Medical Staffing Miseries and Crony Capitalism

Over the past few weeks we’ve spent an inordinate amount of time trying to help physician colleagues hire replacement employees after theirs were poached by the large health system that rents office space to them.  It seems that the supposedly religion-based mega-combination health insurer, hospital chain, medical buildings owner, clinical laboratory and purchaser of physician practices had recently decided to open a large new outpatient clinic. Rather than advertise to the general population to find the receptionists, administrators and ancillary staff needed to staff this new facility, the health system simply hosted a “compassionate care clinic for the underprivileged”, and invited all office staff working for the independent physicians renting space in their medical buildings to participate.  Those who did were treated to a full-blown recruiting campaign, replete with stories of better pay, benefits and the job security of working directly for one of the largest medical businesses in the state.  Within a week office staff in dozens of independent-but-system-affiliated medical offices were surreptitiously interviewing for new jobs during their lunch hour.  Just a day or two later, scores of them were delivering their resignations along with the Christmas cards they handed to their employers and co-workers.  The scene in office after office might have been a Twilight Zone episode in which aliens decide to abduct every other person.  Suddenly this office was missing a receptionist, that one two medical assistants and a third half of its billing staff.  Doctors who were booked solid with patients suddenly found themselves wondering when in hell they would find the time to place ads, review resumes and interview candidates. Temps were called in, of course, but without a thorough knowledge of the patients and routine in each clinic, productivity plummeted.

It’s hard to describe the sense of grim weariness that often descends upon small medical clinics and offices that suddenly lose their support personnel.  Dozens of factors – ranging from specialty to insurance participation to the numbers and personalities of providers – make each clinic setting a little bit different.  Imagine you’re a temp filling in at the reception desk.  A patient calls for something as simple as a new appointment.  One office will have a contract to take their insurance, while the next one doesn’t; what about this one?  Does their insurance require a referral?  How long is it going to take to figure all of this out, and who do you even ask, since everyone else is busy trying to do their own work?  Meanwhile, what does one do with the other dozen calls that are coming in for everything from appointments to questions to prescription refills?  Tempers flare as patients are placed on hold one after another, or promises are made that they’ll be called back when time permits or answers are found to their questions.  In the small office that we’ve been trying to help, 20 patients who had been referred for consultation had gone uncalled after 48 hours.  That might fly in Canada or the United Kingdom, where care is rationed according to whoever can outlive the waiting period, but having to wait for days just to find out if you’ll be seen is still considered poor form in private practice America.

And about those patients who had been referred by another doctor for consultation.  Here too we see the unwelcome effects of paperwork and bureaucracy that is rapidly crowding out civility and good patient care.  In the Old Days (say, five years ago), when a physician wished to refer a patient, he or she would pick up the phone and call the consultant in question.  In the course of the conversation the problem and reason for the referral would be explained, a feel for the patient conveyed and any other factors like insurance eligibility would be checked.  It was not unusual for this approach to avoid the need for referral entirely.  Often the would-be consultant would volunteer that there was little or nothing additional that they would be able to offer the patient, or that an additional test or different medication might identify or fix the problem.  The object, of course, was to actually care for the patient rather than engage in (or avoid) a ritual of paperwork.  But those times have gone.  In the Modern Era of medicine, referral forms are simply faxed over to the would-be consultant’s office along with the patient’s medical records.  More often than not, no reason for the referral is provided – just the mandatory paperwork.  It’s up to the consultant’s office to call the patient, divine the reason for the referral, check to see if their insurance will allow the patient to be seen by the consulting physician and figure out a host of other details.  In the absence of human communication there is little question that the total amount of work increases and many referrals result in unnecessary visits, but that’s the price all of us are being forced to pay for the transformation of medicine from a human endeavor to a bureaucratic minefield.  Referring doctors have undoubtedly realized that they are paid for checking boxes in their electronic medical records and “pay for performance” documentation rather than wasting time talking to their colleagues about difficult cases.

If you get the sense that staff disruption and having to concentrate on systems and paperwork rather than people is bad for clinicians and their patients, then it’s easier to understand just why and how electronic medical records (EMRs) can make things worse rather than better.  It’s bad enough to learn the ins and outs of any new work environment, but when that environment includes a complex, poorly designed and unintuitive piece of software that is suddenly given control of everything everyone does, the difficulty and cost of replacing a departing staff member grows exponentially.  True stories about the terrible design and user interface of EMRs are legion.  As Dr. Scot Silverstein suggests, 2012 really ought to be the year in which these stories are properly re-labeled “incident reports” to be tallied and formally investigated rather than “anecdotes”.  But if these systems are so bad, why are they being sold and deployed in ever-increasing numbers?  And coincidentally, why is it that the stocks of EMR vendors like Cerner, Computer Programs & Systems, McKesson and Allscripts Healthcare Solutions rose by 194%, 105%, 105% and 134% between 2009 and the end of 2011, even as the S&P 500 rose only about 43.5%?

