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Hospital Systems Are Finally Realizing There Are Problems With Obamacare

Stanley Feld M.D.,FACP, MACE

Hospital systems loved the prospect
of Obamacare. Physicians would be forced into full time salaried hospital
system positions. Hospital systems would own physicians’ intellectual property
and surgical skills.

Physicians would be the hospital
systems’ cash cow. Its brick and mortar model was failing. Surgery and recovery
from surgery was improving. Length of hospital stays was decreasing.

The problem hospital systems were
discovering was that physicians were not as productive when salaried as they
were when they owned their own practices.

Surgery was being performed as
outpatient surgery in freestanding surgery centers. Physicians own most of
these surgery centers independent of hospital systems.

The advantage of these outpatient
surgery centers to patients is they are cheaper, price transparent and have
comparable outcomes.

The healthcare insurance industry has
even encouraged their use. The Obama administration doesn’t like them because they
encourage patient choice and independence.
This is the opposite of Obamacare's goal of government dependence and control of patient choice.

Hospital systems thought Obamacare
would provide millions of newly insured patients. This would translate to
higher profits for the hospital systems.

Obamacare’s supposed
goal was
improving access to care for low-income families and individuals. Hospital systems were led to believe that they would treat more
patients with health insurance through expanded Medicaid eligibility.

With the
introduction of health insurance exchanges, low-income individuals would be
able to purchase healthcare insurance coverage at a subsidized rate.

The subsidy would
come in the form of a tax credit. Hospital systems did not realize that low-income
families do not pay taxes so they would not pay any tax to apply a tax credit.
These families making up to $38,000 dollars a year could not afford the lowest
insurance of $12,000 dollars a year. They would opt to not buy the health
insurance exchange offerings.

The health
insurance exchanges would not reduce the amount of uncompensated care provided
by the nation's hospitals.

Suddenly hospital
systems realized that their hospital consultants were wrong.  While it sounded good on paper, many hospital
finance administrators are terrified that Obamacare will result in a hospital
system taking great losses as a result of decreased reimbursement and a
decrease in the promised insured population.

Nguyen, corporate controller at Palomar Health, a San Diego–based system with
690 licensed acute care hospital beds and $2.5 billion in gross annual revenue
says there is a catch-22 built into the healthcare legislation that will
ultimately hurt hospital systems.”

 There is another catch to Obamacare. I cannot
tell if this was an unintended consequence or purposeful deception by the Obama
administration.  The exchanges will have
different tiers with different deductibles and copays.

health exchanges will have four tiers when the program goes live in January
2014, Nguyen explains: platinum (where the patient pays 10% of total healthcare
expenses); gold (20%); silver (30%); and bronze (40%).”

patients will still be responsible to pay
, and they probably don't make that
much money and are likely to choose the silver or bronze tier to keep the
premiums low. … That will increase our bad debt even though they have

The low- income
families will believe they have good insurance coverage. If they get sick they
will be responsible for the high deductibles and co-pays.

If they choose to buy
the insurance they will use the hospital facilities without realizing that the
insurance does not cover everything.

 After hospitalization
they will be hit with a bill they cannot afford. The hospital system will
pursue payment but will not be able to collect. The hospital will have to write
it off.

 There is total
uncertainty about the rules. However, before a hospital system should accept
the program they should know the rules. Their participation can ruin them financially.

Marlene Zurack is senior vice president of
finance and chief financial officer for New York City Health and Hospitals
Corporation (HCC). HCC is a municipal integrated healthcare delivery system
with $7.1 billion in total operating revenue when combined with HHC's MetroPlus
health plan.

HCC cares for indigent and low-income
patients. It is subsidized by the Medicaid's Disproportionate Share Hospital

She is doubtful that the insurance exchanges
will result in a net benefit to her organization. She insures 1.4 million
people. The systems treat 475,000 uninsured patients. She has two problems with
the health insurance exchanges.

She does not know how many of the uninsured
will get insurance, what level of insurance will they buy and how much of a
difference the insurance payment is from the Medicaid's Disproportionate Share
Hospital program.

is likely to lose revenue in the end
, Zurack says, due to cuts being made to
Medicaid's Disproportionate Share Hospital program, which distributes payments
to qualifying hospitals that serve a large number of uninsured individuals.”

reality, Zurack says, the cuts will be extremely damaging to hospitals that
serve this population.

New York City Health and Hospital Corporation
is scheduled to lose $17.1 billion dollars between 2014 and 2020 due to federal
cuts In the Medicaid Disproportionate Share Hospital program.

Obamacare is becoming a reality. Hospital
systems such as HCC are realizing the financial impact of Obamacare.

Care Organizations are Obamacare’s signature tool to improve access to care and
decrease the cost of care.

The promise to hospital
systems’ is that by increasing efficiency ACOs could increase hospital systems’ profit.

Incorporated into the ACO scheme
is profit sharing with the government if there are reduced costs. Included is
reduction in payment if costs exceed benchmark costs.

Only 10% of hospital systems
have signed up in the last two years. The Obama administration has done a lot
of bragging about enrollment

Originally there were thirty-two “Pioneer”
hospital systems. The Mayo Clinic and the Cleveland Clinic rejected being
Pioneer participants. The goal of ACOs is to develop integrated care delivery

Last week 9 of the original 32
Pioneer ACOs withdrew from the original program.
CMS gave no explanation for
them leaving.

I believe they realized they
couldn’t integrate their delivery system the way the government wants.

They cannot make any money
participating in the Medicare Shared Savings Program.

Seven of the nine are applying to transition
to the Medicare Shared Savings Program, while two are abandoning the program
completely. CMS declined to identify which ACOs are leaving the Pioneer program
and which are simply shifting to the MSSP.

