As always, I welcome your constructive comments and suggestions about the material on this website and how we can all be most effective in co-creating the kind of healthcare system we all want.
by Dawn J. Lipthrott
Summary of patient steering effects:
In a massive network like Adventist Health, the instruction or/and expection that the physicians they hire refer in-system creates a funnel that bypasses independent physicians and harms independent practices without patients even being aware that they are being steered through the system. This causes small independent practices to struggle and increases the chances of losing some of our best experienced physicians. As mentioned in Part 1, it can also compromise patients' ability to make a fully informed choice.
The Power to Dramatically Shift Referral Patterns
Most physicians spend years building their reputation and developing relationships with other physicians for referrals. As patients have positive experiences, and as the physician becomes known for his or her competence, quality, and care for the patient, those referral patterns strengthen over time. Specialists need to develop and maintain those referral sources because patients nearly always come to them through the referral of other community physicians.
Integrated delivery hospital systems like Adventist Health with its massive referral system, including its hidden network of over 200 of its own physicians, and any instruction or expectation on its own physicians to refer to its own physician practices and services efficiently steers patients where Adventist Health wants them to go.
Since recently sending out some materials about my concerns about the impacts on patients and physicians, I have had a couple of FPMG/FHMG (Florida Hospital Medical Group) physicians angrily proclaim that they are not instructed to refer in-network. Another calmer person left a comment on the blog that FPMG (FHMG) physicians are free to refer anywhere. However, I have heard from more than one healthcare professional over the past 2 years that Adventist/FPMG-FHMG physicians ARE instructed to refer in-network. So there are conflicting reports.
However, there are other indications that lead me to believe that physicians are instructed or expected in some way, shape or from to refer to FPMG-FHMG/Adventist physicians, at least to refer to Adventist/FPMG-FHMG specialists, services and facilities:
1. Brand new surgeons recruited from out of state immediately get so many patients directed to them that they are able to surpass well-established surgeons in only 3 months of practice.
Below you can see the dramatic shift in referral patterns by patient steering. One of FPMG's (FHMG) new breast surgeons was placed in the very same building as a successful independent surgeon who did most of her procedures at Adventist facilities, but often referred her patients elsewhere for radiation. The new practice was named almost the same as the existing independent practice. In spite of being completely unknown in the medical community or among the public, the Adventist breast surgeon, in only 3 months, was able to surpass the number of similar outpatient surgery breast procedures done by the most experienced and reputable independent surgeons of the original breast care team because of patient steering by the Adventist Health network. And that trend has consistently continued. A picture is worth a thousand words -- the red line is the unknown Adventist surgeon:
That trend of totally outpacing any existing well-known surgeons has continued.
(Source of statistics for all procedure graphs is the Agenecy for Health Care Administration of Florida)
Here is a similar picture of a second Adventist surgeon hired from out of state who was set up by FPMG-FHMG/Adventist Health in a building 4 miles away from the first where there were already 3 or 4 indepedent general surgeons from the original breast care team. The Adventist surgeon also surpassed the established breast surgeons in outpatient breast surgeries in 3 months.
This jump in referrals is not because the surgeons are better, it is because patients are referred to them and steered to them by the system. How do YOU think it happened?
2. Adventist Health/FPMG-FHMG expects return on their investments.
Adventist Health/FPMG-FHMG invests a lot of money in recruiting, paying salary, paying malpractice (which for surgeons can be over $143,000 annually by 2004 standards), renting or subsidizing office space for them, giving or subsidizing both office staff and mid-level professional staff, sometimes putting expensive equipment in their new office that most others in a given specialty cannot afford, and other benefits. They do not do it out of the goodness of their hearts. What is the return on their investment in a physician? Capture of referrals, revenue and market share. (Florida Hospital's concern with ROI is not just common sense, it is the topic of a presentation given to the Physician Strategies Summin conference on hospital/physician relationships - Sales: A Strategy to Enhance Volumes and ROI by C. Josef Ghosn and Karilynn Vargas, Florida Hospital.)
3. Competition: These recruited specialists are then placed in offices, sometimes in the same building, as successful independent surgeons or specialists, not because those specialists need help or because there is a long wait for an appointment, but because FPMG-FHMG/Adventist Health is seeking revenue and market share. (See graphs above.)
4. Adventist Health expects physician 'loyalty'. Adventist Health maintains physician profiles that indicate the number of referrals, the revenue they bring into the hospital, and determinations of their level of loyalty. They are assigned physician liasions to keep them happy and encourage them to be 'loyal'. They refer to independent physicians who sometimes refer to competing facilities or services as 'splitters'. Some hospitals seek to woo them back to referring only to their facilities. Other systems sometimes cut off the 'disloyal' physician. (Sales: A Strategy to Enhance Volumes and ROI by C. Josef Ghosn and Karilynn Vargas, Florida Hospital.)
5. Florida Hospital leadership program presentations show that in planning for a breast care center, they indeed consider what are profitable services, including the downstream referrals they will get from it.
And if you think about it, how can there NOT be some instruction or strong expectation that they refer in network? I could be wrong, but I doubt FPMG would go through all that effort and very large expense and be happy with its employed physicians referring to independent surgeons or specialists instead of their own specialists in whom they also have invested a large amount of money to set them up in practice or buy their existing practice. I don't think they would be happy if any of their physicians decided to refer their cancer patients to MD Anderson's radiology program after cancer surgery by an independent surgeon.
By recruiting and setting up physicians, with the expectation of assuring referrals, the system captures a larger share of the market and increases revenue for visits and procedures.
