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Mayo Clinic CEO Adds to Civil Discourse About Health Care

Posted Apr 08 2010 3:13pm

There has been precious little civil discourse around the reent health care legislation, but Victor Trastek, MD , CEO of Mayo Clinic Arizona,  made a distinguished contribution to it when he spoke to the Harvard Business School Club in Phoenix today.

Of course he was speaking to educated people, but it was heartening to hear him say that everyone in the health care equation is going to have to do his/her part to make the new legislation a success, especially physicians, who will have to step up and learn how to collaborate around scarce resources to produce greater value, and patients, who will have to think about behavioral changes. Although some of the guests asked tough (politicized) questions, he refused to diss the new legislation, despite his admission that there’s a 20% cut in Medicare payments to physicians still “hanging out there” while Congress is on recess and that “rationing is what happens if we fail to get everything else right.”

It was all the more heartening because Mayo Clinic is a leading national health care institution, known for its high quality and ability to treat difficult cases.  It is also a leading employer in Arizona.  It contributes $1.45 billion to the Arizona economy, and its facility has 425 physicians and a staff of 4400, dedicated to the three connected areas of medical practice, patient and medical education, and research.

But Arizona, it turns out, makes up only about 10% of Mayo’s revenues. Mayo Clinic the the largest nonprofit health care system in the country, with a multi-specialty integrated model of care for mostly sicker people. Although it does some primary care, most of its physicians are specialists. And its Arizona CEO is a former thoracic surgeon, not a business guy.

Dr. Trastek said the new legislation tries to answer the question that’s troubling everybody: “How do we give good affordable health care?”

Somewhat surprisingly, he went on to say that although payment is a big part of health care, and payment was the biggest thing addressed by the legislation, the biggest responsibility for the new program’s success falls on the patient.

And then he reminded everyone in the room that presidents since Harry Truman had been trying to increase access to health care for Americans. In fact, I learned that the first Medicare card, signed by Lyndon Johnson, went to Harry Truman!

Then came the presentation of reality: Medicare goes to everybody whether they need it or not, and that may have to change. This is called “means testing,” and no one wants to acknowledge that people with more money might have to pay something for Medicare in the future. Especially if the elderly want physicians to keep taking Medicare patients.

One of the funniest parts of the  presentation was a slide Trastek showed of the actual formula Medicare uses to pay physicians. It is such a complex equation that it ran off the right side of the slide, and Dr. Trastek said that wasn’t even the entire formula! That was a very good visual to show the complexity of the program, and why some people feel it’s unmanageable. Dr. Trastek also told us that Congress went home for Easter without deciding whether to cut physician payments or not (presumably Congress doesn’t want to cut payments and lose physician participants, but doesn’t know how find the money to do the pay-go thing), so Medicare has just stopped paying its bills altogether. Imagine trying to run a physician practice caught between the banks who aren’t lending to businesses and Medicare, which is no longer paying timely. Must be a CFO’s nightmare.

In addition, health care inflation is up 30% in last decade , while payments to physicians went down 5%. So it’s no surprise that physicians try to do more. That’s now they make money.

The current method of funding health care has been through a cost shift from the old to the young. But their are too many of us old people, and not enough young.  And many of the young are unemployed.  Or can’t pay the high premiums. One of the biggest parts of the legislation intends to fix all this.

Mayo has its own plan to address these conditions. It is aiming to create value, coordinate care, reform the payment system,  and thus insure everyone. As a result, it pushed hard to have the payment system shifted to value, or outcomes. As a system, it already measures outcomes, has cut costs, and aims for zero defects. Trastek feels it is the physician’s job to help  patients get the best care under the new law.

And speaking of the law: Dr. Trastek admitted that will take months for Mayo to figure out everything that’s in it.  Bottom line, it will cover 30 million more people, of whom 14 million will be on Medicaid, which states will have to find a way to pay for. That’s why fifteen governors are suing to opt out. But opting out doesn’t seem like Mayo’s answer to the problem: Mayo says we have to deal with utilization or we will never fix the system, because utilization will double and triple without control. Dr. Trastek pointed out that Medicare patients now have the right to see a specialist every day if they want to, and in most cases it’s free. And the specialists (he didn’t say this) don’t try to control utilization, because Medicare doesn’t reimburse them enough and they thus have to “make it up in volume.”

The best parts of the program, I think Trastek believes, are pilot programs to pay for value, and the move of the industry to technology (robotic surgery, tele-stroke programs where doctors are virtually present in rural emergency rooms, and electronic medical records). The messiest parts are mandating that well people buy insurance, fixing the primary care doc shortage, getting rid of skyrocketing debt for medical education, and taking care of payment systems that encourage physicians to drop Medicare patients. Some of the innovative things Mayo does include teaching medical students “delivery skills” such as law and journalism, to improve their communication with patients; training through simulation and collaboration; and

After presenting this factual and complicated picture, Trastek came back to what we can do. Again he pointed out that everybody has to do something — physicians can’t sit back this time and not change their practice methods, and patients can’t continue the American lifestyle of “I will do anything I want, and if I break you will fix me so I can go back out and do it again.”  He believes that in the future, patients will be financially incentivized to take better care of themselves, and health systems will have to learn to work together.   And if not, there WILL be rationing. Health care can’t be free.

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