JACC: Will hospital administrators focus on cost conflicts with employed docs?
Hospital employment raises an “important concern,” because “[h]ospital administrators must be concerned with their costs. That is their fiduciary duty,” wrote Strateinko from Cardiac and Vascular Associates at the Chattanooga Heart, Lung and Vascular Center in Chattanooga, Tenn.
Yet, he made a distinction between institutional costs and global healthcare costs. “One determines hospital profitability and the other healthcare system sustainability. We should not confuse decreasing hospital costs with savings to the healthcare system,” he wrote, adding this question: “If hospital administrators appropriately protect the profitability of the hospital, who will protect the medical interest of the patient when the two are in conflict?”
He placed this responsibility on the shoulders of the physician, but questions whether hospital employment will cause the physician to lose that “balance of authority” and “autonomy,” and therefore, “will the physician be able to champion the patient’s interest effectively?”
He explained that healthcare reform has a role in these changes. “The objective of the first phase of PPACA is to insure those patients who are not currently insured, and will not result in any immediate reduction in costs,” explained Strateinko, who stressed that he supports the Obama Administration vision for reform.
“The second phase of PPACA is cost-containment, which may get implemented around 2014, when there has to be contracture in the total health expenditure,” says Stratienko. He supports this second phase of cost reductions, in particular, because “we cannot continue on the current path of spending 16 percent of our gross domestic product on healthcare, as it puts America at an immense disadvantage in the global economy.”
“Healthcare is changing from a small business model to a very large business model with corporate leaders organizing how healthcare is delivered, and we may lose the focus on improving patient outcomes in this transition,” he cautions. “The economic reality of decreasing reimbursements combined with the current political landscape, which will incentivize large organizations seeking to fulfill the regulations of accountable care organizations [ACOs], has caused larger independent practices to merge more quickly with hospitals and integrated delivery networks.”
For instance, from 2007 to 2010 in Tennessee, the Centers for Medicare & Medicaid Services (CMS) reduced office-based myocardial perfusion imaging (MPI) fees by 23 percent and echocardiography fees by 31 percent. However, Stratienko wrote, CMS has increased reimbursements for hospital-based outpatient MPI by 31 percent and echocardiography fees by 22 percent during the same interval, and thus has created a large disparity in payments for identical services performed in different venues.
However, he predicted that the increased reimbursements in the hospital are not likely to continue due to the limited CMS funds, so those employed physicians who are currently earning more will likely endure contract cuts down the line.
“Hospital administrators seem to be the ones who are predominantly forming ACOs, and they will likely have no option but to cut physician salaries,” Stratienko concluded. “I fear that we, as cardiologists, have made a Faustian deal. In order to keep our practices solvent, we’ve entered into contracts with the hospitals that could hurt us and potentially our patient outcomes when the U.S. healthcare dollars contract in 2014.”