HEALTH PLANS/HOSPITALS: Kaiser needs to set up a major external review

Here’s the latest LA Times article in the series on an issue for Kaiser Permanente that is clearly not going away: Kaiser Transplant Patients Express Their Fear and Fury

And up from the comments from Harvey Frey MD, is the core issue that KP must deal with now before they get put in the "just like the rest of the egregious bastards" category: Harvey says:

Kaiser-Permanente is emphatically a for-profit organization. 50% of
Kaiser’s annual billion dollar profit is paid to the Permanente Medical
Group, and thence into the doctors’ retirement accounts. Fifty cents of every dollar NOT spent on health care directly benefits
the doctors. Money paid to outside contractors comes right out of their
pockets. The motivation behind the Kaiser denial of kidney transplants is clear.

As for cooking their statistics, according to an ER doctor friend of
mine who has worked there, they drive up their heart treatment
statistics by referring out the riskier cases. They get away with their poor care by forcing patients into their
mandatory arbitration system, and blackballing arbitrators who find big
for patients. The only excuse for being a Kaiser supporter is ignorance of what they actually do!

I don’t know if this little blog has any influence, but here’s what I’m calling for. Kaiser needs to set up not an internal inquiry as they’ve started, but a major league external investigation headed by a serious independent medical heavyweight. They must also agree to abide by its recommendations for insulating the (largely salaried) Permanente physicians from the suspicion (as voiced by Harvey), and I hope not the actuality, that they are making medical decisions for their own personal profit.

Don’t forget that capitation as a movement died because the public felt that doctors were withholding care for their own financial advantage. The same thing is becoming understood about FFS–or rather that doctors/the system does too much for their own advantage not for the best care of patients. KP or more accurately The Permanente Medical Group needs to get itself out of that similar ethical hole, and given that it largely pays it physicians with salaries, it ought to be able to make sure that, not only in perception but also in reality, it is working for patients’ best interests.

Because, as I said in a private email exchange last night, if we can’t trust salaried physicians at what has been–to those of us in the  health policy world at least–one of the few institutions that has been an innovator in care and care management on a population basis, who can we trust?

Spread the love

Categories: Uncategorized

Tagged as:

15 replies »

  1. I have worked both sides of the fence, and have worked simultaneously within a “for-profit” and “salaried” system. I know what the environment does to a physician’s behavior.
    Making generalizations is never the complete truth, but they illustrate a point. Naturally, there is always a pseudo-Bell Curve to all phenomena.
    Here are my generalizations:
    1. the most motivated people like to be rewarded for their work. These people exist in For-Profit industries. Physicians are no exceptions– the best and most driven don’t join organizations that hand out fixed paychecks just for showing up. People like this are either motivated by power (academics, government) or money. Having a system where Kaiser physicians were rewarded for a good job done would be a great inducement– the problem is it is perceived as Socialist, and hence does not work to produce motivated people. Kaiser physicians are rewarded for how LONG they are in the system, not how good of a job they are doing on any particular patients.
    2. County systems (outside of major University/academic control) are the ideal worst-case of medical systems. These are the dumping grounds for the least motivated physicians. Show up, get your paycheck, go home. If somebody gets killed or hurt along the way, write it off to limited resources, or “the system”.
    3. Private systems. Unfortunately, these have their ups and downs. Because there is no policing system other than a highly regulated (third party payers pay the paychecks, not patients) there is no “free” market. Reward is related, indirectly, to the ability to gain referrals from other doctors or be perceived as empathetic, from a public that can’t tell what kind of job you are doing.
    3. Academic systems. Like a sports team, there are crap years and phenomenal years. Unfortunately, because third party payers are driving patients away from the old Centers, the response has been to cram faculty with as many staff as possible to populate “Outreach” Clinics, trolling for patients away from the institution. These new academic physicians are not teachers, not researchers, and not the best and brightest, but rather just want a paycheck and steady hours. Teaching has thus entered a new dark age, with the young being taught by incompetent instructers with low volume patient loads. University systems have kept churning out graduates, despite the fact that the market worsens, and there are too many residents filling slots that are unnecessary (except that if you cut your program slots, you cut your funding).
    To summarize, the problem is that we have mega-corporate hospitals, fighting with mega-corporate payer systems, all with patients and doctors excluded from setting the costs. MD pay is hitting the skids, and the talented are seeking a profession elsewhere, while private practice is being driven into big institutions (Kaiser, Sutter, etc.) Ironically, in the cash-only systems (infertility medicine, plastic surgery) where this IS the case, the cost of actually delivering care has steadily declined, and paychecks for MD’s are not lacking.
    There is no solution, as the system is doomed as it stands. Hospitals charge more, insurers charge more, and the end is near where politicians will impose a stupid solution, wrong for everyone (like Medicare/Medicaid).
    See you in Hell.

