Quality Program Fee Increases and IHF Corporate Concentration

This year Independent Health Facilities (IHFs) in Ontario will start paying an annual administrative fee to cover the costs of their quality control program plus a new fee for the direct costs of each quality assessment. Prior to June 2012 the Ministry of Health had paid the College of Physicians and Surgeons out of Ministry funds to run the quality program.

The administrative fee per license is set at 860 dollars for the first year. The amount per license is not large but it is continuous.  Many IHFs also have more than one license, for instance, they may be licensed for diagnostic imaging and pulmonary function testing, so their yearly increase will be thousands of dollars. The administrative costs, plus the new fees for each assessment, are on top of increasing costs for electronic medical records, more reporting, more in-depth accreditation and quality control measures, newer technology and a host of costs.

Moving the quality control costs off the government books is a bit of a shell game. IHFs are primarily funded by OHIP payments, or in other words, public revenues. Having IHF operators directly pay for quality programs means they are going to request more money from OHIP. Either way it comes from the public purse.

The government is hoping that the IHF operators will simply absorb the costs.  Under current rules the extra charges cannot be passed onto patients because of the ban on extra billing.  Operators could ask for increased fees-for-services but in the short-term this seems unlikely given the recent fee cuts imposed by the government. Larger corporations with reserves and the ability to reduce costs through multi-site efficiencies will ride out the increases and recoup losses in future fee negotiations. Many smaller operators will simply feel the most pain.

An article in the October 2012 edition of Health Affairs pointed out an increased quality cost on the clinical side.  The authors make the argument that under the fee-for-service payment structure for surgeries in the United States improving quality outcomes can lead to decreased revenues.  Fewer complications from better quality control lead to fewer billing opportunities per surgery plus extra costs in prevention.  The logic underlying this research finding could easily be applied to other fee-for-service health environments, including most IHFs in Ontario.

In case I sound like a defender of millionaire IHF operators that is certainly not my intention. Nor do I think that quality assessment programs are not needed. They obviously are: though it would probably be better if the College did not run them with its conflict of interest – doctors run the College and are responsible for quality in the clinics – and the College’s history of questionable quality practices, at least in the laboratory sector where they are also in charge of quality.

The point is that the long-term provision of for-profit health services by small physician run facilities is a non-starter. As the costs increase to ensure quality it is more challenging for smaller operators.  Smaller operators also pay a disproportionately larger share of their expenses on the process of licensing and maintaining a separate administration to oversee the private market.  It is telling that in the fact sheet outlining the increased fees the last point discusses how IHF operators can give up their licenses. Licenses usually don’t disappear; they are taken over by other operators, more often than not IHF chains which are, in turn, often part of a larger health care conglomerates.

Small physician-run laboratories have long since moved into corporate giants, individual doctors’ practices are quickly becoming an historical artifact and IHF s are  amalgamating into fewer and larger corporations.  The dynamics of quality control and regulation among for-profit providers lead to long-term, non-competitive, corporate domination of these sectors.

The Health Affairs article can be found at: http://content.healthaffairs.org/content/early/2012/10/12/hlthaff.2011.0605

Quality Problems Plague Britain’s Largest Privatized Laboratory

The Guardian newspaper reported a decline in quality at the Kings College Hospital trust and the St. Thomas Hospital trust’s recently privatized pathology services.

The report cited in the article found an increase in clinical ”incidents” in the first year of the for-profit laboratories operations, and failure to reach “ agreed targets for the “turnaround times” for processing pathology tests 46 times in 2011, with “critical risk levels” breached 14 times.”

Serco, the multinational outsourcing corporation involved in the private laboratory, promised to upgrade the computer system which has also not gone well.

“In January 2012 a patient was given “inappropriate blood” when their medical history was not “flagged” up by the system. In May 2012 patients’ kidney damage results were calculated incorrectly after a “software fault”. The September 2011 performance review complains of the pre-operative blood transfusion interface failing at the same time every week… (GSTS’, the public –private-partnership running the for-profit lab) annual accounts show £2.7 million had to be written off in 2011 due to “potential clinical uncertainty” caused by its new [computer] system.”

The new for-profit lab has continued to lose money.  The joint venture lost 6 million pounds in 2011 which had to be covered by payments from the public hospitals involved in the partnership.  In other words, funding was taken from other public programs to pay for losses in the privatized laboratory services.

