Unsustainable

During a recent interview on public radio, the CEO of one of Maine’s small hospitals (we have only one hospital that might qualify as not small) observed that the implementation of the Affordable Care Act had already resulted in a decrease in the length of hospital stay and shifted some of the health care utilization away from his hospital. These changes have been reflected in decreased revenue for his institution. This in turn was making it difficult for it to subsidize the outpatient practices it had purchased. He added that over the last several years, outpatient medicine was not sustainable without subsidies.

We hear a lot these days about sustainability, but I had never considered outpatient pediatrics in terms of sustainability. But as I thought more about it, I realized that on several levels that primary care pediatrics had frequently had to adjust when its resources had been unable to keep up with demand.

Fifty years ago, outpatient pediatrics was comfortably sustainable, at least from the profit and loss perspective. Most practices were solo, owner-operated enterprises. Real estate was cheap, and many physicians practiced out of their homes. Overhead costs were low. There were no expensive immunizations to stockpile and then, as now, most pediatricians didn’t require much in the way of high tech equipment to make diagnoses. And certainly there were no costly computer systems to purchase and invest valuable time in learning to operate.

If there was something unsustainable about solo practice, it was the issue of coverage. A surprising number of physicians were able to find a balance between being available to their patients and having enough time and energy for personal restoration and a family. However, over time, an increasing number of physicians found solo practice unsustainable. They simply ran out of emotional capital. The solution was to join together in groups. This provided an answer to the on-call issue and offered the promise of an improved financial balance sheet. Business consultants preached the economy of scale. A group could buy things like toilet paper at a discount, and group members could share support staff, saving on payroll.

But it turns out that seeing patients in an outpatient setting doesn’t follow the rules of economy of scale that apply to a factory cranking out widgets. Physicians practice with different levels of efficiency. They are often independent-minded individuals for whom sharing overhead is a difficult concept to grasp. Sometimes, the result is an unsustainable dynamic in which the overhead of the less-efficient members dictates the overhead for the group. As groups grow bigger, even the physicians who understood how to run an office efficiently surrender control to business managers who may not understand medicine. The overhead continues to rise.

The result can be a tense and unsustainable atmosphere with the business manager saying, "You need to bring in more money by doing more studies and/or seeing more patients." The physicians respond, "But doing more procedures doesn’t translate into good medicine. And neither does seeing too many patients."

Even groups that had been able to craft a sustainable model began to face threat from third-party payers whose preferred provider lists that could change year to year might exclude them. This threat of instability created an unsustainable situation in which a practice could no longer count on having a panel of patients large enough to be profitable. The result was often selling out to an even larger entity.

On top of these scenarios consider the rising cost of college and medical school, and the reality that even the best electronic medical record systems adds at least 5 minutes to the physician’s time investment in each office visit. It is surprising that young people still choose primary care.

Is there hope for this bleak picture of unsustainability? I’m not sure, but there is clearly enough fat and waste in our health care system that a redistribution of resources toward primary care could make it sustainable and improve the quality.

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics including "How to Say No to Your Toddler." E-mail him at [email protected].

During a recent interview on public radio, the CEO of one of Maine’s small hospitals (we have only one hospital that might qualify as not small) observed that the implementation of the Affordable Care Act had already resulted in a decrease in the length of hospital stay and shifted some of the health care utilization away from his hospital. These changes have been reflected in decreased revenue for his institution. This in turn was making it difficult for it to subsidize the outpatient practices it had purchased. He added that over the last several years, outpatient medicine was not sustainable without subsidies.

We hear a lot these days about sustainability, but I had never considered outpatient pediatrics in terms of sustainability. But as I thought more about it, I realized that on several levels that primary care pediatrics had frequently had to adjust when its resources had been unable to keep up with demand.

Fifty years ago, outpatient pediatrics was comfortably sustainable, at least from the profit and loss perspective. Most practices were solo, owner-operated enterprises. Real estate was cheap, and many physicians practiced out of their homes. Overhead costs were low. There were no expensive immunizations to stockpile and then, as now, most pediatricians didn’t require much in the way of high tech equipment to make diagnoses. And certainly there were no costly computer systems to purchase and invest valuable time in learning to operate.

If there was something unsustainable about solo practice, it was the issue of coverage. A surprising number of physicians were able to find a balance between being available to their patients and having enough time and energy for personal restoration and a family. However, over time, an increasing number of physicians found solo practice unsustainable. They simply ran out of emotional capital. The solution was to join together in groups. This provided an answer to the on-call issue and offered the promise of an improved financial balance sheet. Business consultants preached the economy of scale. A group could buy things like toilet paper at a discount, and group members could share support staff, saving on payroll.

