Diagnosis for Democracy
Insights into the State of Our Union
A Blog by Rob Tenery, MD


November 3, 2014: 'Working for the Man'

By Rob Tenery, MD on November 3, 2014

It’s time for a reality check! The independent physicians are rapidly disappearing. Replacing them are contract and salaried physicians, whose income is based on their skill sets, seniority or productivity. In all these employment models, their reimbursement does not come directly from their patients, but from some third party.

In the 1970s, doctors first agreed to accept assignment as full payment for their services. It wasn’t the onset of private health insurance and not the Medicare program, not even when these programs set out the fee schedules that the payers would reimburse their enrollees. It was when the providers of services (doctors) agreed to accept those rates as full payment. That's the beginning of when doctors started ‘working for the man'--- an often-quoted idiom used when independent decision-making and control of one’s own self interests are subverted to superiors.

Initially, this seemed innocent enough. Patents were being reimbursed by their insurers, and were in turn, supposed to turn the money over to their doctors. Knowing that many doctors were reluctant to rely on collection agencies, a few patients kept the money. Since the practice was becoming more commonplace, in increasing numbers, doctors made arrangements with the insurer for direct reimbursement, feeling that the payers' reduced payment was better than nothing.

Dial ahead to the advent of managed care health care systems, which linked reimbursement to improved efficiency on the part of the providers--- more specifically, the capitation systems that set out total reimbursements to a fixed group of providers for a fixed group of patients over a defined time. Again, the man is setting not only the fees charged, but also the reimbursements that would be accepted.

It is estimated that by next year, about 50% of U.S. doctors will be working for a hospital or hospital-owned health system. A recent survey by the Medical Group Management Association shows a nearly 75% increase in the number of active doctors employed by hospitals or hospital systems since 2000, reflecting a trend that sharply accelerated around the time that Obamacare was enacted.*

Many factors have contributed to this trend: The growing complexities of the rapidly expanding base of medical knowledge, necessitating ready consultations across specialties. The variances in the requirements of the reimbursement models. The changes in attitudes of the emerging physician population that they would give up some of their independence, rather than fight the intrusions restricting their ability to care for patients.

Fearful of being left out of the panel selection with the payer contracts, many doctors are or have joined with other physician groups (PPOs) or have sold their practices to hospital run and owned organizations. As competition becomes more intense with health care carriers, the independent PPOs find themselves, either creating arrangements with the hospitals with respect to revenue distribution or are being taken in by these hospital systems.

With the number of health care payer options narrowing, the providers of health care services concentrate into fewer, but larger and more inclusive, entities. The physician participants within these systems increasing loose control of their decision-making, and also become distanced from the payer. Thus, the increasing control over physicians by these multidisciplinary health care delivery systems--- the integrated managed care consortium Kaiser Permanente is an example that was founded in 1945.

Now introduce the Affordable Care Act’s formation of the State and Federal Exchanges. Couple that with Medicare and the expansion of the states’ Medicaid coverage. Allow the Individual Mandate and the Employer Mandate requirements of the ACA to be fully implemented.

What is the future for private heath care insurers in this scenario? Many insurers will find other markets in which to provide coverage. The remaining carriers may consolidate or continue to go it on their own. Because of the mandates set out in the ACA, with respect to what their policies must cover, the private insurers will be increasingly at a disadvantage as they compete with the coverage offered by the Exchanges that are shored up with government subsidies.

If the Employer Mandate and the Individual Mandate clauses of the ACA are fully implemented in their current form, it will totally rewrite this country’s health care payment model. Over time, employers will increasingly dump their employees into the Exchanges as the costs of the private coverage options escalate. With a shrinking patient base and without federal subsidy support to meet the coverage demands outlined in the ACA, the private carriers will not be able to compete. Those individuals who aren’t eligible for Medicaid or Medicare and are not covered by the Employer Mandate provision will be forced to pay the escalating premium costs for private coverage, turn to the Exchanges or pay the fine and go ‘uncovered’.

With the physician population moving voluntarily into a subordinate role in these multidisciplinary health care delivery systems, and the Exchanges poised to squeeze out the remaining so-called private health care payers, the end result seems obvious. Most physicians will be hired, fired and reimbursed by an entity that derives its primary revenue stream from federally funded programs. The owners of the treatment facilities may not be the federal government in the projected United States model, but with the main revenue stream coming from government funding, by default, it becomes a single payer system--- just a variant of socialized medicine painted in red, white and blue. **

My physician father warned me in July 1965, when President Lyndon Johnson signed the Social Security Amendments into law creating the Medicare program, that it was only a matter of time that time until socialized medicine would take over.

Physicians should have seen it coming: Accepting assignment, instead of collecting from their patients. Managed care arrangements under a capitation model. Agreeing with the hospital based systems to broker with the payers on their behalf. Willing to give up many of our freedoms to avoid some of the hassles in their practices. Finally, supporting legislation (ACA) that defaults to a single payer, because the law is unsustainable in its current form.

Make no mistake. Within the next decade, our once noble and independent profession will be “working for the man.”

*Graham, J.R., Free of Obamacare Taxes, the Future of Health is Digital, NCPA POSTING, October 22, 2014.

** Socialized medicine is, by definition, a health care system in which the government owns and operates health care facilities and employs the health care professionals, thus also paying for all health care services.




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