GSTS, the joint venture running the labs, is a partnership between Serco and the two hospital trusts. Serco is a British transnational company with revenues of 4.3 billion pounds, a 2009 profit of 258 million pounds and 70,000 employees. Government contracts account for most of its income.

While it is still early in the process, the largest laboratory privatization in Britain has started out poorly.

The information was uncovered by Corporate Watch, an organization dedicated to critical corporate research and is  “based on Freedom of Information disclosures, leaked documents, interviews with staff and an analysis of the company’s accounts.” Their report and the coverage in The Guardian can be found at:

http://www.corporatewatch.org/?lid=4550

http://www.guardian.co.uk/society/2012/sep/30/pathology-labs-takeover-failures

The Risks of For-Profit Community Care

With the sale of the Shouldice Clinic to a health care conglomerate it is useful to review some of the literature comparing for-profit hospitals to non-profit hospitals. The results show that:

1)      there is a higher risk of death in for-profit hospitals, http://www.cmaj.ca/content/166/11/1399.full :

2)      private for-profit hospitals result in higher payments for care than private not-for-profit hospitals,  http://www.cmaj.ca/content/170/12/1817.full, and:

3)      on average, not-for-profit nursing homes deliver higher quality care than do for-profit nursing homes,  http://www.bmj.com/content/339/bmj.b2732.abstract.

These studies stand-out because of their very large sample sizes.  All of the results are based on multiple peer-reviewed studies ending up with sample sizes of dozens to thousands of hospitals and hundreds of thousands to millions of patients.  While there are individual studies with contrary results the strong trends are clear: deaths and costs increase in for-profit hospitals and in for-profit nursing homes quality decreases. This is not a presumption of problems with private hospitals, as Andre Picard writing in the Globe and Mail recently stated, but a well-researched fact.

While studies with similar breadth have not been done on community health clinics and primary care services, the hospital data is so strongly in favour of public non-profit provision it does beg the question, why experiment with for-profit community services?

Monitoring Favours For-Profit Health Care

A new study by the Health Care Compliance Association (HCCA) in the United States found that non-profit health care institutions are audited by Medicare more often than their for-profit counterparts: 6 times per year compared to 4 for the for-profit facilities.  47% of non-profits were also audited by more than one government agency compared to only 27% of the for-profits.

No explanation was given for these findings, but the authors found the results “surprising”. They are correct: it makes no sense.  Media headlines in the last year include many reports of fraud by major drug companies, hundreds of millions of dollars in fines paid by private laboratory corporations and for-profit hospital chains that have been penalized for a variety of legal indiscretions.

Also, most peer-reviewed studies comparing quality in the two sectors find that you live longer and have fewer complications in non-profit hospitals and that for-profit nursing homes violate regulations more often.

One of the arguments made in support of more private profit in health care is that monitoring will increase.  The corporations will “row” and the state will “steer”.  In the country that invented this metaphor, that clearly is not the case.  The corporations steer, the state pays and it is not clear to many who need health care that anyone is rowing.

Canada also has a playing field tilted towards private firms. For-profit corporations are sheltered by privacy laws while public institutions often have their quality ratings published on web sites. Private corporations use surpluses, derived from public payments, to lobby the government, speak publicly about the value of private health care and fund more private firms.

The HCCA findings add another dimension to our understanding of the negative impact of mixed economies in the provision of essential services.  The uneven monitoring adds extra cost to the public non-profit sector and decreases pressure on corporations most likely to cause a problem.  The promise of monitoring safeguards becomes more than a cover for expanded private provision; it becomes a lever pushing in that direction.

Follow this link to read the full HCCA report:

http://www.hcca-info.org/Resources/View/ArticleId/817/Auditing-the-Auditors.aspx

Methadone Clinic Limits Doctor’s Employment

One of Ontario’s little known private secrets is that most methadone, a staple of opiate addiction treatment, is primarily provided by for-profit clinics. Last week a doctor who works in one of these private clinics casually told me that her contract with the clinic forbade her from working for another methadone provider.

The context for the comment was that a clinic was looking for a part-time physician and she could not apply for the job. I guess her “employer” is concerned that she might steer some of her patients, and their money, to the other clinic.

