TThe collapse of Geisinger Health System, which lost $842 million in 2022 and became a new subsidiary of Kaiser called Ryzant, shocked the healthcare world in spring 2023. Founded in 1919, Geisinger was a pioneer in the so-called medical system. “Values-based care” movement. It sponsored a regionally significant health plan with 600,000 members and served as the home for a highly qualified multispecialty medical group of 1,600 members. While coronavirus-related fiscal pressures, fateful business decisions, and difficult local economic conditions all contributed to Geisinger's downfall, federal health policy may have played a key role, with the potential to change in 2024 and beyond. It can disrupt other multidisciplinary groups.
Mr. Geisinger is just the latest member of an elite group of large regional multispecialty medical groups that have lost their independence and joined large hospital systems or corporations.Virginia Mason of Seattle was mortally wounded. Sad end to decades-long partnership with Group Health Founded in 2016 and currently common spirit.Marshfield Clinic, Wisconsin agreed to merge with Duluth-based Essentia Health announced in October 2022 after a long period of operating losses. The merger recently broke down..central texas Scott and White were acquired by Baylor in 2013.. everett clinic In Seattle, Atriusand rely on (Formerly Fallon) Massachusetts, healthcare partner (in partnership with Everett Clinic, both part of DaVita Medical Group); kelsey siebold Houston physicians and many others now join UnitedHealth Group's vast Optum Health physician network. billings clinic In Montana, curl health central illinois, and Guthrie Clinic Both North Central Pennsylvanians are facing financial difficulties and may not be able to survive as independent organizations.
Many of these elite multidisciplinary groups were founded by Mayo Clinic alumni or admirers in the 1920s and 1930s. They grew out of opposition to traditional mainstream medicine, including the American Medical Association and state medical associations, which viewed group practice as a virulent form of medical socialism. Graduate clinicians were drawn to these extraordinary physician-led organizations because of their collegiality, collaboration, and spirit of high-quality, conservative clinical decision-making. They were also chosen by the charismatic medical leaders who recruited them. Most of these groups operated hospitals, and some later offered medical plans, but quality physician care was their core business.
Multiple factors have contributed to the accelerated extinction of these groups over the past decade. One of the main causes is the economic decline of the rural economies surrounding many regions. This decline has tilted the payer mix toward Medicare and Medicaid and increased the number of uninsured and underinsured patients. In addition, rural labor market They have been particularly hard hit by the shortage of clinicians following the coronavirus pandemic. They may also have lost business to academic health center competitors in wealthy areas. Increased market share over the past 12 years.
The survival of the two major players in this elite peer group, Mayo Clinic and Cleveland Clinic, is largely due to Mayo Clinic's growing market presence in Phoenix and Jacksonville, Florida, and Cleveland Clinic's expansion into northeastern Ohio and Southern Florida and the United Arab Emirates.
But federal health policy also played a decisive and disruptive role. As local communities and regions age and young people move away, these multispecialty groups become increasingly reliant on Medicare Part B fee structures, which keep payments to clinicians lagging behind inflation. . 26% Medicare Part B fees also serve as a reference standard for commercial insurance and Medicare Advantage (MA) rate negotiations. As a result, Medicare's lack of inflation adjustment was reflected in delays in commercial insurance and MA rate payments.
The Part B rate schedule update, which falls well below the rate of inflation, not only hurt large groups. Additionally, we were unable to maintain our medical practices at the sole and partnership levels, and were forced to seek hospital employment or sell our medical practices to non-hospital companies. Clinicians' time has become more valuable in hospitals than in doctor-run clinics because Medicare allows hospitals to charge facility fees in addition to physician fees. Because many of these elite medical complexes had relatively small acute hospital capacity, their hospital facility fees were unable to offset the effects of inflation due to rising medical costs, as did their larger regional competitors. was.
The normative assumption of Medicare policy makers was that to make up for the shortfall, doctors would simply increase their practice, that is, provide more services than patients actually needed. As with many new owners of physician practices, this assumption became a self-fulfilling prophecy. private equity firm and hospital system —In fact, strengthen volume-based incentives in physician compensation plans and increase rates to private payers to make up the shortfall.
Health policy also plays a role in the collapse of independent medical organizations. Unlike the hospital industry, which has a unified and strong voice on Medicare payment policy, physician payment advocacy is fragmented based on dozens of professional societies (and some There is also a handicap of having an annual income of $1 million (over 2000). Fragmented advocacy has particularly hurt “have-not” specialties such as pediatrics, psychiatry, family practice, and general internal medicine, and these specialties will likely struggle even more in the future.
The failure of an elite multispecialty medical group that practiced value-based care long before it became a policy touchstone is an indictment of federal physician compensation policy. The potential policy justifications that have kept Medicare fee schedules under wraps for the past decade have made fee-for-service care less attractive compared to “value-based care” and led to the end of piecemeal Medicare payments. The goal was to prepare for the Organizations like Geisinger and Virginia Mason, whose core values supported conservative medical practices, were losers and paid the price of losing their independence.The policy community is loudly criticized the corporatization of medical practice, ignores the catalytic role of physician payment policies that it has supported. The slow tightening of the Part B Medicare fee schedule is the root cause of the demise of these important groups.
Increase Medicare Part B fee schedule payments for primary care and cognitive physician services, preferably through capitation rather than fees, as Congress appears poised to reduce hospital point-of-service payments/facility fees. It makes sense to spend all your savings on it. payment. It remains to be seen whether this modest gain will be enough to stem the net attrition of physicians in these important specialties or to rescue the remaining struggling multispecialty groups.
These elite multidisciplinary groups have not disappeared from the scene. However, they are no longer managed by the clinicians themselves, and it remains to be seen what the new owners will do with their proud heritage of clinical excellence.
Jeff Goldsmith is President of Health Futures Inc. and an independent strategic advisor and policy analyst. He received no compensation for this essay. He is also not employed by or advises any of the companies mentioned above. He would like to thank Glenn Steele, Robert Berenson, Don Crane, and Trevor Goldsmith for feedback on this article.
