Episode 504: Can Hospitals Save Money By Making Doctors Squirm? : Planet Money We sit in on a tense conversation where doctors argue about why it's so hard to start surgery on time. And we hear what happens when you change the way hospitals and doctors get paid.
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Episode 504: Can Hospitals Save Money By Making Doctors Squirm?

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Episode 504: Can Hospitals Save Money By Making Doctors Squirm?

Episode 504: Can Hospitals Save Money By Making Doctors Squirm?

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  • <iframe src="https://www.npr.org/player/embed/255259894/255311405" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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LISA CHOW, HOST:

I'm in a hospital in Akron, Ohio, and I'm recording a very tense meeting.

DEIRDRE BAGGOT: It seems like a really big...

ERIC ESPINAL: It's going to be a two-hour delay. We won't make an incision until 9:30.

CHOW: In this room is a bunch of heart surgeons, top guns at the hospital. And they're here to look at something that no one ever calls them on - their surgeries start late more than half of the time. And having an entire surgical team ready and an expensive operating room sitting empty costs a lot of money.

ALEX BLUMBERG, HOST:

So this hospital has brought in consultant Deirdre Baggot to essentially confront these surgeons about this issue. Deirdre turns to heart surgeon Eric Espinal, whose surgeries start late 43 percent of the time.

BAGGOT: Eric, if you looked at this and saw how you compared in terms of on-time starts to your peers, what's your impression? Or is this actionable? Or what are your thoughts when you look at this data?

ESPINAL: Well, I guess I need to know what defines the on-time start. I don't know how that number's reached.

BLUMBERG: There is defensiveness, and then it turns to finger pointing. Another surgeon, Michael Firstenberg, whose surgeries start late 62 percent of the time, says it's not his fault. He's there. It's the other people on the surgery team that are the hold up.

MICHAEL FIRSTENBERG: We call in, we tell them that we're here, we tell them that we're available. And yet individuals still feel the need to delay the shift from taking off.

JACOB COHEN: I would say - I mean, I'm sorry, Michael, but I mean in terms of reality...

BLUMBERG: At this point Jacob Cohen, an anesthesiologist, jumps in. He does not want the rest of the team to get blamed for this.

COHEN: I mean, I'm sorry, Michael, but in terms of reality on a regular-day basis, I can't put the patient to sleep because we don't have a surgeon who may not be answering their page, may be in the house. But that is - and so they're acting on realistic everyday occurrences. I mean, it's...

FIRSTENBERG: I don't disagree with you at all on that.

COHEN: So, I mean, for them to bring the patient in and that just means we sit in for a half an hour. You know, so there's - I mean, that's...

BLUMBERG: Are you squirming yet? This super uncomfortable conversation, one of the main reasons it's even happening - Obamacare. Hello and welcome to PLANET MONEY. I'm Alex Blumberg.

CHOW: And I'm Lisa Chow. Obamacare is prompting fights like this in hospitals all over the country, fights where doctors and other health care professionals take a look at some uncomfortable stats about themselves, like how often do I start on time, but also, how much do I cost? Today on the program we take a look at Summa Akron City Hospital, one place where these difficult conversations are happening.

BLUMBERG: And we find out how getting a bunch of proud, stubborn surgeons to fight in a room helps control health care costs.

(SOUNDBITE OF SONG, "HOSPITAL BEDS")

COLD WAR KIDS: (Singing) Tell me the story of how you ended up here. I've heard it all in the hospital.

BLUMBERG: This is one provision of the Affordable Care Act - better known as Obamacare - that doesn't get mentioned a lot but it could end up having a pretty big impact. It's this provision that basically sets up a bunch of experiments in hospitals all around the country, experiments in trying to deliver the same or better quality of health care for less money. And one of these experiments is happening in Akron, a city you recently visited, Lisa.

CHOW: And this experiment is trying to solve a very big problem, the fundamental problem in health care.

BLUMBERG: Michael Firstenberg, a heart surgeon, lays out this problem. He says, OK, a patient gets a bypass operation. Medicare pays Dr. Firstenberg and the hospital for that operation.