But it turns out that seeing patients in an outpatient setting doesn’t follow the rules of economy of scale that apply to a factory cranking out widgets. Physicians practice with different levels of efficiency. They are often independent-minded individuals for whom sharing overhead is a difficult concept to grasp. Sometimes, the result is an unsustainable dynamic in which the overhead of the less-efficient members dictates the overhead for the group. As groups grow bigger, even the physicians who understood how to run an office efficiently surrender control to business managers who may not understand medicine. The overhead continues to rise.

The result can be a tense and unsustainable atmosphere with the business manager saying, "You need to bring in more money by doing more studies and/or seeing more patients." The physicians respond, "But doing more procedures doesn’t translate into good medicine. And neither does seeing too many patients."

Even groups that had been able to craft a sustainable model began to face threat from third-party payers whose preferred provider lists that could change year to year might exclude them. This threat of instability created an unsustainable situation in which a practice could no longer count on having a panel of patients large enough to be profitable. The result was often selling out to an even larger entity.

On top of these scenarios consider the rising cost of college and medical school, and the reality that even the best electronic medical record systems adds at least 5 minutes to the physician’s time investment in each office visit. It is surprising that young people still choose primary care.

Is there hope for this bleak picture of unsustainability? I’m not sure, but there is clearly enough fat and waste in our health care system that a redistribution of resources toward primary care could make it sustainable and improve the quality.

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics including "How to Say No to Your Toddler." E-mail him at [email protected].

During a recent interview on public radio, the CEO of one of Maine’s small hospitals (we have only one hospital that might qualify as not small) observed that the implementation of the Affordable Care Act had already resulted in a decrease in the length of hospital stay and shifted some of the health care utilization away from his hospital. These changes have been reflected in decreased revenue for his institution. This in turn was making it difficult for it to subsidize the outpatient practices it had purchased. He added that over the last several years, outpatient medicine was not sustainable without subsidies.

We hear a lot these days about sustainability, but I had never considered outpatient pediatrics in terms of sustainability. But as I thought more about it, I realized that on several levels that primary care pediatrics had frequently had to adjust when its resources had been unable to keep up with demand.

Fifty years ago, outpatient pediatrics was comfortably sustainable, at least from the profit and loss perspective. Most practices were solo, owner-operated enterprises. Real estate was cheap, and many physicians practiced out of their homes. Overhead costs were low. There were no expensive immunizations to stockpile and then, as now, most pediatricians didn’t require much in the way of high tech equipment to make diagnoses. And certainly there were no costly computer systems to purchase and invest valuable time in learning to operate.

If there was something unsustainable about solo practice, it was the issue of coverage. A surprising number of physicians were able to find a balance between being available to their patients and having enough time and energy for personal restoration and a family. However, over time, an increasing number of physicians found solo practice unsustainable. They simply ran out of emotional capital. The solution was to join together in groups. This provided an answer to the on-call issue and offered the promise of an improved financial balance sheet. Business consultants preached the economy of scale. A group could buy things like toilet paper at a discount, and group members could share support staff, saving on payroll.

But it turns out that seeing patients in an outpatient setting doesn’t follow the rules of economy of scale that apply to a factory cranking out widgets. Physicians practice with different levels of efficiency. They are often independent-minded individuals for whom sharing overhead is a difficult concept to grasp. Sometimes, the result is an unsustainable dynamic in which the overhead of the less-efficient members dictates the overhead for the group. As groups grow bigger, even the physicians who understood how to run an office efficiently surrender control to business managers who may not understand medicine. The overhead continues to rise.

The result can be a tense and unsustainable atmosphere with the business manager saying, "You need to bring in more money by doing more studies and/or seeing more patients." The physicians respond, "But doing more procedures doesn’t translate into good medicine. And neither does seeing too many patients."

Even groups that had been able to craft a sustainable model began to face threat from third-party payers whose preferred provider lists that could change year to year might exclude them. This threat of instability created an unsustainable situation in which a practice could no longer count on having a panel of patients large enough to be profitable. The result was often selling out to an even larger entity.

On top of these scenarios consider the rising cost of college and medical school, and the reality that even the best electronic medical record systems adds at least 5 minutes to the physician’s time investment in each office visit. It is surprising that young people still choose primary care.

Is there hope for this bleak picture of unsustainability? I’m not sure, but there is clearly enough fat and waste in our health care system that a redistribution of resources toward primary care could make it sustainable and improve the quality.

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics including "How to Say No to Your Toddler." E-mail him at [email protected].