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

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

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.

Happy Birthday Saskatchewan Medicare from the U.S. Supreme Court

Fifty years ago, on July 1, 1962, Saskatchewan introduced the first universal health insurance program in North America.   The United States Supreme Court’s decision upholding the Patient Protection and Affordable Care Act is a fitting birthday present.  Even though the Act was passed two years ago it now has legs.

Granted the American plan may be better for the insurance companies and private hospital chains than the population.  Nonetheless, it establishes that the Untied States can make health care accessible to all.  It is a step towards a more functional, equitable, democratic and sustainable system.

Congratulations to the CCF-NDP and those prairie activists who started a movement that has now spread across North America.

Government Incentives Build Empires

The American Medical News reports that Fitch, a global investment rating service, found that incentives paid to hospitals for the adoption of electronic health records (EHR) went to increased profits.  Fitch also concluded that:

“…the hospital companies analyzed in the report are not expected to use their positive cash flow to reduce debt. They are expecting acquisitions of other hospitals to remain a top priority. Fitch could not provide specifics on expected acquisition activity, but did say that Community and HCA had the most acquisition activity in 2011.”

A paradox in free market societies, especially the United Sates, the belly of the beast, is that pro-market advocates often support giving corporations incentives to meet public policy goals. One would assume in a capitalist economy private companies would make investments that boosted their revenue and profit.  If government payments are contingent upon EHR adoption it would seem a sound business decision to make those investments to get the money. Corporations adapt their behavior to attract business from other corporations, why should they be treated differently by public purchasers?

One result of using public dollars to finance private corporations is that we lose control over how that money is spent.  In a public health care system if the money is not needed for EHRs then it could be repurposed to improve access, or quality, or some other democratically decided upon goal, rather than financing corporate empires.

The Link to the American Medical News article is:

http://www.ama-assn.org/amednews/2012/05/14/bise0516.htm

US Health Insurance Truths Emerge

As the American government slithers through the mud with the health insurance industry towards universal health coverage certain truths about private insurance that supporters of public health care know, and remarkably, pro-market advocates continue to deny, are emerging.

Mark Bertolini, CEO Aetna Insurance, one of America’s largest health insurance companies, said that Obama’s Affordable Care Act was “the end of insurance companies, the way we’ve run the business in the past, is here”. The reason: the ban on medical underwriting, or companies being able to deny health insurance based on pre-existing conditions or risk factors.

For-profit health care, both insurance and delivery, like other businesses, makes money by limiting risk and maximizing returns. This profitability rule conflicts fundamentally with the belief that all members of society have a right to health care. A person’s health is inherently risky.

Bertolini’s statement indicates the obvious: the preferred business model for private corporations needs to change and companies need to be compensated by the public if forced to take on risk they would otherwise avoid. While countries with universal health coverage can make openings for private businesses, and the United States is doing its best to ensure the insurance industry benefits from increased population coverage, over time for-profit involvement increase s the cost and inefficiently of universal health care. Companies want to be compensated for providing services that go against their economic grain. This approach is unsustainable but it has the support of pro-market governments because….they are pro-market. There is no other benefit.

The link to the Bertolini story is: http://www.forbes.com/sites/rickungar/2012/02/23/single-payer-health-care-is-coming-to-america-are-we-ready/

Testing Expensive

A story about American medical laboratories needing to update their Information Systems (LIS) to match the rapid adoption of electronic medical records (EMR) in health care organizations caught my attention.  It said that lab managers should think of their LIS as they think of their cell phones and be ready to update to the latest’s gadgets and models as often as every year.

This pressure is driven by government policy that is rapidly expanding the use of EMRs in Health Maintenance Organizations, other primary care practices and the new Accountable Care Organizations being set up under the Affordable Care Act. Competition between laboratories to provide services to these organizations means that their LIS has to be compatible with a wide variety of EMRs.  This is a significant difficulty for American labs which has spawned another IT business sector: establishing compatibility between laboratory record systems and the different EMRs used multiple providers.

Canada has been going through a similar evolution, though with a few key differences.  All hospital laboratories in Canada are non-profit and rely on public funding.  In some provinces, like Nova Scotia, this has made the coordination of inpatient laboratory services across the province relatively easy.  Similarly, because all lab work is processed in the public system, all of a patient’s results are available through this integrated network. The problem has been linking the hospital labs to family medical practices: a simpler problem than trying to link multiple laboratory systems with multiple providers.  Nova Scotia has been able to set up a structure that allows community providers, as well as hospital services, easy access to all of a patients lab results.  All doctors’ offices have not yet taken advantage of this service, largely because of a lack of resources, but it is operational and waiting to be used.

A second story from the United States talked about the advertizing that laboratories, even in small states like New Hampshire, are doing to attract the business of the new Accountable Care organizations.  Once again Canada is largely spared this problem.  Even in the provinces with for-profit labs providing insured medically necessary services, while there are extra administrative and advertizing costs, they are small compared to the costs in the US.  These two examples from one health care sector go a long way to explain why American per capita health care costs are so much higher than ours, and both are higher than all other OECD countries.

These American examples come from articles in the Dark Daily, an electronic bulletin that provides news, analysis, trends and management innovations for clinical laboratories and pathology groups.