FIRSTENBERG: However, if that patient that night has to go back for bleeding, then I get paid for that procedure as well. And everybody's happy because look at all the revenue I'm generating independent of the quality.

CHOW: Think about that for a minute. If Dr. Firstenberg screws up and the patient has to come back, he makes more money. Now, no doctor wants to make mistakes, but even doctors know the incentives here are crazy. Ken Berkovitz is a cardiologist at the same hospital.

KEN BERKOVITZ: Everybody in the health care system gets rewarded for doing more rather than rewarded for doing the right thing.

BLUMBERG: And this problem of skewed incentives is what people here at this hospital are trying to solve. And they're trying to solve the problem by taking these skewed financial incentives and trying to align them better.

CHOW: This re-aligning, it's a big experiment, an experiment laid out by the Affordable Care Act that this hospital in Akron has volunteered to be a part of. And what this experiment does, it changes the way Medicare pays this hospital and these doctors.

BLUMBERG: So rather than doing it the old way where Medicare pays for every procedure, it's now a packaged deal. The technical term is bundled payment. And the way it works is - let's use Dr. Firstenberg's example. Rather than paying for the bypass operation and then paying again for the bleeding, Medicare will pay one lump sum upfront to cover not only the surgery but any complications that occur after surgery, as well. That one lump sum, that's all they get.

CHOW: Now, if the patient doesn't have any problems within 30 days of being discharged from the hospital, the doctors could actually make more money than they do today. But they stand to lose money if there are lots of problems after surgery. Dr. Firstenberg says he prefers it this way because this system rewards better care.

FIRSTENBERG: We don't want to be paid for doing shoddy work. I mean, when you go in and you get the brakes done on your car, you get a warranty. We want to be able to approach the same thing.

BLUMBERG: So the hope is moving to a lump sum payment system will improve care. But Deirdre Baggot, the consultant who was leading the meeting at the beginning of the program, says she hopes it does something else also. She hopes it saves money.

CHOW: Yeah, because remember, if you get one lump sum, then everything you do comes out of that. So now you start looking at every Band-Aid and every staff member, every place you might be spending more than you need. The less you spend of that lump sum, the more of that lump sum you get to keep.

BLUMBERG: So how do you get a doctor to spend less? This brings us back to that super tense meeting we heard at the beginning. Deirdre Baggot, the consultant, says that tension, it's part of the point. It turns out if you tell a doctor how much he costs and - and this is key - how his costs rank against everyone else's costs, behaviors change.

BAGGOT: Physicians are innately competitive. So I know after session one, that change will happen. It happens the minute they leave the room because they want to be number one. They were always the top of the class, and they want to do that here.

CHOW: And so Deirdre sets these meetings up like a public report card, like they're back in medical school. Except instead of competing for grades, they're competing on a bunch of other metrics related to how much they cost, whose surgeries start the latest, who orders the most expensive lab tests.

BLUMBERG: Ken Berkovitz, a cardiologist here, says he remembers learning that some of his colleagues were using cheaper anticoagulant drugs than he was.

BERKOVITZ: I was using drugs that were more expensive, that are certainly guideline-based. But there has been some newer data, some newer studies that some of my colleagues and partners have embraced perhaps earlier than I have. And what's brought me to change is looking at the data. And I probably would not have changed so quickly had I not had the data shared with me.

CHOW: Was it uncomfortable when you first saw the data?

BERKOVITZ: It - I can tell you for the physicians, in general, yes, it's uncomfortable.

BLUMBERG: And that is the miracle that happens when the financial incentives get properly aligned. Physicians start to do things that they probably should have been doing anyway, but they didn't because it made them uncomfortable. And perhaps the biggest example of this that you found, Lisa, for a long time, doctors have resisted doing something that many other professions where lives are on the line do as a matter of course. Fighter pilots, race car drivers all use this tool - a simple checklist.

