Stanley Feld M.D.,FACP, MACE

Astonishing events have occurred in the last 2 weeks. On April 27, 2006 CMS published the new regulations for a change in DRG effective October 1, 2007. The New York Times published an article about the change on July 24, 2006. DRGs reflect hospital costs to the healthcare system.

Eighty percent of the costs of care to the healthcare system are the result of the treatment of complications of chronic disease. Eighty percent of those dollars are spent in the hospitals for complicated procedures. If we have any hope of Repairing the Healthcare System, we need to decrease the complications of chronic disease and keep the patients out of the hospital.

The original formulas for the DRG system were created in 1983. It is antiquated. It has evolved into gross overpayment of hospital charges. The proposed new patch is to convert the DRG formula from reliance on hospital charges to the consideration of hospital costs. Not a bad idea. The charges for Dick Cheney’s implanted defibrillator were $30,000. The charge seems inflated and needs to be justified on a cost basis.

The problem is, how is Medicare going to figure out what hospital costs are? How are they going to figure out quality of care on the basis of costs? Was the analytic program developed by 3M created after a competitive bidding process? Does the program have defects? How are hospitals going to adjust to a change in system that they have figured out and profited from in the last 23 years? How are the device companies going to adjust to a change in their excellent margins?

Not surprisingly, the uproar from well funded lobbyists for hospitals and devices companies was loud and unrelenting. Everyone was yelling about the change in the DRG system including Senators and Congressmen.

On August 1, 2006, Mark McClellan tried to explain the changes in the DRG system in the midst of the firestorm of lobbying in Congress and direct to the public media advertising.

“The changes are designed to more accurately reflect hospital costs and reduce incentives for hospitals to treat only the most profitable patients,” said Mark McClellan, administrator for the Centers for Medicare and Medicaid Services.

Again, a good idea, if it does not destroy the Focused Factory Centers of Excellence some hospitals have created. The main issue here is how the costs of care incurred by the hospitals compare to the charges for care. This point always seems to get lost in the political rhetoric. My guess is the difference between costs of care verses charges for care are great. However, I believe the true difference will be difficult to obtain. Few hospitals and device companies have the desire or incentive to reveal the difference.

Medicare’s explanation of the of the shift in fees included the following statement;
“For example, if a patient needs a ventilator for more than 96 hours, hospitals can expect a higher payment than they would get now. However, if the patient needs a ventilator for less than 96 hours, the hospital may get less money than they would get now. Also, if a patient is admitted with seizures, the hospital would get a higher payment. But if that patient just had a severe headache, the hospital could see a lower payment.”

These explanations make no sense to me.
If the patient was on a ventilator for 95 hours, and you as a skillful physician were able to get him off the ventilator, your hospital would get less money than if the hospital kept the patient on the ventilator for 4 more hours. It seems to me that the incentives for less costly care are going in the wrong direction.
If one was admitted for a headache, for example, included in the differential diagnosis for the headache was a brain tumor, if the work up turned out not to be a brain tumor that would be wonderful for the patient’s prognosis. If the diagnosis was a headache, the hospital would get less money because the patient had a better prognosis. Does that make sense to you?

“We want to get the payments right, so each patient gets appropriate care,” McClellan said.

My belief is medical decision making should be made by competent physicians and not legislated by rules that do not work. Medicare should be concentrating on the price they pay hospital for care and how they can create incentives in the system to decrease the complications of disease so the cost of care decreases. They should not be fiddling with payment schemes that are bizarre and clearly create incentive for institutions to abuse the system.

On August 2, the government backed off; “Under intense pressure from health care lobbyists and lawmakers, the Bush administration says it will scale back and delay proposed changes in Medicare payments to hospitals that would have created clear winners and losers.”

“The proposals would have cut payments by 20 percent to 30 percent for many complex treatments and new technologies. Hospitals will instead see much smaller cuts or even small increases for many of those procedures. Some of the changes will be phased in over three years.”

The physician groups should be so lucky. We face 5% reductions per year across the board in a rigid payment system that does not encourage innovation to prevent the complications of chronic diseases.

Why do you think this happens?

Stanley Feld M.D.,FACP,MACE

“Debt, sector trends may push HCA to sell some hospitals” was the title of the article in the Nashville Business Journal August 2, 2006.

