American College of Physicians: Internal Medicine — Doctors for Adults ®

Friday, August 15, 2014

The basic health care transaction

My life changed dramatically 18 months ago when I started my new practice. The biggest change personally was a dramatic drop in my income as I built a new business using a model that is fairly new. That’s a tough thing to do with 4 kids, 3 of whom were in college last fall. OK, that’s a stupid thing to do, but my stupidity has already been well-established.

Yet even if the income stayed identical to what I earned before the switch, the change in my professional life would have been nearly as dramatic:
• I am no longer focused only on patients in my office.
• I am no longer focused on ICD and CPT codes.
• Saving patients money has become one of my top priorities.
• I feel like my patients trust me more, and see me as an ally.
• Patients accept my recommendations for less care (avoiding unnecessary testing and unnecessary medications) much easier.
• I focus far more on preventing problems or keeping them small.
• I laugh with my patients far more.

What is most interesting to me about all of this is what is at the center of all of these changes: I changed the way I am paid for my work. Instead of being paid largely by third-party payors, I am paid by my patients, and instead of being paid more for sickness and procedures, I am rewarded for having healthy and well-informed patients. (For those who don’t know, patients pay me between $30 and $60 per month for my services, and there is no copay for office visits).

Since all of these positive changes stem from the incentives created by this different payment system, I’ve seen even clearer the reasons for all of the problems in our health care system: it’s all about the payment system, or the basic transaction of health care. From this transaction flow all of the bad things about our system, the waste, the impersonal nature of care, the physician burn-out, the spending without consideration of cost, and the blatant profiteering by companies associated with health care. Changing our system for the better, therefore, can’t happen without a basic change in the financial transaction at its center.

A business transaction involves 2 main participants: the buyer and the seller. The buyer gets a product or service they want from the seller in exchange for money.

What about the transaction of health care? Who are the participants in this transaction, and what is the product sold?
• The Seller: It’s pretty clear that health care providers, doctors, hospitals, and ancillary care facilities, are the seller in this transaction.
• The Buyer: It would seem that the patient, the one getting the “care” is the buyer here, but this ignores an important fact: providers get almost all of their money from third-party payors (insurance companies and government organizations). I think it’s pretty clear that doctors and hospitals are selling their “product” to these third-parties, not to the patients.
• The Product: Again, it would seem that the care given by the provider is the thing buyers are paying for, but this clearly isn’t the case. Reimbursement for health services is based on two main things: codes (CPT and ICD), and the documentation required to support these codes.

So, the basic transaction of health care is this:

The health care provider is paid by third parties for codes and documentation.

The codes, which are the most valuable commodity for a provider, are two types: problem codes (ICD) and procedure codes (CPT, E/M). The payment is actually only given for procedures, not problems, but the problem codes are the immediate justification of those procedures, and failure to justify will reduce or eliminate payment. So, the provider is motivated to find the best paying procedures and find problems to justify their submission.

Using this, the transaction of health care becomes this:

The provider is rewarded for finding the best-paying procedure code to match the most severe problem codes.

Documentation is done after the fact as a bookkeeping tool to prove the validity of the problem and procedure codes.

Where is the patient in all of this? Patients are the raw materials used for the product. They are a source of problem and procedure codes. What about the actual patient care? It is a byproduct of this transaction. Care is presumed to be encompassed in the procedure codes (a presumptuous presumption, as many would attest).

Let that sink in: patients are raw materials, and patient care is a byproduct. That’s pretty damning. It’s also fact, not opinion. It flows from the basic transaction of health care.

So let’s translate this to an office visit:
• The patient is nearly always required to come to the office for all “care” because this is the only place where payable “procedures” are done. For a primary care provider, the main “procedure” is the office visit itself.
• The patient history is done to find problems to which procedures can be applied.
• The bigger the problems, the better the reimbursement for procedures for the doctor.
• The main task of the office visit is to find problem and procedure codes, and to document those codes.
• “Customer service” in health care is not something that applies to patients, since patients are raw materials, not customers. Doctors are motivated to treat patients only well enough that they will continue to come and supply codes (much as a farmer would treat his/her cow who produces milk).
• True “customer service” from doctors applies to how quickly and accurately they produce codes for the customer: the payor.

Pretty brutal, isn’t it? This gets worse when you consider some of the corollaries that come from these facts:
• Solving patient problems is bad for business.
• Priority is given to patients with the best-paying payors. Conversely, lowest priority is given to those with the worst payors (i.e. Medicare and Medicaid).
• The best paid physicians are those who are the most skilled at finding the most well-paying codes for the least amount of effort.

When explaining my practice to people, I often take a slightly different take on the transaction:

You are employed by whoever pays you.

