MACRA’s Endgame

Students of economics and business know that one of the fundamental tenets of microeconomics is that firms will enter a marketplace until an equilibrium is reached whereby the economic profit in that market becomes zero. Once this happens, some firms will drop out of the market; others will innovate, reduce costs, and eak out an economic profit greater than zero. The cycle then repeats until a new equilibrium is reached, over, and over, and over. As these cycles move forward productivity increases and costs drop. Ultimately micro crosses over into macroeconomics. Consumption of goods increases and GDP rises.

So as we enter the era of MACRA and MIPS where are we headed as an industry? Are we going to suddenly violate the aforementioned economic laws? Of course not, MACRA is set-up to be budget neutral. In the short run, the winners in this competition take from the losers, but over time the losers will either consolidate with the winners, or elevate their game to match the winners. At that point, like a millennial soccer game, everyone is a winner and everyone’s reimbursement will reset back to the mean. A new equilibrium is reached.

So, although it may appear that CMS is offering a carrot to innovative practices and physicians to adapt the prescribed quality metrics, this appearance is an illusion. CMS is quietly coercing compliance to their metrics through fundamental economic principles.  This behavior from CMS would be somewhat justifiable if their metrics were linked to improving efficiency in the marketplace, but in most cases there is no evidence of this link.

Of course, when a new MACRA equilibrium is reached, we can expect CMS to further disrupt the system and add new hurdles; wash, rinse, repeat. Meanwhile, compliance with these hurdles will cost the industry a tremendous amount of money, to the point where they can no longer make an economic profit. CMS’s plan risks ultimate medicare market collapse.

So how long will the medical industry tolerate the government’s regulatory game before they wake up and a mutiny ensues? This is hard to predict. In my experience, physicians and hospital administrators tend not to be very economic or business savvy. Sooner or later as the losers get their act together and the equilibrium resets, the industry may realize CMS’s game.  If they don’t, they will follow CMS right over the cliff towards marketplace collapse.

I recall my Economics professor frequently quipping, “I can predict the future, I just can’t tell you when.”

💀Why MBA💀

The other week my employer was short staffed at a location that I read remotely for, so I volunteered to go read mammograms there for a week. By Friday I was sufficiently acclamated to the workflow that I had some time at lunch to exercise and decided to go for a walk.  Behind the hospital was a trashed country road with beer cans, bottles, and plastic bags littering the roadside.  After about 1/4 of a mile and being mindful of the surroundings of an abandoned home and a pair of purple Crocs by the side of the road, I passed a human skull in the brush about 25′ from the edge of the road.  As a radiologist, seeing a skull is unremarkable, so it took about two steps further for the context to sink in, look back, and further observe the remaining skeleton spread among the brush.

I explained to the 911 operator what I had found but not that I was an expert.  The responding officer walked over the dark spot in the earth where the soft tissues had melted into the ground, stepped on several ribs, and poked the skull with a pen stating, “That doesn’t look like a deer.”  It was at that point I told him what I did for a living and assured him what we were looking at was human, naming all the bones in an attempt to establish credibility, as well as the covered vascular stent that was laying in the stained earth.  After a moment of silence the officer said, “OK, I need to make some phone calls.”

It is likely that the body had been there for 6-9 months.  While a tragic metaphor, how many people had walked by and not perceived what was so plainly sensed from the edge of the road?  Who else had seen the purple Crocs and dismissed them as I first did as trash having fallen off the top of a car, not a pair of shoes belonging to a human laying in the brush.  Does my advocation give me a heightened sense of seeing human body parts beyond what others perceive?  My wife’s Rorschach cards suggest this is true and classify me as a homocidal sociopath, fortunately we have decided this test is not valid in a radiologist population.

Working on an MBA degree enhances professional mindfulness, effectively gaining a Sixth Sense.  Similar to the movie and life as a radiologist, you begin to walk through life seeing death.  But in an organizational context, you perceive the dying systems that surround you.  This power, as with any power, occasionally becomes a burden as you have departed from your blind cohort and no longer walk among the blissfully ignorant such as that responding police officer.

You realize dying organizations fill your professional life and you see them every day.  As in a scene from a zombie movie, you now have the tools to dispatch the parts of the organization that are rotten and no longer functional.  Conversely, you can also heal those parts that can be salvaged.  At times you are swarmed by people who do not have the same level of mindfulness and sometimes there is no communal ‘sense of urgency’ to move your organization forward.  An MBA gives you the confidence to escape those situations.

At some point you become aware that an MBA is a giant misnomer, you are now a Master of Organizational Sustainability.  Instead of chainsaw, crowbar, rifle, and katana; you have weapons of HR, Finance, Marketing, Behavior, Operations, Law, and Strategy to propel your organization forward.  You also are a master in the judo moves needed to sidestep floundering committees with no structure or mission; those committees that literally used to suck the life out of you by wasting your precious time on this earth.

Yet in another sense, you are professionally reborn.  A new dawn arises on your career with a refined vision of where you want to spend your professional time.  You invest more time in a grapevine of like-minded, cross-disciplinary, functional individuals who know how to get stuff done.  You understand that “Do Your Job” means being part of a winning team, the kind of dynasty that repeatedly surprises the competition.  You find winning organizations or start your own in the quest to innovate.  Supported by your new vision and mindful of your surroundings you step onto an new pathway, perhaps a pathway not yet traveled.

