The Boston Globe reports on a hospital system in Boston accused of steering patients to stay within the corporate boundaries even when the patients’ doctor(s) tried to send them elsewhere:
A whistle-blower lawsuit filed against Steward Health Care exposes a part of medicine largely hidden from patients: the behind-the-scenes pressure health care companies put on doctors to keep patient referrals in-house.
Dr. Stephen Zappala, a longtime Massachusetts urologist, said company representatives exerted immense personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists, putting profits first…Zappala and another doctor who was deposed in his case alleged that Steward’s methods crossed a line.
Zappala charged that when he refused to comply with Steward’s policies, the company disciplined him for minor infractions and eventually canceled his privileges to operate at Steward Holy Family Hospital in Methuen.
Disclosure: My mom worked as an RN for ~20 years at Holy Family Hospital in which is part of the Steward system. She recently retired.
This is interesting in that the allegation is that Steward is trying to keep as much of the patient care bundle inside its corporate boundaries without regard to patient preferences. This sounds like a tiered network or a home host insurance product design where the intention is to move as many patients and procedures to preferred providers. And that is fine for insurers as they have to disclose the benefit structure and the network. Steward runs a fairly narrow network insurance product in Eastern Massachusetts.
This is one of the big challenges as providers that have associated risk bearing entities ranging from Accountable Care Organizations (ACOs) to full fledged integration like UPMC or Geissenger proliferate. Risk bearing entities want to be able to control their risk and that means having a high degree of predictability on as many variables as possible. Population risk may not be amenable to immediate control but provider mix risk is something that is nearly completely controllable. Insurers that don’t have a provider arm will use pre-authorization and network contracting to attempt to control some of their provider mix risk while integrated entities will use those tools as well as direct control of the employed providers to keep the money in house. Steward has a very strong incentive to have all of their non-zebra patients (hi mom!) to to stay at least 300 yards outside of I-95.
This is the basic HMO model with perhaps a few bells and whistles thrown on top. It is not new.
What is new is the proliferation of provider owned risk bearing entities. Or at least this is a retro-wave from the 80s that is lasting longer than big hair. The tools to keep cost increases constrained are the tools that say no. Those tools can be explicit (pre-authorizations, narrow networks and high non-preferred cost sharing) or they can be implicit such as allegedly incentivizing employer physicians to keep as many patients as possible in network for as long as a standard of care that is legally defensible but perhaps not optimal can be met.
My question on all of this is what happens in regions where almost all of the providers have a stake in various and non-overlapping risk bearing entities? The incentives for the multiple provider-payer combinations is for them to be roach motels for at least the profitable net of risk adjustment patients. These entities won’t want to make it easy for the profitable patients to leave to their competitors.
How does competition work when the patients who can send strong signals of quality and preference are entrapped in sticky glue of their current provider-payer entity? That is a question that I’ve been struggling with when I think of Pittsburgh and it looks like it could also be a major question in Massachusetts.
Barbara
There is no easy answer because, among other things, most patients and quite a few doctors have no measurable objective basis for deeming one provider to be better than another except in very obvious situations. Most patients judge quality by status or largely irrelevant markers of patient “experience.” And even if one provider has the capacity to be better at one thing, will it be as willing or able to engage in the softer skills of transition and coordination that U.S. providers don’t value and are pretty bad at?
dr. bloor
@Barbara: This. I think–particularly for employer-sponsored plans–lowest price plans that check all the essential boxes win. Quality of care, or the comparative advantages of one network’s chest cutters to another’s, don’t usually come into play unless people start croaking in droves.
David Anderson
@Barbara: Agreed, no easy answer which is why this is a great headscratcher of a question.
Snarki, child of Loki
My (probably deeply wrong) contribution: demand that health insurers ALSO provide life insurance as part of the package, for a term that extends at least 10 years after the end of any health-care coverage.
Think of it as an “extended warranty”.
Health insurers need to have some “skin in the game”.
kindness
I work for Kaiser here in N. Cal. Outside Medical Services in fact. Within Kaiser if you have a non-acute, non-life threatening diagnosis, you first see your PCP (or Urgent Care) and they refer you to the local Kaiser specialist. If that doesn’t work, they will then send a member to the specialty center for that region within Kaiser. And if that doesn’t work, then they will refer out to physicians outside of Kaiser. This isn’t a secret though. It’s in the handbook they give new members.
Villago Delenda Est
@Barbara: Information disparities ruthlessly exploited by greedheads.