 The nine departing
ACOs are

  • Prime Care Medical Network Inc., an IPA-based ACO serving San
    Bernadino and Riverside counties in California.
  • University of Michigan Health System in Ann Arbor.
  • Physician Health Partners LLC, a medical management company in
  • Seton Health Alliance, a network of providers comprised in the
    11-county Austin area.
  • "Plus ACO," a partership between North Texas Specialty
    Physicians and Texas Health Resources
  • Healthcare Partners Nevada ACO LLC, a multispecialty medical
    group and IPA serving Clark and Nye counties in Nevada
  • Healthcare Partners California ACO LLC, a multispecialty medical
    group and IPA serving Los Angeles and Orange counties in California.
  • JSA Care Partners LLC, a primary medical group and IPA serving
    the Orlando, Tampa and South Florida area.
  • Presbyterian Healthcare Services, an integrated delivery system
    serving the Albuquerque area.

ACO”, a partnership between Texas Health Resources and North Texas Specialty
, has plans to leave the Pioneer ACO program by mid-August, but the
two organizations say they are open to "remaining in the Pioneer ACO
program if we can find an economically viable way to do so."

 ACO’s are doomed. Obamacare is falling apart.

President Obama immediately went on the campaign
trail telling the country how great Obamacare is already.

He continues to ignore problems with Obamacare’s implementation
and costs. He has no regard for America’s financial stability.

Americans’ are starting to understand his attitude.

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

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Hospital Systems’ Abuses Of The Healthcare System


In my very first blogs in
2006 I made the point that all the stakeholders are to blame for the dysfunctional
healthcare syste

Most of the incentives that
created a technology driven healthcare system have been perverse. All the major
stakeholders’ incentives are misaligned.

The major stakeholders are
consumers, physicians, government, healthcare insurance companies,
pharmaceutical companies and employers.

The primary stakeholders
are consumers and physicians. The government, healthcare insurance companies,
pharmaceutical companies and employers are secondary stakeholders. Some
secondary stakeholders provide administrative services and some reimbursement.
None provide medical care.

None of the actions of any
of the stakeholders are transparent. All the stakeholders are trying to take
advantage of the payers (consumers, employers and the government).

The government should be
the neutralizing force. It should level the paying field for all the stakeholders.
Government should not permit one stakeholder take advantage another

Everyone except the
primary stakeholders “patients and physicians” figured out the money game in
the healthcare system early on.

Government and employers
were next to last in figuring out the game of money gouging.  This happened in the early 1980’s when both
said they cannot pay any higher price for healthcare services.

At that point the hospital
systems and the healthcare insurance industry figured out another way to continue
the money gouging. The result was HMOs and managed care. They did not work.

The opacity of pricing
continued, cost shifting flourished, and the price of medical care continued to

Physicians are not
blameless. However, they are the easiest to blame. Physicians are the least
organized and least aggressive stakeholders in the healthcare system.

In the past, I have
pointed out the real problems that have resulted in the dysfunctions of the
healthcare system.
Health policy wonks seem to ignore the real problems.

Consumers and physicians
are mere pawns in this money game.

Without consumers or
physicians there would be no healthcare system.
They generate the engine that
provides the need for medical care and administrative services.

I have covered much of the
abuse of the healthcare system by most of the stakeholders.

I have been relatively
easy on hospital systems and pharmaceutical companies until now.

However, the basic problems
in the healthcare system must be to be recognized and then fixed. All of the
problems have to be recognized at the same time and fixed simultaneously.

A patch on one problem
simply intensifies the overall problems.

Obamacare does not solve
any of the real problems. It is an attempt at patching a problem. It will only
make the problems worse and will not reduce the cost of care.

On February 20,2013 TIME
Magazine published an article by Steven Brill. The article is an excellent article
pointing out the abuses of the hospital systems.

“Bitter Pill Why Medical Bills are Killing Us” presents
examples of the abuses of large and small hospital systems.

The basic philosophy that
hospital systems should operate by should be “Patients First.”  It is not. It is how much money can I make
from each patient.

Steven Brill asked the
major question. “ Why are hospital bills so high?”

He presented the answer:,32068,2178453595001_2136781,00.html

The answer is obvious to
all physicians.

One fellow physician


we know much of this, this is an excellent overview of healthcare costs.


All Americans ought to
understand the distortions hospital system pricing creates. The government
ought to make hospital pricing transparent to everyone..

The government should include
the hospital system’s retail price, wholesale price and actual cost for an item
or service.

Then, consumers can choose
the hospital system to go to.

Policy makers continually criticize
this ideal saying that illnesses are sudden and patients are not in a position
to choose a hospital system or negotiate price.

If the hospital system is
compelled to compete on price the price will be the same as the competitive
price when the patient gets sick. If one hospital is much higher than the next
hospital the patient will know this before hand.

Hospital system charges
are actually higher than they appear. Most hospital systems are non-profit
organizations. The hospital systems do not pay taxes.

Hospital charges are
opaque to everyone, including physicians. Physicians generate the services
hospitals charge for.

As seen in Steven Brill’s
article oncology charges are extremely high.

One oncologist wrote to me
and said he could administer the same therapy in his office for one-tenth the hospital

However, neither the government nor the healthcare insurance industry
would reimburse him for the office procedure. It is the same procedure he performs
in the hospital.

Doesn’t that seem strange? What is going on?

Steven Brill discovered
that it is almost impossible to find out what hospital systems are charging.

The same opacity is true
for pharmaceutical charges.  The
pharmaceutical charges are further inflated by multiple middlemen involved in
drug distribution.

This has been less true
for drugs since Internet Drug stores publish drug prices.

However, since the patients’
physicians prescribed the drug patients are hesitate to use substitute drugs.
The patients’ attitude is that the healthcare insurance company will pay for
the drug less the copay.

Therefore the patients are not interested in looking
up the difference in price or the options for substitution.

This is the reason consumers need skin in the game.

The result of consumer apathy is an increase
in healthcare insurance premiums.

Steven Brill covers the
grotesqueness of retail hospital system charges. He also points out the amount
Medicare reimburses for the grossly inflated charge.

The consumers without
insurance are the consumers that get stuck with the retail charges. Insurer consumers recieve a large discount.  The uninsured
consumers are least likely to be able to afford these charges.

In some cases Medicare
reimbursement is less than 20% of the hospital retail charge. Steven Brill
points out that at this time Medicare reimbursement to hospitals is still 10
times its actual costs.

The article “Bitter Pill” is
excellent. It covers many categories of hospital system abuse by the use of
case studies.

