A short time ago I had lunch with Dr. James Hamrick, who heads medical oncology in the Permanente Medical Group of Georgia. The meeting was precipitated by a conversation with my son-in-law, Dr. Rob Schreiner, who is the Executive Medical Director of Kaiser Permanente of Georgia and Hamrick's boss.
I asked Rob about any multidisciplinary clinics in their system, and he said they recently formed the first of what would be several, a breast cancer clinic, to see how well it worked in their system. I asked him what the process was for starting the clinic in his system. He said James Hamrick and a breast surgeon colleague, Dr. Peter Burns, took the initiative and Rob agreed to support its development.
Because of my interest, I was invited to attend the breast multi-d clinic and sit in on the conversations with patients. It was an excellent experience. At 8:00 am that morning a multi-d conference was held that included the breast surgeons, medical oncologists, a radiation oncologist, a radiologist, and appropriate clinic nurses and staff.
The records and films of eight patients were reviewed. All had had a biopsy and the pathology reports were available. The operating surgeon presented the case, and a discussion ensued on the most appropriate course of action for each. For some patients, consensus was reached relatively easily, but two or three took much more time. The whole process lasted for about an hour.
The group then moved up two floors to an area where all the doctors' offices were, along with a small conference room. I stayed for some of the patients' sessions when they agreed to my being an observer. The patients had at least one family member with them. The process went like this:
The surgeon came in and sat down and told the patient the specifics about the pathology and what that meant in terms of therapy planning. There was an exchange of questions and answers. The surgeon then left, and the medical oncologist came in and explained whether chemotherapy was indicated, and if so, what that would mean for the patient.
The radiation oncologist followed next and went through the same process. The radiation oncologist left the room, and the family discussed among themselves what they had heard. When the patient was ready, all three of the physicians entered the room and asked if there were any additional questions. This session was relatively brief.
The meeting broke up, and the patient went with a nurse to prepare a schedule for therapy. Meetings with all the patients took the entire morning and spilled over into the afternoon.
I was told that patients loved this process. They had seen all the doctors, who were clearly on the same page, and had plenty of time to ask questions.
The doctors also liked the process very much. It was made easier because the meetings were held down the hall from their offices, so when not in the meeting room, the physicians could deal with emails and return calls or even drop down to the clinic in the same building to see a patient. I was favorably impressed, to say the least.
Before I go further, here are some facts about Kaiser-Permanente, their health plan, and their group practice, The Permanente Medical Group. There are eight regional KP groups that operate quasi-independently, some owning inpatient facilities and others with only ambulatory clinics (e.g., Georgia). All doctors are salaried.
The PMG employs primary care and specialist doctors. PMG physicians care for the KP health plan members unless a specialty not represented in the group is needed. In that case the patient is sent to a non-PMG doctor who has an established working relationship to PMG. Care is performed or arranged by PMG, paid by the health plan.
Later, I asked Rob how Kaiser could afford to have all those doctors occupied for half a day or more every week. I have been told in my various travels by physicians that they could not afford to spend that time in a multi-d clinic since they had patients to see and getting all those docs in one room for that much time was difficult or impossible. Here is his reply:
“The following principles and percentages and dollars are roughly true for all eight KP regions; here and there I've given you specific Georgia figures to help make the point:
- The premium price for KP care for large employers is 15 to 18 percent lower in most of our markets, and as much as 25 percent lower in selected markets.
- Analyses by Aon Hewitt reveal that KP being in a market lowers the prices of our competitors by eight to 12 percent; thus, the real difference in cost (rather than price) is greater than 20 percent.
“When compared with traditional healthcare in the U.S., Kaiser Permanente spends more money on the following:
- Adult and pediatric primary care visits. Operational costs per visit are about 50 percent higher in KP than in non-KP, due to longer doctor-patient-nurse face time per visit [fewer patients per hour per exam room, patient panel sizes are 2000–2200 per doc in KP, 3000–3200 per doc in non-KP], more preventive services and educational expenses, more ‘coordination of care’ with specialty and hospital care [non-compensable in traditional systems, thus they don't happen].
