Recently, a spate of articles appeared in the USA Today remnant of the local seacoast New Hampshire papers telling of the shock at Rochester, New Hampshire, when the Frisbie Hospital there, recently bought by Hospital Corporation of America, (HCA) lost 14 of 15 primary care physicians, so all the patients who were cared for by these doctors lost their doctors, and these patients were not pleased. In fact there was much hue and cry.
Of course, Mad Dog read about this with a different set of lenses than the hapless reporter who was free lancing this story.
It took Mad Dog back to a time 7 years ago and to a town 30 miles down the road from Rochester: Portsmouth.
Portsmouth had, in the 1970's been a scruffy Navy/Air Force town, with a red light district and bar fights, but the Air Force base closed and the Navy yard across the river quieted and the town began to gentrify. A new young group of doctors arrived and it didn't take long for them to go to the city fathers, and the board of trustees which ran the hospital to say the town needed a real hospital, rather than the tumble down cottage hospital with vermin running through the basement tunnels.
The Cottage Hospital
Eventually, a deal was struck with Hospital Corporation of America--yes, that HCA--and a new hospital was built. HCA at the time ran scores of for profit hospitals across the country and was one of the largest employers of physicians in America. Physicians were leaving private practice in droves, getting out of running their own businesses and seeking to become employees.
Inside the Hospital
For some years, things seemed to be going well for the community: They had an attractive new hospital with no vermin in the basement; HCA hired lots of primary care doctors and specialists and attracted two spectacular cardiac surgeons--one from Columbia University and one from Mt. Sinai and with the surgeons in place, several groups of cardiologists joined the staff and you really could get a patient with chest pain from the Emergency Room to a catheterization table within an a hour, the gold standard met by very few hospitals.
Pulmonary, infectious disease, neurology, endocrinology and oncology practices arrived and thrived. Patient no longer had to go to Boston 90 minutes away but could be treated locally and with a level of excellence rivaling Boston.
New and Improved
But then something happened. The accountants noticed the outpatient practices were not bringing in a profit and in fact, in sum, were actually costing HCA more money than they brought in. When you added up the rental for office space, salaries for doctors and staff, the outpatient practices were not earning their keep.
Of course, the model for hospital associated practices across the country in not-for-profit systems did not expect the outpatient practices to turn a profit because the only source of income was collection of fees for services in the office, and that was no way to make money.
The practices, however, sent plenty of money "downstream" to the hospitals by referring patients to the emergency room, to the MRI and radiology departments, and for admission to the hospital. The outpatient practices "fed" the hospital practices.
Upgrade
One day, a meeting was called at the hospital and the HCA regional director, a 30 something man from Richmond, VA--call him "Ben"--arrived to speak with the doctors and the CEO of the hospital.
Mad Dog arrived early and he sat down and listened to Ben instruct the local HCA manager--call him "Tony"--with a whiteboard he filled with Venn diagrams. Mad Dog did not understand it completely, but it had to do with the "markets" for medical care and it seemed to fit the clauses in the HCA contracts which told the doctors who had to sign them the patients "belonged" to HCA and if the doctors ever left the practices they could not continue to care for any patients they might have met when in the employ of HCA.
When the CEO of the hospital arrived, she said the meeting was to establish better communications between the practices and the hospital. People made nice noises about how much they loved each other and the CEO said she had not been able to meet a budget in 3 years. Finally, Mad Dog commented that his practice had lost a doctor because when it came time to renew her contract HCA cut her salary and as an endocrinologist she was in a seller's market, so she simply got a job elsewhere, but that meant the hospital no longer got the $850,000 in lab billing which every endocrinologist sends the hospital's way.
August Macke
Well, the CEO said, she didn't want to hear about that. What the CEO was concerned about was that she cannot meet her own budget, not that people are leaving practices "across the street" (in the outpatient offices.)
"But listen to what you are saying," Mad Dog persisted. "You want to open lines of communication but you don't want to hear about our problems."
"The problem is," Ben the regional director interjected, "You guys are just not productive."
"What does that mean, exactly? Productive? How do you define 'productive?' We don't make enough money for HCA?"
"You don't see enough patients."
"So, let me understand. You are talking about bodies through the door?"
"Yes."
"So, if I see a patient for a thyroid nodule as a new patient, which takes an hour, and I do a thyroid ultrasound and see a nodule, which I then biopsy in the office, that's a $1,500 consult. In that same time, I could see 4 return patients for a grand total of four time $80 or $320 for that hour. So which is more productive for HCA?"
Ben seemed perplexed. "Let me think about that. I'll have to consider. "
Mad Dog considered Ben, the man from Richmond, the regional director who was schooling the young Portsmouth manager on Venn diagrams and health care markets who did not know this most basic thing about what he wanted from local medical practices: volume or income.
A year later, as new contracts came up for renewal, doctors left Portsmouth. Cut salaries and doctors will leave. Because HCA had insisted on "non compete" clauses in the contracts the doctors could not remain and simply open private practices in Portsmouth but they had to move at least 25 miles away. Portsmouth lost neurology, pulmonary, endocrinology, hematology/oncology among others. And it lost multiple primary care practices It was called "the purge."
Hearing about Rochester, all Mad Dog could think of was what happened at Portsmouth.
They are doing the same thing to Rochester they did to Portsmouth.
At least, that's the way it looked from afar.
Mad Dog did keep in touch with one of the few primary care doctors who remained at Portsmouth, who told him about "Tony," the manager who Ben had been schooling.
"Wow," the PCP had said to Tony, "You've lost fourteen practices. You must be feeling the heat from Nashville. You hardly have any practices left to manage any more."
"Oh, no. I'm a hero down in Nashville," Tony told him. "I've cut down so much on overhead up here."
"Well, if they eliminated all the practices, they could cut overhead to zero," I told the PCP.
"That might be their plan. They apparently think the real money is in level three hospital medicine. Out patient practices don't have enough procedures so they'd rather get rid of those. The next big thing is emergency care, trauma and ICU care. That and residency training programs."
"Residency programs?" Mad Dog asked. Residency training programs have been, for the most part, confined to university teaching hospitals where full time faculty taught interns and residents of the next generation how to care for patients based on the research and practices of a teaching faculty.
But now, apparently, there is money from the government for teaching residents in the community hospitals, like Portsmouth, where there are patients but no faculty. At my residency training program, at a large university hospital we had 30 departments with chairmen, faculty and research projects. Faculty made rounds on all our patients, taught us at the bedside and at formal lectures.
At Portsmouth Regional Hospital, the faculty consists, far as Mad Dog can tell of a single physician whose academic credentials are, to put it generously, anemic.
"What kind of training can these residents get at this hospital?" Mad Dog asked the PCP.
"What kind of residents can these training programs get?" the PCP asked. "Mostly, they are graduates of foreign medical schools or American schools of osteopathy or places you never knew existed."
"So why would the corporation want anything to do with this?"
"There's money in it," the PCP said. "That's the game."
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