., Health Net Inc. and Blue Shield of California, who asked not to be named because their agreements with Sutter ban disclosure of prices. </blockquote> Also, <blockquote>Operating as a nonprofit, it has $8.8 billion in revenues, 24 hospitals, 17 outpatient surgery clinics and a 3,500-doctor network, making it the largest health-care provider in an 11- county region -- from San Francisco Bay to the Sierra Nevada mountains -- where 10 million people live. Sutter has 35 percent of the revenue and 36 percent of beds that compete for patients in the region, according to a state hospital database, including 100 percent of beds the state tracks in Placer and Amador counties east of Sacramento.</blockquote> Sutter care seems to cost a lot more than care from other doctors and hospitals: <blockquote>After Mark Logsdon tore a ligament in his knee skiing at Lake Tahoe in March, he returned home to suburban Sacramento and had an MRI scan at Sutter Davis Hospital. Sutter’s price for the knee scan was $1,271, payable by Logsdon and his insurer. Exactly the same MRI at one of the local imaging centers owned by Radiological Associates of Sacramento would have cost $696 -- 45 percent less. </blockquote> A few other examples of Sutter's prices compared to others; <blockquote>'Instead of leveraging its system to be more cost- effective, we’ve seen Sutter leveraging its system for monopoly pricing,' said Peter V. Lee, who in June became director of health-care delivery system reform for the U.S. Department of Health and Human Services. Lee was interviewed while he worked at the Pacific Business Group on Health, a coalition that includes Chevron Corp., Walt Disney Co., General Electric Co., and Wells Fargo & Co. In San Francisco, Aetna pays Sutter’s California Pacific Medical Center in a range with a midpoint of $4,700 for an abdominal CT scan, compared to $3,200 at St. Francis Memorial Hospital, owned by Catholic Health Care West. For colonoscopies, Aetna’s midpoint price is $3,200 at Sutter’s flagship CPMC and $2,800 at St. Francis Memorial. In Palo Alto, Aetna pays Sutter $349 per visit for new patients to see Manju Deshpande, a family doctor in Sutter’s Palo Alto Medical Foundation clinic. Three miles away, Paul Ford’s Stanford Medical Group receives $222. If the patient needs an immunization, Aetna pays Palo Alto Medical $85, and Stanford Medical, $16. Deshpande removes wax from the ear for $175. Ford scoops it out for $104. Down the road in Silicon Valley, when obstetrician Sarah Azad, a solo practitioner, delivers a baby for a patient covered by Aetna, the insurer pays her $2,052. When Nicole Wilcox of Sutter’s Palo Alto Medical Foundation does the same job, Aetna pays Sutter $5,890. The doctors practice blocks apart in Mountain View, California. Performance isn’t an issue -- Azad has Aetna’s top rating for quality of care and trained Wilcox during residency. </blockquote> The Sutter CEO, of course, denies there is a problem: <blockquote>Sutter operates in a competitive market, Chief Executive Officer Patrick Fry, 53, said in an interview. 'I don’t see Sutter Health as having market power, given the choices that employers can make,' Fry said. 'The market has a lot of room to make a lot of decisions.' </blockquote>The people who most praise competitive markets often seem to be those who have done the most to reduce the competitiveness of these markets.  The CEO also trotted out another old saw, that his organization has grown not to charge more, but to be more efficient. <blockquote>While Sutter may have higher 'unit' prices than its competitors, Fry said, it is not the most costly for patients over the long run because its integration of hospitals and doctor groups allows it to provide more efficient care, cutting down on the number of procedures. 'Our mission isn’t to maximize profits,' Fry added. 'Our mission, to the extent we can, is to optimize services.' Insurers and patients have many alternatives to Sutter, according to Fry. </blockquote>That is a tune would-be monopolists have been singing at least since the days of the "robber barons" and their monopolies such as Standard Oil. Of course, he is likely to defend a system that makes so much money and pays him and his buddies in top management so much, (and, contrary to his statement above, seems to have maximized profits): <blockquote>Sutter, with 48,000 employees, was among the most profitable hospital groups in the U.S. in 2009, with income of $697 million, up more than three-fold from 2008 due to large investment gains, on revenue that grew 6 percent to $8.8 billion. Its 5.2 percent operating margin -- or operating income as a percentage of revenue -- was 73 percent higher than the median for all nonprofit hospital systems in 2009, according to Standard & Poor’s. As of Dec. 31, Sutter had a $2.63 billion investment portfolio. Sutter paid Fry $2.8 million in 2008, according to its latest Internal Revenue Service filing. His top 14 lieutenants made between $830,000 and $1.8 million each. </blockquote> The article on Sutter emphasized how the strategic use of secrecy has helped Sutter maintain its remunerative ways: <blockquote>Sutter doesn’t allow its prices to be disclosed on insurers’ websites because it believes the information is often misleading and doesn’t reflect the variables of each patient’s case, [Sutter spokesman William] Gleeson said. </blockquote> Of course, keeping prices secret just makes the market even less like an ideally competitive one: <blockquote>As Sutter’s confidentiality terms show, the actual prices that hospitals receive are often kept secret by insurers. Patients in need of hospital care, especially in emergencies, often can’t travel very far, restricting competition. And if they have health insurance, they have little incentive to price shop. </blockquote> Finally, the article reminds us that the latest fad from health policy and health management circles (which seem increasingly to overlap), "accountable