Primary Care

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Wal-mart to be the biggest health retailer in the nation?

November 9, 2011 in Current Events, Nonphysician Clinicians | 1 comment

Hot off the press:

Walmart announced it would stop offering health insurance benefits to new part-time employees, the retailer sent out a request for information seeking partners to help it “dramatically … lower the cost of healthcare … by becoming the largest provider of primary healthcare services in the nation.”

Why would Wal-mart want to provide health care services?  Here are some reasons:

  • Many health care services are high margin.
  • With some exceptions (e.g., Kaiser), most current health care service providers do not take advantage of economies of scale, particularly with respect to information technology (IT) services.
  • Wal-mart could take advantage of their current IT infrastructure to readily create EHR.  In fact, Walmart has offered commercial EHR software & services to healthcare providers since 2009.
  • This effort builds on the success of walk-in clinics at stores like CVS (MinuteClinic).  These efforts increase brand loyalty (people usually have a good opinion of the places they get health care) and increases store traffic.  Further, between 2007 and 2009 retail clinic use increased 10-fold.
  • Wal-mart recently dropped health insurance for its employees.  This could be a public relations mechanism to provide some care to these employees.
  • Wal-mart recently dropped health insurance for its employees.  These people will need low cost primary medical care since insurance won’t cover these services.
  • It could create a service provider which is national in scope an already has an existing distribution network.  Wal-mart has 3,800 stores nationwide that it can use to house these clinical services.
  • Wal-mart already delivers prescriptions drugs through its low cost generics program and Medicare Part D drug plan.

The Wall Street Journal reports that Wal-mart is actively seeking partners for its health care expansion.  I would assume that Wal-mart with staff the clinics with low-cost nurse practitioners (NPs) and physician assistants (PAs).

Although some health reformers have aimed to bolster the role of primary care providers, Wal-mart’s actions may help NPs and PAs who provide primary care while putting competitive pressures on MDs who provide primary care.

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Usual Source of Care Increases Spending

September 26, 2011 in Medicare, Specialists, Supply of Medical Services | No comments

Does having a specialist as your usual source of care (USOC) increase costs?

“Among high-cost beneficiaries, the 27.8 percent attributed to a medical specialist as their USOCphysician had U.S.$1,839 greater costs than those attributed to primary care physicians, representing roughly 4 percent of the mean cost of care. Although this may reflect unmeasured patient preferences and health status differences, research provides mixed results whether management by specialists leads to better outcomes or lower costs (Donohoe 1998; Hartz and James 2006; Smetana et al. 2007)”

Likely, this evidence is based on correlation rather than causation.  Patient with severe illnesses which require significant specialist treatment are more likely to visit specialists.  Thus, going to a primary care provider in addition to these required specialist visit has a smaller marginal benefit.  Healthier patients who do not need to visit specialists, on the other hand, will visit their PCP.  Thus, observing that patients with a specialist as the USOC is more likely due to the fact that having a specialist as one’s USOC is an indicator of health status and only partially due to the fact that specialists may be worse at coordinating care for complex patients.

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Pay-for-performance programs in the United Kingdom

December 28, 2009 in Health Care Around the World, P4P, Quality | 1 comment

Pay-for-performance is a hot topic in the health policy world. However, one of the largest pay-for-performance programs has already been implemented in the UK’s National Health Service. A paper by Doran et al. (2006) reviews the overall implementation of the NHS’s P4P program as well as how some physicians used exceptions to greatly increase their scores and bonuses.  Some excerpts from the paper are below:

In 2004, the National Health Service committed £1.8 billion ($3.2 billion) in additional funding over a period of three years for a new pay-for-performance program for family practitioners (the sole type of primary care physician in the United Kingdom). This program was intended to increase family practitioners’ income by up to 25 percent, depending on their performance with respect to 146 quality indicators relating to clinical care for 10 chronic diseases, organization of care, and patient experience.9 For the clinical indicators, practices claim points that generate payments according to the proportion of patients for whom they achieve each target…For example, for asthma indicator number 6, practices gain points for clinically reviewing at least 25 percent of patients with asthma in the previous 15 months. The maximum of 20 points is gained if at least 70 percent of patients with asthma are reviewed.

Evidence-based quality indicators should not be applied unthinkingly, since patients have coexisting conditions that affect their optimal care. It is inappropriate, for example, to strive to control the cholesterol level of someone terminally ill with cancer. Consequently, the new U.K. pay-for-performance contract allows family practitioners to exclude patients from eligibility for specific indicators in the performance calculations….However, exception reporting also provides an opportunity for family practitioners to increase their income by inappropriately excluding patients for whom they have missed the targets (a practice known as gaming).

