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.

Medicine’s Trilemma

This past year, The Economist published a series of Six Big Ideas that define economics today. One piece, entitled Two out of Three Ain’t Bad, discussed the macroeconomic concept of the trilemma.   The article begins:

Hillel the Elder, a first-century religious leader, was asked to summarize the Torah while standing on one leg. “That which is hateful to you, do not do to your fellow. That is the whole Torah; the rest is commentary,” he replied. Michael Klein, of Tufts University, has written that the insights of international macroeconomics (the study of trade, the balance-of-payments, exchange rates and so on) might be similarly distilled: “Governments face the policy trilemma; the rest is commentary.”

In the field of macroeconomics, policy makers must understand the complicated relationships between interest rates, exchange rates, and capital flows. The self-interested decisions made by countries impact the economies of others. Fortunately, medicine is much simpler.

In a previous posting, I discussed the operational priorities of cost, quality, timeliness, and flexibility. If we substitute the term “access” to represent a combination of timeliness and flexibility, we can construct a similar trilemma for medicine. This medical trilemma would consist of cost, quality, and access. It would look something like this:

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The key to a trilemma is that an operator must pick one side of the triangle to operate along. The operational priority at the third point cannot be directly influenced; it is a dependent variable that only responds to inputs from the chosen side of the trilemma.

A medical trilemma could unify and support discussions regarding operations in medicine. Much of the debate in health care today argues one of these points in isolation, which is reductionistic, noisy, and fails to produce sustainable solutions.

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If viewed through the lens of the trilemma, it becomes clear that that we need to focus on costs and access. The increasing financial burden that Americans spend on healthcare is already unsustainable; it continues to consume up to an unhealthy 20% of GDP. Within families, difficult choices must be made with limited resources. On a national scale, this healthcare expense siphons money away from our schools, defense, and infrastructure. Costs must be contained, and there is increasing awareness within radiology that perhaps costs have been ignored for too long.

Regarding access, the demographics of the health care consumer are not favorable. By now we should all be familiar with the concept of our aging population and the fact that demand for healthcare is likely to outstrip supply in the coming decades. So where does that leave quality? I believe that quality will be the dependent variable left to float.

I am not suggesting we enact “death panels” or anything that inflammatory. I am simply suggesting that future gains in quality must be viewed through the lenses and operational priorities of cost and access. We must focus on operating along the base of the depicted trilemma given our current American demographic and financial tensions.

For example, many pharmaceutical companies are currently developing personalized medicine solutions regardless of expense. This strategy may not be sustainable in the long run. A $250,000 immunotherapy that yields a few additional weeks of sickness would not be supported by this trilemma.

Given the constraints in America today, two out of three is not bad. In the future, perhaps we will apply this model to other examples in medicine and decide what is important and what is noisy “commentary”.

Am I Adding Value?

There is a great deal of paranoia among radiologists about being commodities.  This concern seems to surface repeatedly in journals and at open microphone sessions at the American College of Radiology annual meeting. Yet, the idea of a radiologist being a commodity is a fallacy due to a fundamental misunderstanding of the definition of a commodity.  A commodity is a fungible object that can be traded in a market with low transaction costs.  The two operative concepts in this definition are “fungible” and “low transaction costs”.

Our board certification process would have the appearance of making us fungible.  Is one board certified or CAQ’d radiologist the same as the next?  It depends on whom you ask.  A professional physician, nurse, or technologist knows this question is never true.  However I have first hand experience that schools teach hospital administrators that physicians are fungible.

A medical professional can quickly evaluate the manner in which a colleague cares for a patient and it is frequently unique.  However it take years to develop these perceptive skills.  For example, if you want to know who the best OB/GYN is in a town, ask the other physicians and nurses, you’ll probably find that they cluster with one or two choices.  A recent Harvard Business Review article entitled Why The Best Hospitals Are Managed by Doctors highlights the fact that medical professionals “know what ‘good’ looks like”.  The knowledge gap between experienced medical professionals and academically trained hospital administrators is tremendous.

A typical hospital administrator with no first hand knowledge of patient care and quality, frequently makes mistakes.  Administrators tend to rely on process metrics that only tell a part of the story and do not understand the concept of true quality. If we do switch into a management perspective and value radiologists along the operational priorities of costs, quality, flexibility, and timeliness; no two are alike.  For an administrator to think that one radiologist can be traded for another without a change in operations would be a grave mistake.

Commodities are traded for pennies; the trading of physicians is expensive and low transaction costs are not present in the marketplace.  Headhunter fees, moving costs, time spent on-boarding, credentialing, and decreased clinical productivity during the transition easily add up to over $100,000 for the typical physician.  Management must account for these costs when thinking of making a change.  However if an astute manager is threatening to replace a group or individual and is appropriately applying these concepts, then that incumbent needs to realize that they are not adding enough value and are in severe jeopardy.

Radiologists need to stop being concerned about being commodities and instead start to ask themselves about being expendable.  Every time a radiologist signs a report they need to ask, “Am I adding value?” If not and if done frequently, there are two possible outcomes. First that service may disappear entirely, which is why we have Appropriateness Criteria and computerized decision support. Alternatively for truly needed services, substitutions from other sources outside of radiology may be made.

There are many substitutions already present as well as new ones entering the marketplace.  Other specialists who want to read their own imaging exams are an example radiologists have continuously battled. The financially motivated behavior of self-referral is a negative economic force helping to keep this substitution in check.  Lately, artificial intelligence (AI) is another substitution that has received much attention.  In areas where radiologists are not adding value, AI is poised to replace that task.

A small amount of paranoia is healthy.  It forces individuals to survey their environment and make changes that improve survival.  Radiologists have never been commodities, but they do need to broaden their perception of the environment and marketplace.  If we do not want to end up like our former transcriptionists, radiologists need to perpetually ask, “Am I adding value?”

Patient Centered Screening for Lung Cancer

This month the Journal of the American College of Radiology features an outstanding article describing barriers to lung cancer screening in the context of behavioral economics. This article offers a nice complementary perspective to Porter’s Five Forces where lung cancer screening barriers are analyzed using an industrial economic model.

The pictured ACR Lung-RADS matrix is deceiving in its simplicity.  This graphic represents decades of research, advocacy, and hard work from ACR members, staff, government, and academic partners. In my experience, most radiologists focus on the column labeled “Management”. However, few customers, either internal or external, appreciate the weight behind the management recommendations. Their attention, understandably so, tends to focus on the immediate desire to determine malignancy. Radiologists may do well to adopt a patient centered perspective and shift their focus to the column labeled “Probability of Malignancy”. After all, this information speaks to the underlying clinical concern.

Prediction and decision making is fraught with errors; breaking down future management into probabilities is the best way to combat errors and biases. Equipped with the probability information, customers are able to make the most informed decision about future management, thus combating the biases identified in the JACR article. Patients with a high deductible health plan can make rational decisions about when to schedule their next screening exam, if at all. Incorporating the probability information into a standardized Lung-RADS template requires no additional work for the radiologist after a one-time IT investment.

Shared decision making and patient centered care are important concepts changing the landscape of medicine. By increasing patient engagement, we expect better compliance and outcomes. Most customers do not expect radiology participation in this effort yet engagement with a radiologist has a unique power to impact patient experience. By delivering a more patient centered approach to lung cancer screening, we can impress our customers with the unexpected value of our expertise. Delivering probability information to our customers can enhance the value of radiology, rational acceptance of collective management recommendations, and improved morbidity and mortality.

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.