“Under new ownership, HCA Inc. may use its time as a private company to spin off some of its slower-growth markets to pay down debt and reward investors before re-emerging on the public markets.” HCA executives deny this is the intent.
$20 billion dollars in equity ($31 billion sales price-$11 billion debt) was removed from the company and replaced with $5.5 billion plus $26 billion in debt. The article goes on to say that : The buyers hope to pay down their own debt with HCA’s $3 billion in annual cash flow before possibly taking the company back to the public markets.
HCA typically maintain 25% to 40% share in its markets to be able to create networks, have better negotiating power and create efficiencies of purchasing power. However, in a quick overview of DRG payments available online my first reaction is that HCA’s fees are higher than the average fees in the community.
The Nashville Business Journal points out: “The new owners could sell some assets as they attempt to withstand the strong headwind the industry faces. In addition to announcing its sale, HCA missed second-quarter profit expectations on weak volume and saw an increase in bad debt expense.”

The most important part of the statement is HCA missing its second quarter profit on weak volume and an increase in bad debt expense.

The Healthcare System faces many ills. A gigantic ill is that a noble profession has turned into a Big Business with all the greed we have experienced in other corporate businesses in the last 5 years.

The business of medical care should be efficient effective care on the ill with a strong emphasis of keeping people well and out of the hospital. Until we convert the former view of healthcare as a big business around to a service whose goal is to prevent illness the faster we will be on the Road to Repairing the Healthcare System. How is this accomplished with all the stakeholders being treated fairly and have the opportunity to be innovative and make a good profit? I believe the solution will be the use of common sense and common goals to align all the stakeholders incentives. I believe it will happen before the healthcare system breaks down completely.

Stanley Feld M.D., FACP, MACE

Before I start, in paragraph 3 of the last blog there is a misprint; the words “going public” should be “going private”.

Even before HCA buyout is completed “Insurer,hospital at odds on rates”

“The blockbuster deal this week to take HCA Inc. private comes as the hospital giant conducts intense negotiations with insurer United Healthcare over proposed rate increases that, if not resolved by Sept. 1, could force as many as 850,000 Colorado residents to pick new hospitals and doctors.”

HCA and United Healthcare Insurance are not even close on agreed rates. I predict this is going to happen in every city all over the country where HCA has a significant hospital bed presence.

HCA’s present financial statements reflect relatively thin margins after debt service. The margins will just get worse after the buyout is complete since the debt service obligation increased by 15 billion dollars. It seems the only way for the survival of HCA is to increase their rates. The impact to the Repair of the Healthcare system can be predicted right now. The impending fiasco seems inevitable.

It is time for government officials to provide some real leadership. It is time to enact forceful and effective legislation to Repair the Healthcare System. It is time that the people demand this leadership from their elected officials.

It is long past the time to continue to create rules and regulations in an archaic bureaucratic hierarchy. The result is the creation of ineffective patches onto a broken system. The solution to HCA’s predicted strategy is to construct the new DRG payment system using community rating and stick to it. I mean a payment system that considers the actual cost of service in the community short of debt service and inflated overhead. A reasonable profit should be added to the community rated cost structure. It is ineffective to create a system that will consider the cost of services provided and include the exaggerated overhead and debt service of the institutions into the cost of service. Unfortunately, this would create a significant burden to HCA and to KKR’s investment, but it would decrease the cost of healthcare to society.

The non profit community hospitals with small debt will have a tremendous cost advantage even though they would collect less money than they would under the old DRG system. With a little increase in efficiency of delivering care and quality of care, these community non profit hospitals can drive down the cost of care even further. If they do they should be rewarded. There is little incentive in the system presently to reward providers for decreasing the complications of chronic disease. Unfortunately, it looks like the efficient focus factories will be penalized by the new DRG system, whereas the debt overloaded hospital systems will get their debt serviced by the government.

How do we, the patients, and potential patients, demand a system that is cost effective and driven by quality for the benefit of the major stakeholder, the patient? To me politics means power. Politicians need our vote in order to have power.

I also told you that no one else has been able to fix the healthcare system. <u>It is up to us</u>, the people, and our vote.

Stanley Feld M.D., FACP,MACE

On the last two blog posts I covered the new paradigm Medicare had in the Federal Register for Hospital reimbursement. The goal was to base DRGs on hospital costs and not hospital charges. The reduction in revenue to certain hospitals would be as much as 33%. Specialty services such as Cardiac, Neurosurgical and Orthopedic services would be much affected. It turns out that 70% of hospital profits are derived from these three services.

