The Levy Chronicles: Paul Responds with Gusto
OK folks, so here’s how this started. On Monday, my longtime friend and former state senator Ed Burke, sends an email telling me that Beth Israel Deaconness CEO Paul Levy started ablog and I should check it out. So I did and we mentioned it on Monday. Paul is grateful for the plug and opines that he’s eager to provoke responses in the less-than-adulatory category. Ever eager to help, I took up the challenge and made this post later this week.
I think we may have started something. So Paul responded to our posting yesterday. I’m reprinting his response in full below without comment or response and will save that for later.
So, dear readers, c’mon now and weigh in. What do you think? Has Paul put my in my place? Is he missin’ somethin’? Let’s see where this goes — and you help out…
John McDonough
Well, I asked for criticism and am pleased to have it, but I think the commenter has it wrong. The current system is not great for BIDMC, by any means. We are lucky to make any operating margin at all in the current system, and we are intensely involved in looking for ways to make our hospital more efficient and deliver higher quality care. If you think that we don’t need budget discipline and financial accountability in the current environment, you are way off base. Further, part of our approach is to encourage low acuity patients, those who do not need high-level tertiary care, to be seen in community hospitals.
Yes, when Medicare rates go up only 2%, well short of the inflationary pressures we face in supplies, pharamaceuticals, and salaries of nurses and rad techs, we try capture the shortfall from other insurers. And, it is a good thing they are there, or else we could never deliver the quality of care to Medicare recipients that they deserve and expect.
That being said, the increase in healthcare costs is not, for the most part, a result of growth in hospital costs. It comes from the large increase in drug-related costs and from the greater utilization of out-patient procedures that didn’t exist years ago.
As far as value delivered, please recall that the major advances in diagnosis and treatment of disease originate at academic medical centers like Beth Israel Deaconess. Payments for clinical care generally do not support that important research. It is supported by federal grants from the NIH and by philanthropy from generous people.
Paul Levy
September 30th, 2006 at 10:04 pm
I would sure like to hear from other hospital executives, too. I can’t be the only one with an opinion on this matter. Most of them have been in this field much longer than I. John, why don’t you nudge them to join in?
And, I know (or hope) you are joking, but to be clear, I am not writing to put anyone in their place. If there were one clear set of answers to these issues, the problems would already be solved and we would have nothing to write about or learn from each other. The best way to test our own opinions is to put them out there and let people jump in.
October 1st, 2006 at 6:25 pm
There are few folks I respect and admire more than Paul Levy who has done amazing things over his career. So, yes, put me in my place is tongue in cheek, with respect. I’m getting my response ready, and, like Paul, hope many others will join in the conversation. C’mon folks, we know there are a lot of you out there.
October 2nd, 2006 at 12:19 pm
I didn’t see the original blog Paul Levy wrote, but I gather it is about rising hospital costs. I don’t think anyone is well served by the current non-health system, but I do think some parties (hospitals in particular) played a major role in creating the non-system, which is largely a competitive, non-collaborative one in which hospitals out-bid each other to attract, say, transplant surgeons, and then find they can’t afford to take care of patients with psychiatric or geriatric needs. I would love to see the whole industry really become focused collaboratively on improving the health of the community, rather than competing to one-up each other on the high-tech services they can offer. The only hospitals that seem able to focus on health collaboratively are in the Kaiser system or within the Veterans Administration system. That may be partly because they are capitated and truly integrated systems that do well when the communities they care for stay well…..
How do we get from here to there? Maybe someone out there has the answers…..