Integrated systems like the Florida Hospital system, create its own primary care physician practices, even though in and of themselves they are not usually very profitable for the system. The prize is that those practices are the gateway to the much more profitable specialists' care and facility and service usage. Because they pay their physicians/specialists a salary, and yet negotiate higher insurance reimbursement rates by using the full power of its entire system of hospitals and practices, the system can obtain either top rate or top volume from insurance companies. The difference in salary and money taken is profit. Those specialists then not only bring in that revenue and do procedures at Florida Hospital facilities, but also refer in-house for subsequent services like radiation, chemotherapy, rehabilitation services, etc. which are even more profitable. These are called 'downstream referrals'. It is not coincidental that Florida Hospital failed to renew its contract with the independent radiology group in order to create their own radiology group -- who can then refer to their surgeons who can refer back to their own radiologists for treatment, making sure ALL of that revenue stays in Adventist Health.
Within 2 years, Adventist Health/FPMG-FHMG hired 13 or more surgeons, to re-direct patients from surgeons who had loyally supported Florida Hospital to its own employed surgeons.
As mentioned in Part 1, Adventist Health uses questionable marketing of its practices In addition to the ability to steer patients to their own physicians. FPMG-FHMG/ Adventist Health even used the delay in its own system in providing diagnostic mammograms (which everyone needs to be referred to a breast surgeon) to market it's own surgeons. Here is part of the text from the website of one of the FPMG/Adventist owned breast practices:
“The Breast Care Center of Florida provides a full set of diagnostic and surgical services for breast cancer patients. Our goal is to eliminate the delays and frustration patients frequently encounter during the typical 8 to 12 week timespan from screening to mammography to surgical services. At the Breast Care Center of Florida, our patients can receive all the necessary services with one visit! This is made possible because a single physician, Dr.______, is able to coordinate all elements of the diagnosis and treatment of breast cancer.”
FPMG's (FHMG) marketing makes it sound like the problem is getting into independent surgeons when in reality, the delay for women who need the second diagnostic mammogram was in their own imagining centers. THEY even acknowledged it in their breast care center planning:
In 2008 I called several surgeon practices to see how long it would take me to to get in to see the surgeon if I had a diagnostic mammogram in hand. Before I saw the statement on the website, I thought that in spite of statistics, perhaps local surgeons may have been backlogged. What I found was that most could get a new patient in within 3 days, including the best known breast surgeons in the area, and one was a week. To get into the FPMG-FHMG/Adventist surgeons took 3 weeks and 2 weeks respectively.
I don't know about you, but it bothers me that FPMG-FHMG/Adventist Health plays on a woman's fear of having breast cancer to market its own physicians and deliberately places its employed surgeons in the same building as independent surgeons to diminish any competition. I have to ask myself, is that what is good for patients? And, what does that mean for those independent physicians who are some of our best?
Although I cannot say for sure, it seems that p art of the patient steering seems to involve Adventist Health/FPMG-FHMG referring self-pay (no insurance) or low income Medicaid patients to independent physicians and keeping better paying insurance patients for their own physicians. New FPMG (FHMG) physicians are not usually set up in offices in poor or rural areas, although a small number are. They are placed in higher income areas like Winter Park, Maitland, Celebration, and other lucrative areas. Both Adventist Health and its subsidiary, FPMG (FHMG) , have non-profit status, yet independent breast surgeons perform more Medicaid and self-pay procedures than the non-profit Adventist group. The FPMG breast center did no charity or Medicaid outpatient surgical procedures and only one self-pay when looking at the most common procedure codes (19000-19315).
Group A is the independent surgeons who made up the original breast team;
Group B are Adventist/FPMG owned surgeons;
Group C is a similar sized sample of other independent surgeons in the area;
and the other is the Adventist/FPMG owned breast center.)
William G. Plested, MD, former president of the American Medical Association, described the anti-competitive nature of many vertically integrated hospital delivery systems (like Adventist Health). In testimony to the Senate Subcommittee on Federal Financial Management about specialty hospitals, he states (the bold type appears as such in the original text):
" In fact, it is disingenuous for the hospital industry to claim that physicians have a conflict of interest when many general hospitals engage in self-referral practices. One hospital association claims that a “community hospital that tried to buy admissions in this way would be outlawed.” Ironically, however, general hospitals often channel patients to their facilities and services. They do this mainly by acquiring primary care physician practices or by employing primary care physicians, and requiring those physicians to refer all of their patients to their facilities for certain services such as x-ray, laboratory, therapy, outpatient surgery, and inpatient admissions. They also require such referrals by physicians under certain contractual arrangements or by adopting policies that require members of the medical staff to utilize their facilities (See Exhibit A).
Hospitals value these controlled referral arrangements to such a degree that they maintain them despite the fact that many of the hospital owned primary care practices and other arrangements operate at a loss for the hospital. The hospitals are frequently willing to subsidize these practices with profits derived from other departments and services provided by the hospital or health system. Why? It is clear that they only maintain these revenue losing groups to control referrals and avoid competition.
The AMA is very concerned about efforts by hospitals and health systems to control physician referrals as they pose a number of significant concerns. "
"Integrated delivery' systems like Adventist Health in essence become massive networks that more and more are challenging the very idea of independent practice and create a situation in which it becomes less and less viable for many practices to continue -- unless they join the system. "Integrated delivery" is corporatization of healthcare in a community.
In Part 3, I will discuss how this system and patient steering negatively affects both physicians and patients.