care organizations," may just be a pretext for even more market consolidation: <blockquote>The federal Patient Protection and Affordable Care Act is looking for $500 billion in savings over the next decade to help pay for extending coverage to 32 million uninsured Americans. Yet it doesn’t address the problem of market concentration -- and may make it worse, said Robert Berenson, a physician and policy analyst at the Urban Institute in Washington D.C. The 'unchecked' clout of hospital and physician groups in California is a 'cautionary tale for national health reform,' Berenson said in a February article in the journal Health Affairs. He warned that incentives in the new legislation to improve treatment by promoting doctor-hospital alliances -- called 'accountable care organizations' -- could backfire by strengthening providers’ bargaining leverage. </blockquote>Carilion Clinic A Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/08/15/AR2010081503201.html">article</a> discussed the example of Carilion Clinic in Virginia, whose increasing market power we had <a href="http://hcrenewal.blogspot.com/2008/08/merger-mania-redux-case-of-carilion.html">blogged about</a> in 2008: <blockquote>Railroads put this city on the map, but the king of the domain is now health care -- or rather, the Carilion Clinic. Carilion owns the two hospitals in town and six others in the region, employs 550 doctors and has set off a bitter local debate: Is its dominance a new model for health care or a blatant attempt to corner the market? </blockquote> The Carilion story emphasized again how the "accountable care organization" meme is being used to justify market consolidation, allowing health care oligopolies to appear politically correct: <blockquote>Carilion says it represents an ideal envisioned by the nation's new health-care law: a network that increases efficiency by bringing more doctors and hospitals onto one team, integrating care from the doctor's office to the operating room. The name for such networks, which the new law strongly promotes with pilot programs, is accountable care organizations, or ACOs -- providers joining together to be 'accountable' for the total care of patients, with incentives from insurers to keep people healthy and costs down. </blockquote> Note that this political correctness is also used to justify further consolidation of power by limiting outside referrals: <blockquote>Independent doctors say Carilion is urging its employees to refer patients only to providers within the Carilion network, cloaking its expansion in the lingo of health-care reform. </blockquote> Of course, the Carilion CEO also denies anything but the most altruistic intent, but he too is making a lot of money from the current system: <blockquote>[Edward] Murphy, Carilion's chief executive who earned $2.3 million in 2008, acknowledges that providers holding excessive leverage over insurers is cause for concern but argues that ACOs can be a corrective. </blockquote> Summary We <a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">noted</a> earlier this week that multiple kinds of uncertainty (e.g., about diagnosis, prognosis, and the effects of treatment), and information asymmetry make it theoretically difficult for the health care market to be truly competitive. Meanwhile, there is increasing evidence that the market is actually uncompetitive. Although there are many hospitals and health insurers across the US, in many areas there are very few insurers and very few hospitals or hospital systems from which to choose. We have <a href="http://hcrenewal.blogspot.com/2009/01/to-whom-did-scorpions-in-bottle-owe.html">previously blogged</a> about how market dominant hospital systems seem to be able to charge more than any others. In the 1960s, it became recognized that physicians' professionalism, hospitals' devotion to their missions, and sometimes even (gasp) government regulation might partially compensate for distortions in the health care market. However, as supposed free market advocates became more powerful, they pushed for the commercialization of medicine and hospitals, reducing professionalism and mission support, and the hollowing out government regulation. (However, why did the people who attacked medical societies' codes of ethics as monopolistic have no interest in attacking market domination by insurers or hospital systems?  Inquiring minds want to know.) As we said last time, true health care reform would help physicians and other health care professionals uphold their traditional values, including, as the AMA once stated, "the practice of medicine should not be commercialized, nor treated as a commodity in trade." True health care reform would put health care "delivery" back in the hands of mission-focused, not-for-profit organizations, which put patients' health, safety and welfare first. Meanwhile, these latest stories about market dominating hospital systems suggest some additional lessons. Secrecy is the would-be monopolist's best friend. However, it is hard to think of very many kinds of information that hospitals really ought to be able to keep as proprietary secrets. As usual, sunshine is the best disinfectant. There seems to be a strange and increasing alliance between politically- correct academic theorists and proponents of raw economic power. The theorists' notion of "accountable care organizations" seems to have become a great foil for would-be monopolists, yet the theorists have done nothing to show how their creation would really bring "power to the people." Meanwhile, maybe "ACO" should stand for "aggressive care oligopoly." Meanwhile, be extremely skeptical of the latest health care fad, especially when it is supported both by academics and CEOs.

How Oligopolists Rationalize Their Market Domination: the Examples of Sutter Health and the Carilion Clinic

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20 Aug 2010

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