The facts are
overwhelming.  I am going to try to
categorize these facts in my next blogs. The abuses will be easier to remember.

Consumers must be educated.
The hope is consumers can be activated by education. Only a consumer driven
healthcare system can drive the abuse out of the healthcare system. 

Americans will have an affordable healthcare system.

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

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How Are Accountable Care Organizations (ACOs) Doing?

Stanley Feld M.D.,

 In a word the formation
of Accountable Care Organizations is doing poorly.

If one believes the CMS
press releases one would believe the formation of ACOs is doing well.

In the past, I have gone
into great detail on why I believe Accountable Care Organizations will fail.

I believe physicians and
hospital systems should be accountable for outcomes but only the outcomes they
can control.

They should not be
accountable for outcomes they cannot control.

ACOs are really HMOs on
Risk is transferred from the government to the healthcare providers.

HMOs failed in the 1980’s
and 1990’s because physicians and hospital systems realized that they could not
evaluate risk or manage risk.

It is impossible for
providers (physicians or hospital systems) to control patients’ behavior in
adhering to treatment for their disease.

It is almost impossible for
the government to commoditize reimbursement accurately for diseases unless the
government can weigh the risk of poor disease outcomes.

No one has figured out
the way to accurately risk weight the outcome of a patient’s disease and

CMS believes by
increasing the number of cod
es in ICD-10  to 68,000 codes vs. ICM-9 18,00 codes, the old coding system, the
government will be able to weigh risk leading to accurate cost assessment.

I believe this is a
fantasy of healthcare policy wonks working for the Obama administration.

Many physician groups
and hospital systems believe they will lose money taking on these risks. These
are the groups that are holding back and not forming ACOs.

It is the reason the
Mayo Clinic and the Cleveland Clinic have refused to form ACOs.

Nevertheless on January 1st CMS proudly announced that
it has nearly doubled the number of ACO programs in the country by adding 106
new ACOs to the existing 148 programs for a total of 254 programs to date

The CMS announced its latest and
largest round of accountable care organizations
 under the Medicare
shared-savings program.

I would not be as proud as CMS is to applaud this level of
participation in the ACO program. ACOs are the keystone of Obamacare.

Complete national participation is supposed to occur by January

There are a total of 254 ACO’s signed up in 50 states or 5.08 ACO’s
per state.  There are many more potential
ACOs per state than 5.08 per state.

CMS said half of ACOs are physician-led and
care for less than 10,000 Medicare enrollees.” 

This is not a good sign.
The success of the ACO program is defined as shifting the risk of medical care to
hospital systems and physicians.

What is the problem?

The problem is obvious.
The definition of insurance is,

“Insurance is the
equitable transfer of the risk of a loss
, from one entity to another in
exchange for payment. It is a form of
risk management
primarily used to
hedge against the
risk of a contingent, uncertain loss.”

“An insurer, or insurance carrier, is a company selling the
insurance; the insured, or policyholder, is the person or entity buying the
insurance policy. The amount to be charged for a certain amount of insurance
coverage is called the premium.

Risk management,
the practice of
appraising and controlling risk, has evolved as a discrete field of
study and practice.”

Risk management is far
from an exact science. Risk management depends on a large number of people
paying premiums who are not at risk for disease.

Obamacare’s goal is to
have all the low risk consumers pay for the higher risk consumers.

However, President Obama
has provided low risk consumers an out. The penalty for not participating is
modest compare to the cost of the insurance. If a low risk consumer gets sick
he can immediately join the health insurance exchange program without

The increased cost of
illness is compounded when a large number of patients have chronic diseases.

A contributing factor to
developing chronic disease is obesity.

America has a national
obesity epidemic.

Patients with Diabetes
Mellitus are vulnerable to multiple diseases such as hypertension,
hyperlipidemia, kidney disease, eye disease and vascular disease.

Each might be at a
different stage of progression. The risk for costly complications is different
for each at each stage of disease progression.

The diabetic might or
might not adhere to the treatment regime outlined. It is difficult to risk
weight these patients. It is risky to take the responsibility for the medical
care outcomes for these patients.

In reality the principle
risk managers are consumers.

Healthcare policy
experts have not practiced medicine. They either do not understand these risks
or they want to place the risk with physicians and hospital systems and provide
undervalued reward.

Many medical outcomes are
dependent on patient responsibility for managing their own risk. Patients must
participate in their own care to receive maximum benefit and the best medical outcomes.

Patients must become
professors of their disease.


There are many reasons ACOs will fail

1. ACOs
do not empower consumers to be responsible for their own medical care. 
Healthcare should be consumer driven with consumers controlling their healthcare
dollars. They will then make informed choices about their care and insurance

2. ACOs create artificial
incentives to improve quality medical care and provider performance.

3.  Consumer driven healthcare creates real
incentives to promote price competition by physicians and hospital systems. True
competitors will constantly work to improve their products, attract
consumers, and ultimately increase market share.  

In a systems of ACOs consumers do
not play a role in stimulating completion. Consumers are passive recipients of
treatment from an assigned ACO.

4. Most physicians are reluctant
to assume accountability for patient outcomes.  Physicians recognize that
most medical outcomes are directly under consumers behavioral control.

5.  ACOs structure does not include consumers’
incentive to be responsible or accountable for their own medical care.

 ACOs undermine any attempt to create a truly
accountable healthcare system that can drive down medical costs.

6. ACOs do not encourage provider
accountability.  ACO’s shared savings incentive
does not seem to be adequate for the risk assumption.  

 Providers will continue to
be paid for each service they perform until the government provided
funds run out for that ACO.

7.  There are also grave uncertainties and
practical complications of distributing government funds and savings if any
between the hospital system and physicians on the hospital systems staff.

 8. ACOs create an
unfair competitive advantage for large organizations that are hospital system centric.
Eligibility requirements are vague and ambiguous. The eligibility
requirements suggest that larger organizations have an unspoken
eligibility advantage.

 9.  This is the reason
hospital systems are trying to form ACOs. Hospital systems think they will make
money. I believe hospital systems will lose money. The government will have to
supplement payment for hospital systems to stay afloat.

10. When hospital systems lose
money they will fight with their staff physicians over the distribution of
government reimbursement.

