Robert W. Morrow, M.D.
That is a simple equation that is truer now than ever, since the cost of care once someone is really sick continues to rise quickly.
Primary care decreases the need for expensive tests and procedures, and focuses on preventing and managing chronic health issues. Catch things early and over time, with the help of your trusted, neighborhood doctor (if you can find one), you will see better public-health indices across the board.
I have had an artisanal* small family practice for 37 years, and have remained focused on those who chose me for their care. For me, the evolution of the “healthcare system” has increased the uncertainty of my practice, specifically uncertainty in what and when I will get paid for my work.
If I sold beer, you would pay the price of the beer, and that number would cover the costs to make and distribute it, as well some profit.
Every day, however, I perform health evaluations and treatments with no clear expectation of how much, or when, I will be paid. Despite many years of experience on the front lines of healthcare, I simply have no way to predict what charges a healthcare payer will approve and finally send my way. There is no guaranteed salary for serving my community, only a debilitating uncertainty about keeping my practice afloat.
Payers may make noises about the importance of primary care, but in practice they are doing all they can to reduce or deny reimbursement for my work. It is not unusual for a small primary care office in the New York City area to have less than one month’s operating cash on hand.
How has this happened to my colleagues and to me? And to you?
First, you need to understand that the “system” in the term “healthcare system” is not one that is tuned to providing excellent care. It has been bastardized by the financialization of the economy in general. A financialized healthcare system puts far more emphasis on the value of its stock, than the health of those whom it ostensibly serves.
Rapidly expanding and consolidating health systems have seemed inevitable and perhaps even an improvement. Larger systems can get higher payments and find efficiencies, right? Yes to the first; no to the second.
Your local health system — let’s call it MegaCare Wellness — is busy buying and building.
The rule of financialization is that much more money can be made by massive borrowing to buy competing healthcare offices and hospitals, than by worrying about the messy details of keeping people healthy. To play the financialization game requires that they take on debt by issuing bonds and then let Wall Street dice up those debt obligations to sell to the next sucker down the line.
If that sounds familiar, that is because this is exactly the same playbook that Wall Street used in the notorious “sub-prime” crisis of 2007 and 2008.
Financial transactions on this scale — $100’s of millions a pop — immediately reward the leaders of the big healthcare systems in a way that a really good group of artisanal healthcare providers never could. A patient visit or even an expensive procedure brings in nothing when compared to the acquisition of a competitive system in a neighboring region.
To borrow, a healthcare corporation needs a good balance sheet and a convincing business plan. So the leaders of these behemoths work hard to lay folks off and delay payments to vendors (including healthcare providers like me). And while they are at it, they engineer the take- over of their workers’ retirement funds and reset the seniority clock to year zero, further reducing their obligations.
They also change work rules. You will know this has happened when no one answers the phone at your clinic, or if you call about a billing mistake and you get only a robot response (if you are lucky), or a collection agency.
You may also have noticed your healthcare providers are often grumpy. The doctor and nurse seem more hurried and harried. Waits are longer, there is a strain on simple housekeeping obvious in the bulging waste bins.
Heathcare According to LIBOR
When interest rates were low, bonds were cheap to obtain and service. As interest rates rise, MegaCare Wellness may well get into trouble. The increase in debt by the massive healthcare institutions means that they are vulnerable to financial shocks that have no direct relationship to the delivery of healthcare.
And those shocks are already starting to course their way through the healthcare bloodstream. For example, publicly traded Community Health Systems Inc. is struggling to refinance only $2 billion of its total debt, which is well over $10 billion.
All this means that healthcare systems will push ever harder to reduce their costs of delivering healthcare to you. They have a lot of tricks up their sleeve. If you can stomach it, and it does not make you sick enough to see a doctor, then I’ll share some of those secrets in a subsequent post.
* Artisanal-Made in a traditional or non-mechanized way, using high-quality ingredients; or, pertaining to or noting a high-quality or distinctive product made in small quantities, usually by hand or using traditional methods.