“We are on the eve of a seismic change in revenue reimbursement for hospitals with the expected reconfiguration of diagnostic related groups as recalibrated by the Centers for Medicare and Medicaid Services”.

Paradigm Lost: The Strategic Impact of Revised DRG Payments
By Preston Gee, for HealthLeaders News, July 13, 2006

On July 26, 2006 HCA announced that it was going public and being bought out by KKR for 31 billion dollars. However, KKR, the Frist family, and Bain venture capital were going to put up only 5 billion dollars in cash and finance the rest along with the assumption of 11 billion dollars in debt.

The first question in my mind was perhaps KKR did not think this purchase through. KKR is a pretty smart outfit. I was sure they had thought it out from a cash flow standpoint. There is probably something in the new Medicare payment system that they know and we are not considering.

Private hospitals are not tax exempt. Non profit hospitals are tax exempt. Non profit hospitals have a cost advantage from the start because of the tax exemption. Private hospitals have big debt payments. Non profit hospitals have minimal to moderate debt service obligations adding to their cost advantage.

In the buyout, it looks like HCA- KKR is going to assume a debt service obligation of 25 plus billion dollars. The fees paid by Medicare are constantly being reduced. The new DRG payment system is going to be set up to pay inpatient hospital care by costs and not charges. With the new fee schedule it is hard to visualize how the debt will be serviced by KKR. It is worthwhile looking at HCA’s financial statements. If the debt is serviced, how are they going to generate profits for the LPs in the JV fund? Medicare hope is to reduce payments to hospitals for care by 30% of present levels with the new DRG formula.

The only way I can see HCA-KKR remaining viable is if there is a defect in Medicare’s new paradigm of payment for DRGs. The cost of care in the HCA institutions will go up because of the doubling of their debt. If they are paid on their cost of care and not the community cost of care, they will be able to maintain their profit margin while Medicare in effect is servicing their debt. The net result would be an increase in cost to the government. Since private insurance mimics Medicare private insurance payment to HCA-KKR will also increase. The pass through for this increase would ultimately be to the consumer and tax payer to the benefit of KKR.

If I am correct, rather then decreasing the cost of care through efficiency of care and an increased quality of care to decrease complications of chronic disease, we will see an increase in cost of care.

HCA has many hospitals in each large city. Let’s say 50% of the hospital beds in a city belong to HCAs hospitals. If patients do not choose to use HCA’s beds because of the increased hospital costs, then 100% of hospitalized patients will be competing for the remaining 50% of the beds in the city. This will create a bed shortage. This leverage can force the increase in payment for care to HCA. I have not seen one article about the consequences of this buyout to the cost of medical care.

It is just as I said. “Today’s solutions are tomorrow’s problems.”

Stanley Feld M.D.,FACP,MACE

I apologizing for forgetting to link the complete report; “Proposed changes to hospital inpatient prospective payment system” is in the Federal Register April 25, 2006. It is a formidable document. It has been predicted to revolutionize the way hospitals do business.

The New York Times Article goes on to say; The basic payment for surgery to open clogged arteries, by inserting a drug-coated wire mesh stent, would be cut by 33 percent, to $7,590. The payment for implanting a defibrillator, like the one used by Vice President Dick Cheney, would be cut 23 percent, to $22,000, while the payment for hip and knee replacements would be reduced 10 percent, to $14,500.

Drug and device makers have been lobbying Congress and the Bush administration to delay the changes to allow further analysis. Device makers are scheduled to meet with top White House officials this week. More than 200 members of Congress have signed letters supporting a one-year delay.

The charges should definitely be lined up with costs of service. These charges seem very high to me. The actual cost of the service, procedure and device should be calculated into the charge. We have seen some device charges to be extremely secretive. A reasonable profit should be added to the cost. The fee for the community is then determined. If one provider is more efficient than another provider the efficient provider should not be penalized. The efficient provider should be rewarded by the extra profit. If costs go down then the charge will go down.

The New York Times Article goes on to say; The goal of the new payment system is to pay hospitals more accurately for the cost of care. But Jayson S. Slotnik, director of Medicare policy at the Biotechnology Industry Organization, a trade group, said that payments would, in many cases, be less accurate because the government had relied on old hospital cost reports and claims data that did not reflect the use of new technology.