 The cost of hospital services will then
skyrocket further. Consumers will be the losers.

11. Groups of independent
practitioners as well as other types of small and mid-sized practices may
lack the infrastructure, information technology facilities, or other resources
needed to qualify for ACO eligibility.

12.  They will be forced to join hospital systems.
Hospital systems have a long history of taking advantage of physicians
skills and intellectual property.

 Tension between hospital systems and staff
physicians will be created. Hospital systems’ ACOs will crumble. The cost of
medical care will continue to increase further.

These are just a few of the reasons ACO’s will fail.

No matter how hard CMS tries to change the narrative
these are some of the reasons explaining the lack of hospital and physician participation
to this point.

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


Evidence For Impending Healthcare System Failure

Stanley Feld M.D.,FACP,MACE

The following are the links that is the evidence for the impending failure of the healthcare system in its present form and in the form that Obamacare is adopting.

Obamacare is piling on more regulations and restrictions to the present healthcare system. The present system is a failed system.The regulation will be impossible to comply with and impossible to enforce. They will create more opportunity for secondary stakeholder to extract more funds from monies needed for direct patient care creating a greater decrease in access to care for all .

The links follow the slides I presented in my last blog. Those links could not be opened because they were jpegs.

My hope is the links serve as an excellent reference to Repair The Healthcare System presently or when it collapses under it unsubstainable costs and the present system's inability to be executed.

The Etiology of Accelerated


Medicare 1965-1980 Fee for

authorized HMO’s

Medicare Price Fixing Begins In 1980

Cost shifting Penalizes Private

HMO Fail Because Of Faulty Assumptions In 1990.

 Reasons for Hillarycare’s
Failure To Pass.

Distrust of Government

Healthcare Insurance Companies
Raise Premiums.

Birth of Managed  Care: Another Compicated Mistake  

Managed Cares Fails. 

Managed Care Pricing And
Premiums Remain

2009 Obamacare And The Threat
Of Government Takeover To Freedom, Liberty and Choice.

Rationing Of Healthcare

ACOs Are HMO's On Steroids Combined With Managed Care Is Obamacare's Complicated Mistake. 

ACOs Will Fail At Great Costs To Everyone.

 Tort Reform And Defensive Medicine Are Ignored By Obamacare.

Medical Cost Escalate Out Of
Control And Then The Healthcare System Will Collapse.

The other major slide in the last blog was the barriers to the
Physician/Patient Relationship. This relationship is critical to the
theraputic index. It is almost destroyed and will be totally dstroyed in
Obamacare. Both physicians and patients will become commodities in a
bureaucratic healthcare system. Patients will not win.


Physician/ Patient Barriers to the Physicians/Patient Relationship



The Physician/Patient

physician/patient relationship

 The Magic  of the Patient Physician Relationship  

 Patient and
Physician responsibility contract

 Patient should be the leader of the team

 Barriers for physicians in the Physician/Patient


1. Tort
Reform/Defensive Medicine.

2. Restriction
of Physicians Clinical Judgment

3. Medicine
is a calling not a business

  4.  Constant
lowering physicians’ reimbursement

 5. Physicians
are driven to decrease time spent with patients

6. Government
rations care through panel of experts

7. Physician’s
treatments are driven by government regulations

8. The
traditional media undermining physician credibility

9. Government
is attempting to commoditize medical treatment


Patient Barriers To the Patient/Physicians Relationship

1. Patients are not in control of their own medical decisions.

2. Patients are not in control of their own healthcare

3. Patients
do not have to be responsible for their treatment because they

first dollar coverage.

4.  Education about chronic disease must be extension of
physician’s care

5.  Internet can undermine the Physician/Patient

6. Method of choosing a physician is random and must be
made clearer

7. Portability of information about previous treatment
is difficult

8. Patient must be responsible and in control of their
medical record.

9. Patient must endure poor communication by their

Government and the healthcare insurance industry limit choice with


11. Patients should be responsible for their treatment

America's healthcare system is at a critical turn in 2012.

Obamacare must be repeal.

Effective healthcare reform is essential. Both the primary and secondary stakeholders have abused a system. A system that is punitive.

Consumers must drive the system by being responsible to themselve and their healthcare dollars.

Obamacare is building a system of government dependency by all stakeholders (patients,physicians,hospital and healthcare insurance companies).

The healthcare system should be developed to create innovation and competions among stakeholders for the benefit of consumers and their indepent choice.

The government's inefficiency will create a healthcare system destined to doom at the expense of all of us taxpayers.

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

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President Obama Is Doing It Again

Stanley Feld M.D.,FACP,MACE


since 1965, the Democrats have been able to use the Medicare hammer to bash

Romney and Paul Ryan have co-opted the Medicare issue from the Democrats in
this election cycle.  Medicare has been a
popular entitlement program with seniors that has always been unsustainable.

that a huge number of baby boomers are becoming eligible for Medicare coverage is has become more

realize that Obamacare is unpopular. Over 60% of Americans disapprove of the

even realize that the passage of Obamacare had cost them the 2010 midterm

Republicans are using Obamacare as a rallying call to defeat President Obama in
his re-election effort.

knows that Medicare is almost bankrupt because the government has depleted its
Trust Fund.

also know that President Obama has lied, dissembled the truth or has ranted
about the Republicans on the issue of Medicare during his re-election campaign.

Obama cannot change a basic truth. Obamacare was designed to destroy Medicare.

and Ryan are trying to save Medicare without withdrawing the promise of
Medicare coverage for seniors over 55 years old.

Obama can try to defend Obamacare, a new entitlement, which will bankrupt the
nation and destroy Medicare.

can disavow Obamacare but he cannot do both.

plan is to try to confuse everyone into thinking that he can have it both ways.

