A Business-Based Prescription for Health Care

We recently posted about the travails of the leadership of Caritas Christi Health Care System in Massachusetts, culminating in the firing of the system’s CEO for violating the regulations he, himself, had signed about sexual harassment. This weekend, the Boston Globe ran a commentary on a prescription for “Giving Caritas a healthy future.” It was a prescription that said essentially nothing about the essence of health care, taking care of patients.

The writer was Ellen Lutch Bender, CEO of Bender Strategies LLC, a “healthcare consulting firm,”whose goals are “to enhance bottom line performance and increased market position for our health care clients as they plan for the future,” and a self-proclaimed “visionary.”

She advocated “hiring a strong, visionary, business-minded CEO ... [as] crucial to Caritas's long-term stability.” She asserted that hiring such a leader would be essential to support Caritas’ “healing mission,” but “that mission must be examined for what it is: a sprawling business in a complex, increasingly competitive, capacity-strained environment.” Furthermore, “the healthcare business demands specialized leadership and an organizational structure that supports innovative thinking and fearless decisions. Hospital CEOs must seize business opportunities when they arise.” Particularly, “the next CEO must possess exceptional fiscal management skills....” So, “the challenges facing Caritas argue for a CEO search beyond the traditional physician candidates.” And, “the church, the board, and the new CEO must craft a guiding philosophy balancing religious tenets, sensible business practices, and executive independence.”

Bender’s prescription never once acknowledges the real mission of hospitals, taking care of (mainly sick) people. To her, a hospital is only a “business” in a “competitive environment.” Her description of the ideal leader of a hospital requires no knowledge of health care, nor any commitment to the values of health care. In fact, Bender warned that a sufficiently “quick and nimble” leader would not be attracted “by a constraining, bureaucratic reporting system,” presumably one that actually required that leader to conform to a code of ethics, or put patients ahead of making “bold, foundational changes.”

This commentary makes very clear what sort of thinking pervades the current leadership of health care. Health care is a business, like any other, without any particular values or ideals that set it apart from manufacturing automobiles, or hauling trash.

This thinking has been going on at least since the 1980's, when Einthoven, one of the leaders of the managed care movement, called for breaking up the “physicians guild” and putting managers and bureaucrats in charge of health care in order to constrain health care costs. (See post here.)

Doing that, of course, has not constrained costs, not improved access, and not improved quality. It has lead to a huge increase in the number of health care managers, who now out-number physicians (see post here.) It has let top health care executives make a tremendous amount of money (see post here). It has given health care a few leaders hailed as “visionaries,” some of whom have been monumental flops. (See for example the case of the “visionary” CEO of Allegheny Health Education and Research Foundation, who ended up in federal prison, and whose health care system ended in the second-largest bankruptcy at the time in US history, here on pages 5-7.)

Maybe it’s time to get health care leaders who understand something about taking care of patients, and who put the mission first (and then let them hire savvy business-people to keep the finances in order).

ADDENDUM (July 16, 2006) Ms Bender also urged Caritas to follow the example of Catholic Healthcare West, which she described as "enormously succesful." Yesterday, the San Francisco Chronicle reported that Catholic Healthcare West just settled a lawsuit which alleged that the system "charged excessive and unfair amounts to the small percentage of patients who were not covered by Medicare, Medicaid, or private insurance, and then set aggressive collection agencies on them when they couldn't pay." These practices seemed to directly contradict part of Catholic Healthcare West's stated mission: "serving and advocating for our sisters and brothers who are poor and disenfranchised." Again, what may look like an "enormously succesful" organization to a businessperson may not appear to succesful to patients and physicians. I repeat: maybe it's time to get health care leaders who understand something about taking care of patients, and who put the mission first.

Post Title → A Business-Based Prescription for Health Care

The Consequences of Breaking the Physicians' "Guild"

In 1988, Alain Enthoven, an original member and driving force of the Jackson Hole group, published a short manifesto about "managed competition." (Entoven AC. Theory and Practice of Managed Competition in Health Care Finance. Amsterdam: North Holland, 1988.) This is now not easy to find (but see Amazon here).

