Navigating the “Valley of Death:” Health Care in Turmoil

The American health care system has never been at a more dramatic crossroads. As ACC President William Zoghbi, MD, puts it: "This change is mammoth, it is historic, and it affects everyone's life involved in health care."

It is also very painful, and some would say we are hitting bottom. Michael J. Mytych, MBA, president of Health Information Consulting, Menomonee Falls, Wisconsin, calls this period we have entered the "Valley of Death," with a lot more creative destruction to come.

In their "Physicians Watch List for 2013" survey, the Physicians Foundation listed the top five issues affecting doctors in 2013, as chosen by the physicians themselves:

    1. Uncertainty about the Affordable Care Act
    2. Practice consolidation
    3. The impact of 30 million newly insured patients
    4. A decline in physician autonomy
    5. Rising administrative burdens

Feeling disjointed about where we are with health care? Welcome to the new normal. All of these issues were addressed at the recent ACCF Cardiovascular Summit: Solutions for Thriving in a Time of Change. And to thrive—or survive—may mean the difference between steering a strategic course focused on solutions or wandering the desolate valley of shifting expectations and accountability.

"We are fortunate to have leaders in the ACC with the vision to build the Cardiovascular Summit to help our members navigate the massive changes in cardiovascular practice over the last few years," said C. Michael Valentine, MD, from The Cardiovascular Group, Centra Health, in Lynchburg, Virgina. "Every member—academic, private, and integrated—needs help with finances, data management for quality improvement, service line development, and leadership skills to assist colleagues and administrators."

Not Your Father's Health Care Continuum

Howard T. Walpole Jr., MD, MBA, the Cardiovascular Summit director and chief medical officer of Okyanos Heart Institute, in Freeport, The Bahamas, calls it an era of government reimbursement and shrinking margins, where costs are going up and reimbursement is going down. He said, "We're in an era I like to call predatorial bureaucracy: RAC [Recovery Audit Contractors] audits, the OIG [Office of Inspector General]. These are acronyms my father certainly didn't have to deal with."

It is said that time is a necessary structure to keep everything from happening at once. That structure appears to have failed for physicians because everything is happening at once. Physicians are being pummeled by changes brought by the Affordable Care Act, moves towards accountable care organizations, the 10th revision of the International Statistical Classification of Diseases and Related Health Problems, and the HIPPA 5010 transaction standard. Electronic medical records/electronic health records are not performing as promised, seeming more like million dollar boondoggles—or straightjackets.

Bottom line: can you thrive in this time of change?

Dr. Walpole cited an old African proverb: if you want to go fast, you go alone; if you want to go far, you go together. "The days of us being cowboys are over," he said. "We have got to work more in a teamwork fashion. We have got to learn what our jobs are as physicians, and we have got to learn what our jobs are as administrators."

Also, take some comfort in knowing you are not alone. While physicians find the ground beneath them shifting, others in health care are coming to grips with a new realization, too. "Hospital executives are struggling with the idea that the patient and their physician provider are at the center of the universe and not the hospital." Mr. Mytych noted. "Patient-centeredness is real."

As Suzette Jaskie, MBA, president and chief executive officer of MedAxiom Consulting, put it, 20% of health care dollars go to physicians and half of that goes to physician expenses. However, by what physicians do, virtually 100% of health care expenses are controlled and influenced by physicians. She said, "There is no way out of this mess—trying to create 30% cost savings from what we currently spend—without physicians, period."

One way to produce that kind of savings is integration, and therein lays one source of agony. Ms. Jaskie calls it the three stages of integration. The transaction stage takes 1-2 years and it can be "painful, long, and emotional." At the end of that phase, you still don't get to flip a switch and magically end up with one organization. Cultural integration requires another 1-3 years. Only then do you reach stage three: creating value.

Cultural integration—actually bringing the practice or two or three multiple physician groups together into a co-managment organization with a hospital—encompasses huge cultural changes and challenges that must be met. Mr. Mytych explains his job as "solving giant jigsaw puzzles." Hospital culture differs greatly from physician culture, and many places are struggling to maintain the physician-entrepreneur approach to business as they strive to merge formerly competitive groups into a single service line. Complicating the matter are the different systems that must work together but, in the short term, end up merging into Frankenstein systems that seem out of control. Ms. Jaskie acknowledges the problem, saying that many aspects are working, but it could take organizations 3 or 4 years to get everything "humming."

Lubricating the Works

Charles L. Brown III, MD, is chief of cardiovascular services at Piedmont Healthcare and chief medical officer at Piedmont Heart Institute in Atlanta. Piedmont Healthcare maintains 25 offices and five hospitals across north Georgia and a sixth hospital for which they manage health services with "a kind of plug-and-play approach that allows us to manage the Cardiovascular Service Line (CVSL) in non-Piedmont hospitals." The process of integration meant individuals had to grieve the loss of autonomy and overcome the emotional hurdle of no longer being one's own boss.

