The ascendancy of primary care: permanent or temporary? - Health Care Marketplace

ABSTRACT

The conventional wisdom strongly suggests a health care providern food chain for the future: Primary care physicians (PCPS), principallyfamily practitioners, on the top playing the lead role, distantly followed by specialists, with hospitals and other ancillary services even further down the line. Is this a reasonable expeciation? Will PCPS dominate the new systems? Or will they be but one of many equally necessary components of these developing integrated health care delivery organizations? Looking at the various models now developing, it would seem that future integrated delivery systems will utilize both PCPS and specialists, but with strong augmentation from a diverse assortment of other health care professionals, including nonphysician providers, educators, and administrators. To separate the illusion of primary care dominance of the coming health care system from the likely reality, we should first determine what is driving the apparent present demand for primary care physicians. Next, we will examine the possible and probable reactions to that demand from an economic standpoint and from the points of view of both health care professionals and the public. Finally, we must hy to picture how health care provider organizations of the future are likely to look and how they will integrate their health care professionals.

At present, there are two very different forces bidding up the price for primary care physicians. One of them is hospitals, feeling they require a large network of PCPS to support hospital census and the vast corps of specialists performing procedures at these institutions. The second force is the belief, by health plans and others, that PCPS as gatekeepers provide lower cost, higher quality health care for capitated managed care patients. We believe that both premises are suspect.

Hospital Pressure on Physician Incomes

Hospitals fightly realize that, in a managed care environment, the patient base is allocated by the health plans to PCPS. Therefore, more PCPS captured by a particular hospital not only potentially increases its own bed occupancy but also deprives its competitors of patients. The rapid development and financial support of hospital sponsored IPAS, PHOS, MSOS, and other structural aggregations of PCPS are all symptoms of the struggle to acquire admissions through PCP patient panels. The outright purchase of physician practices by hospitals, by the guarantee of high incomes, is an extreme example of this desire to lock up hospital admissions. These hospital strategies are contributing greatly to the demand for PCPS in the marketplace.

However, history gives no assurance that these hospital strategies will be successful. For all but a few institutions, capitation and per diem revenue still lag far behind income derived from fee-for-service patient care. As the percentage of capitated patients in physician practices increases, this managed care physician constituency will demand that the hospital declare its support by reducing hospital costs. They will expect this cost reduction to result in a consistent, honestly accounted for, and substantial return of risk share to the PCPS. If hospitals fail to perform to the satisfaction of their PCPS (and most do fail), physicians will exercise their prerogative to take their patients elsewhere. The needs of the managed care physician component for less costly services will impair hospital earnings, and hospitals will lack funds necessary for the financial support of physician practices.

Practice purchases, in particular, have inevitably been disastrous investments for hospitals. Hospitals cannot engage in "code creep," unbundling, and other marginal billing practices, nor can they utilize the loose employment and quality assurance procedures that often contribute to the financial success of individual and small physician practices. Physicians on hospital-quaranteed incomes lack the incentive to work 60 hours a week as many did when they were autonomous. Hospitals are paying purchase prices based on historic fee-for-service physician income for practices that will soon be predominantly capitated. Even sophisticated appraisers of practices have difficulty evaluating, the future financial performance of fee-for-service practices after their transition to capitation because of the uncertainty of obtaining and transferring payer contracts. Not-for-profit hospitals have additional legal and ethical constraints as they dive into these treacherous waters, one of them being the two-year limitation on income guarantees to physicians, as well as the government's illdefined legal constraints on not-for-profits in the gray area of physician inurement.

As time goes on, the futility of practice purchases will become apparent to hospitals. Nor will they have the funds to make these purchases. As mana,ed care prevails, hospitals will be unable to shift the costs of low per diem rates and higher shared risk payments to their declining fee-for-service clientele. Additionally. only physicians with established practices can avail themselves of hospital largesse. The rising tide of PCPS out of residency programs and the large number in salaried jobs with group or staff models have no practices of their own to be purchased and thus will represent little economic value to hospitals. The marketplace result of all this would seem to negate the pressure from hospitals to substantially bid up the reimbursement paid to primary physicians.

PCPS as Low-cost Providers

The second driver of demand for PCPS is the notion that they are the lowest cost, highest quality provider of health care to patients. Although low cost and high quality generally are two sides of the same coin, let us examine them independently. Cost in capitated systems depends on the cost of all the components of the health care spectrum, physician reimbursements being but one of these variables. Factors that will affect demand for PCPS in the future also will include data on the total cost of care delivered to patients; skill and training, of practitioners; compression of the entire range of physician salaries; utilization of more nonphysician providers; and more innovative methods of delivering health care to patients, including, patient education.

Total Cost of Patient Care

In capitated systems, the total cost of health care to a patient population for a specific period (ideally a patient lifetime) is the only meaningful financial measure. The fact that the monetary reimbursement to an orthopedic surgeon is far more than to, a PCP doesn't mean that the entire spectrum of care initiated by a patient visit to an orthopedist is necessarily more costly. A simplistic example might be a patient with a painful shoulder. A visit to a PCP would result in x-ray and laboratory tests, several repeat visits, trials of therapy with various costly pharmaceuticals, a series of expensive physical therapy sessions, and ultimately a dissatisfied patient. A visit directly to an orthopedist, on the other hand, could result in an accurate initial diagnosis followed by an injection of the joint, all accomplished at the first visit and producing a satisfied patient. At present, we do not have the data to determine whether care initiated and controlled by PCPS, when total costs, including pharmacy and ancillaries, are taken into account, is the least costly approach. If this proves not to be the case. pressure to hire PCPS by managed care organizations may substantially subside.