In this volume, Enthoven expounded on his scheme to wrest power over health care from physicians and give it to managers and bureaucrats. Enthoven thought of physicians as part of a tightly organized "guild," that is, an economic alliance. His model for this was a pre-World War II document from a French medical society. Basically, he thought such guilds, which he believed to be in place in all Western democracies except in the UK and Scandinavia, were based on principles that were "not the natural expression of a free market in health care," (p.33) and furthermore, that the guild model associated with health insurance "makes it very difficult for government or private payors to control cost growth," (p.41) while they paradoxically "can also produce poor service (p. 42). To combat physicians' overwhelming economic power, Enthoven called for managers to use "tools they have found to counteract market failure." (p. 98) Finally, he suggested using a coordinated strategy to "break up the guild," noting that "overcoming the guild has not been easy in the United States.... However, the guild has broken down." (P. 122)

Some recent opinion pieces document the consequences of breaking up the guild, and turning health care over to managers and bureaucrats.

Debunking Business Dogmas

US News and World Report reminds us that the conventional wisdom among business managers has often proved to be wrong. Yet many health care managers were big supporters of the dogmas debunked by two two management professors, Jeffrey Pfeffer and Robert Sutton. (See the amazingly titled Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting From Evidence-Based Management) :

• Financial Incentives Drive Good Performance (but instead, they have driven a huge number of health care dollars into the pockets of management, for example, see this recent post).
• First Movers Have the Advantage
• Layoffs Are Good Ways to Cut Costs (still the philosophy of too many health care executives who see everyone, except themselves, as interchangable, and are quick to dispatch those with whom they disagree)
• Mergers Are a Good Idea (but remember the mergers of NYU-Mt Sinai, UCSF -Stanford, and especially the mergers that created the Allegheny Health Education and Research Foundation, all now defunct)
• Life and Work Should Be Kept Separate (which really meant don't treat your employees very well, because they can always return to their lives outside of work).

Let's see how long it takes for the news to get out to health care managers.
A Melancholic Look at the Marketing of Pharmaceuticals
In the Atlantic Monthly, Carl Elliott's take on the commercialization of American health care, and how drug marketing has compromised physicians is a must-read. (Web access requires a subscription. The article was briefly posted in its entirety here, but the Atlantic Monthly forced the web-site to take it down. Therefore, I have provided some key quotes, and hope that the Atlantic Monthly will not find them excessive:

For better or worse, America has turned its healthcare system over to the same market forces that transformed the village hardware store into Home Depot and the corner pharmacy into a strip-mall CVS.

For decades the medical community has debated whether gifts and perks from reps have any real effect. Doctors insist that they do not. Studies in the medical literature indicate just the opposite. Doctors who take gifts from a company, studies show, are more likely to prescribe that company’s drugs or ask that they be added to their hospital’s formulary. The pharmaceutical industry has managed this debate skillfully, pouring vast resources into gifts for doctors while simultaneously reassuring them that their integrity prevents them from being influenced.

Doctors’ belief in their own incorruptibility appears to be honestly held. It is rare to hear a doctor—even in private, off-the-record conversation—admit that industry gifts have made a difference in his or her prescribing. In fact, according to one small study of medical residents in the Canadian Medical Association Journal, one way to convince doctors that they cannot be influenced by gifts may be to give them one; the more gifts a doctor takes, the more likely that doctor is to believe that the gifts have had no effect. This helps explain why it makes sense for reps to give away even small gifts. A particular gift may have no influence, but it might make a doctor more apt to think that he or she would not be influenced by larger gifts in the future.

