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Florida Hospital - Adventist Health Part 3:
Negative Impacts on Independent Physicians and Patients

by Dawn J. Lipthrott

Summary of negative impacts on independent physicians and patients:
Adventist Health deliberately bypasses independent surgeons and physicians to steer patients to their own employed hysicians. Over the years, independent physician practice revenue has declined because of lower reimbursement of visits and procedures from insurance companies. Expenses continue to rise. Without increase or even stability of volume, independent physicians struggle. Diverting volume to its own employed physicians destabilizes private practices and discourages new surgeons from coming to the area (except for those hired by Adventist Health because of the difficulty of competing against a massive self-referring system. This anti-competitive behavior creates a climate where that choice will be more limited over time. It compromises patient choice, puts patients at risk in system contract negotiations with insurance companies, and allows corporate interest to influence patient care. The inherent conflict of interest in such a system can unconsciously or consciously lead to more procedures and increased cost.

• Surgeons/Physicians Need Volume of Patients to Survive
• Adventist Health/FPMG-FHMG Floods the Area with Their Own Surgeons/Physicians
• Betrays Local Independent Surgeons Who Have Been Loyal to Them
• How Does This Create Negative Impacts on Patients?

Physicians Need Increasing Volume to Maintain Financial Stability of Practices
The often repeated stereotype of 'rich doctors' is not usually true. There are some who are rich, especially in plastic/cosmetic surgery, cardiac surgery or neurosurgery. In the past there were more physicians making higher incomes. However, over the last 15 years, the financial picture has changed dramatically for physicians. Their expenses have increased while the amount paid for their services has steadily decreased. Over time that erodes not only income, but financial stability for their practices.

Years ago, insurance paid either what the physician charged or 70-80% of it. But those payments have been consistently reduced and insurance companies now base their rate of payment to physicians on what Medicare pays. Some companies pay slightly more than the Medicare rate, some pay the same, and some private insurance even pays less than Medicare even though premiums continue to go up. It doesn't really matter what the physician charges anymore. A doctor could charge $600 for a surgery and another could charge $3000, but they both will get paid $400, not just for the surgery, but for before and after care as a global package. (For more on this, see the article Does Your Doctor Get Paid Too Much?) So in most cases, their income has not even kept pace with inflation. Although this is an older graph, it shows how payment for a common procedure -- minimally invasive gallbladder removal -- has fallen far below inflation rates: (blue line is rate of inflation, red is the rate of payment) In 2004, my own surgeon was paid less by my expensive private insurance than Medicare paid for the same procedure 10 years earlier!






While income is going down, physician expenses are going up. Some of the biggest increases have been in staff and malpractice insurance costs. Because of the complexity and hassle with insurance companies to get paid for their work, most physicians have had to hire more staff--and spend more time themselves dealing with insurance companies. Salaries and benefits for staff have gone up. Malpractice insurance rates have gone through the roof, especially in some states. Here in Florida, a general surgeon or ob/gyn in 2004 was expected to pay an average of $143,000 in most of Florida --and $275,000 in South Florida. The price has gone up since then.

So this situation of increasing expenses and declining income has caused many small practices to struggle. Some physicians have given up and closed practices. Before the stock market crash, many were considering early retirement -- even though they love practicing medicine. With insurance controlling the amount of payment, there are very few ways for doctors to increase income, except by seeing more patients -- to increase volume. That means your physicians not only have to work harder and longer, but are not able to spend the amount of time they would like with each patient. We patients complain about the doctor not spending time and think they don't care. Most would love to spend more time. But if they want to stay in practice, they can't spend too much time.

Enter Integrated Delivery like Adventist Health that Floods the Area with Their Own Physicians/Surgeons:

Under ideal circumstances, this is challenging for physicians. Then on top of that, comes a system like Adventist Health whose primary goal is revenue and increasing market share. No matter how much it has, It is never enough. I heard a speech by Lars Houman, the CEO of Adventist owned Florida Hospital in Orlando. Florida Hospital increased in growth during this recent recession, particularly in outpatient surgery -- far surpassing its competitor Orlando Health, and far exceeding the expected rate which had been predicted to go into the negative in terms of growth. The main message from the CEO was that Adventist Health has to 'create new products' or "increase market share -- or take it from others."

