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Obama addresses AMA: doctors beware

In 1980, when Reagan assumed office there were the malaise of the Carter years and the worst recession since World War II. Trouble in the Middle East and the rise of Islamic fundamentalism were just the beginning of his problems. The economy was in near collapse. Inflation was in double digits and unemployment was high.  Interest rates paralyzed credit markets; people couldn’t get affordable mortgages and the housing market was at a complete standstill. Medicare spending was through the roof and there were 31 million people who were uninsured. High medical inflation was making costs unsustainable, jeopardizing the quality of and access to health care and having profound effects on the rest of the economy.

 

Reagan did not address the AMA as soon as he assumed office, but three years later. In fact, he was at odds with the AMA, and there was every expectation that he would not be well received. In his first term in office, he reformed health care and one of those reforms was an open wound for doctors. There was no fanfare or bravado over these reforms mainly because they never received much media attention when they were debated in Congress, at least not in the beginning. History essentially forgot Reagan’s contributions. In fact, President Obama totally ignored Reagan in his speech when he credited other presidents for tackling health care, even Bill Clinton, who tackled it and failed.

 

Reagan’s speech was short, half as long as Obama’s, often punctuated by  self-effacing humor so characteristic of his style. He began, “Let me start by saying as strongly as I can, the quality of American medicine is unsurpassed…America's doctors have no peers. Your medical accomplishments are a gift to mankind that honors us all.”

 

At first there was only polite applause, but, halfway through, he totally won them over. “Back in 1847 a group of 250 physicians convened in Philadelphia to establish this American Medical Association. Well, I'm going to tell you exactly what I told them. We have the best health care in the world, because it has remained private.” 

 

The ice was broken with both raucous laughter and prolonged applause.   Reagan then began to remind the audience about what he already accomplished and about what he hoped yet to achieve and with their support.

 

Among those things that he accomplished were the prospective payment system that controlled spiraling hospital costs which is still in place today, the streamlining of the FDA’s drug approval process enabling breakthrough drugs to get to those who need them more quickly and the Orphan Drug Act which encouraged the development of treatments for rare diseases that killed and crippled tens of thousands of Americans,  He proposed a limit on tax deductions for high-priced health plans making most employer contributions for health benefits tax free, encouraging employers to provide affordable health benefits to employees.  He also proposed and later passed the Medicare Catastrophic Coverage Act. Although passed with broad bipartisan support and with the blessings of the AARP, the media attacked it with a vengeance because the plan called for Medicare recipients to pay a graduated surtax with a top rate of 5%. The attack was so relentless that finally Congress, putting intestinal fortitude aside, repealed the law. If the law remained in place, today no one would ever worry about what happened when they needed to enter a nursing home and there would be no need to purchase long-term health insurance. 

 

Reagan had his uncomfortable moment, too.  “Well, I'd like to explain an additional proposal you don't support - the one year freeze on Medicare physician reimbursement… As the patient in the movie often says, ‘give it to me straight, Doc…’ Well, we believe the straight answer is that a one year freeze is painful but necessary medicine.” He was booed by most in the audience. However, he was completely up front with the doctors and, at the end, there was applause that continued for eight minutes.

 

Times were different now, but not so different as when Reagan first assumed office.  The previous administration was credited with a generalized malaise of America and there was trouble in the Middle East and Islamic fundamentalism.  The central challenge was the worst recession since World War II. There was increasing unemployment, frozen credit markets, declining home values and people loosing their homes to foreclosures. Medicare spending was through the roof and there were 47 million people who were uninsured. High medical inflation was making costs unsustainable, jeopardizing the quality of and access to health care and having profound effects on the rest of the economy.

 

Unlike Reagan who acknowledged the best of American medicine, Obama began  his speech with a different tone. “Today, we are spending over $2 trillion a year on health care… And yet, for all this spending, more of our citizens are uninsured; the quality of our care is often lower; and we aren't any healthier. In fact, citizens in some countries that spend less than we do are actually living longer than we do.”

 

At about the same point into his speech as when Reagan won his audience over by using humor to promise that health care will remain private, Obama somberly said, “…there are those who will try and scuttle this opportunity no matter what – who will use the same scare tactics and fear-mongering that's worked in the past. They'll give dire warnings about socialized medicine and government takeovers; long lines and rationed care; decisions made by bureaucrats and not doctors. We've heard it all before…No matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.” There was a lot in between these lines, and although the Delegates politely applauded, if they were listening carefully this was no promise to doctors.