This artificial barrier to the efficient use of skilled medical professionals increases public cost. Many methadone doctors work part-time.  They undergo an extensive training program to gain their methadone licence and are in short supply.  It is easy to imagine that a doctor working a part-time shift at one clinic might have a schedule that fits a part-time shift at another clinic that needs a physician. There is an obvious solution to this employment mismatch which works for the doctor, the clinic with the  short-staffed shift and the provision of methadone treatment, but is not workable because a chain of methadone clinics wants to protect its business.

And most of the money being played with is public.  OHIP, Ontario’s public health insurer, pays for the doctors’ visits, drug tests and other medical care.  The Ministry of Health covers the cost of the drug and disability insurance, welfare or seniors’ drug plans, all public money, pay most of the dispensing fees, which are in the range of twelve dollars a dose. The bottom line is that this is a publicly funded program primarily delivered for-profit chains who create restrictions that decrease the efficient use of the resources needed to provide a necessary service.

A similar contractual difficulty limiting good quality health care came to light a few years ago when private companies were increasing their presence in the delivery of publicly funded home care. Comcare, a for-profit in the same business conglomerate as Dynacare, one of Canada’s three multinational medical laboratory companies, had an employment contract clause forbidding its employees from talking about their policies and procedures.  This gag clause works against a central safety mechanism in our health care system: the moral obligation, and for registered professions, for example, nurses, doctors and therapists, the legal obligation to report dangerous conditions.

Contracts like these add cost and dysfunction to our heath care system.  Unfortunately I am sure they are only the tip of the iceberg. Rather than uncovering snippets of information over coffee, a basic accountability stipulation would be that companies receiving public money must make all their contracts affecting staff and the provision of care public.  After all we are now posting union contracts, management pay scales and hand washing statistics for public institutions on-line.  Lets level the playing field.

 

GlaxoSmithKline Sets Record with 3 Billion Dollar Fine

And the list goes on.  It is no secret that many for-profit health companies in the United States are regularly fined for various forms of fraud, usually cheating Medicare or Medicaid, or jeopardizing patients’ health, or both.  This is the second big one I have read about this  week, the other being cardiac surgeons working for the hospital chain HCA performing unnecessary procedures on up  50%  of patients.

The lower level of for-profit involvement in Canada’s health care system has meant less blatant fraud, though there have been prosecutions and legions of questionable practices involving private companies ‘bonusing’ doctors or patients to increase business: activities which both increase cost and jeopardize care.  It just goes with the turf of paying for private profit to provide what should be a collective benefit.

From the August 6, 2012 posting in the The Chronicle of Higher Education:

Academic Researchers Escape Scrutiny in Glaxo Fraud Settlement

By Paul Basken

Federal prosecutors triumphantly announced the nation’s largest-ever health-care-fraud settlement last month, when the pharmaceutical maker GlaxoSmithKline admitted marketing its drugs for unapproved purposes [3 billion dollar fine].

Virtually unpublicized was a key detail: One of the central pieces of evidence in the case was a 2001 scientific journal article listing 22 authors, most of them university researchers, that was actually written by Glaxo-hired authors to overstate the benefits and understate the risks of a highly profitable Glaxo drug.

For years, critics had been pointing out flaws in that study of the drug, the antidepressant Paxil, and warning that the study’s recommendation of the use of Paxil on children had dangerously misrepresented data and hidden information indicating that the drug promoted suicidal behavior among teenagers………

In the settlement announced last month, Glaxo agreed to plead guilty to two counts concerning the false marketing of Paxil and another antidepressant, Wellbutrin, and one count of failing to report safety data about Avandia, a diabetes drug.

To read the full article go to http://chronicle.com/article/Academic-Researchers-Escape/133325/?key=SW53Il9vZXNHYnpgOGtBNW1VYSBrOEt3YCEQbS9zbltcFQ.

For further comment read the post on Fear and Loathing in Bioethics http://loathingbioethics.blogspot.ca/2012/08/gsk-admits-papers-were-fraudulent-but.html.