The impact on local general surgeons can be documented with state health care agency statistics, as you could readily see in Part 2 on Patient Steering. As you will see in Part 4, there was and is no community need to hire additional surgeons. We do not have a shortage and these surgeons are not hired to serve underserved populations. They are put in high income areas. Most metropolitan areas would be lucky to get 1-2 new surgeons per year. Adventist Health had already hired 2-3 in 2005. In the past 2 years, they have hired 10 or more in addition to other specialty surgeons like colorectal surgeons, further cutting into procedures that many general surgeons performed.

Remember the 2 Adventist/FPMG-FHMG breast surgeons that in 3 months surpassed the best known independent surgeons because of patient steering by Adventist Health? Here is how Adventist/FPMG-FHMG has increased its own surgeon volume by taking it from independent surgeons who have decreased throughout the tri-county area.

Adventist Surgeons vs. Independent Surgeons:

Within just one year, the Adventist surgeons, all but two of whom were brought in from out of state, surpassed in outpatient breast surgeries, the established independent surgeons that were previously considered Florida Hospital's 'breast team' although they were separate practices. They still are part of the breast care team, although all Adventist surgeons are too. (The original team is Group A in the graph).









Below you can see the progressive decline of the 'original breast team' surgeons (blue) and some other independent general surgeons (yellow) and the increasing volume of Adventist/FPMG-FHMG employed surgeons (red). When you flood the market with corporate owned surgeons, you damage any independent practice.









Statistics taken from Agency for Health Care Administration data, State of Florida

Independent surgeons also have to absorb most of the lower reimbursement Medicaid or charity (as shown in Part 2 on Patient Steering), or even self-pay patients (who don't always pay).

Adventist Health and other systems like it, effectively diminish competition from independent practitioners. And what does it mean for drawing new independent physicians to a community like Orlando?

Patients need to understand what this means for us and what this means for some of our best surgeons and other physicians who do NOT sell out to large hospital systems like Adventist Health -- they will leave practice earlier than they planned and it will mean a huge loss to patients of some of our best, most experienced, and most reputable physicians.

I don't blame most of the physicians who become part of this system. Many are new physicians just starting out with no money to invest in a practice coming to an area where they are not known and having to build a practice from scratch. Why do that when a hospital system will give you your own practice even if it is run by the hospital system, markets your practice and tells other physicians to refer to you?

Others are established physicians in their mid to late 50's or early 60s who have many good years of service ahead of them, but are tired of hassling with insurance companies and who are tired of working so hard to keep their small practices financially stable -- and who now have to compete against the hospital system's physicians and patient steering. It's easier to sell your practice to them and coast into retirement. They pay you for buying your practice, they pay you a steady salary, they give you a supply of steady referrals, and they handle all your billing and marketing. You and your patients just have to cooperate with their corporate goals. Perhaps many of the doctors don't realize some of the compromises they will have to make until they are in the system and no longer have a way out if they want to practice medicine in this area. For some, it will push against their integrity as physicians who have traditionally placed the well-being of the patient above all things.

I do blame Adventist Health and other integrated delivery systems with similar structures who push the edges of anti-competitive and ethical behavior toward physicians, patients and the community at large -- and perhaps sometimes cross those edges to the detriment of patients and physicians for their own goals. And I have even more respect and appreciation for those independent surgeons and other physicians who resist the temptation to enable that system.

Betrayal of Loyal Surgeons:

By flooding the area with their own surgeons and using their size to steer patients away from independent surgeons, in my opinion, Florida Hospital and Adventist Health, and systems like it betray those surgeons. They betray those who consistently have done nearly all of their surgeries at Adventist owned Florida Hospital facilities and surgery centers, who have contributed greatly to hospital revenue by doing their procedures and admitting their patients there. (See Part 4 on how much specialists contribute to hospital bottom lines and why it is so lucrative to employ them.)