PCPS Are Not Created Equal

There is no question that the skills and qualifications of physicians are highly variable. While some PCPS are capabie of handling, more serious medical problems. others are less competent. Often, PCPS do not have the training, and experience necessary to manage seriously ill patients, especially those with multisystem diseases. Many managed care organizations today do not have PCPS, except for general internists, to manage hospitalized patients. Also, a comprehensive knowledge of pharmacy virtually defies mastery by any single physician, whereas specialists have extensive expertise in their limited areas. Depending on a gatekeeper PCP. or any single physician. to make these difficult patient care decisions is leaning on a weak reed. Further, patients have long, felt that a major strength of the American health care system lies in its specialist physicians. The public is not likely to soon accept a system that does not provide reasonable access to specialists whom they perceive to be more highly trained than generalists.

Other areas that reflect considerable differentiation of training, and ability among, PCPS are office productivity and utilization management. Success in capitation requires the ability to effectively care for fairly large volumes of patients. In a capitated environment, 5,000 to 6,000 patient visits a year may be needed to justify the average PCP reimbursement expectation. Many PCPs, and many specialists, have not adopted the facility, work ethic. or motivation required to handle that many patient visits. PCPs who are unable to produce at that level will not be aggressively marketed by group- or staff-model HMOs or their provider organizations.

Similarly, with improvements in data systems, trackin, of utilization factors will be far more prevalent. This data analysis will comprise not only, a PCP's office functions. but also utilization of ancillary services, number and content of referrals, and utilization of hospital days. We can expect to see Aide differences in the desire of organizations to hire or retain particular PCPS based on an analysis of their ability to appropriately manage utilization. Perceived inadequacies in productivity and utilization management will substantially reduce the value of many PCPs compared to other PCPs and specialists and will compromise their value to managed care organizations.

Compression of Physician Salaries

Unquestionably, a major contributor to the cost of health care has been the high reimbursement of specialist physicians. This is unlikely to continue. If we examine the history of other nations that have experienced physician oversupply. particularly those of Eastern Europe, we find enormous compression of physicians salaries. A personal communication with the medical director of the Republic of Slovakia, for example. reveals that all physicians in that small state are on exactly the same salary scale! While that may, be an extreme outcome to predict here. we can expect income differentials between PCPs and specialists to decline from hundreds of thousands of dollars annually to tens of thousands in the next few years. Reducing the physician cost per visit will make specialty care a more viable alternative in managed care settings.

Using More Nonphysician Providers

PCPs are not alone in increasing productivity by employing nonphysician providers. Already, in capitated Group practices, nurse anesthetists and nurse midwives are contributing to the reduction of costs in their respective specialties. Specially trained optometrists are sharing patient care with ophthalmologists, thus greatly increasing, the number of patients that can be seen by a single ophthalmologist. Orthopedic and urologic physician assistants are widely employed. Chiropractors are treating medical back conditions, allowing their orthopedist colleagues to focus on surgical problems. The list is long and getting longer. The result will be a further reduction in the differential cost of patient visits to specialists compared to PCPs.

New Methods of Delivering Care

In fact, it is highly likely that all physicians will be in excess supply in the future as newer systems of health care prevail. Telephone advice systems will reduce the number of personal physician-patient interactions. Case management by master's degree-prepared clinical nurse specialists is proving highly effective in caring for sicker patients. The more widespread use of nonphysician providers mentioned above will reduce the demand for PCPS and specialists alike.

Patient education programs are also reducing the need for one-on-one patientphysician interactions. Just as mental health professionals have utilized group therapy, many other prevalent clinical problems can benefit from the same approach, especially those that involve a hi,h degree of patient education. Diabetes classes are a common example. Education techniques have rich possibilities for extending, health care through interactive video and teleconferencing as well as cable TV technology.

Health Care Organizations of the Future

The common denominator of these newer patient care systems is lower utilization of all physicians, generalist and specialist alike, in direct patient care. Because of the dispersal of work among many other professionals, the demand for PCPS in the future may not exceed the demand for specialists. PCPs have not been trained operationally to perform the role of directors of the health care system. PCPs-dominated systems have not demonstrated operational cost savings over multispecialty roup models. And the public does not seem prepared to embrace a system that imposes too many flaming hoops between patients and specialists of their choice

Successful health care organizations of the future must and will take very seriously their commitment to embrace the entire continuum of care, not simply focus on episodes of illness and crisis. Only in that way can the total cost per patient life be reduced. Integrated health care organizations will employ professionals who will help keep patients well and who have the expertise to care for them when they are ill. These professionals will include not only physicians, but also nonphysician providers and an array of experienced administrators, health educators, highly trained case managers, clinical pharmacists, and others. It seems inevitable that the role and need for all physicians will be proportionately reduced. In this scenario, no physician group will gain ascendancy. Clinical operational systems and their management will be the key to success.

Primary care physicians will have an integral role in these systems, but not entirely or even primafily as the most effective healers of illness. If the latter is their expectation, they will be disappointed. Their role will be part physician, part director and coordinator of care. PCPs will play an active role in creating exciting new systems of total patient management and will help manage and preside over their execution. Finance, management training, leadership abilities and conflict resolution techniques will be among the skills that will be necessary to the success of all physicians and their organizations in the future. These subjects are not now part of most medical school curricular. Wise physicians will take note and proceed accordingly.

COPYRIGHT 1995 American College of Physician Executives
COPYRIGHT 2004 Gale Group