Using Technology To Put Physicians In Control
Our healthcare system is failing. It costs more and has overall worse outcomes than any other industrialized nation. It is failing because those on the front lines of healthcare -the physicians – have no say in how the system is run.
Distributed Ledger Technology(DLT) – otherwise known as blockchain – has the ability to change that. DLT is about decentralization, disintermediation, and eliminating censorship by removing the need for a third party in any transaction. We need no middlemen between us and our patients, and this technology has the ability to make that our new reality. Our failing healthcare system is run by middlemen, so the potential of distributed ledger technology to disintermediate those middlemen yields the potential to improve the failing system.
Healthcare is one industry that has experienced increasing consolidation, vertical integration, and centralization over the years, and it has heavy regulatory oversight. The slow regulatory capture over the practice of medicine has been achieved through laws that have been pushed through Congress, as outlined in the historical summary later in this article. As a result, healthcare has become radically inefficient, and in many cases borders on a monopoly. There are single health systems dominating entire geographic areas₁, leaving little to no choice for patients. Third-party administrators are gaining market share and driving up the cost of healthcare through consolidation deals and price-obscuring practices. Consolidation regulation and exploitation of the healthcare markets have created misaligned incentives. All of these things could be eliminated through decentralizing technologies like DLT.
For example:
Pharmacy benefit managers are merging with insurance companies, as with the recent 2018 CVS–Aetna and Express Scripts and Cigna mergers.₂ This creates a situation where the one controlling the supply of the medications will be negotiating the payment and pricing for those medications. With the creation of in-pharmacy minute clinics, they can then also hire, employ, and control the prescribers of those medications by giving them protocols to follow.
Large health systems are attempting to merge with physician staffing companies, such as the recent attempt at an HCA-Envision Merger, in order to control the entire supply chain of physician services.₃ Often, in order to work for one of these systems, you must sign a non-compete. This leads to physicians being trapped in these systems, unable to move and fearful of retaliation if they don’t comply with practice guidelines enforced upon them.
Physician practices are being bought up by private equity firms, and at times, the physicians are being replaced by less qualified personnel to save money. For example, in Texas, the Children’s Health group was purchased, and the physicians were replaced by non-physician practitioners in order to save money.₄ Health systems also merge, leaving little choice in where people in geographically isolated areas can get their healthcare.
Hospitals also own other third-party administrators (TPAs) around the pharmaceutical supply chain, such as the group purchasing organization (GPO) Intalere, owned by Intermountain Healthcare. Intalere is one of the 4 GPOs in the country that control the in-hospital supply chain of prescription drugs. Interlare was formerly Amerinet, demonstrating an example of the tactics these organizations use – frequently changing names in order to obscure the truth around their economic strategy and market share.₆ Intermountain Healthcare claims to be “fixing the problem” by making their own medications, because they own the TPAs that administer and decide on medications and devices, they profit on both ends at the expense of the patient.₇
Mergers like this not only leave patients with little choice but also drive up the cost of healthcare because they create a lack of competition in the markets. It is for reasons outlined through the examples above that decentralization enthusiasts are turning to DLT in hopes that this technology will disrupt the trend. The lack of a need for a trusted third party to broker a deal is especially interesting for healthcare, considering the mal-aligned incentives and back-door deals that plague our healthcare system.₈
DLT has the potential to revolutionize how healthcare is delivered and paid for, but only if it is implemented properly. The question is, how can we create an optimal and truly decentralized healthcare system for the benefit of the majority? How do we make sure not to create new mal-aligned incentives in the future? It is a two-step:
Step 1
“We must first let go of the idea that we need to work within the current system, and integrate with current legacy systems….”
Those systems are the very systems that need to be decentralized. There are inefficiencies and mal-aligned incentives that can be addressed in nearly every aspect of the healthcare system.