October 2nd, 2006 at 1:20 pm
Nancy, you cannot REALLY think that hospitals PREFER a system in which they are underpaid by insurance companies, the federal government, and the state for psychiatric and geriatric care in order to support transplant and other specialties. I would open a larger psychiatry unit tomorrow if we could be paid anything close to what it costs. But society — including the federal government, which would be the single payer under the regime John favors — does not value the “cognitive” specialities. Primary care, psychiatry, neurology, nephrology, and the like are consistently underpaid, whereas procedural specialties tend to do better. (And, hey, guess what, in the United Kingdom, with its single payer NHS, the same thing happened. Finally, just recently, the NHS raised salaries of primary care doctors because they could not get people to work in that field of medicine.) The fact that we have the system we have is probably not a mere accident of history. Before we try to design how to get from here to there, someone should offer a more balanced view of how we got here.
(And to see my original comment on this topic, please go to http://www.runningahospital.blogspot.com.)
October 2nd, 2006 at 4:06 pm
Although Paul’s argument has merit, unfortunately, his perception of the source of health care costs is outdated. While hospital spending growth averaged 3.7 percent in the nineties and drug spending growth peaked at 15.9 percent in 2000, these trends have reversed. As of 2004, CMS reports that hospital spending growth has accelerated to 8.6 percent and prescription drug spending growth has slowed to 8.2 percent.
October 3rd, 2006 at 5:08 am
You use 2004 data and call my numbers outdated? Don’t forget, too, that a portion of the hospital cost increase covers the drugs that are used in the hospital for inpatients. I am guessing that the CMS number does not separate out that inherent part of hospital costs, but I don’t know that for sure. Anyway, my comment was based on conversations with OUR payers, not some national Medicare average: It is what they answer when I ask why they are increasing rates in double digits to subscribers but only increasing our reimbursements in the low single digits. Maybe they are not telling me the truth. Would one of them care to comment?
My major point, though, is that in the reimbursement environment hospitals face — Medicare and Medicaid rates set by legislative and regulatory action; and insurance company rates set through intense negotiations — we have absolutely no incentive to raise hospital costs. We are constantly looking for ways to increase efficiency while maintaining the highest possible level of patient service and quality. Why would you think otherwise? I wish you could be there when we set our budget for the coming year and could see the kinds of hard choices that have to be made to produce even a very modest operating gain, which is then recycled to invest in renewal and replacement of facilities and equipment. Remember, we are not a for-profit trying to produce ever higher returns for shareholders.
October 3rd, 2006 at 7:15 am
If we want to have a serious discussion here about rising costs and how to address them, let’s leave behind the whining about underpayments.
Yes, BIDMC is probably underpaid by some payers for its costs (although don’t forget all the Disproportionate Share payments from Medicare and Medicaid, and all the Indirect Medical Education payments that are attached to those government “underpayments”—the federal government actually does a great deal to support hospitals that teach and provide care to the uninsured).
But lots of other hospitals are overpaid—just look at the latest MedPac report if you want to see the growing gap between the haves and have-nots in the hospital world. This gulf is deeply troubling but the solution is not just to pump more money into the have-nots….we can’t afford it as a community.
Instead:
Let’s talk about the solutions to a health care system in which the path to better results for financially struggling hospitals is to attract more doctors who do well paid services (e.g., cardiac surgery, orthopedic surgery) instead of providing services that are truly needed in their community (e.g., mental health and substance abuse services). This is the crazy world of competition that Nancy Kane is talking about in her post.
Let’s talk about the solutions to a health care system in which cognitive services are underpaid, mainly because really fixing the problem would require reductions in payments to the doctors who do the overpaid services, and those doctors have much more political power and clout than the doctors who do cognitive services (look at the last 20 years of attempts to actually implement RBRVS if you need any evidence of how difficult this battle over reallocation truly is!)
Let’s talk about the solutions to physician incomes in the US that far exceed the multiples of average wages that are earned by doctors in almost any other country.
Let’s talk about how to finance medical education in a more rational way so that young physicians don’t have to make a choice between huge amounts of educational debt or pursuing a lucrative specialty like dermatology or radiology.
Let’s talk about how we are going to develop primary care capacity to meet the needs of a growing and aging population.