Without a delay, Mr. Slotnik said, hospitals can expect to see a 35 percent reduction in Medicare payments for stroke patients treated with clot-busting drugs. The basic payment for such cases is now $11,578.

Is this the actual cost of service plus a reasonable profit or the distortion created by the DRG payment systems? Are these distortions leading to profits that have enabled hospitals to be make vast improvements in their infrastructure and facilities?
Physicians treating patients are not aware of these distortions when they order the procedures to practice the best medicine they can. Physicians only see the decreases in payment they receive while experiencing and increase in overhead. Physicians experiencing a decrease in net profit should be thinking about how to become more efficient and decrease their overhead.

The hospitals taking care of less profitable diseases should be encouraged to develop centers of excellence for those less profitable disease, so they can become more efficient and in turn more profitable.

Mark B. McClellan Medicare administrator said in an interview “If you take a big step back and look at Medicare spending, 90%-plus of what we are spending is going for the complications of chronic disease.” He goes on to say “We can get healthier beneficiaries and lot lower costs related to complications if we can get more prevention.”

A problem in the system is we do not provide reimbursement for prevention. We will discuss this in detail in the future.

In Focused Factories, the system has an increased chance of experiencing less complications from diseases and procedures than in a general care facility. We should be encouraging “Focused Factories” and not discourages them.

There is much more to say about this article. These new rules can lead to more dysfunction in the healthcare system as well as a decrease the quality of care. However, prices paid for DRGs have to be aligned to be more realistic with the actual cost the hospital accrues for care. This will be extremely difficult to obtain voluntarily. In a consumer driven environment, the consumer can demand this price transparent.

Stanley Feld M.D.,FACP,MACE

An article “Bush Administration Plans Medicare Changes” in the New York Times on July 17, 2006 illustrates the point I made previously. This article needs to be read carefully by all. It is especially confusing to the consumer who should be driving the repair of the healthcare system. The complete report; “Proposed changes to hospital inpatient prospective payment system” is in the Federal Register April 25, 2006

I believe the government is trying to do the right thing from the hospital cost of service viewpoint. Hospital DRG fees are exorbitant. It is doing the wrong thing from a quality of care point of view. In my opinion, the DRGs should reflect the hospitals cost plus a reasonable profit. Presently, certain DRGs are too low and others are much too high.

Michael Levittt, the Secretary of Health and Human Services, said “the new system would be more accurate because payments would be based on hospital costs, rather than on charges, and would be adjusted to reflect the severity of a patient’s illness. A hospital now receives the same amount for a patient with a particular condition, like pneumonia, regardless of whether the illness is mild or severe.”

This new approach is a good thing, because then hospital costs for service will be transparent. Hospitals will have the incentive to become more efficient if their costs are too high to make a reasonable profit. We have established previously that charges are artificial retail prices.

Federal officials said that biases and distortions in the current system had created financial incentives for hospitals to treat certain patients, on whom they could make money, and to avoid others, who were less profitable.

Dr. Alan D. Guerci, president of St. Francis Hospital in Roslyn, N.Y., said the new formula would cut Medicare payments to his hospital by $21 million, or 12 percent. “It will significantly reduce payments for cardiac care and will force many hospitals to reduce the number of cardiac procedures they perform,” Dr. Guerci said.

The first statement is misleading because the charges have nothing to do with the treatment of certain diseases. It has to do with distortions in reimbursement caused by the DRG reimbursement system. Additionally, everyone would love not to have to treat certain diseases that are less profitable. This is why our system is broken. The two thirds of the uninsured are uninsured because they are individuals group insurance plans are in their 50’s with hypertension, and obesity. They cannot buy insurance even if they wanted to because the insurance company views them as too high a risk for complications of their underlying chronic disease.

Regina Herzlinger in her book Market Driven Health Care advocated Focused Factories. Focused Factories are a great idea. The best example is a proprietary hospital in Canada that only does hernias. The hospital can do hernias cheaply, efficiently and still generate a healthy profit. The focused factory has developed a system of care (process of care) and experience treating many hernia patients resulting in few complications and short length of stay in the hospital. The hospital can therefore afford to do hernias more cheaply than the traditional hospital reducing the cost of care.

Focus Factories such as this one can serve as a model to stimulate an increase in quality care throughout the healthcare system. Hospitals and Clinics concentrating on full service care for each chronic disease (Focused Factories) are an excellent idea. Inpatient and Outpatient Focused Factories are one of the solutions to Repairing the Healthcare System.