To evaluate P4P in the UK, the authors analyzed family practice data extracted from clinical computing systems in England in the first year of the pay-for-performance program (April 2004 through March 2005).

Exception reporting by practices was not extensive (median rate, 6 percent), but it was the strongest predictor of achievement: a 1 percent increase in the rate of exception reporting was associated with a 0.31 percent increase in reported achievement…A small number of practices appear to have achieved high scores by excluding large numbers of patients by exception reporting

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Seattle doctors try flat-rate no-limit primary care

July 8, 2009 in Supply of Medical Services | 5 comments

Primary care doctors in Seattle are looking to eliminate insurers from the medical care process. 

“Qliance customers pay $99 to join, then a flat monthly rate of $39 to $119, depending on age and level of service. Patients can quit without notice and no one is rejected for pre-existing conditions…Co-founder Norm Wu said per-patient revenue is triple that of insurance-based clinics. He said many costs are fixed so the firm, now losing money, will turn to profit as business grows.  More than 50 noninsurance clinics operate in 18 U.S. states, based on different business models, Wu noted.”

In essence, primary care doctors are providing taking on the risk of excessive patient illnesses.  However, since Qliance only treats patients in the primary care setting, its risk is minimized.  If a patient gets too sick or needs to be hospitalized, Qliance is not liable for these types of medical treatment.  Patient who participate in the Qliance plan need to buy catastrophic health insurance in order to cover hospitalization and speicalist care visits.  This health care model seems feasible for Qliance’s end since primary care visits much more predictable than hospitalizations. 

Will the primary care docs at Qliance simply refer all patients to specialists to save money?  They will certainly have this incentive is the clinic becomes busy, but that will be tempered by competitive pressure to provide quality service.  If quality drops, patients may return to a traditional insurance plan. 

The key assumption here is that patients are able to judge quality in the primary care setting (e.g., physician friendliness, wait times to see a doctor, time spent with a doctor), whereas they may not be able to judge hospital quality or specialist quality when they are severely il and have complicated diseases.

I doubt the membership model will revolutionize healthcare, but I am willing to bet that it will carve out a significant market share from patients who are willing to pay for better primary care.

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Medicare: Primary Docs to get more money, Specialists less

February 26, 2009 in Medicaid/Medicare, Physician Compensation, Public Policy | 1 comment

Joe Paduda of Managed Care Matters has a two great posts on Medicare’s new payment structure.  

The first post reports how exactly Medicare is changing its reimbursement for medical services.  ”It looks like reimbursement for cognitive services – the 99xxx codes for readers expert in CPT-4s…office visits and similar services for others – will be increased while payments for surgeries, imaging, and other ‘procedures’ will be reduced.”

The question remains, will these changes stick?  For years, policy experts have advised CMS to increase primary care compensation and decrease specialist compensation.  However, specialists are a smaller, more cohesive group.  This facilitates the formation of compelling lobbies for specialists.  Mr. Paduda accurately predicts that these Medicare reimbursement changes will create a “loud, violent, and ugly” political backlash from specialists.

In the second post, Mr. Paduda reveals some insight as to how Medicare reimbursement changes will affect Medical care contracting in the short- and long-term.

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Geriatrician Shortage

August 6, 2008 in Current Events, Physician Compensation, Supply of Medical Services | Permalink

According to U.S. Census projections, the number of individuals 65 and older will increase from 12.4% of the populations in 2000 to 20.7% of the population in 2050. With the expected incredible rise in the number of elderly in the U.S., one would expect a concurrent rise in the number of geriatricians.

NPR’s Marketplace, however, reports that there are too few geriatricians. Currently there are only 7000 geriatricians, a 22 percent decline eight years ago. Why isn’t the increased demand for geriatricians–due to the aging popualation–causing more medical student to choose to specialize in geriatircs?

Brandeis professor Dr. Stuart Altman reveals the reason: the insurance system is biased against doctors–like geriatricians–who concentrate on preventive medicine. “The way the health system pays the workers in it, it has a very strong bias in favor of high-tech services, highly specialized services and primarily services for acute care.” Time-intestive, non-procedure based primary care is not as highly compensated. In fact, geriatricians make a quarter to a third less than other specialists.

Some physicians who focus on primary care, however, are discovering that concierge practices give physicians more time to spend with patients and can be more lucrative as well. In my hometown of Milwaukee, Froedtert is opening its own concierge clinic.

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