A Blizzard, A French Restaurant, and the Future of Healthcare

Health Tips / A Blizzard, A French Restaurant, and the Future of Healthcare

Posted 03/11//2013

If you’d been one of the handful of pedestrians walking down Chicago’s Halsted Street during our snowstorm a couple weeks ago, you might have glanced into the window of an otherwise deserted French restaurant, your attention held for a moment by a pair of geezers engaged in extremely animated conversation in the warm amber light.

One of them (me) was clearly on the defensive, sliding down into his chair disconsolately, occasionally bringing his outspread hand before his face as if to ward off blows. The other, hunched forward with a devilish grin, was animatedly enjoying himself. If you looked carefully, you saw him extracting and unfolding newspaper clippings, internet printouts, and handwritten notes from various locations in his coat, wallet, and shirt pocket.

These two were discussing healthcare.

Or rather, I was learning about the future of healthcare from a longtime friend, an internist in his fifth decade of practice, as fiercely independent as any John Wayne or Clint Eastwood character (though the comparison stops there as he’s 5’1” and totally bald with thick Woody Allen glasses). My colleague enjoys regaling fellow physicians with bad news about the future of medicine even as his wine-stained evidence accumulates in a pile on the crisp linen before him.

It’s a good thing we had plenty of wine. And because we were the only customers all evening as the snow fell steadily outside, every once in a while our waiter joined the discussion. Everybody has a healthcare story to tell.

“It’s not that the Affordable Care Act is necessarily a bad thing,” my old friend began, “but rather the way all of American healthcare has, in one fell swoop, been capitulated to the health insurance industry. The near future will be a series of sweetheart deals between the major insurers and the mega-medical centers that wipe out the small fry like the neighborhood hospitals. The far future will be ‘Northwestern: a Division of Blue Cross’ and ‘Rush: A CIGNA Hospital.’”

Here’s what he predicted we’d be seeing during the next five years:

  • The small primary-care office with a family practitioner or internist will become extinct (“We’re both dinosaurs, David”). The insurance industry dislikes our undersized offices because we’re not cost effective. Even doctors themselves, with declining reimbursement rates and rising costs, can’t afford to keep their offices open anymore. “When was the last time you actually saw a freshly minted young doctor open a solo practice?” he asked. “Years ago,” I muttered. “Maybe decades. Chiropractors still open their own offices, but not MDs.”
  • With the president announcing he’ll reduce health care costs by cutting reimbursement rates to both doctors and hospitals, no medical school graduate will go into primary care unless somebody agrees to pay off his loan. Since this is unlikely, primary care will be handled by Certified Nurse Practitioners (CNPs) and Physician Assistants (PAs) in clinics that will be owned by insurance companies. Your “doctor” will be an employee of your health insurance company.
  • To turn out the army of CNPs and PAs needed for 40 million new patients, community colleges are offering two-year crash courses. Some of them will add a PhD if you write a term paper, a deliberate strategy so the CNP or PA can introduce himself as “Dr. Jones” and the patient will never know the difference.
  • With declining reimbursement to hospitals, we’ll see about 25% of hospitals in the US closing their doors. At this point, my friend pulled out a hospital bill from one of his patients. For a total hip replacement and four-day stay, the hospital and surgeon had billed the insurance company $37,000. And they had received, as a total noncontestable settlement, $2,500. “You can’t have a business survive when your fees are slashed by 92%. They’re toast.” Read more here.
  • So far, the new and mandatory electronic health record (EHR) system is turning out to be a disaster for everyone. There are now more than 400 (!) software companies trying to sell their products to every medical practice in the country, and guess what? They’re not compatible with each other. If you’re at Midwest Orthopedics and your x rays are needed across the street at Rush, you have to hand carry them because the two EHR systems are incompatible. More here.
  • The ultimate beneficiaries of EHRs are neither the doctor nor the patient but rather the insurance companies, who can use the data (which they have access to) to monitor medical practices and penalize doctors financially if they don’t tow the line. The new buzz phrase is “physician accountability,” but there’s nothing new about it. It’s the same “use cheap generics, don’t do too many lab tests, keep your patients out of hospitals” refrain we’ve been hearing from insurance companies for years.
  • The fee-for-service model will be done in five years. Group practices, populated mainly by CNPs, will be assigned a certain number of patients and reimbursed a fixed fee, learning to work fast and efficiently if they want to keep their bank accounts healthy. They’ll be penalized if they spent too much on patients and “bonused” if they don’t (a lot like the old HMO model).
  • We’ll ultimately settle into a three-tier system. For the well-to-do, the concierge practices are working well. An experienced primary care doctor limits herself to 300 patients, collecting an average of $2,000 annually from each. That’s $600,000 and with 50% expenses for running an office, she takes home half of it. Surgeons would be unhappy with an income of $300,000 a year, but a primary care doc with no more insurance headaches, ever, would likely think she was in heaven. The second tier is for the middle and upper-middle income patient. Fee-for-service can never completely vanish, but members of this group will have to contribute more out-of-pocket then they did in the past. Still, they’ll have a doctor who knows them. At the bottom will be huge clinics, owned by tax-exempt health care systems or insurance companies. Ten-minute visits. New doctor every time. Everybody in the US is covered, but your health care is like Charlie Chaplin on the assembly line in Modern Times.
  • The real winners in all this are the executives running these programs. First, many work for companies that boast being not-for-profit, but what that really means is they pay no taxes, so they have more money to pay their executives. “Here, look at this,” my friend said, thrusting a newspaper clipping from the Charlotte Observer in front of my crème brulee. “Ten executives from Carolinas HealthCare pay themselves based on profits, which mean cost cutting, staff reductions, and sweetheart contracts with suppliers. The lowest paid executive walks away with a million-plus a year. Her boss, the CEO makes multiples of that. No wonder they’re all smiling!” The CEO of Cigna Corp racked up a salary of $19.1 million in 2011. Even the oh-so-noble Blue Cross of Illinois pays its CEO $12.9 million a year.

We finished our wine and desserts, grateful for the numbing effects of alcohol and sugar. “And you?” I asked. “What are you going to do?

“Same as always. Go to work. I like growing old with my patients. I like my office. No electronic records for me–it’s a 2% penalty and I’ll just pay it to save the headache.”

We put on our coats and headed out onto Halsted. The snow had stopped and the street was deserted. As we said our goodbyes and started trudging in opposite directions, I heard my friend’s voice once more. “Hey, David,” he called back over his shoulder, smiling, “We’ve got to do this more often. You have to admit its always fun talking about healthcare.”

Be well,
David Edelberg, MD