He can laugh about it now: "We showed a picture last year at this meeting that was taken in 2006 showing a group of us sitting in the corner of a bar at the Ritz Carlton at an ACC chapter meeting with martini glasses and red wine bottles all around us. We realized there was a lot of energy being spent competing with each other, and we should probably throw out that competitive nature and focus energies on doing something constructive. And that was really the fundamental 'light bulb' moment for the leaders of a lot of those groups. We could probably do something better collaboratively than we could competitively." (There is even science to support that. University of Pittsburgh investigators reported in 2012 that moderate amounts of alcohol increase both positive emotions and social bonding!1)

Michele M. Molden, former Piedmont Heart Institute president and CEO and now executive vice president and—here's a new title—chief transformation officer for Piedmont Healthcare, noted that the process can be described as "disruptive innovation" and quite often, cardiovascular is the first systems foray into integrative relationships with physicians. "The view in a large part of the administration of Pidemont was that we had put the inmates in charge of the asylum," she said. She also stressed the importance of administrators understanding the keys to change management so they don't stomp on positive ideas budding up from the ground under the guise of "this is not the way we have done things before."

According to Ms. Molden, Piedmont had an epiphany: physicians and administrators see the world through completely different lenses. Physicians are constantly rewarded for making life-or-death decisions based on very incomplete information, a far cry from administrators' training. "For Piedmont, we realized somewhere along this incredibly disruptive journey that if we could take those two lenses and create a lens that combines the best of both of those views it would in fact be the thing that made Piedmont successful in the future. But that requires constant dialogue and conflict with each other, and if you cannot learn to manage conflict, you will not be successful because this is all conflict. Those two different views are often equally valuable and equally divergent."

Dr. Brown added that there is no single solution when it comes to structure: employment, coalition, integration, et cetera. But the real core should coalesce around a true physician-system partnership through the realignment that is changing the face of health care in the United States. At his own center, they are still not there but, having started several years ago, they are getting closer. "We're really still building the culture of our 120 cardiovascular doctors and just getting ready to turn on the machines for what will truly create value for our health care system. We haven't done it yet, but we have built the ship that's going to take us down the river towards that goal."

Big Data

Mr. Mytych noted he has done a significant amount of research recently for major corporations on where the industry is going and how hospital and physician organizations will have to adapt to what people are asking them to do. This leads to a lot of talk about care collaboration, clinical integration, population health management, disease management, and big data. How big? Late last year, the University of Pittsburgh Medical Center announced a 5-year, $100 million investment in a sophisticated enterprise analytics effort meant to foster personalized medicine. Together with technology partners Oracle, IBM, Informatica, and dbMotion, they plan to create a data warehouse that brings together clinical, financial, administrative, genomic, and other information that today is difficult to integrate and analyze. Advanced analytic and predictive modeling applications for clinical and financial decision making are expected to produce better patient outcomes, enhanced research capabilities, continual quality improvements, and reduced costs.

Big data equal big implementation costs, but Mr. Mytych said, "We cannot navigate this Valley of Death without solid analytics." The problem: a tremendous lack of data standards, which are only in their infancy.

With an emphasis on developing a system based on quality, Peter L. Duffy, MD, director of Cardiovascular Quality at Reid Heart Center in Pinehurst, North Carolina, concurred that excellence depends on good data. "If you can't measure it, you can't analyze it. If you can't analyze it, you can't improve it."

It's not easy, but Dr. Duffy thinks it is about time. No business would operate without knowing what its outlays are, but medicine has because it hasn't had to care about costs. But now $100 million will be spent to uncover all costs and determine where to save. "Medicine is an art but health care is a business."

This data collection may unfurl as an uphill battle, because past efforts have often been inaccurate, using inappropriate, or even worse, harmful information. Instead, just like with most things in medicine, physicians will trust data that are accurate, timely, and reproducible; otherwise, Dr. Duffy added, "it just becomes junk."

RIP Fee-for-Service

Pull away the curtain of concern covering the Affordable Care Act, and what's really driving the discussion is the federal deficit, not changes in health care law, said Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform. Tapping his expertise, Mr. Miller currently is helping a number of states and regions design and implement payment and delivery reform.

At the Cardiovascular Summit, he asked, "In what other industry in America are key professionals told at the end of the year that their salaries are going to be cut by 30% whether you have done a good job or not?" Nobody else would tolerate that, but it derives from the fact that health care costs are the primary forces escalating the federal deficit. The Congressional Budget Office projects that 46% of growth in the federal deficit over the next decade will come solely from Medicare/Medicaid and insurance subsidies.