Competition and Quality

I submitted the following comment to a blog dedicated to medical laboratory quality.  One of the posts argued that more competition would improve quality.  The blog can be found at:

http://www.medicallaboratoryquality.com

The argument that more competition would increase laboratory quality is, at best, weak.  Apple may have a more consumer friendly product, but is it of better quality? Blackberries work pretty well. More to the point, there are many examples in computers, cars, hedge funds and children’s toys, all competitive sectors, that have produced terrible quality: think pinto, Microsoft millennium 2000, dell batteries, firestone tires and cadmium.  Further to the point, health care is not like other consumer products and it is hard to argue sectors of health care that are not competitive, like hospitals or the NHS have poorer quality, though they certainly can be improved.  In the 1970’s when Ontario’s community laboratory sector was very competitive quality was poor, so much so that a series of conservative governments felt compelled to bring in regulations to improve quality and reduce competition.  Your example of Newfoundland pathology testing ignores the fact that similar problems have occurred in the United States with a competitive laboratory market and in Ontario, Manitoba and BC with multiple laboratory providers. The effect of more competition in the provinces with multiple laboratory providers has been increased secrecy, a barrier to improved quality, and decreased pre-analytic and post analytic quality.  Based on the evidence it is hard to sustain the argument that more competition will increase quality: the sounder argument
makes the opposite point.

Secrecy Hurts Patient

Nick Bala, a Queen’s university professor who complained to the College of Physicians and Surgeons of Ontario about a pathologist for misdiagnosis of his skin cancer, came to my Kingston book launch. He wanted to give me the details of his case and thank me for helping shed light on our medical laboratory system.

One of the factors that contributed to Mr. Bala’s misdiagnosis was that CML HealthCare, the for-profit company that employed the pathologist, misplaced the original biopsy slide. This raises a series of questions. How often do these organizational mistakes occur? How serious are they? Are patients notified of possible errors? Is the College informed or interested?

In Ontario a quality assure program funded by the Ministry of Health and administered by the Ontario Medical Association (OMA) does formal quality testing of medical laboratories. By formal I mean that it is both a structured program and that it uses a formalized testing routine: they notify labs of the impending test and identify the test samples. Even with this advance knowledge about 1% of the tests have problems. Considering that there are millions of tests performed annually this means that an alarming number of tests may not provide a reliable result: but we do not know serious the problem is.

The OMA’s program is shielded by provincial legislation and only provides general information on laboratory quality. The secrecy in the quality program is reflected in the secrecy maintained by Ontario’s Ministry of Health on laboratory policy. As often as not efforts to obtain information from the government on the laboratory sector are meant with silence or a barrage of objections from ministry officials and company lawyers.

Nick Bala raises a very valid point: it is time to shed light on this sector of health care delivery. Laboratories are a core service providing key information that affects patient care and we know very little about them. Doctors and the for-profit corporations have often resisted opening up the discussion, probably because it would restrict their power and income, but it is more necessary than ever with the new push for more for-profit delivery of our publicly funded health care.

Kingston Book Launch

Kingston Book Launch – False Positive:
Private Profit in Canada’s Medical Laboratories

Join me for an informal discussion on my book and the politics of health care and laboratory services in Canada.

Tuesday, April 12, 7–p.m.
Novel Idea Bookstore,
156 Princess Street (corner of Bagot),
Kingston, Ontario.

Automation and Private Labs

I received my first comment on False Positive from an official reviewer. The reader was surprised at the private sectors reluctance to embrace new technologies. I also was interested that this came out so clearly; though since these decisions are primarily related to the funding incentives it should have been expected.

Laboratory services, as with most physician based for-profit medical services, including imaging, surgeries, and primary care chains, are primarily funded by fee-for-service. This would tend to encourage more services rather than the global funding of hospitals which would encourage more efficient testing or the avoidance of tests.

In the case of Ontario’s laboratory services it is more nuanced than just quantity driven by fee-for-service. It was the inability of this kind of payment system to adapt to changes in technology. The fee-for-service structure proved unable to easily incorporate more efficient procedures. The result is a reliance in the private sector on outmoded but financially more rewarding processes.

This history raises significant concerns about recent moves by provincial governments’ to pay acute care hospitals based on how many surgeries or other services they provide. Whether it is called patent focused or activity based funding it is still fee-for-service and it will tend to skew the provision of services to the most highly rewarded and away from improvements in quality or prevention, which is usually the preferred option for a patient.

This in another instance when it is important to visit lessons from history. In 1969 Ontario introduced global budgeting for hospitals, including their laboratory services, with the stated goals of making them more cost-effective and more flexible to meet local health needs. Compared to the behaviour of the for-profit laboratory corporations it worked and there are no new reasons for reversing this policy.