SECTION OF HOSPITAL MEDICINE Introduction to the American Health Care System II October 20, 2015 Gregory Ruhnke, MD, MS, MPH Section of Hospital Medicine University of Chicago

How is health care different? Moral Hazard and Cost-Sharing Value and the intensity (quantity) of health care services provided Specialty mix, intensity, spending, and quality Physician Supply Outline

Difficult to measure quality (output) Restriction to physician entry Consumer plays major role in production process Information asymmetry (physician vs. patient) Adverse selection (asymmetric knowledge of health status) Health insurance and moral hazard Inelastic demand (little  based on  in price) Uncertainly of treatment effects How is health care different?

Moral hazard: change in behavior when the risks or costs are borne by others Extent of change depends on trade-off rate Price elasticity = (  in demand)/(  in price) Moral Hazard and Cost-Sharing

SECTION OF HOSPITAL MEDICINE Flat-of-the-Curve Medicine  

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1974 – ,807 enrollees from 6 sites Compared: full coverage 25% copay 50% copay no coverage until catastrophic cap Rand Health Insurance Experiment

The cautionary tale The HIE results imply that if 1,000 low-income 50-year-old men at elevated risk were enrolled in a no-cost-sharing rather than a cost-sharing plan, then we would anticipate that about 15 of them, who would otherwise have died, would be alive five years later (1,000 x 0.05 x [ ] = 15.0).

Value and the intensity (quantity) of health care services provided

Physician/System Factors Medical Education  practice System capacity Fee-for-service (discretionary utilization) Marketing w/o good data Defensive medicine “The Perfect Storm of Overutilization”

Patient Factors Desire for new technology Direct-to-consumer marketing (PPI) “A menu without prices” (moral hazard) “The Perfect Storm of Overutilization”

SECTION OF HOSPITAL MEDICINE Supply Creates Demand System Capacity will be utilized Roemer’s Law “In an insured population, a hospital bed built is a bed filled is a bed billed.” My practice is influenced by capacity

SECTION OF HOSPITAL MEDICINE Flat-of-the-Curve Medicine  

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Physician-Induced Demand Number of physician-initiated visits Higher surgical rates where there are more surgeons Variation in average number of visits per patient with change in panel size Patient shortage  10-20% increase in MD income per patient

SECTION OF HOSPITAL MEDICINE Variation in Intensity of Utilization SLCChicagoMiami MD visits per person/year MD specialist visits/per/year MD visits per enrollee during Last 6 months of life Enrollees seeing 10+ different 4% 29% 35% MDs during last 6 months life

SECTION OF HOSPITAL MEDICINE Flat-of-the-Curve Medicine  

SECTION OF HOSPITAL MEDICINE Resource Constraints # ICU Beds 18 ➔ 8 # monthly admissions122 ➔ 95 % of days with ICU bed available95 ➔ 55 Pneumonia and MI patients less likely to be admitted to ICU, but no change in mortality

SECTION OF HOSPITAL MEDICINE Why is this important? Impending 30% increase in MD supply 25 new medical schools Imaging infrastructure is expanding Geographic and specialty maldistribution of physicians

SECTION OF HOSPITAL MEDICINE Specialty mix, intensity, spending, and quality

Figure 2. Kaplan-Meier plot of actuarial survival by timing of referral in propensity score matched population (n = 2078).

 532/170 hypertension/diabetes patients  2-years with exams and lab tests

Physician Supply: Past, Present, and Future

SECTION OF HOSPITAL MEDICINE Physician Supply up to 1960 Flexner Report 1910 (173 MDs / 100K) By 1930, 125 MDs / 100,000 population From 1930 to 1960 modest expansion to 140 MDs / 100,000 population 1950s only 1 in 3.4 applicants accepted

SECTION OF HOSPITAL MEDICINE 1960 – Surgeon General Consultant Group on Medical Education (Bane Report) Shortage predicted  Gov’t subsidies 1965 – 1980 medical schools increased from 88 to 126 Annual graduates 7,409  15,135

SECTION OF HOSPITAL MEDICINE GMENAC 1981 GME National Advisory Committee Alvin Tarlov Demographic and population trends MD specialty and geographic distribution US graduates and IMG immigration

SECTION OF HOSPITAL MEDICINE GMENAC (continued) Predicted a surplus of MDs by K surplus (extra 15%) by K surplus (extra 30%) by 2000 Normative decisions about clinical care Support to medical schools discontinued

SECTION OF HOSPITAL MEDICINE 1980s GMENAC did not address GME 1983 Medicare Prospective Payment Payments to hospitals to support GME IMGs ↑  More interns and residents

SECTION OF HOSPITAL MEDICINE General IMG statistics, 2007 Number of physicians in US941,304 Number of IMG physicians*243,457 % IMG physicians in U.S.26.0 % IMGs among residents27.8 % IMGs in primary care 58.0  % USMGs in primary care26.0  * from 127 countries

SECTION OF HOSPITAL MEDICINE Top states where IMGs practice, New York35,93442%  2. California26,20923% 3. Florida20,24337%  4. New Jersey13,82445%  5. Texas13,70524% 6. Illinois13,69834%  7. Pennsylvania11,23126% 8. Ohio10,04629% 9. Michigan9,74934%  10. Maryland7,26227%

SECTION OF HOSPITAL MEDICINE 1980s (continued) 1986, Council on GME (COGME) Agree with GMENAC (80K surplus by 2000) Mostly excess of specialists Rec residency positions 140%  110% 110/50/50 rule (50% generalists) Bureau of Health Professions (DHHS) same

SECTION OF HOSPITAL MEDICINE 1990s

SECTION OF HOSPITAL MEDICINE 1990s (continued) 1997, Medicare caps # of residency positions eligible for support Skepticism about the impending surplus Richard “Buz” Cooper model of demand (GDP)

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Y2K AAMC “No one saw a real doctor on the street corner selling pencils.” 2005 COGME reports suggest shortages Baby boomers, physician gender and lifestyle changes 2000 – reports and statements by 19 medical organizations on shortages

SECTION OF HOSPITAL MEDICINE 2005 – current 2006, AAMC recommends a 30% increase in medical school enrollees by new schools of allo/osteopathic med Expansion of existing medical schools Payment reform to bolster primary care

SECTION OF HOSPITAL MEDICINE 2005 – current Generalists 72 / 100,000 population Specialists 128 / 100,000 population The Massachusetts Experience

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What proportion of residents go into primary care?

SECTION OF HOSPITAL MEDICINE PGY-3 Resident Career Plans who had reported a General Internal Medicine Career Plan as a PGY-1

SECTION OF HOSPITAL MEDICINE Dissent Dartmouth group on variation Studies have not shown insured patients having access problems Geographic maldistribution Specialists, physician-induced demand More discretionary, low-value care

SECTION OF HOSPITAL MEDICINE Patient Protection and Affordable Care Act National Health Care Workforce Commission Health Resources and Services Administration grants to states for planning Loan support Training grants to improve primary care education and build primary care capacity Community health center investment

SECTION OF HOSPITAL MEDICINE Affordable Care Act (continued) Increases Medicaid payment for PC services 10% bonus to PC MD services and general surgeons in underserved areas Redistributes funding for unfilled residency positions to funded PC slots ↑ GME funding to small, rural hospitals GME funding expanded to community- based settings and for didactic time

SECTION OF HOSPITAL MEDICINE Thank You