 

He continued to describe his vision. “If we do that, we can build a health care system that allows you to be physicians instead of administrators and accountants; a system that gives Americans the best care at the lowest cost...” The Delegates applauded; however, in the private practice of medicine, doctors, whether in groups or solo, were proprietors and had to manage their businesses. If the Delegates listened carefully to what was being said at this moment, in between the lines, they would have heard that these business operations will no longer be the responsibilities of doctors.     

 

He talked about electronic health records and preventative medicine, about controlling the tendency to over utilize medical technologies and testing with evidence based medicine all of which will control costs. All doctors would agree. Then he said, “But what accounts for the bulk of our costs is the nature of our health care system itself … a system that automatically equates more expensive care with better care…. It is a model that has taken the pursuit of medicine from a profession – a calling – to a business.  That is not why you became doctors… You entered this profession to be healers – and that's what our health care system should let you be.” The Delegates were completely silent as if mesmerized by these words and then interrupted with the most enthusiastic applause of the entire speech.   However, there were a few who heard what was really said. The President of the United States just placed the bulk of  the blame for all the costs of health care squarely on the shoulders of physicians, but not those in the room; they were healers and that was what a health care system should let them be.  The system should permit them to practice medicine free of all those awful distraction of running a business.  Indeed, there were doctors who were motivated to order more studies just to make more money but the President painted the entire medical profession with a very broad brush as though running a business was the flaw that caused all doctors be become greedy.    

 

It was now when he revealed the fundamental dictum behind his health reform.  “That starts with reforming the way we compensate our doctors and hospitals. We need to bundle payments so you aren't paid for every single treatment you offer a patient… but instead are paid for how you treat the overall disease…We need to create incentives for physicians to team up…We need to give doctors bonuses for good health outcomes – so that we are not promoting just more treatment, but better care.” What the President just described was a system that would replace fee-for-service with a single capitated payment to a group of collaborative doctors organized in a pod and the pod will be paid according to the way they performed by complying with certain best practices of treatment. Such an organization is called a provider sponsored organization of PSO.   Although some in the audience might have been aghast at his vision, the rest responded with polite applause.

 

He talked about Geisinger Health System  and Intermountain Health System, where high-quality care was provided at a cost well below average.  “These are islands of excellence that we need to make the standard in our health care system.”  He did not speak about Pilgrim Health System in Massachusetts and Cal-Advantage in California,  which went bankrupt as an island of excellence. 

 

Some in the audience knew that centers of excellence were very large horizontally integrated health care systems. They also knew that in such systems many decisions, including medical decisions are made by bureaucrats, with patient cost in mind,  and not doctors, with patient care in mind. In these systems, best practices can compromise the individualization of care and sometimes certain treatments were not offered to certain patients. There was a fine line that separated doctors, who were motivated to order test for their own financial gain although they knew it was unnecessary, from doctors, who were motivated to comply with pre-designated  treatments even though they knew an alternative treatment was more effective or safer but they still did so because they made more money.  This was when payment for performance became payment for compliance. If any in the audience question whether he was serious about  this paradigm shift in compensation,  President Obama answered their concerns.  "Replicating best practices. Incentivizing excellence. Closing cost disparities…Any legislation sent to my desk that does not achieve these goals does not earn the title of reform”

 

There was one moment though, one uncomfortable moment. “Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That's a real issue. And while I'm not advocating caps on malpractice awards…I do think we need to explore a range of ideas about how to put patient safety first…” Tort reform was off the table. While the President spent considerable time justifying his government public option by showing how cuts could be made from this program or savings could be gained from that, as fuzzy as the math might be, the fact was that the highest item of operating expenses for any health care system, including those same centers of excellence that the President so admired, was the cost of  medical liability.  Malpractice insurance, defensive medicine, risk management, litigation, and all other associated opportunity costs to these were hundreds of billions of dollars, more than most of the costs about which he spoke so glibly and intended to cut.  Nevertheless these expenses had, for some reason, were more important to preserve than all the rest which he cut with impunity. There were disapproving boos from the Delegates; however, they were from only a handful.

 

At the end, the  applause from Delegates on the convention floor of Chicago’s Hyatt Regency was polite. If he anticipated the same enthusiasm with which last week’s speech in Green Bay was received, he must have been a little disappointed. After all, this speech was better, much more detailed. Still, he was received well and his address was interrupted about 30  times with the same polite applause, which is a good sign considering the audience. All in all, it was a good day, good enough for the President to feel that he won the AMA over to support his mission to reform American health care. Whether he did or not, two thirds of all physicians in the United States did not belong to the AMA, which was no reason to believe that the AMA represented the prevailing interests of the entire medical profession.   The AMA was just a symbol.