Business of Cardiology

Consolidation and hybridization in the health care enterprise: How are cardiologists affected?

The structure of U.S. health care and the role of cardiologists and other CV professionals continue to evolve.

More than 70% of U.S. cardiologists are no longer independent practitioners, but they are employed by hospitals and health care systems. As these cardiologists adjust to their new practice environment, challenged by changing job descriptions, burdensome electronic health records, egregious insurance company pre-authorization procedures, dynamic CV team care models and seemingly capricious new compensation plans, many find that the local hospital they signed on with has merged or been acquired by a larger system, many of which operate in multiple states with scores of individual hospitals and thousands of physician employees, and new unfamiliar administrators. Fewer than half of U.S. hospitals are still independent, sharing an uncertain future with their cardiologist employees.

This continuing trend is demonstrated by recently announced plans by Dignity Health and Catholic Health Initiatives to operate a national chain of Catholic hospitals in 28 states. Ascension Health, already the largest nonprofit system in the U.S. with 141 hospitals, could grow to 191 hospitals in 27 states with annual revenues of $44 billion if the pending merger with Providence St. Joseph Health is consummated. Advocate Health Care in Illinois and Aurora Health Care in Wisconsin recently announced their intention to merge, creating a powerful regional health care system, including employed cardiologists, hospitals, clinics, long-term care and mental health facilities, surgery centers and pharmacies with combined revenues of nearly $10 billion per year.

L. Samuel Wann, MD, MACC, FESC
L. Samuel Wann

These large hospital systems strive to streamline their operations, improve their financial performance and reinvigorate their commitment to provide affordable health care that emphasizes value and return on investment, not simply increasing the volume of services provided or the number of patients served.

The concept of a cardiac service line has emerged, embracing a dyad leadership model of clinicians and administrators to promote both fiscal responsibility and clinical excellence, coordinating re-organized programs to minimize needless duplications and redundancies, promote the strengths of their individual legacy hospitals to attract patients, payers and physicians, and expand cost-effective services outside the hospital. Larger hospital systems are often able to bargain more effectively with payers, and have an advantage in offering both primary and secondary care through extensive networks of outpatient clinics and entry-level hospitals as well as highly specialized, costly, resource-intensive services in centralized tertiary care centers, bundling charges for complex procedures performed efficiently in high-volume centers of excellence while providing ready community access to primary and secondary care in a less-expensive environment. These large systems often create closed or tiered networks of care using preferred pricing to steer patients to their own facilities and employed physicians.

Challenges ahead

The integration of previously independent, highly competitive cardiologists and other physicians into a cohesive, collaborative working group is challenging, particularly in an environment of uncertainty about health care financing and changing payment models for both physicians and health care systems. The concern is real, as physician payments account for about one-third of all health care expenditures; health care accounts for about one-third of the U.S. economy. Our health care costs are high compared with the rest of the industrialized world and continue to grow.

Not all procedures and services can be performed on demand, in every location, by all cardiologists, regardless of what has been offered in the past, or the understandable desire by patients, referring physicians and their communities to maintain convenient facilities close to home. Socioeconomic disparities affect the availability of effective CV services in facilities located in affluent suburbs, central cities, prestigious tertiary care centers, and remote, rural areas. Determining exactly where each service will be offered, by whom and to whom, and at what cost is an iterative and uncomfortable process in an environment of changing needs, local practices and expectations and new public and private payment models. Managing these far-flung health care installations stresses both financial and clinical capabilities.

The volume of coronary revascularizations, both surgical and percutaneous, emergent and elective, continues to decline while the need for chronic care outside the hospital for an aging population with HF and atrial fibrillation continues to increase.