The late 1980s and the 1990s [were] a period when the drug industry was undergoing
key transformations. Its ethos was changing from that of the country-club establishment to the aggressive, newmoney entrepreneur. Impressed by the success of AIDS activists in pushing for faster drug approvals, the drug industry increased pressure on the FDA to let companies bring drugs to the market more quickly. As a result, in 1992 Congress passed the Prescription Drug User Fee Act, under which drug companies pay a variety of fees to the FDA, with the aim of speeding up drug approval (thereby making the drug industry a major funder of the agency set up to regulate it). In 1997 the FDA dropped most restrictions on direct-to-consumer advertising of prescription drugs, opening the gate for the eventual Levitra ads on Super Bowl Sunday and Zoloft cartoons during daytime television shows. The drug industry also became a big political player in Washington: by 2005, according to The Center for Public Integrity, its lobbying organization had become the largest in the country.

Many companies started hitting for the fences, concentrating on potential blockbuster drugs for chronic illnesses in huge populations: Claritin for allergies, Viagra for impotence, Vioxx for arthritis, Prozac for depression. Successful drugs were followed by a flurry of competing me-too drugs. For most of the 1990s and the early part of this decade, the pharmaceutical industry was easily the most profitable business sector in America. In 2002, according to Public Citizen,
a nonprofit watchdog group, the combined profits of the top ten pharmaceutical companies in the Fortune 500 exceeded the combined profits of the other 490 companies.

During this period reps began to feel the influence of a new generation of executives intent on bringing market values to an industry that had been slow to embrace them. Anthony Wild, who was hired to lead Parke-Davis in the mid-1990s, told the journalist Greg Critser, the author of Generation Rx, that one of his first moves upon his appointment was to increase the incentive pay given to successful reps. Wild saw no reason to cap reps’ incentives. As he said to the company’s older executives, “Why not let them get rich?”

The industry began hiring more and more reps, many with backgrounds in sales (rather than, say, pharmacy, nursing, or biology). Some older reps say that during this period the industry replaced the serious detail man with “Pharma Barbie” and “Pharma Ken,” whose medical knowledge was exceeded by their looks and catering skills. A newer, regimented style of selling began to replace the improvisational, more personal style of the old-school reps. Whatever was left of an ethic of service gave way to an ethic of salesmanship.

Many doctors began to feel as though they deserved whatever gifts and perks they could get because reps were such an irritation.

The trick is to give doctors gifts without making them feel that they are being bought. “Bribes that aren’t considered bribes,” Oldani says. “This, my friend, is the essence of pharmaceutical gifting.” According to Oldani, the way to make a gift feel different from a bribe is to make it personal.

Such gifts do not come with an explicit quid pro quo, of course. Whatever obligation doctors feel to write scripts for a rep’s products usually comes from the general sense of reciprocity implied by the ritual of gift-giving. But it is impossible to avoid the hard reality informing these ritualized exchanges: reps would not give doctors free stuff if they did not expect more scripts.

Drug company–sponsored consultancies, advisory-board memberships, and speaking engagements have become so common,especially among medical-school faculty.... The industry as a whole is hiring more and more doctors as speakers. In 2004, it sponsored nearly twice as many educational events led by doctors as by reps. Not long before, the numbers had been roughly equal. This raises the question, Are doctors becoming the new drug reps?

According to an internal study by Merck, reported in The Wall Street Journal, doctors who attended a lecture by another doctor subsequently wrote nearly four times more prescriptions for Vioxx than doctors who attended an event led by a rep. The return on investment for doctor-led events was nearly twice that of rep-led events, even after subtracting the generous fees Merck paid to the doctors who spoke. These speaking invitations work much like gifts. While reps hope, of course, that a doctor who is speaking on behalf of their company will give their drugs good PR, they also know that such a doctor is more likely to write prescriptions for their drugs.

The semi-official industry term for these speakers and consultants is “thought leaders,” or “key opinion leaders.” Some thought leaders do not stay loyal to one company but rather generate a tidy supplemental income by speaking and consulting for a number of different companies. Reps refer to these doctors as “drug whores.”
Thought leaders serve an indispensable function when it comes to a potentially very lucrative marketing niche: offlabel promotion, or promoting a drug for uses other than those for which it was approved by the FDA—something reps are strictly forbidden to do.