Reviving a Classic Model in Medicine

In the mid 1970’s Dr. George Engel pioneered the biopsychosocial model of medicine. The model is pretty self-explanatory, yet I used to get lectures about it as a child while I was trying to eat Honey Nut Cheerios and watch Spider-Man. You see, my father trained under Dr. Engle at the University of Rochester and has practiced behavioral neurology since that time. So as in a scene from A River Runs Through It, I learned about Dr. Engel’s gospel at an early age.

I am haunted by the report that our federal Department of Health and Human Services (HHS) is considering handicapping metrics for physicians who work in difficult psychosocial communities.

Only a federal bureaucrat would commission a study to validate Dr. Engel’s four-decade-old work. A lay reader of Wikipedia can easily understand the impact upon HHS or Medicare biomedical metrics for physicians who choose to serve challenging psychosocial communities. Yet the New England Journal of Medicine and Harvard School of Public Health weigh in suggesting we need further study and more metrics with increasing fudge factors.

There is no need to complicate the debate over our nation’s healthcare crisis with more noisy commentary.  These proposed and increasingly complicated metrics will require employed non-clinical PhD or MPHs to decipher. Buried in the middle of the NEJM text is the only significant statement in the entire piece, “we need to make strides in addressing the underlying issues themselves.”

Caring for a diabetic in Detroit is very different than Grosse Point. The biology is the same, however the psychosocial challenges are completely different. As a medical student I was quite fortunate to have a Henry Ford Hospital primary care continuity clinic in Detroit. My patients had psychosocial challenges a kid from the Brahmin Boston suburbs could never imagine. For example, residents of Grosse Point or Hingham do not contract syphilis when their spouse comes home from prison. Nor do they have transportation barriers in seeing their physician or diabetes nurse.

Rather than HHS further complicating their already arcane metrics with fudge factors for physicians in challenging communities (requiring data wonks to interpret), why not keep it simple and address the whole patient?  We need to provide support for psychosocial barriers to health. This would take money away from healthcare programs that folks in Hingham and Gross Point enjoy but there is no need to further disenfranchise those Americans who are already struggling.

Our Veterans Healthcare Administration remains the most enlightened healthcare system I have seen regarding Dr. Engel’s model.   By imbedding psychologists and social workers within primary care clinics, those PCPs can provide warm hand-offs to qualified professionals to break psychosocial barriers to a veteran’s health. This is a model that should be duplicated elsewhere in the public and private sectors as it improves access and reduces downstream costs of chronic diseases such as smoking, substance abuse,  diabetes, and obesity.  Unfortunately, it appears that HHS, NEJM, and Harvard are moving in a different direction.

Lung Cancer Screening’s Five Forces

I was struck by the tweets after the Center for Medicare Services’s (CMS) recent payment ruling on lung cancer screening. Some called the decision unfair, but here is my favorite:Untitled.png

This tweet, combined with the official response from the American College of Radiology, more clearly describes CMS’s decision.  Let’s review this decision using an economic industrial model known as Porter’s Five Forces.

Adapting this model and illustrated by the title figure, we can see that CMS has a monopoly over the Medicare population. The threat of health insurance substitutes in the over 65 population is almost nil. Customers (ie patients) effectively have no control over CMS’s decisions through the federal rule making process; their only recourse is a legislative fix that is lengthy and cumbersome. Finally, there will be no new entrants into the risky and expensive senior health insurance market, which is why Medicare was created in the first place.

Civilian hospitals that choose to offer lung cancer screening must compete using the inner circle of Industry Rivalry. Applicable tactics from Wikipedia include:

  • Sustainable competitive advantage through innovation
  • Level of advertising expense
  • Powerful competitive strategy
  • Firm concentration ratio

Innovation is perhaps the most important force that will allow hospitals to offer lung cancer screening to patients. Computer aided diagnosis, standardized reporting using patient centered Lung-RADS, and even some level of physician extender or automated draft reports and clinical registry entry will help practices keep costs down to a level that allows a small profit margin. In an urban market where there is a low concentration ratio, patients are more likely to find an innovative practice to provide this important service.  Rural patients may have to go without being screened.

Dr. McGinty and the ACR are correct; CMS’s decision will certainly limit access to this life and cost saving service. However from the perspective of CMS and the Five Forces, the decision is not unfair. The question of logic depends on your perspective and mission. As CMS’s primary mission is “an effective steward of public funds” , one might argue that their decision is logical as they are forcing innovation within the marketplace.

However, CMS’s position ignores the downstream costs of those who are not screened and must be treated for advanced stage lung cancer later. It also ignores the increased pain, suffering, morbidity, and mortality of advanced stage lung cancer.  Thus, a more holistic mission might be to allow access to lung cancer screening for ALL Medicare patients by restoring a higher level of reimbursement and reducing regulatory hurdles for this service.  From a temporal and patient centered perspective, CMS’s decision is completely illogical.

Finally, local practices would be wise to ignore the noisy commentary from our federal bureaucrats and push innovation locally, so that they remain sustainable and all patients will have access to quality care.