Is Bigger Better? The Implications of Health Care Provider Consolidation An Interview with Atul Gawande Timely Analysis of Immediate Health Policy Issues October 2014 Robert A. Berenson In this paper, the Urban Institute’s Robert Berenson interviews surgeon and The New Yorker columnist Atul Gawande to explore the potential benefits and drawbacks of “Big Medicine”—standardized, evidence-based health care delivered by large health care chains. Gawande is also executive director of Ariadne Labs, which seeks to transform how care is delivered around the world. Introduction providers an incentive to deliver care more efficiently The Promise of Big Medicine and pay more attention to patient outcomes. After marveling at the Cheesecake Factory’s ability to produce high-quality restaurant meals at inexpensive Gawande goes on to note that health care provider prices, surgeon and The New Yorker columnist Atul consolidation is already in place, with 90 “super- Gawande made a case for bringing restaurant-chain regional” health care systems forming across the United efficiency to the health care sector in his “Big Med” States, including chains of clinics, hospitals, and home article in 2012.1 Gawande’s core argument: “Big chains care agencies, with physicians increasingly choosing to thrive because they provide goods and services of become employees of larger organizations instead of greater variety, better quality, and lower cost than owning their own practices. Given this movement, he would otherwise be available. Size is the key. It gives cites analysts’ expectations that successful mega- them buying power, lets systems will likely drive independent medical centers them centralize common out of business, either by functions, and allows them “We’re moving in [the direction of Big Medicine] buying them up or to adopt and diffuse based on the belief that ‘bigger’ will have drawing away their innovations faster than they substantial advantages—because you have to patients with better quality could if they were a bunch have information technology and learning and and cost control. Only a of small, independent structure, and in other industries being bigger few small practices and operations.” has yielded important advantages, including stand-alone hospitals will economies of scale.” remain successful, “Big Medicine” would perhaps catering to the also produce more standardized approaches to luxury end of the care spectrum the way gourmet diagnosis and treatment, replacing the current tolerance restaurants do for food. Gawande pronounces that “the for physician autonomy—and wide variation—in theory the country is about to test is that chains will clinical decision-making. As one doctor commented in make us better and more efficient.” Gawande’s article: “Customization should be 5 percent, not 95 percent, of what we do.” Relying on basic Gawande anticipates commonly expressed concerns standardization of work processes and care protocols, about Big Medicine. “We have no guarantee that Big the delivery organization then would devote increased Medicine will serve the social good. Whatever the attention to execution. This reorientation of care would industry, an increase in size and control creates the be facilitated by population-based payments*,2 that give conditions for monopoly, which could do the opposite of what we want: suppress innovation and drive up * “Population-based payment” is when “a provider entity agrees to keep a portion of the savings generated. However, if the provider accept responsibility for the health of a group of patients in exchange delivers inefficient, high-cost care, then depending on the structure of for a set amount of money. If the provider effectively manages costs the arrangement, it may be held responsible for some of the additional and performs well on quality-of-care targets, then the provider may costs incurred.” costs over time. In the past, certainly, health care increasing quality, decreasing costs, and being systems that pursued size and market power were better accountable for results requires learning, structure, and at raising prices than at lowering them.” a backbone that is locally adaptable but capable of the benefit that comes from large size. So, it is possible that A Discussion Between Atul Gawande Big Medicine will be based in a more disaggregated and Robert Berenson world rather than a consolidated one. To sort through the potential benefits and drawbacks of Berenson: So what does being big get you? Big Medicine, Atul Gawande and Robert Berenson, a former practicing internist, vice chair of MedPAC, and Gawande: Those driving innovation are creating new a current institute fellow at the Urban Institute, came systems for improving communications, finding the together for a discussion. In this interview, Gawande right care, and getting people to really work as teams talks about what different versions of Big Medicine toward what is best for the patient. could look like and addresses whether an organization needs to be big to adopt the positive aspects of Big One way I’ve seen Big Medicine work is when a Medicine. hospital takes their systems and stretches them out into the community. With new payment approaches, they become incented to reach out to the primary care “Of course, if all you scale up is a physician, they put a nurse on it, they connect, they dysfunctional organization, then you just scale make the doctor-to-doctor conversation happen, and a up dysfunction and that doesn’t solve plan is made. Hospitals are reaching out and also anything.” connecting to pharmacies and other kinds of services. For example, for the first time I’m seeing pharmacies What Does it Mean to Be Big? start to do hospital delivery of patients’ meds—which addresses the absurdity of discharging sick people and Berenson: Do health care organizations have to be then telling them to go to their pharmacy without ever big to offer the kind of innovative high-quality care thinking, “oh, how about we connect them so that their you talk about in “Big Med”? home pharmacy does a delivery at discharge so they Gawande: We’re in the process of shifting from what I have their meds when they go home.” And then they’re call “cowboys” to “pit crews” in medicine3—doctors connected to their home-based system. We’re starting have to have a team that can be structured to make sure to see this outreach actually happen now, out of that everybody, including the doctor, has the right role, recognition that penalties for readmissions reward so they’re able to deliver results for populations. There developing more innovative ways of providing that is a size at which there is a clear advantage, but it’s not care. This approach does have disadvantages. Hospitals now clear how “big” Big Medicine needs to be. We’re haven’t had the needed links to the community, they moving in that direction based on the belief that have a very high cost structure, and they have a “bigger” will have substantial advantages—because tremendous amount of capital sunk into keeping the you have to have information technology and learning hospital alive. and structure, and in other industries being bigger has yielded important advantages, including economies of A second way is a practice-led model. I wrote about it 4 scale. Of course, if all you scale up is a dysfunctional in “The Hot Spotters” —physicians typically aren’t organization, then you just scale up dysfunction and even notified when a patient has been admitted to the that doesn’t solve anything. hospital, so they are every day bird-dogging: “Our several thousand patients, have any of them been There are definitely those who bet differently. The admitted to the hospital?” They call around to the trend right now has been toward consolidation, creating hospitals and have a staff member whose sole purpose more market power, but there are interesting is to ask: “Did any patient of ours get admitted?” If organizations such as AthenaHealth that, at least in they did, a clinician goes to the hospital to see them and ambulatory settings, are trying to construct a way that find out what’s going on; they get a plan together so relatively small groups can have all of the advantages that they’re there with a net to catch the patient when of big organizations by offering electronic health they come back out of the hospital. It is incredibly records (EHRs), billing capability, and quality labor-intensive work just to know what happened to a operations that can become a backbone for practices. In physician’s patients. The large physician groups, in many ways, all health care is local. To be successful at particular, have been quite effective at being able to be Timely Analysis of Immediate Health Policy Issues 2 on top of the care, reduce the cost of the care, avoid any Insurance approval is usually one of the first ways to avoidable hospital admission altogether, or move the know if someone has been admitted, so it might be that patient back out if he or she was admitted. they are creating these linkages. Some are going much But physician groups have not had the necessary further. Highmark Blue Cross in Pennsylvania has now systems of care—the information technology, the ways bought an entire network of hospitals and clinics in of measuring performance. Hospitals at least have some western Pennsylvania, including Allegheny General ability to look around and ask: “Are we preventing Hospital. The aim of insurers like these is to drive infections? Are people washing hands? Are we making stronger vertical integration of patient care while sure people have their flu shots? Are we really avoiding price increases. following through on those things?” When you consider integrated organizations like Kaiser The fourth possibility is that outside vendors enable Permanente and Geisinger Health System, much of small groups to succeed in producing integration.