Occasionally independents may do a few surgeries at another hospital. Some have decided that a non-Adventist oncologist or radiologist is the best choice for their patients. Adventist Health wants all the procedures and all the downstream referrals for radiology and oncology after cancer surgery. Although this is a non-profit system, values like loyalty and treating people and business partners professionally do not seem to matter. Physicians can no longer trust such a system that would so easily betray them to gain more revenue and market share.

How Does this Create Harm or Potential Harm for Patients?

This approach has negative effects for patients in several ways. Some of them were covered in previous sections, so I will just list those:

1. Lack of transparency and resulting diminishing of trust.
2. It raises, and sometimes almost doubles, your healthcare bill.
When a doctor is part of FHMG, a physician hospital group, they automatically charge a hidden 'facility fee'. The 'facility fee' is as if you were seen at the hospital itself. It is not named on your bill, but it is part of the charge.
3. Reduces patient autonomy and informed choice.
In addition to what was described in previous sections, large system employment of its own physicians has negative impact on both established practice and the possibility of independent physicians coming to the area to establish a practice. That ultimately will reduce the choice for patients, especially in terms of the choice to have a physician who is NOT employed by the hospital corporation.
4. Decisions based on corporate goals rather than what is best for the patient.
5. Inherent secondary interest.
6. Increases chance of loss of excellent experienced physicians:
When I sent a survey to local surgeons last year nearly all of them indicated that they were more likely to consider leaving practice earlier than originally planned because of having to compete with Adventist Health. When asked how Adventist Health could better support them, they said "Stop hiring surgeons!"
7. An unfair competitive environment can easily discourage independent physicians to attempt to set up practice in the area.
8. Patients can become pawns in contract negotiations with insurance and system employed physicians, especially if they do not alternative hospital privileges:
Using the full force of the entire hospital system to 'negotiate' its own physician reimbursement contracts creates unfair advantage and also puts patients at risk if insurance doesn't do what the system wants -- at any level. According to professional license information through the State of Florida, very few Adventist owned surgeons have hospital privileges anywhere other than Adventist owned facilities, especially new ones brought to this area. Several years ago, a breakdown in insurance contract negotiations left tens of thousands of patients without access to Florida Hospital inpatient, outpatient, imaging or physician services(see the stories on Blue Cross and Aetna.) If your physician is an employee of that system and does not have privileges elsewhere, what do you do?
9. It adds to the expense of healthcare. Two hundred employed physicians in 90+ practice locations does not seem like wise use of health care dollars, especially when you place them in areas where they are not needed -- like the same buildings where there are already physicians in the same type of practice. Benefits like malpractice insurance, staff, office space, productivity bonuses based on volume or revenue brought in to the system all contribute to the costs of healthcare. Because of entire system negotiation power, system physicians (or, the hospital) can get reimbursed at a higher rate than solo or small group practitioners who have no negotiating power. Some d ata on outpatient surgical procedures from the State Agency for Healthcare Admininistration also shows that hospital system owned surgeons frequently create a higher charge for operating costs for the same procedure than independent surgeons in common general surgery procedures. It is not clear if the charge is reimbursed at a higher rate or is just a higher charge and then written off. Costs are passed on to patients and insurance companies who will then raise premiums to pay for them.
8. If not challenged the pattern continues and can create an ever-expanding hospital-owned system until independent surgeons and physicians will become a thing of the past. People complain a single-payer system run by the government, yet are clueless that increasing corporatization by hospital systems squeezes out choice of an independent physician and services.

Part 4: Community Need vs. Capturing Market Share and Revenue

Overview: Ethical Issues in Hospital Based Delivery Systems

Part 1: Hidden Onwership/Employment of Physicians

Part 2: The Power of Patient Steering by a Large System

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.
E-mail me at
© Dawn Lipthrott, Ethical Health Partnerships, 2009
(May be copied and distributed as long as this identifying information is retained on copies.)

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