          “ It's President Obama who has put
Democrats in the position of being the party that is cutting current seniors'
benefits, rationing care (thanks to the IPABs), and letting the program
collapse as it becomes unsustainable”.

year the nation’s healthcare cost was $2.5 trillion dollars. This year the
quoted healthcare system costs are $2.8 trillion dollars. An increase in $300
billion dollars a year for ten years is $3 trillion dollars.

have been blamed for the increase in costs. However, each year physicians have
received reimbursement cuts not increases. President Obama is ignoring the real
causes of the increases in cost.

article in the New England Journal of Medicine stated that the Romney Ryan Plan
could work. Paul Ryan (R) and Ron Wyden (D) stimulated this article submitted
to the NEJM. The NEJM seems a most unlikely place to have this article

assume the NEJM is feed up with President Obama’s rhetoric. The Wyden-Ryan is
an alternative to traditional Medicare.

is a premium support plan. It could shift Americans, under 55 years old, from
traditional Medicare coverage with the total government totally controlling their
healthcare choices by the Independent Physician Advisory Board (IPAB) to a
system of choice by individual seniors controlling their own healthcare decisions.

 “Will this premium-support proposal based on
full competition among private plans and traditional Medicare work?”

President Obama is
afraid the government will lose control over the healthcare system and seniors.
He is arguing that the premium support system is a voucher system. It simply shifts the
cost of care to seniors without improving the efficiency of care.

He makes vouchers sound
like a dirty word.

Traditional Medicare has been shifting the cost of care over to
seniors in the last 4 years by increasing the deductible seniors have to pay
annually. The basic deductible for any hospitalization is now $1300.00 up from
$500.00 in 2007.

The basic premiums are now $109.00 a month up from $96.00 in
2008. The premium is scheduled to increase to $239.00 a month per senior in

Medicare premiums are means tested so the premiums for seniors
earning more than $110,000.00 per year by any means including dividends,
capital gains, sale of a home, retirement fund payments or any source of income
will increase the premiums markedly.

The means testing is done by CMS having a direct connection to the
IRS and seniors’ tax return each year.

Medicare premium payments for seniors are significant especially when less
than 50 cents of every dollar is going to direct medical care.

 “President Obama’s argument would be true only if there were no
room to improve health care efficiency or if private plans ignored
opportunities to cut costs, increase market share, and improve their bottom

 Ryan and Romney believe
government has no business telling private individuals and employers how much
they can budget for healthcare.

A consumer driven plan can force
the market to improve efficiency and quality.

“Under a premium-support system, each additional test or
procedure would not generate additional reimbursement from the government. Most
Medicare beneficiaries live on fixed incomes and are not in a position to pay
more in deductibles or premiums.

That reality can force
health plans and providers to coordinate patient care and find other
efficiencies rather than perpetuating the current fragmented system.

The Wyden–Ryan proposal for people 55 and younger offers this safety
valve.  It converts Medicare to a defined contribution plan from a defined benefit plan. It gets the government out of
the insurance business puts consumers in charge. It saves Medicare.

If President Obama is correct, traditional Medicare with its
price controls and government regulations, will be the low-cost plan in every
market and seniors will shift back to traditional Medicare when the cost
differences become apparent.  The
competitive market place consumer driven healthcare experiment will be declared
a failure.

“One should not be fooled. If the alternative to market
incentives is price controls wielded by the IPAB, access to necessary services
will inevitably be limited, as providers (physicians, hospital and insurance
companies) seek more lucrative business.”

Price controls have never worked.

President Obama is also ignoring the serious fiscal problems
facing this country. The real threat is that America’s creditors will refuse to
lend us more money.

America must slow the growth of Medicare.  Increasing entitlement spending of any kind is
no longer an option.

The only question is how to do it.

“The Wyden–Ryan proposal outlines a strategy for Medicare reform
that harnesses market forces to control costs. It provides a real alternative
to the top-down controls favored in the Obamacare.”

The NEJM article recognizes that Paul Ryan and Ron Wyden have
defined the policy parameters that could be the basis for real Medicare reform
in 2013.

President Obama is starting to realize Obamacare’s problems.  

Seniors are realizing that President Obama is doing more harm to
Medicare with premium increases and rationing care than Paul Ryan.

President Obama is the one throwing grandma off the cliff not
Paul Ryan.

Obama has also been successful at faking out Americans with his trick plays.  

next trick play is to look like he is rebooting Obamacare to eliminate the

He has put together a group led by Neera Tanden, who was a senior member of the White House team that
helped pass the health law.

The group includes Peter Orszag (former budget
director), John Podesta (transition director), Donald Berwick (first Medicare
chief), Ezekiel Emanuel (Orszag's health policy guru), Joshua Sharfstein
(former No. 2 at the Food and Drug Administration) and Tom Daschle, D-S.D. (former
Senate Majority Leader and Healthcare advisor).

“Call it Healthcare Overhaul, Version 2.0. Their
biggest idea is a first-ever budget for the nation's $2.8-trillion healthcare
system, through negotiated limits on public and private spending in each state.”

Another diversionary sham.

So far the group’s proposals include additional
ideas, such as a malpractice liability shield for doctors who follow best
clinical practices and competitive bidding for all Medicare supplies and lab
tests, not just home health equipment.

This group wrote the Obamacare law. It views cost
controls as unfinished business.

imposed control over individual freedoms does not work!

let him fake us out again! I won’t.

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

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A Real Marketplace For Healthcare.

Stanley Feld M.D.,FACP,MACE

President Obama’s Healthcare Reform Act is all about government control of 19% of the U.S. economy.

The media has publicized ridiculously high charges for cardiac bypass and other complicated procedures. It ought to find out what the actual contracted reimbursement fee is.

All the stakeholders are at fault for the lack of transparency, misinformation, administrative waste, misuse of taxpayers’ dollars and the manipulation of the media.

It is important for the government and the healthcare industry to continue to blame physicians for being the villain in our dysfunctional healthcare system.

Remember physician receive only 10% of the healthcare dollars spent in our healthcare system. Who receives the other 90%? What value do the other recipient add to medical care?

The medias quoted prices are a scare tactic to keep government’s control of the healthcare system advancing.

What is going to happen after Obamacare is repealed?

There will still be millions uninsured.

There will still be millions who cannot buy insurance because of pre-existing conditions.

There will still be millions who choose not to purchase coverage.

There will still be inefficiency and waste in the healthcare system.

Stakeholders are adjusting to the potential restrictions of Obamacare. They are finding new ways to game the healthcare system.