Now for the most melancholy conclusions,

In 1997, John Lantos, a pediatrician and ethicist at the University of Chicago, wrote a book called Do We Still Need Doctors? We will always need health care, of course. But, as Lantos observes, it is not clear that we will always need to get our health care from doctors. Many of us already get it from other providers—nurses, physical therapists, clinical psychologists, nutritionists, respiratory therapists, and so on. The figure of “the doctor” is not cast in stone.

We simply live in a country that has decided that the traditional figure of the doctor is not worth preserving in the face of modern economics. Instead, we put our trust in the market.

Not if Health Care Renewal can help it!

The Seven Minute Visit

Peter Salgo is a physician who is also upset about the demise of the traditional figure of the doctor, but seemingly despairs about doctors' prospects for challenging the managers and bureaucrats. He just wrote an op-ed in the New York Times. He sees the problem beginning when managers broke the physicians' "guild,"

Patients aren't unhappy just because health care costs too much (though they would certainly like it to be more affordable). Rather, people sense a malaise within the system that has eroded the respect they feel patients deserve.

As health-care dollars became scarce in the 1980's and 90's, hospitals asked their business people to attend clinical meetings. The object was to see what doctors were doing that cost a lot of money, then to try and do things more efficiently. Almost immediately, I noticed that business jargon was becoming commonplace. "Patients" began to disappear. They were replaced by "consumers." They eventually became "customers."

Doctors in hospitals all over the country began hearing the same business language and facing the same pressures to "keep things moving." I used to be asked how well my patients were doing. Suddenly administrators were asking how long I was planning on keeping sick people in the intensive care unit.

Yet, he seems to feel a degree of learned helplessness,

Doctors know you cannot provide compassion in seven-minute aliquots. But we have felt powerless to change things. The medical establishment has, many of us feel, simply rolled over and gone along to get along. It has sacrificed patients' best interests on the altar of financial return.
This leaves the solution to the problem in the hands of our patients. You, the patient, are the system's best hope. Evaluate what it is you expect from your doctor, then ask for it. If you are unhappy with your doctor, fire him. If you cannot get more than a seven-minute face-to-face encounter with your doctor, he needs fewer patients.

The problem with this scheme, of course, is that primary care doctors are getting scarcer and scarcer. The American College of Physicians just reported, for example, that the number of medical school graduates training in general internal medicine has reached a new low. So in my humble opinion, we doctors cannot just wearily leave the field, hoping that patients alone will be able to take on the bureaucrats and managers. The doctors, along with other health professionals, and patients are all in this mess together, and we will all need to work to clean it up.

I do agree with Salgo's hopes for the results of doing something.

In one respect the business people are right. Restoring the doctor-patient relationship will not save anyone any money. But I submit that it doesn't have to. There are other ways to curtail health care costs. Some involve high technology; others do not. None of them requires patients to sacrifice their self-respect.

We can and must reduce health care expenses. But we cannot do it at the expense of patients' well-being. The doctor-patient relationship is critical to the integrity of the health care system. It is not disposable. Turning doctors into shopkeepers who regard patients as customers is unacceptable.

Post Title → The Consequences of Breaking the Physicians' "Guild"

Pizza Without the Cheese

The New York Times just published an interview with Gordon N. Bethune, retired chief executive of Continental Airlines, and arguably one of the more succesful leaders in the airline business. He made some pithy points points that seem to easily translate into the health care arena, providing some useful lessons for improving the management of health care organizations.

