1. The Evolution of Modern Medical Practice Strategic Management of Health Care Organizations 26 Jan 2006 Edward P. Richards Professor of Law, LSU Law Center

2. History of Medicine and Medical Science

3. 3 Shamanism Oldest Medicine Primitive Tribes Integrates Religion And Medicine Persists Even Today In So Called Modern Cultures Alternative medicine Psychotherapy?

4. 4 Explicitly Ministers To The Psyche And The Body Often Sophisticated Rituals And Herbals Driven By Myths Trial And Error And Careful Observation Some Cure, Most Do Not Leviticus Public Health Code Rules Reduce Food Poisoning

5. 5 Useful Pharmacopeia Ethnobotany Study Of Plants Used By Ritual Healer Many Drugs Have Been Discovered Witches Used Foxglove - Digitalis Medicinal Chemists Refine And Modify Botanicals Who owns the IP?

6. 6 Greco-Roman Rationalism Galen And Successors Driven By Rational Theories Religion Is Left To Priests Observations Forced To Fit Into The Theory Plato Was Terrible About This Mistakes Are Not Corrected Persisted Until 16th Century

7. 7 Hospitals as Religious Institutions Started in Europe in the Middle Ages Some of the Oldest Institutions in Continuous Operation Run by Nursing Sisters For the Poor More Egalitarian in the United States

8. 8 Nursing Only Church Did Not Sanction Medical Care Goal Was to Alleviate Suffering Ease the Transition to Heaven Most Died From Their Illnesses Only the Very Sick Entered Excellent Environment for Infectious Diseases Changed With Technology in the 1880s

9. 9 Scientific Medicine Not The Philosopher's Scientific Method The Imperative To Disprove Theories The Full Disclosure Of Information Science Is Constantly Questioning And Rethinking Scientists are also people They are susceptible to conflicts of interest Fame is often more important than money

10. 10 Paracelsus Philippus Aureolus Theophrastus Bombastus Von Hohenheim Early 16th Century Transition From Alchemy Experiments And Systematic Observations Antimony

11. 11 Anatomy And Function Andreas Vesalius Mid 16th Century Accurate Anatomy William Harvey Early 17th Century Flow Of The Blood And Operation Of The Heart

12. 12 Edward Jenner Smallpox Major Killer Along with Measles, Wiped Out The Indigenous Peoples 1798 – Published His Book On Cowpox First specific treatment based on scientific observations

13. 13 William Morton Dentist Ether Anesthesia 1846 Rejected by the medical profession and died penniless

14. 14 Ignaz Philipp Semmelweis Childbed Fever Fellow Medical Student Died Controlled Studies 1849 Rejected by the medical profession and died penniless

15. 15 John Snow Cholera In London Broad Street Pump Proved Cholera Is Waterborne 1854

16. 16 Louis Pasteur Scientific Method Germ Theory Vaccination For Rabies Pasteurization 1860s-1880s More powerful than the medical profession Was friends with the wine growers

17. 17 Joseph Lister Antisepsis 1867-1880s Listerine

18. 18 Koch - 1880s Koch’s Postulates Agent Must Be Present In Every Case; Agent Must Be Isolated From The Host And Grown In Vitro [In A Lab Dish]; Agent Must Cause Disease When Inoculated Into A Healthy Susceptible Host; And Agent Must Be Recovered Again From The Experimentally Infected Host. Limitations

19. 19 Organic Chemistry – 1880s German/Swiss Dye Industry Bayer Hoffman La Roche Ciba Became Drug Chemistry

20. 20 Sanitation Movement in Public Health Shattuck Report - 1850 Water Sewage Food Sanitation - FDA - 1905 Life Expectancy Goes from 25 – 50+ fast Slowly Rises to 76.5

21. 21 Tuberculosis Control - 1900 The Major Killer Koch And Pasteur Sanatoria Pasteurization Of Milk Disease Control Of Dairy Herds Effective Drugs Came Later

22. 22 Antibiotics Sulfa Drugs In The 1930s Penicillin Alexander Flemming – 1928 Purified By Chain And Florey In 1939 Streptomycin – 1944 First Antituberculosis Drug Selman Abraham Waksman – 1944 (Coined The Term Antibiotic)

23. 23 Medicine and Surgery - 1890s Medicine Starts to Work Surgery Can Be Precise Patients Do Not Get Infected Professionalism Starts to Matter What is a Quack if Nothing Works? Why Train if Training Does Not Matter? We will see that this is key to legal regulation of medicine

24. 24 Hospital-Based Medicine Started With Surgery Medical Laboratories Bacteriology Microanatomy Radiology Services and Sanitation Attract Patients Internal Medicine Obstetrics Patients

25. 25 Reformation of Hospitals Paralleled Changes in the Medical Profession Began in the 1880s Shift From Religious to Secular Began in the Midwest and West Not As Many Established Religious Hospitals Today, Religious Orders Still Control A Majority of Hospitals

26. 26 Post WW II Technology Ventilators (Polio) Electronic Monitors Intensive Care Shift From Hotel Services to Technology Oriented Nursing Became capital intensive

