Doctors vs. Zombies

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My life changed dramatically 18 months ago when I started my new practice.  The biggest change personally was a dramatic drop in my income as I built a new business using a model that is fairly new.  That’s a tough thing to do with four kids, three of whom were in college last fall.  OK, that’s a stupid thing to do, but my stupidity has already been well-established.

Yet even if the income stayed identical to what I earned before the switch, the change in my professional life would have been nearly as dramatic.

  • I am no longer focused only on patients in my office.
  • I am no longer focused on ICD and CPT codes.
  • Saving patients money has become one of my top priorities.
  • I feel like my patients trust me more, and see me as an ally.
  • Patients accept my recommendations for less care (avoiding unnecessary testing and unnecessary medications) much easier.
  • I focus far more on preventing problems or keeping them small.
  • I laugh with my patients far more.
  • I no longer feel like a Zombie at the end of the day (and I no longer eat brains)

What is most interesting to me about all of this is what is at the center of all of these changes: I changed the way I am paid for my work.  Instead of being paid largely by third-party payors, I am paid by my patients, and instead of being paid more for sickness and procedures, I am rewarded for having healthy and well-informed patients.  (For those who don’t know, patients pay me between $30 and $60 per month for my services, and there is no copay for office visits).

Since all of these positive changes stem from the incentives created by this different payment system, I’ve seen even clearer the reasons for all of the problems in our health care system: it’s all about the payment system, or the basic transaction of healthcare.  From this transaction flow all of the bad things about our system, the waste, the impersonal nature of care, the physician burn-out, the spending without consideration of cost, and the blatant profiteering by companies associated with healthcare.  Changing our system for the better, therefore, can’t happen without a basic change in the financial transaction at its center.

A business transaction involves two main participants: the buyer and the seller.  The buyer gets a product or service they want from the seller in exchange for money.

What about the transaction of healthcare? Who are the participants in this transaction, and what is the product sold?

  • The Seller:  It’s pretty clear that healthcare providers, doctors, hospitals, and ancillary care facilities, are the seller in this transaction.
  • The Buyer:  It would seem that the patient, the one getting the “care” is the buyer here, but this ignores an important fact: providers get almost all of their money from third-party payors (insurance companies and government organizations).  I think it’s pretty clear that doctors and hospitals are selling their “product” to these third-parties, not to the patients.
  • The Product:  Again, it would seem that the care given by the provider is the thing buyers are paying for, but this clearly isn’t the case.  Reimbursement for health services is based on two main things: codes (CPT and ICD), and the documentation required to support these codes.

So, the basic transaction of healthcare is this:

The healthcare provider is paid by third parties for codes and documentation.

The codes, which are the most valuable commodity for a provider, are two types: problem codes (ICD) and procedure codes (CPT, E/M).  The payment is actually only given for procedures, not problems, but the problem codes are the immediate justification of those procedures, and failure to justify will reduce or eliminate payment.  So, the provider is motivated to find the best paying procedures and find problems to justify their submission.

Using this, the transaction of healthcare becomes this:

The provider is rewarded for finding the best-paying procedure code to match the most severe problem codes.

Documentation is done after the fact as a bookkeeping tool to prove the validity of the problem and procedure codes.

Where is the patient in all of this?  Patients are the raw materials used for the product.  They are a source of problem and procedure codes.   What about the actual patient care?  It is a byproduct of this transaction.  Care is presumed to be encompassed in the procedure codes (a presumptuous presumption, as many would attest).

Let that sink in: patients are raw materials, and patient care is a byproduct.  That’s pretty damning.  It’s also fact, not opinion.  It flows from the basic transaction of healthcare.

So let’s translate this to an office visit:

  • The patient is nearly always required to come to the office for all “care” because this is the only place where payable “procedures” are done.  For a PCP, the main “procedure” is the office visit itself.
  • The patient history is done to find problems to which procedures can be applied.
  • The bigger the problems, the better the reimbursement for procedures for the doctor.
  • The main task of the office visit is to find problem and procedure codes, and to document those codes.
  • “Customer service” in healthcare is not something that applies to patients, since patients are raw materials, not customers.  Doctors are motivated to treat patients only well enough that they will continue to come and supply codes (much as a farmer would treat his/her cow who produces milk).
  • True “customer service” from doctors applies to how quickly and accurately they produce codes for the customer: the payor.

Pretty brutal, isn’t it?  This gets worse when you consider some of the corollaries that come from these facts:

  • Solving patient problems is bad for business.
  • Priority is given to patients with the best-paying payors.  Conversely, lowest priority is given to those with the worst payors (i.e. Medicare and Medicaid).
  • The best paid physicians are those who are the most skilled at finding the most well-paying codes for the least amount of effort.