Effects of prevention

The good news is that our patients are living longer. Prevention as well as exciting advances in percutaneous interventions for acute coronary occlusion and stroke, valve implantation and AF ablation have all improved outcomes while shortening hospital stays. Life-altering, life-saving procedures such valve replacement, coronary revascularization, stroke thrombolysis and AF ablation often require only an overnight stay in the hospital, treating conditions which previously required long hospitalizations, usually with less optimal outcomes. Paradoxically, effective prevention of CVD may not be cost-saving, but merely delay the appearance of disease, in ever older patients with multiple comorbidities.

Machine learning, robotics, more precise diagnostics, personalized medicine and genetic engineering are but a few of the promising advances on the horizon in our technology-driven culture. Smartphone and other remote monitoring devices assist in disease management outside the traditional medical environment in conditions including HF, diabetes, hypertension, MI, AF and ventricular tachycardia. New subspecialties directed at specific-patient populations are emerging, including cardio-oncology, gynecardiology and geriatric cardiology, tailoring diagnostic and therapeutic approaches to individualized needs, such as those of women and the frail elderly. Implementing the remarkable innovations provided to us by our health care colleagues in the basic sciences and pharmaceutical, diagnostic and device industries is a challenge for us all.

Preventive care initiatives, including smoking cessation, effective treatment of hyperlipidemia and hypertension, and exercise have all contributed to lessening the need for acute hospitalizations, without eliminating the need to maintain ready access to emergency intervention for patients with acute MI or stroke. Many health care systems are relatively oversupplied with tertiary care services, but underequipped to deliver primary and secondary care, more of which may be provided by nonphysician members of the CV team in the future.

The money question

How to pay for all this care is hotly debated. As the future of Medicare, Medicaid, and individual and employer-provided health insurance is being deliberated in Washington, D.C., and at the ballot box, other sectors in health care enterprise are also addressing health care in new and provocative directions.

The proposed merger of the large insurance company Aetna, which has 22 million health plan members, with CVS, which manages a large pharmacy benefit management business and 10,000 retail pharmacies with more than 1,000 nurse practitioner-staffed “minute” clinics in its stores, promises radical change in how basic primary care is delivered, bypassing traditional physician offices and hospital-associated clinics and urgent care centers in favor of walk-in clinics in its drug stores. Aetna also has new partnerships with large health systems, hospitals and physician groups operating retail clinics in several states. How the new Aetna-CVS care model will affect referral to CV specialists and preauthorization for expensive advanced care warrants careful monitoring. Many other large health insurers are also testing the water to deliver health care services themselves, not just market insurance products. UnitedHealth Group, which already employs 30,000 doctors, recently paid $4.9 billion for the DaVita Medical Group, whose physicians care for patients in more than 300 clinics and surgical centers in six states, also paying $2.3 billion for Surgical Care Affiliates, which employs physicians in 30 states. United’s Optum unit also operates a large pharmacy benefits management service and provides management consulting services through the Advisory Board, a large health care consulting company.

As health care systems, health insurance companies, pharmacy benefit managers and retail pharmacies are busy realigning and reinventing themselves, three giants of the business world — Amazon, JPMorgan Chase and Berkshire Hathaway — announced that they are joining forces to simplify health care delivery to their employees and control costs using advanced technology. Henry Ford, Henry Kaiser, the Veterans Administration, labor unions and other groups have had some success in creating their own internal health care systems to control costs and quality. What impact, if any, this new venture will have on CV professionals and health care systems is uncertain, but the stocks of major health insurers and pharmacy benefit managers dropped immediately in anticipation of the focus of this putative “solution,” which would seem to be directed at health care intermediaries, suppliers and benefits managers, not at bedside providers.

If successful in providing transparency, controlling costs, improving their corporate profit and increasing the value of the tax-advantaged health care benefits they provide to their 1.2 million employees, perhaps these three corporate giants will share their logistic, financial and risk-management prowess with others, including public payers, propelling us toward some version of a single-payer system. Maybe the private sector can do what the government has not, but effective innovation and its diffusion in the complex arena of health care is not easily accomplished, even if these large companies with little experience in delivering health care can deliver on their promises.

Disclosure: Wann reports no relevant financial disclosures.