27. 27 Post World War II Medicine Conquering Microbial Diseases Vaccines Antibiotics Shift to Chronic Diseases Better Drugs Better Studies Leukemia Chronic Diseases are much more lucrative

28. 28 Hospitals Shift From Nuns to Paid Staff Advantages of Nuns Work Cheap Work Long Hours Well Organized and Disciplined Keep Physicians In Line Supply Plummets Replaced With Paid Staff Not Many Nuns Even In Religious Hospitals

29. Governmental and Private Regulation of Medicine

30. 30 Pre-Constitutional Period Limited Occupational Licensing NY Passed Licensing Law in 1760s Not Enforced Extensive Public Health Regulation Old Notion of Dirt Nuisance Managing Fear People Terrified of Epidemic Disease Yellow Fever and the Constitution

31. 31 Constitution - Post Civil War Jacksonian Populism and Distrust of Institutions Decline of Occupational Licensing Existing Laws Were Rescinded Doctors Lawyers Continued Growth of Public Health Regulation Driven by Snow’s Discoveries Shattuck Report – Boston - 1850

32. 32 Schools of Practice – Mid 1800s Allopathy Homeopathy Naturopaths, Chiropractors, Osteopaths, and Several Other Schools

33. 33 The Profession - 1870s Most Medical Schools are Diploma Mills No Bar to Entry to Profession Small Number of Urban Physicians are Rich Most Physicians are Poor Cannot Make Capital Investments Training Medical Equipment and Staff Physicians Push for State Regulation

34. 34 Authority to Regulate Medical Care and Public Health - The Police Power Historical Right of Societal Self-Defense Central Colonial Function Not Police Forces Public Health and Safety Left to the States by the Constitution Can Be Preempted by Federal Legislation Tobacco Labeling Medical Device Labeling

35. 35 Constitutional Attacks on State Regulation of Medicine Equal Protection/Due Process Discriminating Based on Training Discriminating Based on Theory of Practice License as Property Right Inception of Licensing Laws Discipline of Licensees All Trumped by Police Power

36. 36 Constitutional Limits on the Police Power Civil Rights Chinese Laundry Cases Other Shams for Discrimination Contraception Sterilization and Abortion Access to Adequate Pain Relief?

37. 37 The Role of Legal Regulation in Professionalizing Medicine Protection of Licensees Quality of Care Availability of Care Fair Pricing Governmental Interests

38. 38 Protection of Licensees Critique from the Left Paul Starr - Social Transformation of American Medicine Critique from the Right Milton Friedman “Hostile” v. “Friendly” Licensing Not Incompatible with Other Goals

39. 39 Improving Quality and Availability of Care Require Training Exclude Unorthodox Practitioners Discipline Incompetent or Impaired Docs Subsidize Indigent Care with Required Treatment Mandates EMTALA Medicare/Medicaid Non-Discrimination Rules

40. 40 Fair Pricing Sustain Prices to Assure Supply Prevent Monopoly Pricing Prevent Gouging Based on Patient’s Limited Bargaining Position Emergency Conditions Emotional Vulnerability Lack of Knowledge This never worked very well

41. 41 Governmental Interests Cross-Subsidize Government Programs Tax the Profession Political Influence of Professionals Draw on Professional Expertise Traditional Public Health Traditional Mental Health

42. 42 Licensing and Education Mid to Late 1800s Physicians are Solo Practitioners Most Make Little Money Have Limited Respect Effective Medicine Drives Licensing Licensing Limits Competition Physicians Start to Make Money Makes sense to invest in training

43. 43 Consolidation of Power American Medical Association Gains Power Linked State and Local Societies to the National Society Linked Medical Staff Membership to Local and State Society Members Exclusionary Politics Blacks Women Jews

44. 44 Reform of Medical Education Schools with High Standards Could not Compete Degree Cost More Took More Time Did not Affect Entry to Practice or Success Race to the Bottom Schools Were Closing Curriculum was Weakening

45. 45 Outside Forces Carnegie Foundation “Flexner Report” Most Schools Failed Not Like US News and World Report Rankings Incentives to Change Foundation Money Student Selection Pressures

46. 46 Effect of Licensing State Required Training in Approved Programs Some Programs Were Not Approved Some Unorthodox Practitioners Had Their Own Schools so They Cooperated Students Had an Incentive to Attend a Better School

47. 47 How Did Medical Schools Change? Professionalism of Faculty Full-Time Salaried Positions Education Requirements Emphasis on Research Driven by Outside Money Reinforced by the Success of the Research Development of Modern Residency Training

48. 48 What Happened to Unorthodox Practitioners? Homeopaths and Osteopaths Homeopathic Schools Closed Osteopathic Schools Evolved to be Much the Same as Other Medical Schools Osteopaths are Now Licensed and Treated the Same as Other Physicians Chiropractors Politically Very Powerful Got Their Own License and Allowed to Keep Practicing

49. 49 Where Are We Now? All States Require A Medical School Degree Most Require One Year Post-Graduate Residency Training No States Have Separate Licenses for Specialties Private Certification of Medical Specialties Required by Most Hospital and Health Plans Extra Training and Examinations

