Focused Factories: A Way To Improve The Quality Of Medical Care

Stanley Feld M.D.,FACP,MACE

The best way to beat competition is to not permit their entry into the marketplace. Businesses would do this if they could.

Medical specialists learn the nuances of disease processes and have the ability to discover early clues of disease. Surgical specialists understand their facility needs to increase their efficiency and effectiveness. They know what they need for effective post operative care. There is no reason that family practice groups can not have a couple of physicians become expert in a particular chronic disease.

“Focused factories’ are needed for medical and surgical care to avoid the complications of both acute and chronic disease. General Hospitals do not have the ability or desire to create focused factories. Focused factories could convert the care of profitable diseases with complications to unprofitable diseases without complications. The economics do not work for General Hospitals. General Hospitals try to prevent Specialty Clinics and Specialty Hospitals from being developed in their area.

“Hospitals are still the heart of the health care industry, consuming a third of the $2 trillion U.S. health care bill. Some are very good. But many are not, brimming with infectious bugs, systemic error and negative hospitality. And because the hospital industry does all it can to thwart competition, many communities are stuck with the hospitals they have.”

Hospitals hide behind the provisions of the Stark law to prevent the development of doctor owned efficient facilities for treating specific diseases (Focused Factories). There are many examples proving Focused Factories’ expertise used in treating particular diseases are more effective than a General Hospital. The most quoted examples are a hernia hospital in Canada and the Heart Hospital in Houston.

“Congressman Fortney “Pete” Stark (D-Calif.) passed legislation in two parts between 1989 and 1995, banning physicians from “self-referral,” meaning that a doctor can’t refer a patient to an physical therapy practice, lab or other facility that she owns part of because then she’ll benefit from the revenue associated with the services provided. Without Stark, the theory goes, unnecessary and expensive procedures would proliferate”

Congressman Stark thinks all physicians are crooks and will take advantage of patients. However, I think he is realizing the unintended consequences of his thoughts about physicians and his legislation. If patients own their healthcare dollar(ideal medicalsavingsaccount) they would be wary of anyone taking advantage of them.

“Recently Congressman Stark told a Forbes reporter that he regretted the bill because of the perverse effects and the army of lawyers creating an industry to take advantages of loopholes in the bill” .“The Stark laws have had a huge impact on how medical business models are structured.”

The laws have had an impact on discouraging physicians from creating Focused Factories. Focused factories are one stop clinics. They avoid fragmentation of and duplication of care. They take advantage of the concept of continuing quality improvement of care. They provide care in the most cost efficient way to remain competitive in the marketplace. They also permit the physicians to retain the value of his intellectual property rather than giving their intellectual property to a third party businessperson. .

“Yet in an interview today the Congressman lamented that he had ever made his legislative intrusion into medical practices. The unintended consequences of trying to legislate good behavior, as Sen. John McCain would tell you about campaign finance reform, is too many lawyers looking for loopholes.”

The loopholes have given an advantage to already large clinics and hospitals and do not provide incentives to smaller clinics to devise efficient models of medical care.

“Patients have a choice, but it’s not widespread yet. It’s called the specialty hospital, a center that focuses on the care of a particular body part such as the heart, spine or joints, or on a specific disease such as cancer. There are 200 specialty hospitals in the U.S. (out of 6,000 hospitals overall).”

The protection for large healthcare institutions is cracking with the realization that hospitals absorb two thirds of 2 trillion dollars spent on healthcare. Hospitals earn much of this money treating hospital acquired illnesses and complications of surgery. The government and the insurance industry is now making noise to stop paying for hospital acquired complications. In order to protect themselves, hospitals are starting to enter into joint ventures with their physicians.

” The specialty hospital often deliver services better, more safely and at lower cost. A recent University of Iowa study of tens of thousands of Medicare patients found that complication rates (bleeding, infections or death) are 40% lower for hip and knee surgeries at specialty hospitals than at big community hospitals. A 2006 study funded by Medicare found that patients of all types are four times as likely to die in a full-service hospital after orthopedic surgery as they would after the same procedure in a specialty hospital.”

If the correct rules are made by the government Mr. Stark’s fear of physician being crooks can be assuaged. The government must collect appropriate data to determine the need for car the quality of care, and the real cost of that care. So far no one has figured out how to collect correct data.

“Three of the nation’s top ten cardiac programs are at specialty hospitals in South Dakota, Indiana and Texas. Three of the top ten hospitals for total joint replacement surgery are specialty centers in Oklahoma, Ohio and Georgia.”

There is good reason for this. The physicians develop the facility they need and use it efficiently. Their motivation is quality care and a good cash return in a competitive marketplace.

“Specialization is a law of nature,” says Robert Tibbs, a neurosurgeon and part-owner of the Oklahoma Spine Hospital. “Spine surgery is an elective procedure. One of the biggest risks to any surgery is infections. Last year, out of 1,773 patients who slept over at the hospital, only 7 got an infection. That’s one-third to one-ninth the rate seen for similar patients at a big hospital.”

“At Oklahoma Spine anesthesiologists are practiced in putting patients under in the prone position for back surgery. At a big hospital few anesthesiologists would be skilled in that particular task. “You don’t take your Ford to the VW mechanic,” says Tibbs’ partner Stephen Cagle.”

If physicians are permitted to be innovative under appropriate rules without fear of penalty or disgrace they can accomplish amazing things. Our government should be looking at making rules that encourage innovation not abuse.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.