Let’s talk about solutions to the competitive system that closed down community hospitals all over Massaachusetts in the past 10-15 years, and now has serious plans to open up teaching hospitals in the suburbs. (Maybe our new state goald should be that no one should have to drive further to a teaching hospital than they do to buy a gallon of milk….) The main reason that teaching hospitals want to promote care in the community setting now is that they are at capacity (witness Faulkner and the Brigham).
Let’s talk about the solutions to a system in which public health has been slashed over the past decade, while we’ve continued to build and build and build in the Longwood Medical area (the mascot of Brookline and Longwood areas should be declared to be the crane….)
Let’s talk about the solutions to a system in which we say we idolize competition and yet we have permitted growing market concentration and dominance by just a handful of providers and payers….
Let’s talk about the solutions to a system with enormous quality problems, in which some fairly significant proportion of services are unnecessary, harmful or both, and yet the incomes of individuals and institutions depends on continuing to provide this care.
So Paul, let’s talk about system problems and the need for system change, and how in the world we are ever going to address these deep challenges…We need leadership and ideas from smart folks like you. If you start to really talk about these issues, your blog will be read by almost as many of us as are addicted to Health Care for All’s!
October 3rd, 2006 at 11:08 am
Well, I am certainly not as good at the rhetoric as you are, and so maybe my comments are not so inspirational. I am just trying to be practical, but you want to reply with a speech. I actually agree with many of your points, particularly the part about dominance in the marketplace. But, I don’t think that talking about our need to cover our costs is whining. If you want some ideas to help solve some of these issues, check out my blog.
October 3rd, 2006 at 6:39 pm
What Ranworth66 has done is to lay out many of the logical parameters of an intelligent discussion on health system reforms. That is not merely rhetoric or a speech. It is informed, and yes, inspirational dialogue, and is a big essential step toward framing the real discussion and debate that must take place in our communities and among our lawmakers. It is needed to take place between co-workers and family members, and among community members and law makers (what a strange notion). Not enough lawmakers are seeking ways to ask their constituents what they think and want and way too much communicating with lobbysts has been the prevailing status quoe for quite a long time and it seems to only be intensifying. Let’s do what we can to change that–how about every hospital and health center hosting a community forum on healthcare needs where the elected officials come and listen to members of their community?
Whay are we citizens of Massachusetts and the country so complacent when repeatedly given limited and false choices by “leaders” and politicians about ideas and options for addressing the health care crisis in access, cost and quality? I could list the reams of data that should make us all ashamed and determined to take collective action to really fix this. overwhelmingly we are a civilized caring people, aren’t we?
The IOM reports, the Commonwealth Fund reports (such as their latest, the US health system score card, led by Jim Mongan), the US census data, the HHS reports and UPenn data on nurse to pt staffing ratios, the public surveys that demonstrate a strong desire to have universal insurance coverage with a role for government in making that happen, and on and on. We do not lack data or information or a sophisticated understanding of the problems.
Part of the answer, in my humble opinion, is that many people who could speak out and be heard in a high-profile way and who could do much more to get us on track to tackle head-on the issues Ranworth66 raises, just don’t. People who are in positions of power in institutions and other places across society seemingly lack the courage to stand up to special interests and their leaders. Or maybe too many of these potential leaders are the protectors of the “special interests” and they see the healthcare crisis as a game of when push comes to shove I’ll protect me and mine instead of commiting to work toward a common good. Mabe its like a club or something and us ordinary folks are paying the price for their membership. And some folks pay with their lives, or just with parts of their bodies damaged from easily preventable illness… I don’t know for sure but it seems too naive, bordering on denial, to say “oh, it’s just good people caught up in a complicated system”.
Insurance Co execs, Hosp execs, big Pharma execs, and all the related industry lobbying groups and their execs are in the mix. Hmmm. It might prove useful to know who sits on whose corporate boards that approve exec compensation packages and sign off on mega-merger market competition schemes and who paid the $7.5 in 2005 lobbying fees that were spent on shaping the new health law… Who wins and who loses in the reform, and following the money trail will be the proof in the pudding in due time I suppose. But most thinking people agree that the law does not begin to adequately address the many areas of reform that are still needed.