CHOW: That's because checklists save lives. Did the patient get their antibiotics on time? Check. Did the catheter come out on time? Check. Just the simple act of making a list and checking things off, that reduced post-surgical death rates by almost half according to one study. And yet, even though this information about checklists was out there, heart surgeon Eric Espinal and his team didn't want to use one.

ESPINAL: I got to admit, as a physician, when we came up with this, I kind of felt a little silly for the first few weeks following sort of a checklist or a menu.

BLUMBERG: But because of this move to a lump sum payment, the hospital and the doctors here got over feeling silly. Because now checklists also make them money. Checklists cut down on complications. And in the old world, complications that sent patients back into a hospital, they didn't cost the doctors anything. But Dr. Berkovitz says in the new world...

BERKOVITZ: Complications are very expensive. If you can reduce complications and change nothing else, you dramatically reduce the cost of a case.

CHOW: Hanging out at Summa Akron City Hospital, I got to see one other way this experiment, in changing the way doctors get paid, was also changing the way doctors behave.

ESPINAL: How's her activity level? Does she get up and walk?

JULIE WHITEHURST: She is refusing to get up in the hallway.

CHOW: It came during morning rounds. Eric Espinal was asking about a 63-year-old patient who was recovering from heart surgery and about to be discharged. Dr. Espinal turned to Julie Whitehurst, the discharge nurse.

ESPINAL: So is the plan for home then?

WHITEHURST: She is refusing home care. She doesn't want anything to do with it. I tried to talk her into it for eight days now (laughter). I can't force her to have it.

BLUMBERG: Now, this patient refusing a home health care nurse, it wouldn't have mattered - financially, at least - to the cardiac team under the old system. If she ended up back at the hospital, they still got paid. But with this experiment in changing to a lump sum bundled payment, her refusal matters to them financially. She gets sick at home and has to be re-admitted to the hospital, it cuts into the hospital's and the doctors' money.

CHOW: And so Dr. Espinal starts considering things he might not have considered about this patient before. For example, why is she refusing home health care?

ESPINAL: I suspect that the reason that this particular patient didn't want home nurses coming into her home is 'cause she was embarrassed about how she lived. She lives in such a difficult, dirty sort of situation that she's embarrassed to have people to come to her home. And that's something that we have to deal with. Some patients don't live like you and I do. They have - they're barely kind of living on the fringes, and these are patients that get very, very sick. So I think we need to kind of understand that.

BLUMBERG: Under the old model, there certainly wouldn't be a financial incentive for Dr. Espinal to delve deep into the psychological state of a patient like this. But now, in this new model, he has a financial stake in trying to figure out, why is she doing this thing that she's doing?

CHOW: And this financial stake compels him to be more dogged about making sure that patient doesn't have problems and have to be re-admitted to the hospital.

BLUMBERG: And in this patient's case, they came up with a workaround. She never did agree to home health care. So what they did is they agreed to set up an earlier than normal office visit with her. So normally it's, like, something like two weeks after surgery. In her case, they invited her in just one week after surgery so they could monitor her condition more closely. It costs a little bit of money out of that lump sum, but it's a lot less than if she had to be re-admitted.

CHOW: Now, this experiment that we've been describing here in Akron, it hasn't officially begun yet.

BLUMBERG: Yeah, all these things that they have been doing, it's in preparation for the official change, which happens January 1. That is when Medicare will officially change the way they get paid at this hospital.

CHOW: And this hospital isn't the only one. Hundreds of hospitals are doing bundled payment experiments around dozens of other procedures, not just heart surgeries.

BLUMBERG: And the plan here, as envisioned by the Affordable Care Act, is to do what you do with experiments. Set them up and you let them run. In this case, they're going to run for three years. So in three years, we will be able to say definitively whether or not all those uncomfortable conversations, whether or not they were worth it.

(SOUNDBITE OF SONG, "HOSPITAL BEDS")

COLD WAR KIDS: (Singing) There's nothing to do here some just whine and complain in bed at the hospital.

BLUMBERG: As always, we want to hear your thoughts, questions, comments. Please write to us at planetmoney@npr.org.

CHOW: Or you can find us online at planetmoney.com, Facebook, Spotify and Twitter. I'm Lisa Chow.