His major messages were:

"If you are going to be in the watch business, it helps to know how a watch works." In the airline context, Bethune's message was "that the airline business has been mismanaged by executives who do not really understand what matters to customers...." This criticism has clear parallels in health care. Although there seems to be no systematic data on the training, experience, and credentials of executives of health care organizations, it seems that few have had any direct experience caring for patients. (For example, see posts here and here.) Thus, few seem to understand the context of health care, much less internalize its values. The lesson is that health care organizations should be lead by people who understand the health care context and its values, either by direct experience and training, or by seeking extensive input from people with such experience and training.

"If you are being rewarded for findings ways to make pizza cheaper, eventually you'll take the cheese off. You'll make it so cheap that people won't eat it." In summary, do not let economic considerations over-shadow the organization's primary mission. Again, this has clear parallels in health care. The cost-cutters in the federal government (at the Center for Medicare and Medicaid Services, or CMS), managed care, and hospitals have zealously cut reimbursement for the basics of health care, e.g., nursing care in hospitals and reimbursement to patients' personal physicians for office visits. But no one seems to balk at paying huge amounts for new drugs and high-tech gizmos. (See post here.) The lesson is that we should be cutting frills, and paying less for over-priced goods and services, while supporting basic health care services.

"I asked an executive at an energy company once what he rewarded, and he said R.O.E. - return on equity. I told him if you asked someone on the second shift what roe was, he'd probably say fish eggs." In the medical context, we have discussed the latest pay-for-performance fad, and the pitfalls of the the proposed measures of performance. (See post here.) The lesson is that you should measure quality and performance, but with metrics that make sense. "You should tell people how to keep score, and reward them for it. But you better make sure you're using the right scorecard."

"You need to gain the trust of your employees." We have posted on numerous instances of conflicted and even corrupt leaders' deception and intimidation of their employees, including highly-trained nurses and physicians. Far too many health care leaders see their employees as interchangeable cogs in the machine. This may be a major reason for the dissatisfaction of physicians and nurses, and a contributor to quality problems and medical errors. (See post here.) The lesson is that all employees and staff should be treated with the respect deserved by every human being, and that trained professionals should be regarded as the essential resource of health care, not machine parts.

Good lessons.... Let's see if any health care organizations take them to heart.

Post Title → Pizza Without the Cheese

Reasoning by (Mis)Analogy Revisited: How is Health Care Like Manufacturing Toyotas?

As someone who has done a bit of academic work in health quality, an area that has not received a lot of support, I welcome every well-intentioned effort to improve quality. Furthermore, it is reasonable to try to apply lessons learned outside of health to improve health care.
That having been said, I remain troubled that a lot of thinking about health quality seems to depend on drawing misguided analogies. I had previously posted about how the former chairman of Intel likened health care to making computer chips.
The latest example appeared in the New York Times. This op-ed article, entitled, "The Health Factory," asserted that hospitals have a large

opportunity to reduce the rate of catastrophic medical error, if the hospitals would just follow the example of the world's most succesful industrial organizations. Companies like Toyota, Alcoa and Vanguard differ from one another in the products they produce and the technologies they employ, but they share a management approach that has resulted in a combination of safety, quality, efficiency, and responsiveness unmatched by their competitors.
It may seem a stretch to compare a carmaker's , aluminum refiner's, or mutual fund company's operations with a hospital's. But all these companies manage complex processes that require a great deal of problem solving.

To me, it seems a stretch to far. Once again, hospitals do not produce products, they provide services. Moreover, unlike, say a hotel or airline, they must provide unique services to patients who show up at unpredictable times with unpredictable problems, and combinations of problems.
Certainly, there are processes that occur in hospitals that are routine, such as, for example, washing linen or sterlizing surgical instruments. But there is tremendous variability in what goes on in every hospital Emergency Department, operating theatre, medical ward, etc., etc., etc.
It thus makes little sense to think that quality improvement measures designed for businesses whose goal is to produce identical products on assembly lines (e.g., Toyota cars and Alcoa aluminum ingots) are going to apply to most of what goes on in hospitals.
But forcing the application of such measures in situations where they do not readily fit is likely to produce worse, rather than better quality.
Maybe that's why the op-ed cited a single anecdote to support this argument, and started off by wildly inflating the dangers of hospitalization, likening it to "parachuting off a bridge."
I appreciate well-intentioned efforts to improve health care quality, but to be succesful, such efforts need to be informed by appreciation of the health care context.
In a larger sense, thinking about and managing health care as if it were a routine, assembly-line process, as Ludmerer wrote in Time to Heal, like "making cars or breakfast cereals," may be a cause of, rather than a solution to our current health care ills.