When explaining my practice to people, I often take a slightly different take on the transaction:

You are employed by whoever pays you.

The reality of my former practice, and those of most of my colleagues, is that they are employed by the third-party payors, and so will spend most of their time doing the job required by their employer.  In my new practice, on the other hand, I am employed by my patients because I am paid by them.  They are no longer a cow from which I can milk codes. They are no longer a well from which I can draw procedures. They are the one I am hell-bent on keeping happy so that they’ll continue to pay for the care I give.

Finally, the care I give is no longer a byproduct of codes; it is the product for which I am paid.  My kind of practice is the ultimate accountable care organization because we are accountable to our patients for the quality and value of what we do for them.  If they don’t like the product we sell, they leave.  The end result is more time devoted to assuring the quality of care our patients see.

More time for patients?  That’s something I had to get used to when I started this practice.  It’s also something my patients are still getting used to.

Surely there’s a catch.

No, I work for them, and that makes all the difference.


11 replies »

  1. I admit to some jealousy! Any degree of control at all over medical practice seems like a dream. But for those of us in hospital practice like myself (anesthesiology), there just isn’t any way to do as you’re doing. Patients don’t come to see me personally; they present either through the ER or via their surgeons. My group pools all the receipts and gets paid through insurance, rarely via self-pay, or not at all. In the meantime, the hospital dances on the strings of the Joint Commission and CMS, and we all dance on the strings of the hospital. Oh well. Being a doctor is still a thousand times better and more personally rewarding than any other job I can think of, thank heaven. Haven’t quite reached zombie status yet.

  2. I must say I am impressed with the huge step you have taken to take back your practice, provide superior healthcare, and hopefully make your practice profitable. I have worked in the healthcare arena for some time now and I have actually begun to build a consulting business for this reason exactly. I would love the opportunity to discuss this model and how you are faring in greater detail, as well as share my plans. I think you have made a tremendous advancement for the patients and your own freedom. I also think more Independant physicians need to adopt a similar model. Also I would love the opportunity to link to your blog or have you guest blog for me in the near future, people need to hear this message!

  3. And no ridiculous paperwork to prove you did something for the patient, and no idiotic EMR system which interferes with face to face patient time.

  4. In a way, but it is FAR more than I would get with capitation (which is usually around $10-15 per member per month (or less). The fact that I have no contracts with payors to keep track of, no auditors breathing down my neck, and only the patient to make happy is, however, the biggest difference.

  5. I’m not saying you should. I would like to see more physicians adopt this model… but I’m having trouble understanding the difference between the two options.

    Your patients now pay you $30-$60 pmpm to manage their care.. isn’t that the same as capitation?

  6. Why would I?

    You work for whoever pays you. I work for my patients. This system is far better for me and for my patients, plus, it saves money for payors (I give more time to my patients, so they make better-informed decisions, like where the cheapest meds are, when they should go to the ER, etc). I am their health advisor or coach.

    I’ve found a system that works far better and is much better for me, my staff, and my patients. Why would I leave that and go back to capitation?

  7. Why not take capitation then? I see many providers abhor the thought of capitation from insurance companies. Is this just a who-pays-who type of thing?

  8. Well, we keep calling it “insurance,” but the large component that you obviously object to and have acted against is not insurance, it’s 3rd party pre-payment (economically inefficient) intermediation. I agree with your antipathy there. “Insurance,” properly, is hedge contracting against otherwise ruinous large adverse events. There is but one choice there: [1] risk-rated underwriting (mostly by the for-profit private sector), or [2] “social insurance” (e.g., Medicare Part A). I guess you could include in the latter the spend-down-to-penury means-tested Medicaid etc.

    Short of full self-pay for everyone, there’s no getting around a need for insurance in health care — and all of the administrative heartburn it entails.

  9. Insurance can’t be completely avoided, but we are in a third-party system that creates an envoronment where sickness and procedures are rewarded. Yes, that would still be the case for specialists doing procedures people will need at times, but it doesn’t have to be the case for primary care or for non-procedural care. The problem is that third-party payors no longer act like insurance companies (paying for unforseen expenses by charging a large group of people to be protected from those expenses). If primary care docs got out of this pay-for-procedure mindset and were instead working to minimize the number of people needing those procedures in the 1st place, they woud actually be doing something the insurance companies would like: lowering their risk. My goal with my patients is to keep them from spending their deductibles by keeping them as well as possible. I am the consummate bargain for the insurers (including the government) because I save them money while costing them absolutely nothing.

  10. Admirable. Without a doubt. But… Patient needs a CABG px (and, yeah, I know you don’t do those). Who pays for that? Gramps got a spare $52k lying around? (Yes, maybe some do.) Hip job? $23k. Two very common px’s for the aging demographic.

    We’re right back to insurance. Those frustrating 3rd party “customers.”