CEOs need to face severe consequences for this sort of thing.
dr. bloor
@Villago Delenda Est: Although I think Barbara’s comment speaks to “what’s the useful information and does *anyone* have it,” and I’d add “in this case, how exploitable is it?” TBH, unless you’re a zebra (Hi David’s Mom!), “pretty good” physicians will be just fine for the vast majority of folks with the vast majority of problems. The comparative quality of one system’s urology department versus another might be a negligible consideration compared to premiums and out-of-pocket costs for most.
tl;dr–for most people, being “trapped” in a system won’t bother them if they feel the price is right, or have any impact on their life spans anyways.
YetAnotherJay formerly (Jay S)
@kindness: At Kaiser (formerly Group Health) here in WA there are some specialties that don’t have enough docs so wait times can be fairly long. I’m not sure what the rules are for outside referrals now but I think they were fairly loose in contract areas (without KP med centers) and I believe they are working to tighten them up and beef up staffing. How local is “local” in N. CA? 50 miles or less? 100? Are local specialists well distributed through CA?
I'll be Frank
For all the blah blah blah about informed consent, Healthcare remains one of the most opaque marketplaces. No disclosure about conflicts of interest, self-dealing, fee-stacking, or any number of other questionable practices that a Fiduciary would have to disclose. I think “informed consent” is half a dodge to distract from all the other shenanigans going on.
I'll be Frank
@Snarki, child of Loki: That would help with the problem of insurers not wanting to pay for cures that will mostly pay off for the next insurer.
L85NJGT
Medical groups have become capital intensive, patient recruitment and retention is expensive (records retention requirements are a huge cost driver), so why let them wander off the map?
For a given patient catchment the demographics are relatively fixed – i.e. they shift over a longer scale than a CEO’s expected tenure. So two options for subsidies – state redistribution (OMG! Obamacare! TAX!), or provider systems with large geographic footprints that steer patients in-house and are able to cost shift internally.
I expect a continued shift to integrated payer/provider duopolies in most markets, with some of the gilded nonsense of the last decade getting squeezed into a more utilitarian customer experience, and with higher margin specialty providers looking for ways out.
As always, the policy debates are a different thing from moving public opinion. Single doc shops loosely affiliated with an independent local hospital is now sepia tinged nostalgia, but that won’t stop FOX & GOP from framing it that way – their customer base demand simple, “good old days” answers in all matters.
Feathers
I expect this is especially a problem in Massachusetts, because there are all of the teaching hospitals in Boston, with cutting edge treatments that are probably not available in the local hospitals.
Would there be the same differential in the rest of the country? Lots of people live in outer suburbs or NH/RI, but work near the big Medical Centers of Boston.
One note on very tight network: I worked at Harvard and they have an in-house HMO. Recommended it to a new employee. She came in the next day all snooty, saying she had talked to her mother and would never consider insurance with only two hospitals. The hospitals were Mass General and Beth Isreal.
Ended up very good for me, because I was admitted to a program at McLean Hospital for a severe depressive episode after a miscarriage, which I can’t imagine normal insurance covering without a battle I didn’t have the energy to fight. It was just a referral.
L85NJGT
As to branding and marketing, providers seem to be drifting into to the sort of idiocy US News & World Report has fostered in college & university selection.
2nd best cardio department in mid-sized hospitals in the region
Branding that doesn’t speak to informed physician selection. It’s not just a who is a good or bad provider binary; in an Ortho department (for example), doc A is the one you want for hips, and doc B for shoulder work. OTOH maybe docs C and D are perfectly capable of repairing a torn rotator cuff.
kindness
@YetAnotherJay formerly (Jay S): In cases like that it becomes a question about the actual diagnosis. If it isn’t going to hurt or kill you to have it longer they will wait but if there is ever a question about the member getting sicker, they refer out right away to one of the UC’s or Stanford out here. Kaiser is averse to law suits.
Barbara
@Feathers:
If something is actually not available at a local hospital there is usually no big issue with getting a referral. The problem arises when these super expensive hospitals demand equal preference for their ho-hum can get it anywhere services that they charge a lot more for, or when someone decides that they want a surgical procedure to be done by the “best known” facility for doing it even when local physicians doing it are quite adept at it. This is a bigger problem in Boston than other places, but it goes on everywhere. The Maryland solution might help Massachusetts with this problem.
Old Scold
Isn’t this a violation of the Stark laws? Or did they disappear when we weren’t watching them, too?