BLUMBERG: And I'm Alex Blumberg. Thanks for listening.

(SOUNDBITE OF SONG, "HOSPITAL BEDS")

COLD WAR KIDS: (Singing) Nurses are fussing, doctors on tour somewhere in India. I got one friend laying across from me. I did not choose him. He did not choose me. We got no chance of recovery. Joy and hospital, joy and misery.

CHOW: An experiment laid out by the Affordable Care Act that this hospital in Akron has volunteered to be a part of. And what this experiment does, it changes the way Medicare pays this hospital and these doctors.

BLUMBERG: So rather than doing it the old way where Medicare pays for every procedure, it's now a packaged deal. The technical term is bundled payment. And the way it works is - let's use Dr. Firstenberg's example. Rather than paying for the bypass operation and then paying again for the bleeding, Medicare will pay one lump sum upfront to cover not only the surgery but any complications that occur after surgery, as well. That one lump sum, that's all they get.

CHOW: Now, if the patient doesn't have any problems within 30 days of being discharged from the hospital, the doctors could actually make more money than they do today. But they stand to lose money if there are lots of problems after surgery. Dr. Firstenberg says he prefers it this way because this system rewards better care.

FIRSTENBERG: We don't want to be paid for doing shoddy work. I mean, when you go in and you get the brakes done on your car, you get a warranty. We want to be able to approach the same thing.

BLUMBERG: So the hope is moving to a lump sum payment system will improve care. But Deirdre Baggot, the consultant who was leading the meeting at the beginning of the program, says she hopes it does something else also. She hopes it saves money.

CHOW: Yeah, because remember, if you get one lump sum, then everything you do comes out of that. So now you start looking at every Band-Aid and every staff member, every place you might be spending more than you need. The less you spend of that lump sum, the more of that lump sum you get to keep.

BLUMBERG: So how do you get a doctor to spend less? This brings us back to that super tense meeting we heard at the beginning. Deirdre Baggot, the consultant, says that tension, it's part of the point. It turns out if you tell a doctor how much he costs and - and this is key - how his costs rank against everyone else's costs, behaviors change.

BAGGOT: Physicians are innately competitive. So I know after session one, that change will happen. It happens the minute they leave the room because they want to be number one. They were always the top of the class, and they want to do that here.

CHOW: And so Deirdre sets these meetings up like a public report card, like they're back in medical school. Except instead of competing for grades, they're competing on a bunch of other metrics related to how much they cost, whose surgeries start the latest, who orders the most expensive lab tests.

BLUMBERG: Ken Berkovitz, a cardiologist here, says he remembers learning that some of his colleagues were using cheaper anticoagulant drugs than he was.

BERKOVITZ: I was using drugs that were more expensive, that are certainly guideline-based. But there has been some newer data, some newer studies that some of my colleagues and partners have embraced perhaps earlier than I have. And what's brought me to change is looking at the data. And I probably would not have changed so quickly had I not had the data shared with me.

CHOW: Was it uncomfortable when you first saw the data?

BERKOVITZ: It - I can tell you for the physicians, in general, yes, it's uncomfortable.

BLUMBERG: And that is the miracle that happens when the financial incentives get properly aligned. Physicians start to do things that they probably should have been doing anyway, but they didn't because it made them uncomfortable. And perhaps the biggest example of this that you found, Lisa, for a long time, doctors have resisted doing something that many other professions where lives are on the line do as a matter of course. Fighter pilots, race car drivers all use this tool - a simple checklist.

CHOW: That's because checklists save lives. Did the patient get their antibiotics on time? Check. Did the catheter come out on time? Check. Just the simple act of making a list and checking things off, that reduced post-surgical death rates by almost half according to one study. And yet, even though this information about checklists was out there, heart surgeon Eric Espinal and his team didn't want to use one.

ESPINAL: I got to admit, as a physician, when we came up with this, I kind of felt a little silly for the first few weeks following sort of a checklist or a menu.

