Taking Back Medical Decision Making and Control

When the young spine surgeon sat down, the room erupted in enthusiastic applause. The applause came from the “Blue Bloods” of spine, including former society presidents, founders and committee chairs.

Mark Curtis, M.D., was giving his thoughts about what he’d just heard from David Jacofsky, M.D., the head of The CORE Institute and founding partner of the National Orthopaedic and Spine Alliance (NOSA).

Jacofsky had just finished telling attendees at the 11th Spine Technology and Educational Group symposium in Los Cabo, Mexico, how NOSA was putting control back into the hands of surgeons when deciding what is best for patients. No more pre-approvals and fighting with insurers. Instead, surgeons were back to creating their own guidelines and protocols.

Jacofsky’s vision stands in startling contrast to the litany of insults of the past couple decades—declining reimbursements, onerous Milliman and insurance guidelines, more hours for less pay and, worst of all, erosion of the physician’s most precious asset…his oath to do what’s in the best interest of his patient.

Goodbye Gloom and Doom

Curtis said he and his young colleagues have all wondered about these things and what lay ahead in their future practice of surgery. He said that for the past 20 years, all you ever heard was “doom and gloom.”

For the last 30 years or so, physicians treated patients, sent out a bill and got paid whatever was asked and that was the business. “That for me is not a business that I’d ever want to be a part of now. I’m very optimistic and excited about what the next 20 years holds for me, ” said Curtis.

According to the panelists consisting of Jacofsky, Frank Phillips, M.D. and Roger Strode, JD, those next 20 years are going to look a lot different than the last 20 years.

Controlling Surgeon Populations

First, said Strode, an attorney specializing in hospital consolidations, surgeons are now working in an environment where large hospitals and systems are consolidating. There were almost 400 practice purchase deals concluded between 2010 and 2013 representing an overall deal value of over $30 billion. The percentage of physicians who consider themselves independent has gone down to 36%.

Strode said the large hospitals know they are not going to get paid based on “just cranking out volume, ” but are getting paid on outcomes, on gathering data, on controlling clinical costs and acquiring new capabilities. “And when I say acquiring new capabilities, what I really mean is, hospitals trying to get control of populations of physicians.”

Hospitals want to control surgeon populations in order to get referrals and to enforce standardized clinical choices on the employee physician. They are also striking direct deals with large employers to provide services for their employees.

Employers Discover Healthcare Costs

“Employers are becoming the largest consumers of healthcare, ” said Jacofsky.

Companies have spent hundreds of thousands of dollars to research how to save a quarter of a cent for a pound of raw material. “They had that data and they used it to save money. They never did that for healthcare before, but now they do.”

Companies are now calculating their true healthcare costs when they self-insure. He said employers are now able to rank physicians in their local areas based on documented costs for a given episodes of care.

The Surgeon-Driven Solution

Enter NOSA, an alliance of The CORE Institute, the Cleveland Clinic, the Rothman Institute and OrthoCarolina.

Instead of leaving it to the hospital, NOSA collected episode of care data for 27 procedures and shows employers the all-in cost of treating their employees and not charge a deductible, not charge co-pay, fly the patient and their family to one of the NOSA sites, put them up in a hotel and fly them back. NOSA shows the employers that the total cost of care—whether for the 90 days of treatment or over the following 12 months plus work-time missed—is less expensive than paying for that employee’s health insurance with the average local provider.

To make this work, Jacofsky said, you need to be able to standardize, reduce variation and predict the costs.

Standardized Episode-Based Pathways

First, he said, NOSA created a standardized episode-based pathway and took full financial risk for a flat, all-inclusive price. In the case, for example, of a total knee replacement, NOSA would charge a simple flat rate for a full episode of care—like $30, 000. “This sort of turns the entire control upside down because now we go to the hospital and we tell the hospital, ‘If you want us to bring these patients to you, this is how much per day we’ll pay you, and these are the benchmarks you need to hit in order for you as a hospital to get a quality bonus from us, ’ because we now control the entire bundle, ” said Jacofsky.