The answer of course is that healthcare providers (and indirectly taxpayers and insurance ratepayers) are being essentially forced to buy these things as a result of government policies, just as taxpayers were forced to loan money to the failed solar energy company Solyndra.  This legislation was part of the 2009 stimulus bill, whose impact on industries and companies specifically selected by the federal government for favorable treatment was described in a recent USA Today article:

“The clearest connection between the stimulus and the economy might be in health care software, in which the boost in companies’ value far exceeds the amount spent so far in a five-year program costing up to $30 billion. Together, the gain in value of companies such as McKesson, Cerner and Athenahealth since the stimulus bill was proposed is at least $20 billion.

The stimulus has paid about $100 million so far to clients of Cerner, the largest maker of electronic medical-records (EMR) software, said Piper Jaffray analyst Sean Wieland. Given Cerner’s 20% market share, that translates into $500 million in extra annual sales for the industry, which may double as lower Medicare reimbursements, also part of the stimulus law, kick in for doctors who don’t use EMRs by 2015, he said.

‘This really did accelerate adoption,’ said Jeff Townsend, chief of staff at Kansas City, Mo.-based Cerner, whose stock-price value is up 194% or $6.5 billion, since January 2009. Cerner’s new-software sales rose 26% in the first nine months of 2011 vs. 2010′s pace of 16%. He said extra spending will add to growth, as doctors upgrade their systems and connect them to each other.

That spending has lifted nearly all health information technology stocks. Allscripts Healthcare Solutions, an EMR company whose CEO Glen Tullman raised money for Obama in 2008, has seen shares rise 134%. Rival Athenahealth, which supplies Internet-based medical-billing and EMR services as a cheaper alternative to software, has doubled since mid-2010.

The question is whether the spending was efficient, says Athenahealth CEO Jonathan Bush, who has donated to Mitt Romney‘s presidential campaigns and is former president George W. Bush‘s cousin. He says Washington could have spurred adoption of cheaper, more flexible technology such as his through regulatory changes without subsidizing software.

‘We’re a beneficiary of stimulus spending, but we’d be doing even better without it,’ said Bush, whose company benefitted from the administration’s decision to have Medicare reimburse doctors for regularly using EMRs, favoring pay-as-you-go Internet business models such as Athena’s, rather than paying for software purchases up front. ‘What you really needed was hundreds of cloud-based companies innovating.’”

With the nucleus of the medical records industry represented by the Chicago-based Health Information and Management Systems Society, it’s hard not to draw the conclusion that the imposition of rewards for deploying and penalties for not purchasing and using EMRs is a prime example of “Crony Capitalism” in action.  Here’s one of the best definitions and analyses of the term that we’ve seen:

“President Obama, progressive politicians, Occupy protestors, and leftist intellectuals are having a field day attacking what they call the failures and excesses of capitalism. They declare wealth to be prima facie evidence of perfidy, making no distinction as to how it was obtained. They preach equality, not just in opportunity but in economic outcome. In their eyes, all members of the 1% are already guilty, so economic justice demands that the rich be heavily taxed, not just to lift others up, but to bring them down.

Some defenders of capitalism draw a sharp distinction between those who obtained their wealth through government favors and those who created their wealth by satisfying willing customers through free exchange. The former are called Crony Capitalists. The latter, interestingly enough, don’t have a name. Let’s call them Market Capitalists…

What makes Crony Capitalists different is their willingness to use the coercive powers of government to gain an advantage they could not earn in the market. This can come in the form of regulations that favor them while hindering competitors, laws that restrict entry into their markets, and government-sponsored cartels that fix prices, grant monopolies, or both.

Crony Capitalists are also more than happy to help themselves to money from the public treasury. This can come from wasteful or unnecessary spending programs that turn government into a captive customer, subsidies that flow directly into their coffers, or mandates that force consumers to buy their products.

Examples abound. Heavily regulated industries attract and breed Crony Capitalists, who are highly skilled at capturing the agencies intended to regulate them. Banking and healthcare top the list. Banks operate under a cartel in which the Federal Reserve fixes prices, namely interest rates. Bankers also enjoy periodic bailouts that allow them to privatize gains and socialize losses. Healthcare operates under a cartel in which the government approves new products, fixes prices, and has become the primary payer. Is it any wonder that banking and healthcare are such a mess?…

Market Capitalists do not go to Washington. They strive to please customers, not politicians. They put their own money at risk to earn their own rewards, never foisting losses on others. Because they are risking their own hard earned dollars, they are careful to invest where it makes the most economic sense, not where it curries political favor. They meet their rivals in open competition, may the best products win.”

Indeed, this is what makes the case for the presence of Crony Capitalism in the EMR business so compelling.  The function of markets is to reward those who come up with efficient, effective and easy-to-use solutions to problems faced by consumers who live in the real world.  It’s a form of democracy in which we get to vote with our wallets on exactly which products meet, or do not meet our needs in healthcare.  Prior to 2009, the market penetration of conventional EMRs was anemic precisely because these pieces of software did not, and still do not, meet the needs of most healthcare providers, their support staff, and the patients they care for.  No one needs subsidies or penalties in order to encourage the sale of products and services that meet the needs of those who would use them.

One of the questions we have routinely come across as we interviewed job candidates over the phone has been whether or not the doctor’s office in question had an electronic medical record.  Prospective employees who had worked with EMRs previously are always the first to ask.  We’ve were typically forced to confess that this particular practice still makes use of paper charts.

The most common response?  “Thank God.”