50. 50 Joint Commission on Accreditation of Hospitals 1950s Now Joint Commission on Accreditation of Health Care Organizations American College of Surgeons and American Hospital Association Split The Power In Hospitals Medical Staff Controls Medical Staff Administrators Control Everything Else Enforced By Accreditation

51. 51 Contemporary Hospital Organization Classic Corporate Organizations CEO Board of Trustees Has Final Authority Part of Conglomerate Medical Staff Committees Tied To Corporation by Bylaws Headed by Medical Director Constant Conflict of Interest/antitrust Issues

52. 52 Hospital Economics - Old Days Patients Are Necessary More Patients Meant More Money Docs Admit Patients Insurance Was So Generous It Cross- subsidized Indigent Care

53. 53 Hospitals Have High Fixed Costs Capital Costs Not Built on the Donations of the Faithful Anymore Ancillary Services Lab, Etc., Must Be up for Even One Patient Nursing Can Be Cut Back, but Only by Closing Units Pretty Hard to Get Excited About Malpractice Risks Unless You Can Fill Every Bed in the Hospital

54. 54 Value of An Admitting Physician Only 2 Cases a Day, Average Stay a Week Each Case Is Worth $15,000 to the Hospital Over the Week 10 Beds Filled at Any One Time Take a Month Off, Have a Few Slow Days, Say Only 400 Patients a Year. $6,000,000 a Year If You Are Sloppy, They Just Stay in the Hospital Longer

55. 55 Physicians Owning Hospitals Originally Was Unethical to Own a Hospital Conflict of Interest Exception for Small Towns Changed When Hospitals Made Money Characteristic of Medical Ethics Lawyer Ethics Are Also Pretty Flexible HCA Was The Model - Interesting Times

56. 56 Physician Practices Pre-1990 Sole Proprietorships Partnerships Mostly Small Some Large Groups First Organized As Partnerships Then As Professional Corporations Shaped by Corporate Practice Laws

57. 57 Corporate Practice of Medicine Physicians Working for Non-physicians Concerns About Professional Judgment Cases From 1920 Read Like the Headlines Banned In Most States Real Concern Was Billing By A Non- physician Not as strict in Louisiana, but followed national staffing models

58. 58 Impact of Corporate Bans Physicians Do Not Work for Hospitals Contracts Governed by Medical Staff Bylaws Sham of “Buying” Practices Physicians Contract With Most Institutions Charade of Captive Physician Groups Managed Care Companies Contact With Group Group Enforces Managed Care Company’s Rules Physicians Can Be As Ruthless As Anyone

59. 59 Where Do Physicians Get Business? No Referral or Finders Fees Unlike Lawyers, Docs Generally Do Not Pay Them Because of Real Penalties Goodwill, No Grief on Peer Review Now Patients Are Controlled by Managed Care Organizations Not as true in LA

60. Managed Care and DRGs

61. 61 Managed Care Pressures on Hospitals DRGs Capitation Negotiated Reimbursement Still Need Butts in Beds Must Get Them Out Quick and Cheap Death Can Be Very Cheap Right to Die – Yes Please Do!!

62. 62 Right to Die - Old Days Technological Imperative Every Day Every Procedure Every Increasing Stage of Intensive Care Big Money Just Making It Past Midnight Might Be Worth Another $2,000.

63. 63 Managed Care Pressures on Docs When is Denying Care Cheaper? What is the Timeframe Issue? Insurers Now Control the Patients Employee Model Contractor Model De-selection Financial Death No Due Process

64. 64 Right to Die - Today DRG payments do not increase with increased stay in the hospital Most private insurance also has limits and will pressure the hospital to transfer the patient to a nursing home Nursing homes do not do high tech care Limits on nursing home reimbursement

65. 65 Specialty Hospitals Benefits Regionalization improves technical care Are we really seeing that? Real Business Model No Emergency Room No EMTALA duties - more next time Destabilize Community Hospitals No indigent patients Dump complicated patients back

66. New Challenges

67. 67 Emerging Infectious Diseases Antimicrobial Failure New Agents HIV, Ebola, SARS Bioterrorism Flu pandemics Excess Capacity is Surge Capacity

68. 68 Managing Emergencies such as Hurricanes Should major facilities be in evacuation zones? What should the planning look like? Who should pay?

69. 69 Obesity and Life Style Diseases The medical care system, especially in LA, is geared to acute care and procedures The medical needs are primary care to prevent and mitigate chronic diseases The current system is the most expensive and least effective approach

70. 70 Aging Population Politicians want to control the growth of Medicare The population is aging so the number of enrollees will continue to rise As the population ages, there will be more years in the program, and thus higher total costs Health is not cheap

71. 71 Health Care as a Tax on Labor Look at the airlines and the car companies Employer paid health care is a major tax on labor intensive businesses Automate Ship jobs overseas Not good for the economy Tax paid health care spreads the cost over all businesses and individuals and does not penalize labor intensive businesses