Truth. Capitation did not improve #quality. At a Harvard business course a professor shared how to hack doctor brains: none of us like to be told we are “average” so if you show a doctor data or a graph of “average” or “below average” (on RVUs) they will do their best to get into a top quartile. This describes precisely how my managers set priorities or “motivated” via shaming of “you are not pulling your weight.” Those with MBAs who spent their 20s partying are a lot savvier than those of us who spent our 20s on 30-hour call nights in hospitals. I was late to wisening up, getting my MBA in my 40s in order to understand American capitalism and the American #healthcare industry. In the U.S., driving outcomes it is much less about understanding molecular basis of diseases or even social determinants of health. Instread, the the key to driving outcomes at scale in American healthcare is understanding budgets, revenue, business models, operations, value chain. How do we change these perverse incentives? Typically, those currently on hospital boards set the agenda and priorities per current payment realities. Change will not come from there. The big players are big as they have business models of profit from the status quo. These big players also have the deep pockets for lobbying to buy votes, especially so since Citizens United. So government is also not a reliable source of change nor did the writers of the Constitution really want government as a source of change. As 4th of July approaches, I wonder if the founders would still consider this the same country? I used to be big on systems, that too ones that are publicly funded, to drive population health. What I see instead are unequal systems that are widening disparities. When in the public sector I saw a lot of insider vendor deals siphoning taxpayer money away from recipients to private profit. So I’ve really paused to re-examine a lot of my beliefs and assumptions as well as what that means on how I vote. I upset some friends over this. I look at outcomes over time and I examine my past beliefs and decisions to consider how to be wiser and more effective in the future.
Tell me I’m wrong… Medicine is a volume business. Medicine is not a quality business. 💵💵💵💵💵💵💵💵💵💵💵💵💵💵💵💵💵 This is true at baseline, when private equity gets involved the treadmill gets faster and the incline gets steeper. If it was a quality based business we wouldn’t be reading stories like the Baylor cardiac surgeons running multiple rooms with unqualified staff. We’re saying more, more, more when we should be saying better, better, better. 🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️🏃♂️ How does the model change? The business model has changed from pure fee for service with bundled payments, accountable care organizations and pay for performance. Capitation has limited the amount of money that can be collected from a patient regardless of the number of services performed. But many of these programs are not incentivizing quality, they are punitive. This leads to decreased satisfaction, stress, burnout and a spiral of negative momentum. It has led to a defensive posture when approaching patient care. How do we turn the table? How do we make it positive? 😀😀😀😀😀😀😀😀😀😃😃😃😃😃😃 I don’t have the answers but I’m sure you do. What has worked in your corner of healthcare and what hasn’t? Is there any example where PE improved the delivery of care? I want to learn.
Having worked with a number of physicians over the course of my US healthcare career, I would say it's the 80/20 rule. 80% want to provide a quality service at a fair price. 20% are driven by financial incentive and walk a very fine line on insurance fraud. The fine line of insurance fraud is the out-of-network strategy that some PE investors also pursue. The challenge is really the 20% because we are left trying to strike a balance that rewards quality and prevents financial abuse. We've been trying for decades to find the right balance. I wish that we would specifically address those 20% separately so that we can relax the controls on the system as a whole and empower the remaining 80% of physicians. We have the data to do it.
The fault lies with ourselves. What's the progress with VBP (value based programs)? It's meant to improve quality and deliver value (an ambiguous definition that's translated into dubious measurable metrics). In 1963, a published paper declared that healthcare couldn't be a free market product that's made out to be today. "The special economic problems of medical care can be explained as adaptations to the existence of uncertainty in the incidence of disease and the efficacy of treatment.” ~~ in 'Uncertainty and the Welfare Economics of Medical Care' by Kenneth Arrow (an economist who went on to win the Nobel Prize a decade later). It's no longer an issue of free markets but one of regulatory capture in a political economy that is fueled by lobbying. As with any market failure, there are negative externalities. However, in this case it is paid for by those who can't afford the healthcare product and have to live without it. It is a market where the decision-makers do not pay the price for being wrong. Know of a legislator who has the same healthcare program quality as that of Medicaid? Covid changed it all. As Cassius said - "The fault, dear Brutus, is not in our stars, But in ourselves, that we are underlings." We elect them.
What about MDs who learn about budgets, revenue, business models, operations, and value chain? Wouldn't we be well positioned to lead medicine into a better place? What do you think as an MD/MBA?
How should doctors or recent medical graduates try to contribute in terms of changing the system? Do we start getting an MBA or work and just understand a healthcare system’s priorities?
Addressing the perverse incentives in the healthcare system is vital. 🔥 ↗️This often overlooked issue needs more attention from industry leaders.
Edward Caja
2w
Perhaps by realizing that human nature is something that will NOT be changed, and act in accord (as opposed to thinking that human nature can be ignored 'because this is medicine').
Medicine is a business where someone else buries your mistakes.
James Potts
2w
Set standards & qualifications & stick with them from environmental services up..no excuses
THE problem with medicine: the guy in the suit.
Founder & CEO at ORET Healthcare Enterprise
2wUmbereen S. Nehal, MD, MPH, MBA, I completely agree with your thought-provoking post. The volume-driven, profit-maximizing healthcare system in the U.S. prioritizes financial outcomes over patient health, leading to perverse incentives that worsen care quality. For instance, physicians are pressured to provide high-margin reactive care instead of preventive care, push unnecessary tests to increase billing, and some insurance companies deny necessary but expensive treatments to maximize profit. Focusing on short-term financial gains contributes to harmful patient care policies, and beneficiaries of the status quo continuously resist change. We need more patient-centered clinicians with business acumen to lead healthcare organizations, realigning incentives to prioritize patient outcomes and deliver high-quality care.