Post Title → Reasoning by (Mis)Analogy Revisited: How is Health Care Like Manufacturing Toyotas?

Reasoning By (Mis)Analogy: Should Hospitals be Compared to Microchip Factories?

Rant alert: I have become increasingly distressed by changes in health care prompted by poor analogies between it and various businesses. One of my pet peeves has been hospital quality improvement schemes based on what purportedly works to improve quality on production lines.
Hospitals couldn't resemble mass production in a factory less. Yes, of course, most products used in hospitals are mass-produced in a factory, and physicians and other health care professionals depend on products manufactured with great uniformity and predictability. Each patient presenting to a hospital, however, has a unique set of problems and issues. Attempts to manage these issues are based on our currently far from complete understanding of human biology, and how psychosocial factors impinge on it. Patients present at any time, with varying degrees of severity, at various stages in their life. The goal is to provide the best approach to each patient customized to that patient's situation and problems. Doing so is likely to require using drugs, devices, and equipment that will perform predictably and reliably. But the choice of what tests to do, what treatments to employ, how to discuss and inform the patient of what is going on, etc are unique to each patient.
In contrast, the goal of production lines is to produce identical products, designed by humans, based on good understanding of physics, chemistry etc., and the principles of engineering. So how would practices designed to improve the design and manufacture of goods and equipment on a production line likely apply to how hospitals take care of unique patients?
In this week's JAMA there appears a good example of the genre of applying industrial production techniques to health care, an article by Andrew S. Grove PhD, the "former chairman of the board of Intel Corporation." [Grove AS. Efficiency in the health care industries: a view from the outside. JAMA 2005; 294: 490.]
Grove starts off with this comparison: "the health science/health care industry and the microchip industry are similar in some important ways: both are populated by extremely dedicated and well-trained individuals, both are based on science, and both are striving to put to use the result of this science." These criteria are extremely broad. One could use them to compare health care with the airline industry, major league baseball, or the Communist Party in the Soviety Union under Vladimir Lenin. All these organizations could have claimed to be populated by well-trained, dedicated people, who based their work to some extent on scientific principles.
Then blithely dismissing that "one industry deals with the well-defined world of silicon, the other with living human beings," Grove goes on to tell us how to do health care better.
Particularly galling, I think, is his criticism of the slow pace of the "war on cancer" compared to the increase in the number of transistors included on microchips.
Maybe he really got to the point nearer the end, when he pushed for more and quicker implementation of the electronic medical record. "When it comes to operational efficiency, nothing illustrates the chasm between the 2 industries better than a comparison of the rate of implementation of electronic medical records with the rate of growth of e-commerce." This comparison is hard to fathom. EMRs, to be useful, need to digitally categorize data that is very hard to organize. No one yet knows how to store, for example, the contents of the medical history in anything other than a text file. Yet an electronic medical record that consists mostly of text and image files may be no easier to manipulate than a paper chart. E-commerce, on the other hand, must simply keep track of stereotyped transactions. (Readers of Health Care Renewal have seen why the EMR may not be as much of a panacea as its promoters proclaim.) But selling more EMR systems may increase the demand for Intel's chips.
I have no objection to inter-disciplinary work. And health care can obviously benefit from insights from other fields. But why are we in health care constantly berated by people based on bearing such bad analogies as those proposed by Grove?

Post Title → Reasoning By (Mis)Analogy: Should Hospitals be Compared to Microchip Factories?