Boreal B[l]og

Years ago, in the doctor’s lounge, one of my colleagues said, “I admit it.  I make money off CT scan referrals to the center where I invested.  I’m greedy.”

While honest, he was not fulfilling a fiduciary duty, a legal obligation to act solely in another party’s interests. Parties owing this duty are called fiduciaries.  That meant when I practiced, I had to act in my patient’s best interests.  I could not order a test to make money unless the patient needed the test. For example: I might see a patient with classic carpal tunnel syndrome, 5 minute history and exam. Confirmation, if surgery were a consideration, was a nerve conduction velocity, testing to see if the velocity of conduction were decreased through the carpal tunnel of the wrist. I billed either for a simple new patient visit, $95 then, or 2 nerve conduction (NCV) studies, one in each arm, to confirm, $86.  I could have billed for both and charged $181, but it was a 5 minute evaluation, and a 5 minute NCV, and that seemed excessive.

I knew some who charged an extensive new patient visit ($165), two NCVs plus sensory conduction (the other way) on both arms with electromyography (EMG) both arms, to see if the muscle were damaged (almost never, these days) done by the tech, while they were seeing another patient, nearly $800.  Physician time: 10 minutes.  We were paid by amount billed.  My wife ran a CT scanner back then, but I did not send patients to her.  Her readings of scans were better than other radiologists, but there was an appearance of a conflict of interest had I sent a patient to her.  Many colleagues did not have such worries.  They invested in CT scanners then sent patients to them, a nationwide practice so bad that the Stark laws, named for the California congressman who introduced them in the late 80s, were passed, limiting referrals by doctors to places in which they had invested.

The Oregon Health Plan is Oregon’s Medicaid plan, Medicaid being a joint federal and state program that helps with medical costs for some with limited income and resources.  In 1996, because insurers wouldn’t cover Medicaid services in Eugene, physicians created an IPA, not the beer one, an individual practice association.  Each physician ponied up $6000 for a set number of shares; many were not happy about doing it.

For-profit Agate Healthcare bought out the IPA, claiming in 2001 they had covered 30,000 Medicaid patients and had stayed within budget. For-profits do not have a fiduciary responsibility to their patients but rather to their stockholders.  Stated another way, costs to cover medical care from beneficiaries are called “Medical Losses,” the amount paid divided by the amount received called the Medical Loss Ratio, a term I dislike, because it has the sense that delivering medical care is bad.  Doctors with shares got dividend checks every year and they could buy and sell shares.  This is OK.  It’s capitalism, and for risking $6000, doctors got some reward.

Agate later contracted with Trillium Healthcare to manage the Plan, and now with 94,000 patients Trillium has rapidly increased their revenues from a quarter to a half billion in the past two years.  Over time, stock options, something most of us don’t have, exercise, or even understand, allowed executives to obtain more shares.

Successful companies are often bought by a larger one.  Centene, based in Missouri, with $16.1 billion in revenue and $261 million in net income, bought Agate. Yet in 2015, 13,000 Lane County patients still did not have a doctor.  Big problem.  Eventually, they did, but that’s not “high-quality care” that payers, hospitals, and doctors are often trotting out.  There was concern that Agate kept some of the Medicaid money to make them look like a cash cow, a company with a lot of cash on hand.

When the buyout occurred, Agate had marketed themselves well, their share price increasing 600% overnight.  My bank pays me 0.15% annually.  When Agate was bought for $109 million, the proceeds went to the shareholders, not for medical care for homeless or paying medical debts people had in Lane County, but rather to rich, connected locals, all white and mostly men.

The CEO got $5.7 million, the CFO $4.2 million, and the entire 13 member board of directors received $34.2 million.  Another 77 doctors got a total of $41 million; 128 shareholders got $34 million. For a $6000 investment, continuously compounded, the last received a 19% return over 20 years.  The whistleblower, an investor, felt he came by his half million “somewhat honestly,” whereas the board, he said, “well, that’s an awful lot of money.”  Yeah.  It is.  But “somewhat”?  The letters to the editor blasted the whole lot of them, not that much will change.

From medical loss ratios to “managing ED use and bed days,” for profits have dictated care.  We doctors put ourselves here by fee for service and cranking up the service. For profits manage the number of bed days by discharging patients early and denying some care, but in all fairness, I saw many patients who stayed in the hospital with either no visits on the chart during a long weekend, or a bunch of “doing well”  with no documentation why they needed continued hospitalization. This isn’t and wasn’t optimal utilization of hospitals. As for denying care, in my day, carotid surgery for asymptomatic narrowing was not indicated, heavily abused, with high complication percentages. I had the data.

There is too much money flying around in medicine, but fiduciary responsibility to patients must not be lost. Fiduciary responsibility to patients often requires one to leave money on the table, rather than taking all the groceries that were supposed to feed everybody.  Like not charging $800 for carpal tunnel workups.  Or doing unnecessary surgery.

How did the Agate issue become public?  The board president, a physician, put out talking points to defend its sale.  Who got how much was kept secret; the company hired lawyers to keep the sale results private.  The media sued, and all was to be contested in court, because Agate shareholder felt it was private information whereas the media felt the money came from public funds, which indeed it was.

The newspaper knew that prior to the sale of the company, many on the inside bought shares from others who didn’t know what was happening.  This is dishonest, but it is the way people work. The paper finally received 218 pages from a disgruntled member whose own share was about a half million (the somewhat honestly guy).  He was disgruntled because share owners were asked to fund the legal costs for a minuscule amount, enough to irk him to go public. When you stand to get $5.2 million, a little thing like asking others to pay legal costs tends to annoy people.  It’s remarkable how the whole secret house of cards came tumbling down over a buck a share issue.

We need a single payer system.  This sort of stuff is what Bernie Sanders railed about all spring.

We need to tax capital gains progressively, so that when somebody makes an investment that grows 6 fold overnight, they will pay a much higher rate.  I like 80%, but 70% would be acceptable.

Finally, I noted that every doctor named but one was a surgeon.  That one got individually blasted in a letter to the editor.  Seemed that he disappeared when a woman’s father was in his final hours. She never forgave him. Would you?

Fiduciary responsibility would have dictated different behavior there, too.