Step 2
“We must put the physicians back in charge of healthcare at every level, while restoring privacy and agency to the physician patient relationship” The only true solution is to completely reorganize and decentralize power away from the consolidated third party stakeholders, such as the health systems, pharmaceutical companies, and insurance companies and towards the individual people who consume, create and utilize healthcare. To simplify who these people are, it is the caregivers and those receiving care. In other words, the individual people who utilize, consume, and create the current healthcare system will now collectively build the new decentralized system, because the new system will be community-driven.
Right now, both physicians and patients are frustrated with the current system, so it makes sense that the solution lies with them, and it may be the optimal time for them to take that initiative, in order to build a new system they can be proud of. Physicians must be willing to take that step, to advocate for their patients and make a change by considering themselves part of the solution. This inefficient system is in need of a change, especially because the bureaucracy that leads to these costs and disappointments is the result of layers of regulations that have been stacked on top of one another over the years.
Here Is A Brief Historical Summary Outlining How The Practice Of Medicine Has Been Regulated:
1929 First employer-sponsored health insurance was created for teachers, which later gave rise to Blue Cross
1946 The McCarran-Ferguson Act was passed, which exempts the business of insurance from most federal regulations, including antitrust laws in some instances.
1965 CMS created– Center for Medicare and Medicaid – the United States taxpayer-sponsored healthcare coverage for the elderly, disabled, and the poor, created from the amendments to the Social Security Act of 1935.
1971/1972 More Social Security Act amendments widened enrolment in CMS
1973 HMO’s Health Maintenance Organization Act of 1973- incentivized the privatization of insurance
1981 ACGME was created to fund advanced medical education. created because VA hospitals could not staff –created a way to get cheap labor from highly trained physicians.
1982 EFRA Equity and Fiscal Responsibility Act of 1982 – created more government incentives to utilize the for-profit HMOs
1986 EMTALA Emergency Medical Treatment and Labor Act -requires every patient to be screened for an emergency regardless of ability or willingness to pay.
1991 OIG HSS safe harbor law that protects PBMs and GPOs from the anti-kick-back law₂
1992 Current Procedural Terminologies (CPT), Diagnostic-Related Groups (DRGs), and Relative Value Units (RVUs), and International Classification of Diseases (ICDs) ,all created in an attempt to control costs by monitoring and controlling how physicians spend healthcare dollars, all controlled by the AMA (American Medical Association)
1996 HIPAA was created – The Health Insurance Portability and Accountability Act of 1996, which created standards for the electronic exchange, privacy, and security of health information. Final privacy rule published in 2000
1997 SGR– Sustainable Growth Rate created. A freeze on graduate medical education was created, which has contributed to the current physician shortage
2003 Changes made to HIPAA eliminated patients’ right to control the disclosure of their own medical records.
2009 The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009 to attempt to address the privacy and security concerns associated with the electronic transmission of health information, in part, through several provisions that strengthen the civil and criminal enforcement of the HIPAA rules
2010 ACA, “Affordable Care Act,” incentivized everyone to have insurance coverage by penalizing those who do not.
2014/2015 MACRA The Medicare Access and CHIP Reauthorization Act of 2015
2016 PQRS Physician Quality Reporting System – ended in 2016 and became MIPS
2017 MIPS Merit-Based Incentives Payment System- attempts to tie payments to “outcomes” and replaces PQRS – a “patchwork collection of programs,” according to CMS
Despite efforts by the government to regulate and control the healthcare system, it continues to get more expensive and less efficient. Considering our laborious legislative process, the likelihood of major change within our current system is low. Special interests that have a lot to lose spend money on lobbying to keep their interests in favor. Furthermore, many of the above policies took years to create, and with the acceleration and advancements we are making in technology, it is becoming impossible to create policies in a timely enough fashion in order to keep up.
So, how do we fix this? The answer lies in putting those with the appropriate competency, training, and compassion back in charge: the physicians! Join us next month for physician-led solutions to the problems impacting our freedom to practice medicine.
