Date: May 21, 2009 2:16 PM
Fredrick H (MD, PhD, JD) wrote:

   Just as Fee-For-Service encourages overtreatment, Capitation encourages undertreatment.
While overtreatment may cost money, undertreatment can cost lives; so, it is a greater evil.
 
    If a doctor is capitated and finds a condition that requires a referral, what happens?
Either he has to pay out of his capitation funds, so is encouraged to take on problems beyond his competence, or he doesn't have to pay, so is encouraged to dump patients.
 
    So this would encourage doctors to form networks and be capitated as a group -- i.e., push them into HMOs, with all their intrusion into the doctor/patient relationship. In m y opinion, HMOs are the Scourge of American medicine, and should not be encouraged.
 
    And, yeah, payers like capitation because they can save money while the doctors take the rap for denying care.
 
    The smaller the group, the greater the statistical chance that they get too many really sick patients and don't have the funds to treat them. When this happens to HMOs they have been shown to deny more needed care for purely financial reasons. To prevent this, the payer has to pay a larger excess over the average cost of care the smaller the risk-taking entity. Thus, the larger the risk-taking entity, the less will be the capitation required to prevent its ruin. Thus the cheapest system would be Universal Health Care - NOT capitation of individual doctors or small HMOs.

GR is an Academic Group's Executive Director
Sent: May 22, 2009 8:06:50 AM EDT

The underlying economic motivation of fee-for-service is to provide services. There is no incentive to seek to deliver care faster, better or cheaper. The incentive is to provide more, and to restrain efforts that would reduce demand for services.

I would differ that the risks are tiny of unnecessary care, unnecessary care can cost lives to the same extent that under treatment does. That unnecessary hospitalization that results in an infection, that unnecessary surgery that exposes the patient to complications, the unnecessary antibiotics, etc.

Capitation can be quite liberating, and can place the physician and the patient at the center of the decisions regarding healthcare. The authorization programs and the bureaucracy can be reduced. How else can we provide economic incentive to physicians to provide care, faster, better and cheaper? Fee for services says, if I heal you in 3 sessions, I make less then if I drag it out to 5. If I treat you medically and avoid hospitalization, I deprive myself of income? If I suggest that the surgery is not needed now, and can wait, and watch it, I might never get to do the surgery and lose the income. Where is the reward for keeping the office open an extra hour to see that sick patient, rather than closing and sending them to the costly ER?

Among the problems with capitation is that it is dependent upon primary care physicians, and there are few of them compared to specialists, and the structure of care delivery is weighted to the high end, hospital centric care. The medical community has followed the money, hospitals with duplicative high end services because there is better reimbursement, rather than care that their community needs ("not-for-profit" does not guarantee that the community interests are put before the institution's)

There are many problems with capitation as there are with Fee-for-service, at least with capitation physicians are more in control, and rewarded for working with patients to maintain health, and avoid the need for medical care.

HMO's, at least in the northeast have largely been out of capitation for years, a backlash created by the specialists and hospitals which saw the loss of control to the primary care physicians, and a shift in the dollars away from their coffers. So while capitation can be designed in a manner that is supportive of the goals of the system, payers decided that it was easier to abandon capitation, accept the existing fee-for-service economic model in the area, and pass on the costs in premiums.

I do incentive programs with physicians that provide additional compensation for improved HEDIS measures, reduced re-admits, and some other measures, as well as global. Putting some attention and money into desired services does increase them.

Having watched the politics of the stimulus bill for EHR and the formula approach to Medicare physician payments, I am not reassured of the governments ability or willingness to conduct health care any better than the marketplace where competing forces may keep more balance than increasing the power of a central government.

From Fredrick; Sent: May 22, 2009 10:00:32 AM EDT

RE: "Unnecessary care can cost lives to the same extent that under treatment does." "To the same extent?" I don't believe that for a moment! That unnecessary care CAN cause injury is surely true. That the injury caused is even of the same order of magnitude a denied necessary care I seriously doubt, and would wonder if there is any data supporting that statement.

You point out the incentives of the FFS doctor, but totally ignore those of the capitated one - to save money by seeking excuses not to do needed care, to claim that accepted treatments are 'experimental', to delay appointments to minimize patient load, to have nurses do GP jobs, and GPs do specialist jobs, to drive away expensive patients by giving poor service, or even to euthanize them. (Why has Kaiser turned a blind eye toward some of its nurses implicated in multiple patient deaths?)

And these decisions are made in back offices by accountants and the doctors they have co-opted, or worse, by nurse drones working from scripts.

These are not imaginary risks - we see them all the time in our current HMOs.

I prefer a system where doctors have no incentive to deny care, and where costs are controlled by an openly-debated scientifically-based set of guidelines and payment schedules.

From M.M.; Sent: May 22, 2009 11:54:28 AM EDT

Fredrick,

I’m new to this discussion but one fact keeps coming back to me and that is the healthcare industry is in the dark ages when it comes to automation. I sold data base management systems for 20 years and most industries have all information on-line for everyone they do business with, customers, vendors, etc.

I recently lost my mother and my sister to cancer and I was involved in taking them to the hospitals (three), doctors ( multiple), labs (many), clinics (many), etc. We answered the same questions and filled out the same forms in each location, multiple times. This cost time and money. Why isn’t all this information on-line?

Why don’t we have a national database with all patient history on-line so authorized people can access this when needed?

Banks and credit card companies can look your information in real time and see all transactions and the same is true for insurance and most other industries.

The savings are huge for centralized database technology. They also increase the ability for analyzing and measuring productivity and have the needed requirements to help improve performance. Errors can be found and corrected with the right kind of filters and audits. This would save us tens of billions. This is just one simple thing we should all be able to agree on that would bring us out of the dark ages and into the 21 century.

I don’t hear anyone pushing for a national healthcare database. Why?

Mike

PS I’m retired and not trying to sell any body anything…

From Fredrick; Sent: May 22, 2009 1:40:35 PM EDT

Mike:

The primary opposition to a national medical database are Privacy Advocates, who are afraid that it will be used against them by employers and insurers, and will allow more breaches of privacy of famous people by nosy hospital employees.

I think that some providers are opposed because it may limit their ability to hide their errors and "lose" inculpatory evidence.

Nevertheless, I believe that the Obama administration IS providing money in the "stimulus package" to advance the technology.

I personally don't think it's going to be much of an advantage. The well publicized outages of major on-line databanks (even Google just last week) reveal the dangers of making patient care dependent on "cloud computing". Thus, hospitals & doctors will need to maintain some kind of hard copy backup, so where will the savings be?

And, if doctors are Luddites, their staff are even more so. There will be major problems with training and employee resistance.

Cost will be a big problem, but I understand the government is planning to make a common system available as open-source.