  2. “Removing the profit motive would do a world of good for our system.”
    And just who is supposed to make the high risk R&D investments to develop and commercialize new drugs, medical devices, surgical procedures, etc. if there are no profits to be earned?

  3. First off, all healthcare should be moved to nonprofit status. Doctors should be paid based on flat salaries, not fee for service.
    However, that same logic also applies to all the business people who manage healthcare. Likewise, they should not be given “bonuses” based on denying patient care.
    The US needs a national healthcare system where ALL WORKERS ARE FEDERAL EMPLOYEES WHO ARE SALARIED. That way you eliminate the incentive to do unnecessary medical procedures, defraud Medicare for extra money. Removing the profit motive would do a world of good for our system.

  4. “$500 million split evenly among 10,000 doctors is $50,000 each, not $50. Aside from that correction, I’m staying out of this one.”
    I did the math wrong, but not the way you claim.
    I was not discussing what happened last year, I was discussing a theoretical example where an executive decision saved Kaiser $20 million and executive received a $500,000 bonus. If 50% of the savings went to physician pension plans, that would be $10 million. Divided by over 10,000 physicians, that would represent an addition of $1000 (obviously greater than $50, I know).
    Nonetheless, the central conclusion would be the same. The executive would receive a very large bonus and the doctors would get a trivial addition to the pension plan (which they wouldn’t see for years). That is why simply absurd to suggest that this was a decision engineered by physicians for their own benefit.

  5. Amy,
    $500 million split evenly among 10,000 doctors is $50,000 each, not $50. Aside from that correction, I’m staying out of this one.

  6. “You haven’t understood what I said. Kaiser doctors may be salaried, but at the end of every year the Permanente Medical Group, the For-Profit organization to which they belong, gets 50% of the excess income the Kaiser plan receives, which goes into their pension plans. Last year this was an EXTRA $500,000,000 paid to the doctors.”
    Trust me, I understood what you said; I’m just not satisfied with it. First we need to know who makes these decisions. I seriously doubt it is done by a vote of the physicians. Therefore, it is done by the executives.
    Then we need to know about the bonuses the executives get for performance. Let’s say, just hypothetically, that if an executive saves the company $20 million dollars, he stands to get a contractually specified bonus of $500,000.
    Perhaps 50% of the savings do go into the physician benefit pool, as you claim. There are over 10,000 physicians, right? Every physician would get a grand total of $50. So, the executive could count on a massive bonus, and each individual doctor couldn’t even buy a tank of gas with his bonus. That is almost certainly what we are talking about here and it is simply absurd to suggest that this was a decision engineered by physicians for their own benefit.

  7. I think I may have misread Dr. Frey at first: he evidently thinks Kaiser is not really one of the “egregious bastards” but might be improperly classified with them. I still think he wants to kill UR in HMOs, and maybe even a staff model HMO where any surplus is distributed to the physicians.

  8. I’d like to underline the point that Kaiser prefers to hire physicians as administrators – in fact, in my view, a lot of the problems are coming from physicians serving in roles they aren’t properly qualified for. The Kaiser physicians I met were all looking enviously at Silicon Valley and trying to figure out how to become business and technology leaders. Physicians are allowed to split their time between medical center and administrative roles. For instance, the CTO of the Northern CA technology group continued to serve as an anaesthesiologist and often called the department while he was in surgery.