Many of these major stakeholders and power players have demonstrated that they do not look kindly on the most common sense reform options that should include rarely-mentioned ideas for honest public discussion. To name a few:
re-focusing healthcare services and “coverage benefits” to maximize health promotion and disease prevention (and not just doing it superficially for marketing purposes)
set explicit rules to limit non-healthcare expenditures in health care spending. it makes so much sense it almost sounds illogical to say it as a reform goal. but it is a hugely important area to explore for cost control reforms.
to elaborate, we need to have a public discussion about “healthcare spending” by insurers and hospitals in the areas of admin, marketing, tv, radio and billboard advertising–does any of that help anyone’s health or is it a waste of precious healthcare resources???
what about prohibiting corporate profiteering and million dollar salaries at tax-exempt nonprofit healthcare institutions? these are heavily subsidized by taxpayers! The AG and SOS who both have authority over nonprofit corporations don’t talk about and don’t use their positions to effectively act on this aspect of our healthcare crisis–ever. This is galling when so many of our neighbors across the state struggle to pay their helathcare costs, too many are and will remain uninsured, and most of us are under-insured all while we spend more than any other state on healthcare, $9k per capita in 2006 totalling $62Bil. Where’s all that money going and are most of us getting our monies worth? Where’s the accountability, the transparency on a system-wide level?
Where are our civic leaders who we need to help generate and sustain a serious public discussion about these issues? Perhaps the new health law will serve to stimulate that activity. And I hope to hear about local forums hosted in health care settings.
December 7th, 2006 at 2:04 pm
The extant healthcare non-system system rewards corporations and stockholders with profit at the expense of all else. Hospitals and other healthcare institutions have ratcheted productivity up on the back of the primary providers - registered nurses.
Until the drivers of the healthcare industry are the providers and recipients of that care, instead of the for-profit insurance, big pharma and for-profit organizations, medical suppliers and services, no incremental changes will permanently and significantly lead to universal access and affordability of preventive and catastrophic care.
Mr. Levy is disingenuous to suggest otherwise. His organization sports a robust marketing and PR department that snaps to attention whenever a Globe reporter visits. It strategically caters to physicians with high dollar diagnostic reimbursement rates, while its medical patients languish in the ED waiting for any avilable bed to open up on any service.
Ask Drs. Wolf and Clardy at BIDMC about patient bed delays. Ask any ED nurse or medical unit nurse about those patients.
One of the problems is that Mr. Levy’s information from his own direct reports is so filtered to present only the best face to him, that he isn’t even aware of the actual patient care situations and the dilemmas that his organization’s nurses and physicians face on a daily basis.
However, he is not alone.
Until nurses and physicians take control for the autonomy of their disciplines’ practice, CEOs and bean counters will continue to control practice which only makes forward progress when the risk (patient litigation, patient errors resulting in harm and death) exceed the organizations’ tolerance level.
If hospitals were truly committed to patient safety, patients would be full participatory members of healthcare quality and patient safety planning committees, they would be represented on hospital boards, and they would drive patient advocacy in those organizations.
Nurses would be supported for advocating for patients, and not floated to meet whatever chronic understaffing situation of the moment is identified by hospitals which don’t limit admissions to fully-staffed beds, but admit willy nilly and stretch extant nursing staff to take responsibility for the patients.
Levy’s institution has a “just say yes” admission policy for heart patients - oh, those high dollar reimbursement rates! The delays for admission are nigh unto nil for this group. But then there are those pesky chronically ill, resource eating medical patients. They don’t enjoy the same open door policy now, do they, Mr. Levy?
Registered nurses are the key missing element in all healthcare and policy discussions. The almost three million of them form the spine of the healthcare system. If they ever reach consensus on professional issues and patient care delivery, they have the numbers and the carrying power to drive healthcare in a different direction.