The Boston Globe reports on a hospital system in Boston accused of steering patients to stay within the corporate boundaries even when the patients’ doctor(s) tried to send them elsewhere:
A whistle-blower lawsuit filed against Steward Health Care exposes a part of medicine largely hidden from patients: the behind-the-scenes pressure health care companies put on doctors to keep patient referrals in-house.
Dr. Stephen Zappala, a longtime Massachusetts urologist, said company representatives exerted immense personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists, putting profits first…Zappala and another doctor who was deposed in his case alleged that Steward’s methods crossed a line.
Zappala charged that when he refused to comply with Steward’s policies, the company disciplined him for minor infractions and eventually canceled his privileges to operate at Steward Holy Family Hospital in Methuen.
Disclosure: My mom worked as an RN for ~20 years at Holy Family Hospital in which is part of the Steward system. She recently retired.
This is interesting in that the allegation is that Steward is trying to keep as much of the patient care bundle inside its corporate boundaries without regard to patient preferences. This sounds like a tiered network or a home host insurance product design where the intention is to move as many patients and procedures to preferred providers. And that is fine for insurers as they have to disclose the benefit structure and the network. Steward runs a fairly narrow network insurance product in Eastern Massachusetts.
This is one of the big challenges as providers that have associated risk bearing entities ranging from Accountable Care Organizations (ACOs) to full fledged integration like UPMC or Geissenger proliferate. Risk bearing entities want to be able to control their risk and that means having a high degree of predictability on as many variables as possible. Population risk may not be amenable to immediate control but provider mix risk is something that is nearly completely controllable. Insurers that don’t have a provider arm will use pre-authorization and network contracting to attempt to control some of their provider mix risk while integrated entities will use those tools as well as direct control of the employed providers to keep the money in house. Steward has a very strong incentive to have all of their non-zebra patients (hi mom!) to to stay at least 300 yards outside of I-95.
This is the basic HMO model with perhaps a few bells and whistles thrown on top. It is not new.
What is new is the proliferation of provider owned risk bearing entities. Or at least this is a retro-wave from the 80s that is lasting longer than big hair. The tools to keep cost increases constrained are the tools that say no. Those tools can be explicit (pre-authorizations, narrow networks and high non-preferred cost sharing) or they can be implicit such as allegedly incentivizing employer physicians to keep as many patients as possible in network for as long as a standard of care that is legally defensible but perhaps not optimal can be met.
My question on all of this is what happens in regions where almost all of the providers have a stake in various and non-overlapping risk bearing entities? The incentives for the multiple provider-payer combinations is for them to be roach motels for at least the profitable net of risk adjustment patients. These entities won’t want to make it easy for the profitable patients to leave to their competitors.
How does competition work when the patients who can send strong signals of quality and preference are entrapped in sticky glue of their current provider-payer entity? That is a question that I’ve been struggling with when I think of Pittsburgh and it looks like it could also be a major question in Massachusetts.