Importantly, we don't need to trim 30%: it will require 4% in Medicare spending cuts to be able to fix the Medicare Sustainable Growth Rate (SGR) and get a decent payment update for physicians and another 3% to get costs more in line with growth in the gross domestic product (GDP). Certainly more modest reductions, said Mr. Miller, but getting there will be tough because those few percentage points still translate to many, many dollars. CV care is going to be in the danger zone on this because it is the single largest share of costs: roughly 20% of the national health care costs are CV-related.

Cutting payments to doctors is the only lever CMS wields today. How can you redesign care to reduce costs and improve quality? How do you create better payment systems rather than simply cutting rates? The problem: you can't do that from Washington. It has to be done by the people who deliver health care.

In the keynote address at the Cardiovascular Summit, Mr. Miller listed three principles to create a win-win-win situation that is good for patients, good for spending, and good for physicians.

Spending can be reduced by improving patient care. A huge cost savings can be realized if preventable hospitalizations can be cut substantially, reducing overuse of technology without harming patients. Nationally, we see dramatically different costs at different facilities that deliver similar care. In HF alone, there is a 10-fold difference in costs across different medical centers in different parts of the country. Even across one state, cost variations can be huge. A study in California showed a $2,200 variation in the average cost of stents across the state and a $16,000 disparity in costs for implantable cardioverter-defibrillators across California hospitals. (It could be worse. A recent paper in JAMA Internal Medicine reports that there is a nearly $115,000 differential in charges for standard hip replacement at comparable general hospitals.2)

We can reduce spending by improving physician payment rates. Mr. Miller said average costs for patients whose care cardiologists either direct or influence is $10,000 to $11,000 a year in the Midwest, for example. Only a very small part of that goes to cardiologists or other physicians. If physician reimbursement is cut by 27%, Medicare saves a grand total of just 3%. On the other hand, physicians could be given a 5% payment boost if they can figure out how to get 4% savings elsewhere. That would produce bigger cost savings for Medicare than cutting physician reimbursement. "If people are correct and there is 30% to 40% waste in health care, you could double physician payment, get 20% savings elsewhere, and still end up saving Medicare a lot of money."

But—and here's the rub—you can't do this with the fee-for-service payment model. Fee-for-service sounds good: you get paid for what you do. But its implementation leaves very little flexibility for physicians. You don't get paid when the patient calls you instead of coming to the office, for example, nor do you get paid to hire nurses to work with your chronic disease patients. Most ironically, fee-for-service ties services and payment so closely that if you improve care, reduce infections, complications, and readmissions, people stay well and they don't have to come into the office, you will lose money. Mr. Miller concluded, "We have to do something to fix fee-for-service."

That means not just tweaking the current system around the edges, but making more extensive changes to get better pay for physicians, he added. "We need to genuinely pay physicians based on quality and not volume; based on what the physicians think quality should be and not what some external entity says it is. We need to get coordinated care among multiple physicians and to be able to deliver care management from the physician practices, not from health plans and disease management companies that try to talk to the patient independent of the doctor. And we must have the flexibility for phone calls, internet communication, and even home visits for patients who need them."

So, given this still-moving cultural shift in the industry, can a doctor maneuver through the change or is it time to head to higher ground and retire? Mr. Mytych actually thinks the land beyond the Valley of Death will provide for both patients and their physicians well because it will house a model of unparalleled analytical capability unseen in health care, using data derived from health IT to assess comparative effectiveness, reduce duplicate therapies, and improve overall quality and delivery.

"If we waited until everything was finished, we'd be waiting a long time—perhaps 10 years. Right now, we have to look at the puzzle and say, 'What's the best picture we can make out of these pieces today? What pieces need to be jettisoned or obviously replaced?' And then ask, 'What do we need to do to build towards that future model?' We will have a much clearer landscape and data that allow us to do a better job in health care."


1. Sayette MA, Creswell KG, Dimoff JD, et al. Psychol Sci. 2012;23:869-78.
2. Rosenthal JA, Lu X, Cram P. JAMA Intern Med. 2013 February 11. [Epub ahead of print]

Keywords: Fee-for-Service Plans, Continuity of Patient Care, Bahamas, Decision Making, Medicaid, Disease Management, Cost Savings, Health Care Costs, Patient Protection and Affordable Care Act, Government, Electronic Health Records, Quality Improvement, International Classification of Diseases, Delivery of Health Care, Quality of Health Care, Accountable Care Organizations, Medicare, Leadership

< Back to Listings