You will recall I said 80% of the healthcare dollars are spend on the complications of chronic disease. Medicare claims that 90% of its’ healthcare dollars are spent on the complications of chronic disease. Focused Factories developing Systems of Chronic Disease Management using evidence based medicine can reduce the complications of chronic disease by at least 50%. The result would be a savings of 40% of the total healthcare dollars spent ( 50%*80%=40%).

St Francis Hospital in Roslyn N.Y. is a small hospital that had a difficulty competing with Long Island Jewish Hospital and North Shore Hospital, very close and powerful neighbors. Twenty-five years ago the hospital decided to build a strong Cardiac Treatment Center. It built a “Focused Factory” for Cardiac Disease. It sounds like it is going to get penalized for developing this center of excellence. I do not know what the difference between their cost of service rendered and charges is, or the differences in charges between it and its competitors. However, if the actual cost of service is in line with the cost of service in the community it should not be forced to reduce their emphasis on Cardiac Care to take on less profitable diseases. This will diminish the quality of service in the community.

Stanley Feld M.D.,FACP,MACE

As I predicted, after the Practice Management Companies bought physicians practices, physicians’ productivity fell sharply, and collection dropped greatly. Overhead increased as the Physician Management Companies moved their bureaucratic machinery into the physicians’ office. The PMCs’ hiring practices came into conflict with physician hiring reflexes. Profit decreased even further. Most of the National Practice Management Companies went out of business. Many sold the practices back to the doctors at ten cents on the dollar and left town.

The Hospital systems were forced to sell the practices back to the physicians also. The consultants for the hospital systems had a plan. If the hospital system could not profit by owning the physicians practices, they could at least own the front office and back office management of the physicians practice and collect a fee.

You will recall hospital systems were pouring profits in expansion of their hospitals, as well as buying other failing hospitals. Their goal was to have greater control over their marketplace. The marketplace control should result in better negotiating power with the insurance industry and Medicare.

Physicians, in general, are lousy business men. I mentioned previously that physicians want to take care of patients. They do not want to be business managers nor deal with the complexity of managing large practices. The physicians permitted the hospital systems hold onto the billing and employment functions. The physicians were paid on the basis of salary plus productivity minus overhead. Most physicians had some ideas of the workings of the formula. However, most did not and do not know the components of the overhead structure. They also have little understanding of the percentage of collections. Again, the physicians were driven to work harder to increase productivity, but did not seem to be increasing income.

Presently, another layer of mistrust between hospital systems and physicians is developing. They are starting to question the hospital system’s ability to manage the practice and are starting to rebel against the multitude of practice rules imposed.

If only the hospital systems and physicians trusted each other. They could then promote the concept of delivering excellent care to patients and permit each others skills to implement this goal. This concept would go a long way to start repairing the healthcare system.

I think the tension between hospital systems and physicians serves as a potential firebox that can blow up the entire system.

Many single specialty practices merged in order to have negotiating power with the various hospital systems in their town as well as with the Managed Care Companies. Some of these mergers have been very successful. Most have not been effective. Merging cultural and personality differences between competing medical practices is a very difficult task. The development of efficient governance in large multi-office merged practices is extremely difficult. Information technology and systems development could help greatly but would require large expenditures of money. As practice revenue diminishes physicians are hesitant to make large capital outlays.

In any event, it is easy to see how the variety of tensions created could lead to the further dysfunction in the healthcare system.

Stanley Feld M.D.,FACP,MACE

The concept of buying physicians’ practices, have the physician produce revenue by working 12 hours a day and efficiently billing and efficiently collecting billing opened an opportunity for Managers with advanced information technology expertise and equipment. It also offered an opportunity to form national networks to negotiate better fees with the national insurance industries. This represents Price Transparency for negotiated fees from the insurance industry by large physician networks. These National Practice Management Companies could also have immense negotiating power because they controlled the labor force. The development of these Practice Management Companies along with hospital systems controlling their labor force through the IPA frightened the insurance industry. Their promise of reducing the cost to the employer healthcare benefit from 18% of gross revenue to 12% of gross revenue seemed to be fading as their negotiating position was threatened by coalescing groups of networks.