BLUMBERG: But because of this move to a lump sum payment, the hospital and the doctors here got over feeling silly - because now checklists also make them money. Checklists cut down on complications. And in the old world, complications that sent patients back into a hospital, they didn't cost the doctors anything. But Dr. Berkovitz says in the new world...

BERKOVITZ: Complications are very expensive. If you can reduce complications and change nothing else, you dramatically reduce the cost of a case.

CHOW: Hanging out at Summa Akron City Hospital, I got to see one other way this experiment, in changing the way doctors get paid, was also changing the way doctors behave.

ESPINAL: How's her activity level? Does she get up and walk?

WHITEHURST: She is refusing to get up in the hallway.

CHOW: It came during morning rounds. Eric Espinal was asking about a 63-year-old patient who was recovering from heart surgery and about to be discharged. Dr. Espinal turned to Julie Whitehurst, the discharge nurse.

ESPINAL: So is the plan for home then?

WHITEHURST: She is refusing home care. She doesn't want anything to do with it. I tried to talk her into it for eight days now (laughter). I can't force her to have it.

BLUMBERG: Now, this patient refusing a home health care nurse, it wouldn't have mattered - financially, at least - to the cardiac team under the old system. If she ended up back at the hospital, they still got paid. But with this experiment in changing to a lump sum bundled payment, her refusal matters to them financially. She gets sick at home and has to be re-admitted to the hospital, it cuts into the hospital's and the doctors' money.

CHOW: And so Dr. Espinal starts considering things he might not have considered about this patient before. For example, why is she refusing home health care?

ESPINAL: I suspect that the reason that this particular patient didn't want home nurses coming into her home is 'cause she was embarrassed about how she lived. She lives in such a difficult, dirty sort of situation that she's embarrassed to have people to come to her home. And that's something that we have to deal with. Some patients don't live like you and I do. They have - they're barely kind of living on the fringes, and these are patients that get very, very sick. So I think we need to kind of understand that.

BLUMBERG: Under the old model, there certainly wouldn't be a financial incentive for Dr. Espinal to delve deep into the psychological state of a patient like this. But now, in this new model, he has a financial stake in trying to figure out, why is she doing this thing that she's doing?

CHOW: And this financial stake compels him to be more dogged about making sure that patient doesn't have problems and have to be re-admitted to the hospital.

BLUMBERG: And in this patient's case, they came up with a workaround. She never did agree to home health care. So what they did is they agreed to set up an earlier than normal office visit with her. So normally it's, like, something like two weeks after surgery. In her case, they invited her in just one week after surgery so they could monitor her condition more closely. It costs a little bit of money out of that lump sum, but it's a lot less than if she had to be re-admitted.

CHOW: Now, this experiment that we've been describing here in Akron, it hasn't officially begun yet.

BLUMBERG: Yeah, all these things that they have been doing, it's in preparation for the official change, which happens January 1. That is when Medicare will officially change the way they get paid at this hospital.

CHOW: And this hospital isn't the only one. Hundreds of hospitals are doing bundled payment experiments around dozens of other procedures, not just heart surgeries.

BLUMBERG: And the plan here, as envisioned by the Affordable Care Act, is to do what you do with experiments. Set them up and you let them run. In this case, they're going to run for three years. So in three years, we will be able to say definitively whether or not all those uncomfortable conversations, whether or not they were worth it.

(SOUNDBITE OF SONG, "HOSPITAL BEDS")

COLD WAR KIDS: (Singing) There's nothing to do here some just whine and complain in bed at the hospital.

BLUMBERG: As always, we want to hear your thoughts, questions, comments. Please write to us at planetmoney@npr.org.

CHOW: Or you can find us online at planetmoney.com, Facebook, Spotify and Twitter. I'm Lisa Chow.

BLUMBERG: And I'm Alex Blumberg. Thanks for listening.

(SOUNDBITE OF SONG, "HOSPITAL BEDS")

COLD WAR KIDS: (Singing) Nurses are fussing, doctors on tour somewhere in India. I got one friend laying across from me. I did not choose him. He did not choose me. We got no chance of recovery. Joy and hospital, joy and misery.

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