The reality of my former practice, and those of most of my colleagues, is that they are employed by the third-party payors, and so will spend most of their time doing the job required by their employer. In my new practice, on the other hand, I am employed by my patients because I am paid by them. They are no longer a cow from which I can milk codes. They are no longer a well from which I can draw procedures. They are the one I am hell-bent on keeping happy so that they’ll continue to pay for the care I give.

Finally, the care I give is no longer a byproduct of codes; it is the product for which I am paid. My kind of practice is the ultimate accountable care organization because we are accountable to our patients for the quality and value of what we do for them. If they don’t like the product we sell, they leave. The end result is more time devoted to assuring the quality of care our patients see.

More time for patients? That’s something I had to get used to when I started this practice. It’s also something my patients are still getting used to.

Surely there’s a catch.

No, I work for them, and that makes all the difference.

After taking a year-long hiatus from blogging, Rob Lamberts, MD, ACP Member, returned with "volume 2" of his personal musings about medicine, life, armadillos and Sasquatch at More Musings (of a Distractible Kind), where this post originally appeared.

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Members of the American College of Physicians contribute posts from their own sites to ACP Internistand ACP Hospitalist. Contributors include:

Albert Fuchs, MD
Albert Fuchs, MD, FACP, graduated from the University of California, Los Angeles School of Medicine, where he also did his internal medicine training. Certified by the American Board of Internal Medicine, Dr. Fuchs spent three years as a full-time faculty member at UCLA School of Medicine before opening his private practice in Beverly Hills in 2000.

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Amanda Xi, ACP Medical Student Member, is a first-year medical student at the OUWB School of Medicine, charter class of 2015, in Rochester, Mich., from which she which chronicles her journey through medical training from day 1 of medical school.

Ira S. Nash, MD, FACP, is the senior vice president and executive director of the North Shore-LIJ Medical Group, and a professor of Cardiology and Population Health at Hofstra North Shore-LIJ School of Medicine. He is Board Certified in Internal Medicine and Cardiovascular Diseases and was in the private practice of cardiology before joining the full-time faculty of Massachusetts General Hospital.

Zackary Berger
Zackary Berger, MD, ACP Member, is a primary care doctor and general internist in the Division of General Internal Medicine at Johns Hopkins. His research interests include doctor-patient communication, bioethics, and systematic reviews.

Controversies in Hospital Infection Prevention
Run by three ACP Fellows, this blog ponders vexing issues in infection prevention and control, inside and outside the hospital. Daniel J Diekema, MD, FACP, practices infectious diseases, clinical microbiology, and hospital epidemiology in Iowa City, Iowa, splitting time between seeing patients with infectious diseases, diagnosing infections in the microbiology laboratory, and trying to prevent infections in the hospital. Michael B. Edmond, MD, FACP, is a hospital epidemiologist in Iowa City, IA, with a focus on understanding why infections occur in the hospital and ways to prevent these infections, and sees patients in the inpatient and outpatient settings. Eli N. Perencevich, MD, ACP Member, is an infectious disease physician and epidemiologist in Iowa City, Iowa, who studies methods to halt the spread of resistant bacteria in our hospitals (including novel ways to get everyone to wash their hands).

db's Medical Rants
Robert M. Centor, MD, FACP, contributes short essays contemplating medicine and the health care system.

Suneel Dhand, MD, ACP Member
Suneel Dhand, MD, ACP Member, is a practicing physician in Massachusetts. He has published numerous articles in clinical medicine, covering a wide range of specialty areas including; pulmonology, cardiology, endocrinology, hematology, and infectious disease. He has also authored chapters in the prestigious "5-Minute Clinical Consult" medical textbook. His other clinical interests include quality improvement, hospital safety, hospital utilization, and the use of technology in health care.

Juliet K. Mavromatis, MD, FACP, provides a conversation about health topics for patients and health professionals.

Dr. Mintz' Blog
Matthew Mintz, MD, FACP, has practiced internal medicine for more than a decade and is an Associate Professor of Medicine at an academic medical center on the East Coast. His time is split between teaching medical students and residents, and caring for patients.

Everything Health
Toni Brayer, MD, FACP, blogs about the rapid changes in science, medicine, health and healing in the 21st century.

Vineet Arora, MD, FACP, is Associate Program Director for the Internal Medicine Residency and Assistant Dean of Scholarship & Discovery at the Pritzker School of Medicine for the University of Chicago. Her education and research focus is on resident duty hours, patient handoffs, medical professionalism, and quality of hospital care. She is also an academic hospitalist.

Glass Hospital
John H. Schumann, MD, FACP, provides transparency on the workings of medical practice and the complexities of hospital care, illuminates the emotional and cognitive aspects of caregiving and decision-making from the perspective of an active primary care physician, and offers behind-the-scenes portraits of hospital sanctums and the people who inhabit them.