Healthcare costs will rise and inefficiency in the healthcare system will increase whether we have Obamacare or not.

President Obama is trying to set rules and create regulations to eliminate potential solutions to our healthcare system’s problems.

He is trying to regulate and eliminate high deductible insurance plans and Health Savings Accounts. Under Obamacare it will be much cheaper for employers to pay the penalty than provide healthcare insurance for their employees.

Employees will be forced to buy insurance from President Obama’s health insurance exchange (Public Option). There will be no other options. At that point the government has full control of healthcare.

It wouldn’t be a bad thing if the government could afford another potentially inefficient entitlement program. President Obama is clearly trying to squeeze complete government control of healthcare through the back door.

It will not work!

What should be done?

The government must create a real marketplace for healthcare insurance. A marketplace constructed for the benefit of consumers and not secondary stakeholders’ vested interests. Stakeholders would adjust because of their competitive compulsion to get customers. They will compete for consumer business by lowering healthcare costs.

The mindset must change to a consumer driven system not a government driven system.

My Ideal Medical Saving Account would be an excellent way to provide full first dollar healthcare insurance coverage for unplanned medical expenses. It would also provide financial incentive for consumers to be responsible for their health and healthcare dollars.

These are some of the rules that government should have.

1. Healthcare insurance policies should be “guaranteed renewable.”

2. Healthcare policies should include a right to purchase insurance in the future regardless of pre-existing illness.

3. Healthcare insurance policies should follow you from job to job regardless of a move across state lines.

4. Individual healthcare insurance policies should have the same tax-deductible status as employer provided healthcare insurance policies.

The government could form a successful individual insurance market place with these simple rules or regulations.

 “Most pathologies in the current system are creatures of previous laws and regulations.”

“ Solicitor General Donald Verrilli explained as much in his opening statement to the Supreme Court: “The individual market does not provide affordable health insurance,” he noted, “because the multibillion dollar subsidies that are available” for the “employer market are not available in the individual market.”

My Ideal Medical Savings Account could apply to Medicare and Medicaid. It provides incentives and real healthcare insurance coverage. It allows the consumer to choose. It encourages consumers to be knowledgeable shoppers for healthcare. 

The main argument for a mandate before the Supreme Court was that people of modest means can fail to buy insurance, and then rely on charity care in emergency rooms, shifting the cost to the rest of us.

The government is spending that money already. The mandate will not stop the emergency room use.

 A consumer driven healthcare system using My Ideal Medical Saving Accounts would provide incentives for the indigent or those of modest means to try to save money for them by taking care of their health. The government provides those educational resources already. This might encourage its use.

The emergency room treatment expenses for indigent and uninsured are not the central reason for rising healthcare costs. Costs are rising because people, who do have insurance, and their doctors, overuse health services and don’t shop on price.

The Ideal Medical Savings Accounts should be fully tax deductible to both individual and groups.  The healthcare system would then become consumer driven. Consumers would become price sensitive because of financial incentives. A competitive healthcare market would then be created. The result would be a decrease in the cost of healthcare. It certainly would be cheaper than the artificial, bizarre, government controlled healthcare market for we have today.

Enlarging government control would make the healthcare market more expensive and less efficient than the unsustainable government controlled healthcare system that exists.

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

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The Healthcare System vs. The Medical Care System

Stanley Feld M.D.,FACP,MACE

The difference between the healthcare system and the medical care system is very clear to me. The stakeholders in the healthcare system are patients, physicians, government, hospital systems, pharmaceutical companies, pharmacies, pharmacy middlemen, and healthcare insurance companies. 

 Government, hospital systems, pharmaceutical companies, pharmacies, pharmacy middlemen, and healthcare insurance companies are secondary stakeholders in the healthcare system.

 The primary stakeholders are patients and physicians. They also comprise the medical care system. Without the primary stakeholders there would be no need for a healthcare system.

 The secondary stakeholders have long ago taken over the healthcare system. All businesses and the government deal with the hand they are dealt using their best judgment. The people running the business or government pursue their vested interest. The difference between businesses and government is businesses work to make as big a profit as possible. Government, depending on the political party in power, pursues fulfillment of its ideology.  

 Since 1942 and the Economic Stabilization Act of President Roosevelt the market place for medical care has been distorted. In 1946 healthcare insurance was introduced. At that time the interaction between the primary stakeholders, physicians and patients, started to be destroyed by secondary stakeholders.

The cost of healthcare has progressively increased since the government passed the Medicare and Medicaid in 1965. Costs increased further in 1980 when the government said we couldn’t keep paying these increasing costs and instituted price controls for Medicare and Medicaid.

This led to cost shifting of the difference to the private healthcare insurance sector.  Businesses providing healthcare insurance for their employees accepted the resulting premiums associated with cost shifting until 1985. At that time they said, “stop.”

The healthcare insurance industry asked corporations what percentage of your gross revenue could you afford for healthcare insurance benefits. The healthcare premiums were 18% of gross revenue.

 The corporate answer was they could afford up to 12% of gross revenue. The healthcare insurance industry’s response was, no problem.

HMO pricing became the most economical option for corporate employers. HMO fixed healthcare cost for corporations and healthcare insurers.

HMOs shifted the risk to physicians and hospitals. HMOs failed because physicians and hospital did not know how to assess risk. They accepted risk initially because they were afraid to lose patients.

 Hillarycare failed to become law because of the potential for patient abuse, restrictions of access to care, rationing of care and loss of freedom of choice. Patients did not want the government to dictate their medical decisions.

 Obamacare was passed by a Democrat controlled congress with a very liberal ideology.

  Many congressmen did not read the entire document or debate the potential unintended consequences.

  The difference in ideology between liberal and conservative is easy to understand.

 “Liberals believe that health care is treated as a market commodity today but should not be, and conservatives think that health care is not treated as a market commodity but should be.”

 The healthcare system is not a true marketplace. The healthcare marketplace has been continuously distorted by government regulations and adjusted regulations since Medicare passage in 1965.

 All the stakeholders have distorted the market even further by adjusting to government regulations in order to purse their vested interest.

If real repair of the healthcare system is to occur a real marketplace has to be created. Obamacare is another adjustment in an already distorted marketplace. Obamacare is accelerating the dysfunction in the healthcare system until it implodes and results in increasing costs not savings.  