NOSA founders, he said, learned how to maintain their profit margins and to mitigate or control their risks. The key was to make sure that they minimized variability and variation in outcomes. Too much variability could have badly hurt NOSA because they really aren’t big enough to effectively spread risk among large numbers of people—like an insurance company.

“As a concept, it’s a target toward employers. It’s a target around bundled care. It’s a target around taking risks and it’s targeted around minimizing variation in a way that allows us to improve our margins, ” emphasized Jacofsky.

Assuming Risk and Control

In other words, NOSA took back control when they assumed risk. When the physicians assume the payer’s risk and provide certainty of the costs, the payer has no interest in managing the care of the patient. No more pre-approvals for surgery. No more phone calls to insurer medical directors begging to perform a procedure.

“The whole way we think about how we care for patients is completely changing, ” Jacofsky told his audience.

“For example, an insurer will pay to take care of a patient with back pain for a year for a fixed fee. What you do with them you decide. The insurer wants to approve your algorithm, because they want to know you’re not just going to avoid operating on people since you are already paid by diagnosis, but you show them an algorithm that they approve, as long as the patients are on that algorithm, that’s fine.”

What that means, says Jacofsky, is that surgeons are going to make the same amount of money for not operating on a patient as they would if they did operate on a patient.

Seizing Guidelines

When asked if the NOSA formula was a way to fight Milliman Guidelines, Jacofsky said, “Fighting guidelines is a complete and utter waste of time. They are here to stay, they are done. You will have to follow them. Either your insurance company’s going to tell you we’re not paying you because you did not follow the guideline, or you’re going need to be on guidelines for your hospital in order to maintain your privileges, or you need to be in a group like NOSA because we know that we can show you data that when a physician stops using the standardized protocols, the complications rates immediately start to go up.”

The question, said Jacofsky, is how do you define the guidelines? What do you do to make the guidelines surgeon-driven and decided by surgeons so that it’s not an insurance company that’s telling you this is the best way to do it?

Where’s the Fight?

“The reason that physicians have no power right now is because they have spent so much time around a table, in their practices, thinking that the fight is inside that room of doctors and not realizing that the fight is outside. Hospital administrators and insurance companies love that fact and encourage physicians to continue to banter and argue with each other.”

“So I think surgeons just need to redefine how they think about healthcare and if they continue to do what they’ve always done, they’ll continue to get what they always get, which is $0.06 on every $1 that’s spent on healthcare.”

Regaining Surgeon Credibility

Surgeons have been blamed for generating the expenses in the system, “which obviously is not true when you look at numbers. We’ve got less creditability and we don’t control things anymore, ” said Phillips.

Agreeing with Jacofsky, Phillips said the answer is not to fight the system on a patient-by-patient basis but rather, “Come up with a predictable approach. We don’t have predictability and that’s what payers hate. In spine it’s tough, joints it’s easier, it’s a more predictable disease with treatment pathways. Spine is all over the place. Predictability is the challenge.”

“Either the surgeons can get together and figure out what they want to standardize to or at some point the hospitals are going to do it, ” added Phillips.

Art or Algorithm

Anticipating the inevitable criticism that medicine can’t be turned into an algorithm, Phillips said the idea of the art of medicine “has really sort of been an excuse for surgeons just doing what they want. And spine’s been probably the most obvious example of that…now we have to prove that what we do works.”

Data is power. With that power, surgeons can evaluate risk, apply standard algorithms for episodes of care to assure quality and regain control over making decisions about what is in the best interest of the patient. One might call it the C=R+Q Formula. Control equals Risk plus Quality.

Those young surgeons leaving Cabo looked happy. The Blue Bloods looked a little puzzled, but they were applauding. It was a remarkable meeting in Cabo. It was a meeting of hope and restored possibilities.