The structure of U.S. health care and the role of cardiologists and other CV professionals continue to evolve.

More than 70% of U.S. cardiologists are no longer independent practitioners, but they are employed by hospitals and health care systems. As these cardiologists adjust to their new practice environment, challenged by changing job descriptions, burdensome electronic health records, egregious insurance company pre-authorization procedures, dynamic CV team care models and seemingly capricious new compensation plans, many find that the local hospital they signed on with has merged or been acquired by a larger system, many of which operate in multiple states with scores of individual hospitals and thousands of physician employees, and new unfamiliar administrators. Fewer than half of U.S. hospitals are still independent, sharing an uncertain future with their cardiologist employees.

This continuing trend is demonstrated by recently announced plans by Dignity Health and Catholic Health Initiatives to operate a national chain of Catholic hospitals in 28 states. Ascension Health, already the largest nonprofit system in the U.S. with 141 hospitals, could grow to 191 hospitals in 27 states with annual revenues of $44 billion if the pending merger with Providence St. Joseph Health is consummated. Advocate Health Care in Illinois and Aurora Health Care in Wisconsin recently announced their intention to merge, creating a powerful regional health care system, including employed cardiologists, hospitals, clinics, long-term care and mental health facilities, surgery centers and pharmacies with combined revenues of nearly $10 billion per year.

L. Samuel Wann, MD, MACC, FESC
L. Samuel Wann

These large hospital systems strive to streamline their operations, improve their financial performance and reinvigorate their commitment to provide affordable health care that emphasizes value and return on investment, not simply increasing the volume of services provided or the number of patients served.

The concept of a cardiac service line has emerged, embracing a dyad leadership model of clinicians and administrators to promote both fiscal responsibility and clinical excellence, coordinating re-organized programs to minimize needless duplications and redundancies, promote the strengths of their individual legacy hospitals to attract patients, payers and physicians, and expand cost-effective services outside the hospital. Larger hospital systems are often able to bargain more effectively with payers, and have an advantage in offering both primary and secondary care through extensive networks of outpatient clinics and entry-level hospitals as well as highly specialized, costly, resource-intensive services in centralized tertiary care centers, bundling charges for complex procedures performed efficiently in high-volume centers of excellence while providing ready community access to primary and secondary care in a less-expensive environment. These large systems often create closed or tiered networks of care using preferred pricing to steer patients to their own facilities and employed physicians.

PAGE BREAK

Challenges ahead

The integration of previously independent, highly competitive cardiologists and other physicians into a cohesive, collaborative working group is challenging, particularly in an environment of uncertainty about health care financing and changing payment models for both physicians and health care systems. The concern is real, as physician payments account for about one-third of all health care expenditures; health care accounts for about one-third of the U.S. economy. Our health care costs are high compared with the rest of the industrialized world and continue to grow.

Not all procedures and services can be performed on demand, in every location, by all cardiologists, regardless of what has been offered in the past, or the understandable desire by patients, referring physicians and their communities to maintain convenient facilities close to home. Socioeconomic disparities affect the availability of effective CV services in facilities located in affluent suburbs, central cities, prestigious tertiary care centers, and remote, rural areas. Determining exactly where each service will be offered, by whom and to whom, and at what cost is an iterative and uncomfortable process in an environment of changing needs, local practices and expectations and new public and private payment models. Managing these far-flung health care installations stresses both financial and clinical capabilities.

The volume of coronary revascularizations, both surgical and percutaneous, emergent and elective, continues to decline while the need for chronic care outside the hospital for an aging population with HF and atrial fibrillation continues to increase.

Effects of prevention

The good news is that our patients are living longer. Prevention as well as exciting advances in percutaneous interventions for acute coronary occlusion and stroke, valve implantation and AF ablation have all improved outcomes while shortening hospital stays. Life-altering, life-saving procedures such valve replacement, coronary revascularization, stroke thrombolysis and AF ablation often require only an overnight stay in the hospital, treating conditions which previously required long hospitalizations, usually with less optimal outcomes. Paradoxically, effective prevention of CVD may not be cost-saving, but merely delay the appearance of disease, in ever older patients with multiple comorbidities.