 The healthcare insurance industry controls costs. Many Democratic healthcare policy experts have ignored the facts. The healthcare insurance industry’s goal is to maximize its profit. It takes 30% of the healthcare dollars off the top.

The healthcare insurance industry should not be in control of the economics of the healthcare system.

 Consumers should be in control of their medical care decisions and the money they spend for those decisions.

Personal medical care decisions should not be left to the munificence of the government. The government has never done anything efficiently.  

 Private and Medicare insurance has kept control of medical decisions out of consumers’ hands.  Consumers purchase healthcare insurance individually or from Medicare. Consumers also can receive healthcare insurance from their employers as a job benefit.

 The healthcare insurer directs consumers to use physicians and hospital in its network. The insurer negotiates reimbursement rates for the insured with hospitals and physicians.

Consumers are given little or no information about the comparative cost or quality of any particular doctor or hospital.  Consumers go to a doctor in their network.

Physicians do a history and physical exam and order tests and procedures on patients’ behalf.  When the test and procedures come back physicians prescribe the appropriate medication after a follow-up visit.

The healthcare insurance company reimburses physicians.

  Patients receive a copy of the bill from the insurer with patient portion of the co-pay. The explanations of benefits are impossible to interpret.

This is not a marketplace transaction. Patients have no control over the reimbursement. Patients and physicians have little incentive to restrain overuse of the healthcare system. They have no incentive to even scrutinize the bill. Patients’ have no incentive to control costs.

The use of healthcare services is divorced from marketplace forces that constantly assess cost benefit ratios.  Neither physicians nor patients have incentive to get the best care at the lowest price with the best quality.

As healthcare costs increase each year the source of the increase remains opaque. The increasing costs are made to appear to be the result of patients’ and physicians’ overuse of the healthcare system.

The increase in cost could be the result of the healthcare insurance industry and the pharmaceutical industry’s increased profits.

All stakeholders pursue their vested interests. The only way to align vested interests is to have consumers be responsible for thei health and healthcare dollars.

Only then will a true market place exist. Entitlements and price controls do not work. The cost of healthcare will skyrocket with Obamacare and create a larger budget deficit.


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

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Unintended Consequences Of Medicaid Reform

Stanley Feld MD.FACP, MACE

Everyone will be paying for the increased costs associated with Medicaid changes. Patients and taxpayers will conclude that President Obama’s healthcare reform act was a complicated bureaucratic mistake.

States want to limit Medicaid eligibility criteria. States have large budget deficits that are not permitted by their constitutions.

President Obama wants to increase enrollment in order to cover 16 million uninsured. States are also decreasing reimbursement by at least 10-17% to hospital systems and physicians. The result will be for participating providers to drop out of the Medicaid program.

Physicians have the option to drop out of Medicaid. The present physician shortage will intensify as more physicians drop out of Medicaid.

“No one can force doctors to accept Medicaid patients. It’s their right to decide what insurance to accept, if any.

Hospital systems by law cannot drop out of Medicaid. If President Obama does not give them a waiver as presently requested by 29 states several things can happen.

  1. There will not be enough physicians to service the increase in hospitalized Medicaid patients.
  2. Hospitals will be forced to hire physicians. The shortage of physicians will require hospitals to pay more to physicians than the reimbursement.
  3. The cost of service to hospitals will be higher than reimbursement.
  4. It will require hospital systems to cost shift to the private sector.
  5. Hospital systems will try to do this by demanding increased payment from the healthcare insurance industry.
  6. The healthcare insurance industry will raise rates. Many are already raising rates because of the anticipated changes and the decrease in enrollment for private healthcare insurance.
  7. Employers are decreasing the amount of coverage resulting in higher out of pocket expenses to employees.
  8. Employers will have incentive to drop private healthcare insurance completely and pay the penalty.
  9. This will result in a further skyrocketing of healthcare premiums for employers.
  10. Consumers will be forced to buy into the public option.
  11. Everyone will pay more for health care

How is this going to play out?

Texas is a prototype. Fiscal responsibility and a balanced budget is the goal. Texas wants to avoid a state income tax and be business friendly. The state has calculated the more business the more tax revenue and the more employment. More employment means more sales tax and property tax revenue.

The Texas House Republicans’ budget is going to reduce Medicaid funding to balance the budget. Republicans control the State House. The annual growth of the state’s $8.3 billion Medicaid program is not sustainable nor will it permit a balanced budget.

“Local hospitals facing a possible 10 percent cut in Medicaid fees plan to pressure commercial health insurers for better rates, which could drive up costs for everyone.”

There will be cost shifting with Medicaid cost cutting.

“What will happen is fewer physicians will take Medicaid patients, and patients will then go to the emergency room,” said Sandy Lutz, managing director of PricewaterhouseCoopers’ Health Research Institute in Dallas.

North Texas doctors accepting Medicaid already are in short supply. Only 39% of Dallas physicians are accepting Medicaid.

This cut will not allow doctors to meet their overhead,” said John Holcomb, chairman of the Texas Medical Association’s committee on Medicaid and access to care.

“Why would someone take a 10 percent cut and keep scheduling Medicaid patients when they could schedule a commercially insured patient?” Holcomb asked.”

More on this story

Medicaid reimbursement to hospitals will be a fraction of reimbursement needed to cover expenses. Hospitals would then try to recoup expenses from private health insurers.

“We’ve grown into a health care system where we’re forced to depend on private insurers and employer-based insurers to pick up the tab the government does not pick up.”

The healthcare industry and the hospital systems negotiate hard deals. The hospital systems eventually get a small increase in reimbursement. The increase in reimbursement is passed on to the employers at a multiple increasing the healthcare insurance industry’s profit.

“Obviously health plans like us resist that cost shift as much as possible,” said Darren Rogers, president of Richardson-based Blue Cross Blue Shield of Texas.

Employers have been decreasing the level of coverage to employees while increasing the co-pays and deductibles.

As President Obama’s healthcare reform act progresses, employers will be discontinuing healthcare insurance coverage for employees. It is cheaper to pay the penalty than it is to provide healthcare coverage.