  9. So, Dr. Tuteur, is a physician executive a doctor?
    From the article:
    a Kaiser physician executive [said] this week that the program’s chaotic start had not hurt patients.
    “It isn’t as if waiting another six months or nine months for a transplant is a death sentence,” Dr. Sharon Levine had told The Times.

    Harvey Frey, M.D., Ph.D., J.D. of the Health Administration Responsibility Project is an activist will grab any excuse to bash managed care. In the main, I think he wants to destroy the whole concept. He said “The motivation behind the Kaiser denial of kidney transplants is clear.” I do not deny that the move by Kaiser to bring transplants in-house is motivated by profits. I think it is a stretch, quite a long stretch, to say that in any particular case KP “denied care to make a profit”. This is a very long way from “aggressive” UR.
    It feels to me like the managers made a big mess of their transplant program change: they apparently tried to do a “Big Bang” bringing it entirely in-house all at once and they didn’t understand their own processes and the regulatory environment well enough to do that. It appears also be that some of the problems (“errors or inconsistencies”) have existed in their outsourcing program for a long time, and the change has surfaced them. This happens a lot.
    One of my favorite business school profs said: “Everything is management’s fault” and it is true. Are the failures of the program attributable to the “line-level” surgeons? No. But let us not forget that lots of managers are doctors. And in my experience, very good ones.
    > if we can’t trust salaried physicians …
    > who can we trust?
    I like President Regan’s little dictum: “Trust, but verify.” On a day-to-day basis we cannot do other than trust. But trust should not be blind.

  10. Pat. I think you’re right and that’s what I’ve understood. What’s important now is that the truth and perception quickly become the same thing.
    The only way to do that is a full external inquiry. Allowed to go anywhere and see everything. I thinkk Kaiser will come out looking good overall, with severe problems in this one program.
    But otherwise “things that are perceived to be real are real in their consequences” (yup, that’s a quote)

  11. BTW, re: the Permanente physician bonuses. They are small compared to the bonuses in the non-KP world. When I was there, one year I got the maximum bonus — it amounted to about 5% of my salary. Two years later when I was eligible for a bonus at Blue Shield, my bonus was 6 times as big (or 30% of my salary)and it wasn’t even the maximum amount awarded that year.
    Some of the excess income that goes to the Permanente Med Groups is re-invested in stuff used to benefit patients. It doesn’t all go to bonuses. Re: the capitation. It is a global cap. The docs there really function in an environment where they feel responsible for spending their members money wisely. They are not, unlike some big for-profit insurers, stuffing their pockets with wads of dough they earned by skinnying down the benefit.

  12. Read the article in the LA Times. A Permanente physician was the administrator of the program. She may not have had the ultimate control nor could you say she wasn’t “involved.”

  13. Amy:
    You haven’t understood what I said. Kaiser doctors may be salaried, but at the end of every year the Permanente Medical Group, the For-Profit organization to which they belong, gets 50% of the excess income the Kaiser plan receives, which goes into their pension plans. Last year this was an EXTRA $500,000,000 paid to the doctors.
    This is spelled out in a contract called the “Tahoe Accord” between the Kaiser Plan and the for-profit Permanente Medical Group.
    Thus the doctors have a very strong incentive to assure that there is lots of money left over at year-end.

  14. Why do you blame the physicians of Kaiser? It is my understanding that they are salaried. Moreover, they do not vote on hospital contracts or vote to set up kidney transplant programs. These tasks are completely in the hands of executives of the parent organization.
    Wouldn’t it be more appropriate to blame the administrators of Kaiser and investigate how they stood to benefit from denying care to patients? In fact, is there even a shred of evidence that the doctors of Kaiser were involved in any way?

Leave a Reply

Your email address will not be published. Required fields are marked *