Solving the Problem of Healthcare Economics

CHICAGO–“Healthcare has been on a six-to-seven decade drinking binge that would make even a sailor blush,” said Ron Howrigon, president and CEO of Fulcrum Strategies, a contract negotiation and practice marketing firm based in Raleigh, N.C. “We cannot have half the U.S. economy being spent on healthcare.”

As moderator of a session held during the Annual Meeting of the American Academy of Otolaryngology–Head and Neck Surgery, which took place September 9–11 in Chicago, Howrigon used his perspective as an economist to weave together the voices on the panel: two administrative and one medical. The panel shared their experiences with the economics of healthcare from the perspective of a small rural practice, a mid-sized practice intent on growing, and a large hospital practice.

Howrigon opened the session with a description of the current economic landscape of healthcare, noting that the United States currently spends three trillion dollars a year on healthcare. As he explained, “The size is one thing, but it is the trend that is a problem. … All trends like what we’ve seen in healthcare eventually reverse themselves.” While he hopes that the reversal will be gentle, he emphasized that the healthcare industry is three times the size of the entire construction industry, which means that if it crashes, the crash will be spectacular.

While Howrigon painted a grim picture of the future of healthcare, he also noted, “The silver lining is that we are always going to need healthcare,” while adding that it will not be possible to provide everything for everyone. Such an observation led to a brief discussion of the possibility of a single-payer solution to the healthcare problem, but the panel generally agreed that the proposals that have been put forth by the government thus far do not represent good solutions.

The problem of healthcare economics is huge and must be solved, he added. All of the panelists agreed that physicians should play a role in solving it.

Value-Based Care

Kris McGriff serves as an administrator at Oregon Health and Science University (OHSU) in Portland, an academic setting that she describes as full of red tape and hurdles. She explained that her practice’s biggest problem is space constraints, both in the operating room and in terms of hospital beds. McGriff works at OHSU to increase value and quality and decrease cost. She primarily develops patient-focused efforts such as the creation of multidisciplinary clinics that allow patients to receive all of their services on one day. The hospital also works to develop partnerships with community hospitals to improve value for patients.

Paul W. Flint, MD, professor and chair of otolaryngology-head and neck surgery at OHSU, attended the session and joined the conversation. He noted that, from a physician perspective, there appears to be a great deal of tension between pay for value and pay for volume. Another audience member agreed but noted, “What we’re all doing is trying to figure out how to get a bigger piece of the pie. … We have to rethink this whole thing. … We need to bring the value of what we do as doctors.”

Charles Ford, MD, owns Blue Ridge ENT in Boone, N.C. As the owner of a small practice in the mountains, he constantly thinks about how to keep costs down while providing quality patient care. One approach that makes sense to him is incorporating office-based surgery.

The balance between pay for value and pay for volume is always on his mind as he brings his small practice into the future.

In-Office Increase

Kevin Watson, MHA, is chief executive at Colorado ENT and Allergy in Colorado Springs, Colo. The practice includes 12 physicians and one nurse practitioner. While Watson described the practice as “good-sized,” he is in the process of growing it.

Colorado ENT and Allergy plans to meet the future by bringing as many procedures into the office as possible. They have also merged with an allergy practice so that they can treat not only otolaryngologic allergies, but also general medical allergies. They have invested in space and equipment but have also focused on making physicians and their schedules as efficient as possible. For example, Watson said that the practice has added ancillaries such as computerized tomography (CT) scans. Their intention is not to increase revenue from the CT scans, per se, but rather to use the CT scans to identify procedures that can be performed on the same day in the office.

We cannot have half the U.S. economy being spent on healthcare. —Ron Howrigon

Practice Consolidation

As the only physician on the panel, Dr. Ford articulated the challenges felt by physicians. Of course, he acknowledged, all practices have weekly, or even daily, internal challenges. These internal challenges are the challenges that physicians expected when opening a private practice, but now these internal challenges are joined by external challenges, many of them previously unanticipated.

Dr. Ford said that while his practice remains independent, hospitals are increasingly purchasing small practices and employing the physicians (See “Drivers of Hospital and Health System Consolidation,” right). This consolidation of healthcare has expanded to hospitals, with the University of North Carolina and the Medical Center recently signing a letter of intent to merge. Dr. Ford resists this trend, explaining, “I will say that being independent is a value to me. … I don’t like being told by a hospital when I have to work.” The two other challenges identified by Dr. Ford are insurance companies and government regulations.

The Next Generation

After laying out these challenges, however, Dr. Ford emphatically stated that he remains optimistic. He explained that the future will largely be in the hands of the physicians who are training as residents today. Dr. Ford noted that the new generation of residents is being socialized differently than residents from decades before. Current residents are taught to be part of a team and, thus, become medical professionals who seek out team care in their careers. He acknowledged that this socialization may be part of what is driving healthcare away from small practices and into hospitals.

Dr. Ford concluded that physicians, as a whole, are extremely adaptable. Consequently, he believes that physicians will adapt to the healthcare terrain that is placed in front of them. They will strive to deliver value and volume, while at the same time attempting to solve the looming problem of a healthcare crisis.

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Dr. Pullen is a freelance medical writer based in Illinois.