Employees will end up paying for individual coverage at an increased premium with after tax dollars. Presently employers pay for premiums with pre-tax dollars. The result will be a decrease in employees’ discretionary income. Consumer spending will decrease. Jobs will not be created and unemployment will increase.

The wheels are starting to fall off. President Obama has not thought this out very well.

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


Accountable Care Organizations: Another Complicated Mistake

Stanley Feld M.D.,FACP,MACE

Before I beginning I would like to congratulate the Texas Rangers for the magnificent baseball they played against the New York Yankees bringing the American League pennant to Dallas Texas.


Accountable Care Organizations: Another Complicated Mistake

One the many pilot programs being set up by President Obama’s healthcare reform law is Accountable Care Organizations (ACOs). ACOs have become the latest fad among health policy wonks desperate to control costs and boost quality in healthcare.

“An Accountable Care Organization ( ACO) is a health system model with the ability to provide and manage the continuum of care across different institutional settings. These settings include ambulatory (outpatient),inpatient hospital care and post acute care.”

“ACOs should have the capability of planning budgets and resources and are of sufficient size to support comprehensive, valid, and reliable performance measurement.”

In turn, it has become a source of confusion for hospital administrators. Some administrators are hiring healthcare policy consultants to help them create ACOs.

President Obama’s contends ACOs will raise the quality of care and lower the cost of medical care simultaneously.

This is pie in the sky thinking. All President Obama has to do is look realistically at the success rate for Accountable Care Organizations. He continuously uses the following examples of ACOs success:

“What our system needs are more Kaiser, Geisinger, Mayo and Intermountain health systems. These are the integrated delivery systems that are already delivering higher quality and lower costs.”

My question is where is President Obama’s data? Mayo is in the process of not accepting Medicare. Mayo is losing too much money servicing Medicare and Medicaid patients.

Mayo said last week it will no longer accept Medicare patients at one of its primary care clinics in Arizona. Mayo said the decision is part of a two-year pilot program to determine if it should also drop Medicare patients at other facilities in Arizona, Florida and Minnesota, which serve more than 500,000 seniors.”

Mayo says it lost $840 million last year treating Medicare patients, the result of the program’s low reimbursement rates.

In Arizona Mayo lost $120 million dollars. The losses are usually made up by cost shifting to the private insurers and private patients. These losses are getting harder and harder to make up by cost shifting.

"Mayo Clinic loses a substantial amount of money every year due to the reimbursement schedule under Medicare," the institution said. "Decades of underfunding and paying for volume rather than value in Medicare have led us to this decision."

This is a direct contradiction of President Obama’s contention.

Medicare and Medicaid programs have been no more successful than private insurers in supporting the growth of these organizations. Real health reform will occur when President Obama recognizes patients own their diseases. Patients must have appropriate incentives and be active in their care.

Massachusetts has published data on costs. The cost of care has not been reduced by Partners Healthcare System, an integrated delivery system at Massachusetts General Hospital.

“But there is no sign that Partners has used its size and scale to deliver care at a lower cost. Indeed, there is evidence that it has used its market power to extract higher rates from insurance companies.”

There are no data showing that quality, safety, and efficacy in the delivery of care throughout the Partners system is better than other community hospitals or academic medical centers in the area. .

On January 1,2012, Kathleen Sebelius is supposed to establish a Shared Savings Programs through Accountable Care Organizations in which authorized providers contract with the Secretary of HHS to manage and coordinate care for Medicare beneficiaries.

Acceptable providers include group practices, networks of practices, hospital-physician partnerships and other groups that the Secretary deems appropriate.

Kathleen Sebelius has been empowered by President Obama’s healthcare reform law to use her discretion, without congressional oversight about who will be appropriate providers.

In order to be deemed appropriate ACOs must:

  1. Care for at least 5,000 patients.
  1. Have a sufficient number of primary care professionals.

The number of primary care providers has not been defined by Kathleen Sebelius at this time. The term primary care providers has been used rather than primary care physicians. It is a subtle point overlooked by many. A nurse practitioner or physician assistant is a provider. It is only a matter of time before a shortage of primary care physicians will be replaced by M.D. equivalent providers.

  1. Have defined processes to promote evidence-based medicine.

This is a slippery slope. There is constant change in definitions of the best evidence based medicine. There are also defects in clinical studies.

  1. Coordinate care through telehealth, remote patient monitoring and other enabling technologies.
  1. Meet patient-centered criteria established by the Secretary, such as the use of patient and caregiver assessments or the use of individualized care plans.

Kathleen Sebelius alone controls the money and makes the determinations for appropriate care. How would you feel if the government selected and bought your car or dress shirts? Big brother is getting bigger and bigger on President Obama’s watch.

Patients own their disease. Neither hospitals or physicians can control complications of chronic disease. They cannot control most readmissions. They should not be liable for those readmissions.

Hospital systems would love to hire physicians and own their intellectual property. They have been unsuccessful in multiple attempts. Previous attempts have cost them dearly.

Hospitals are confused and terrified of the potential financial consequences of ACOs. The rules are vague. Hospital are hesitant to invest to form an ACO.

President Obama wants to control every aspect of clinical medicine.

It is time to face the real issue explicitly. President Obama wants hospital systems to form integrated delivery systems. The ACO concept has not been well thoug
ht out by President Obama. The concept is a non- executable mess. President Obama wants them because he thinks knows best.

He wants to shift the responsibility for costs of insuring patients from the government to hospital systems with hospital systems controlling physicians. He wants the government to pay a fixed low price for medical care. Providers will have fight with each other over distribution of the funds.

Accountable Care Organizations are really HMOs in disguise.

“While we are at it, who is looking at the issue of plan design? If you create ACOs, you probably intend to limit consumer choice of physicians and doctors as part of their insurance plans. Do you mean to put the primary care doctors in the middle of that issue, restoring them to the hated "gatekeeper" role we saw during the era of managed care?

Physicians and hospital systems are starting to figure t out. The best way to fight a war is not to show up. Patients will lose.

Health policy wonks are telling hospitals to form ACOs because they will get privileged funding. Hospital systems are having difficulty understanding the logic.

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