Gut Check
Ryan Madanick, MD, ACP Member, is a gastroenterologist at the University of North Carolina School of Medicine, and the Program Director for the GI & Hepatology Fellowship Program. He specializes in diseases of the esophagus, with a strong interest in the diagnosis and treatment of patients who have difficult-to-manage esophageal problems such as refractory GERD, heartburn, and chest pain.

I'm dok
Mike Aref, MD, PhD, FACP, is an academic hospitalist with an interest in basic and clinical science and education, with interests in noninvasive monitoring and diagnostic testing using novel bedside imaging modalities, diagnostic reasoning, medical informatics, new medical education modalities, pre-code/code management, palliative care, patient-physician communication, quality improvement, and quantitative biomedical imaging.

Informatics Professor
William Hersh, MD, FACP, Professor and Chair, Department of Medical Informatics & Clinical Epidemiology, Oregon Health & Science University, posts his thoughts on various topics related to biomedical and health informatics.

David Katz, MD
David L. Katz, MD, MPH, FACP, is an internationally renowned authority on nutrition, weight management, and the prevention of chronic disease, and an internationally recognized leader in integrative medicine and patient-centered care.

Just Oncology
Richard Just, MD, ACP Member, has 36 years in clinical practice of hematology and medical oncology. His blog is a joint publication with Gregg Masters, MPH.

Kevin Pho, MD, ACP Member, offers one of the Web's definitive sites for influential health commentary.

MD Whistleblower
Michael Kirsch, MD, FACP, addresses the joys and challenges of medical practice, including controversies in the doctor-patient relationship, medical ethics and measuring medical quality. When he's not writing, he's performing colonoscopies.

Medical Lessons
Elaine Schattner, MD, FACP, shares her ideas on education, ethics in medicine, health care news and culture. Her views on medicine are informed by her past experiences in caring for patients, as a researcher in cancer immunology, and as a patient who's had breast cancer.

Mired in MedEd
Alexander M. Djuricich, MD, FACP, is the Associate Dean for Continuing Medical Education (CME), and a Program Director in Medicine-Pediatrics at the Indiana University School of Medicine in Indianapolis, where he blogs about medical education.

More Musings
Rob Lamberts, MD, ACP Member, a med-peds and general practice internist, returns with "volume 2" of his personal musings about medicine, life, armadillos and Sasquatch at More Musings (of a Distractible Kind).

David M. Sack, MD, FACP, practices general gastroenterology at a small community hospital in Connecticut. His blog is a series of musings on medicine, medical care, the health care system and medical ethics, in no particular order.

Reflections of a Grady Doctor
Kimberly Manning, MD, FACP, reflects on the personal side of being a doctor in a community hospital in Atlanta.

The Blog of Paul Sufka
Paul Sufka, MD, ACP Member, is a board certified rheumatologist in St. Paul, Minn. He was a chief resident in internal medicine with the University of Minnesota and then completed his fellowship training in rheumatology in June 2011 at the University of Minnesota Department of Rheumatology. His interests include the use of technology in medicine.

Technology in (Medical) Education
Neil Mehta, MBBS, MS, FACP, is interested in use of technology in education, social media and networking, practice management and evidence-based medicine tools, personal information and knowledge management.

Peter A. Lipson, MD
Peter A. Lipson, MD, ACP Member, is a practicing internist and teaching physician in Southeast Michigan. The blog, which has been around in various forms since 2007, offers musings on the intersection of science, medicine, and culture.

Why is American Health Care So Expensive?
Janice Boughton, MD, FACP, practiced internal medicine for 20 years before adopting a career in hospital and primary care medicine as a locum tenens physician. She lives in Idaho when not traveling.

World's Best Site
Daniel Ginsberg, MD, FACP, is an internal medicine physician who has avidly applied computers to medicine since 1986, when he first wrote medically oriented computer programs. He is in practice in Tacoma, Washington.

Other blogs of note:

American Journal of Medicine
Also known as the Green Journal, the American Journal of Medicine publishes original clinical articles of interest to physicians in internal medicine and its subspecialities, both in academia and community-based practice.

Clinical Correlations
A collaborative medical blog started by Neil Shapiro, MD, ACP Member, associate program director at New York University Medical Center's internal medicine residency program. Faculty, residents and students contribute case studies, mystery quizzes, news, commentary and more.

Interact MD
Michael Benjamin, MD, ACP member, doesn't accept industry money so he can create an independent, clinician-reviewed space on the Internet for physicians to report and comment on the medical news of the day.

PLoS Blog
The Public Library of Science's open access materials include a blog.

White Coat Rants
One of the most popular anonymous blogs written by an emergency room physician.

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