- IT systems (roughly $75K per MD per year)—this includes the clinical documentation system to be sure (the EMR), but also PACS systems, quality reporting systems, software bridges linking multiple databases, portable IT systems/connectivity for hospital-based doctors, etc.
- Improvement systems Quality improvement infrastructure including software, but more importantly, people to lead and manage the process, such as physician-leaders, nursing-leaders, and most importantly, process improvement engineers.
- Non-contracted hospitals and ERs. Because we focus our patient volume with signed contracts at only those few “partner hospitals” where PMG practices, and who in return give us low unit costs per patient (those non-contracted hospital systems left out demanded we pay 100 percent of billed charges). In general, an ER visit or a hospital day at a non-contracted hospital costs five times more than at one of our partner hospitals, partly due to much higher unit prices, partly due to the self-interest behavior of non-PMG fee-for-service physicians.
- Labor costs for support staff—salary and benefits of nurses are higher in KP.
“When compared with traditional health care in the U.S., Kaiser Permanente spends less money (in aggregate) on the following:
- Hospital care (despite the high cost of non-contracted hospitals, see above). We have 25 percent fewer inpatient admissions per 1,000 [patient] members, 50 percent lower 30-day all-cause readmission rates, a 20 percent shorter length of stay, lower drug and implantable costs, and less unnecessary testing (fewer normal cardiac catheterizations, etc.), and fewer misadventures due to a culture of collaboration among PMG specialists and hospitalists.
- Physician salary and benefits. We pay primary care doctors more than those in a fee for service (FFS) practice, but pay specialty docs less. The range of lowest-paid to highest-paid docs in FFS is $150K [primary care] to $1.2M (cardiovascular, orthopedic and cardiothoracic surgery], whereas in KP it's $180K to $500K [GI, cardiovascular and vascular surgery].
- Drug costs. KP is the second largest purchaser of pharmaceuticals in the U.S., second to CMS, so KP can negotiate better prices.
- Implantables (artificial joints, CV stents, AICDs, pacers, etc.). KP has a financially favorable group purchasing arrangement.
- Specialty care. KP doctors order fewer cardiac catheterizations that turn out to be normal, less unnecessary surgery, less testing per patient/condition, less duplication of testing, less “automatic specialty consult” for every little thing, etc.
“The foundation of the above economic equation is:
1. All physicians are salaried physicians, rather than in a fee-for-service situation. Dr. Atul Gawande was right, of course, about the advantages (”Big Med” in The New Yorker, 13 Aug. 2012).
2. A physician culture that bought into the concept that waste is unethical; bought into using the formulary and preferred implantables, because it's our docs who create the shorter list of devices and drugs based upon the available evidence of patient benefit; multispecialty group practice (i.e., don't dump on one another, do see the patient immediately, do circle back with the referring doc, do have end-of-life discussions, etc.).
“So applying the above context to the specific question of 'How can KP ‘afford’ to sequester five highly paid specialists—breast surgeon, plastic surgeon, medical oncologist, radiation oncologist, and radiologist—plus other personnel (health psychologist, breast care coordinator) for half a day per week, seeing three patients each (not sustainable in an FFS environment)? There are two reasons:
- The multi-disciplinary clinic produces fewer complications, fewer medical malpractice allegations, fewer misadventures, less duplicative testing, etc.
- The other elements of the system partially subsidize this clinic, such as an investment in ‘quality.’”
So i asked Rob how KP measures up in the quality of care. He said they always do very well in the National Committee for Quality Assurance (NCQA) rankings. I went online to see for myself; and sure enough, four KP regions were in the top 20 of 474 plans listed. Kaiser Georgia was 36th of the 474 and far ahead of the other Georgia health plans. (Rob is not happy that his group is “only” 36th and vows to be better next year.)
I have known Rob for 30 years and have always been proud of him and his wife (my daughter, Pattie), but until recently I had no idea that he was operating at such a high administrative level.
Luckily, my interest in multi-d clinics gave me an opportunity to raise the hood and see how complex health systems work and how they can deliver high-quality care at a lower than average cost. I know there are other systems that do as well, but getting the inside information was eye opening and invaluable. I learned a lot.