Machine learning, robotics, more precise diagnostics, personalized medicine and genetic engineering are but a few of the promising advances on the horizon in our technology-driven culture. Smartphone and other remote monitoring devices assist in disease management outside the traditional medical environment in conditions including HF, diabetes, hypertension, MI, AF and ventricular tachycardia. New subspecialties directed at specific-patient populations are emerging, including cardio-oncology, gynecardiology and geriatric cardiology, tailoring diagnostic and therapeutic approaches to individualized needs, such as those of women and the frail elderly. Implementing the remarkable innovations provided to us by our health care colleagues in the basic sciences and pharmaceutical, diagnostic and device industries is a challenge for us all.

Preventive care initiatives, including smoking cessation, effective treatment of hyperlipidemia and hypertension, and exercise have all contributed to lessening the need for acute hospitalizations, without eliminating the need to maintain ready access to emergency intervention for patients with acute MI or stroke. Many health care systems are relatively oversupplied with tertiary care services, but underequipped to deliver primary and secondary care, more of which may be provided by nonphysician members of the CV team in the future.

PAGE BREAK

The money question

How to pay for all this care is hotly debated. As the future of Medicare, Medicaid, and individual and employer-provided health insurance is being deliberated in Washington, D.C., and at the ballot box, other sectors in health care enterprise are also addressing health care in new and provocative directions.

The proposed merger of the large insurance company Aetna, which has 22 million health plan members, with CVS, which manages a large pharmacy benefit management business and 10,000 retail pharmacies with more than 1,000 nurse practitioner-staffed “minute” clinics in its stores, promises radical change in how basic primary care is delivered, bypassing traditional physician offices and hospital-associated clinics and urgent care centers in favor of walk-in clinics in its drug stores. Aetna also has new partnerships with large health systems, hospitals and physician groups operating retail clinics in several states. How the new Aetna-CVS care model will affect referral to CV specialists and preauthorization for expensive advanced care warrants careful monitoring. Many other large health insurers are also testing the water to deliver health care services themselves, not just market insurance products. UnitedHealth Group, which already employs 30,000 doctors, recently paid $4.9 billion for the DaVita Medical Group, whose physicians care for patients in more than 300 clinics and surgical centers in six states, also paying $2.3 billion for Surgical Care Affiliates, which employs physicians in 30 states. United’s Optum unit also operates a large pharmacy benefits management service and provides management consulting services through the Advisory Board, a large health care consulting company.

As health care systems, health insurance companies, pharmacy benefit managers and retail pharmacies are busy realigning and reinventing themselves, three giants of the business world — Amazon, JPMorgan Chase and Berkshire Hathaway — announced that they are joining forces to simplify health care delivery to their employees and control costs using advanced technology. Henry Ford, Henry Kaiser, the Veterans Administration, labor unions and other groups have had some success in creating their own internal health care systems to control costs and quality. What impact, if any, this new venture will have on CV professionals and health care systems is uncertain, but the stocks of major health insurers and pharmacy benefit managers dropped immediately in anticipation of the focus of this putative “solution,” which would seem to be directed at health care intermediaries, suppliers and benefits managers, not at bedside providers.

If successful in providing transparency, controlling costs, improving their corporate profit and increasing the value of the tax-advantaged health care benefits they provide to their 1.2 million employees, perhaps these three corporate giants will share their logistic, financial and risk-management prowess with others, including public payers, propelling us toward some version of a single-payer system. Maybe the private sector can do what the government has not, but effective innovation and its diffusion in the complex arena of health care is not easily accomplished, even if these large companies with little experience in delivering health care can deliver on their promises.

Disclosure: Wann reports no relevant financial disclosures.