The industry of National Practice Management Companies grew quickly. The Professional Management Organizations (PMOs) had the same notion as the hospital system. If they put a powerful information technology system in place and bought physician practices, maintained the productivity of the workforce, and leveraged the ability of the information systems, they could increase the PMOs value. Once that was accomplished they could go public, and make millions from a hard working labor force (physicians and their practices). The attraction to the physicians was the cash and stock in the PMO obtained from selling their practice. Additionally, the practice debt was taken over, salaries were guaranteed with incentives and the complexity of practice management was gone. The physicians could also buy additional private stock in these startup PMOs. The hope was when the PMO went public the physicians would get an additional payout for their practice. This was supposed to represent additional incentive to make the Practice Management Organization successful. Remember, the physicians could not keep track of their collections and income was falling. Income was falling because of decreasing fees, increasing overhead and poor individual practice administration. The promise of the PMO was to fix all of this. Then the physician simply had to take care of his patients.

None of these management organizations foresaw the inevitable. Physicians were now paid employees for a larger company. The Physicians did not like the corporate rules applied or the restrictions on their freedom to make clinical judgments. No matter how hard they worked their income did not increase. Bilateral mistrust increased. The physicians’ productivity decreased partly because of reduced work hours, coffee breaks, and lunch hours, luxuries they did not enjoy previously. Physicians adopted a 9 am -5 pm schedules rather than a 6 am-9 pm schedule they maintained when they owned their own practice.

Who suffered? The patient and the physician patient relationship suffered greatly.

What happened next?

Stanley Feld M.D.,FACP,MACE

Unfortunately, the relationships between hospitals and physicians have always been adversarial. However, when insurance carriers presented a dizzying array of fees for services, hospital systems stepped in and volunteered to “help” physicians form negotiating organizations called IPAs (Independent Physician Associations). I assume the hospital systems consultants told the administrations of the hospital systems that organizing was the only route to survival. It also seems that every hospital system organized its staff simultaneously.

These associations would negotiate fees for the physicians who practice at that hospital. The independent physicians could either opt in or out of the contract at their own free will. The fees for joining an Independent Practice Association (IPA) ranged from $1,000 to $10,000. What was strange to me was that in all of the IPAs I was involved, the hospital systems knew the physicians negotiated fees but the physicians never knew the deal the hospital made with the insurance company and their various managed care products. Nor did we know the fees they were getting for the services we ordered in the hospital. I always had the feeling the physicians were at a disadvantage. However, I did not have any proof. Most of the physicians were confused about the contracts. They could not keep up with the various prices the various Managed Care Companies (MCOs) were paying for their services. The physicians did not have sophisticated enough information systems to keep track of the changing fees. The physicians’ income was going down. It seemed that hospital systems’ net profit was increasing.

Hospitals increased expansion and renewal of their physical plants with the increase income. This increased profit could only occur if the hospital systems were getting a better deal from the insurance industry or Medicare than we were. In order to decrease costs, more services and procedures were paid for as outpatient services. Many of these workups and procedures could only previously be done in hospital at great expense. Complete workups for illness could easily be done as an outpatient in the physicians’ office at a much lower cost to the insurance company. The insurance industry was started paying for outpatient workups to reduce their costs.

Hospitals then went into the outpatient business in direct competitors to their staff physicians. However, independent practicing physicians on the hospital systems staff were hesitant to refer patients to the hospital owned and controlled staff. It was clear that one could workup and treat a patient as an outpatient cheaper than as and inpatient in the hospital. Presently hospital outpatient clinic workup is more costly than a workup in a physician’s office. Please note Dr Westbrook’s x-ray example.

Hospitals had very high brick and mortar investments. This investment was now being underutilization, as they continued to pour money into expansion and improvements to the structures. Hospital systems now became interested in buying physicians’ practices. The hospital systems viewed practicing physicians as a hard working labor force that could be very profitable to the hospital. Physicians had a difficult time keeping track of their collections and negotiated fees, while trying to practice medicine. With the hospitals’ “sophisticated” information systems that they paid millions for, collections by the hospitals seemed to be a no brainer to hospital administrators.

The hospital systems also saw that if they controlled physicians’ practices they would be in a more powerful negotiating position with the Managed Care Organizations. Many hospital systems bought physicians practices cash plus a guaranteed salary for 3 to 5 years. The hospital took over the debt and the administration of the practices.

What happened next was disastrous to all, patients, physicians, hospitals, insurance companies and the government. Everything seems to be going from bad to worse.