Using Technology To Put Physicians In Control

Written by Dr. Leah Houston

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 healthcarethe 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 an 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 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 mal-aligned 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 personal to save money- example Children’s Health in Texas where the 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.5

Hospitals also own other third-party administrators (TPA’s) around the pharmaceutical supply chain, such as the group purchasing organization (GPO) Intalere owned by Intermountain Healthcare. Intalere is one of the 4 GPO’s 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 TPA’s 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 drive up the cost of healthcare because it creates 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 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 t o 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 parity 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 created 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 lead to these costs and disappointments are the result of layers of regulations that have been stacked on top of one another over the years.

2014/2015

First Employer sponsored health insurance created for teachers- later gave rise to Blue Cross

The McCarran-Ferguson Act was passed that exempts the business of insurance from most federal regulations including anti-trust laws in some instances.

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.

More social security’s acts amendments widened enrolment in CMS

HMO’s Health Maintenance Organization act of 1973- incentivized the privatization of insurance

ACGME created to fund advanced medical education – created because VA hospitals could not staff –created a way to get cheap labor from highly trained physicians.

EFRA Equity and Fiscal Responsibility Act of 1982 - created more government incentives to utilize the for-profit HMO’s

EMTALA Emergency Medical Treatment and Labor Act -requires every patient to be screened for an emergency regardless of ability or willingness to pay.

OIG HSS safe harbor law that protects PBM’s and GPO’s from anti-kickback laws 2

Current Procedural Terminologies (CPT’S) Diagnostic Related Groups (DRG’s) and Relative Value Units (RVU’s) and International Classification of Diseases (ICD’s) 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)

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

SGR - sustainable growth rate created. A freeze on graduate medical education was created which has contributed to the current physician shortage

Changes made to HIPAA eliminated patients' right to control the disclosure of their own medical records.

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

ACA “Affordable Care Act” incentivized everyone to have insurance coverage by penalizing those that do not.

MACRA The Medicare Access and CHIP Reauthorization Act of 2015

PQRS - Physician Quality Reporting System – ended 2016 and became MIPS

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 for major change within our current system is low. Special interests who 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. 1

1 https://www.usatoday.com/story/news/ nation/2018/03/30/sutter-health-lawsuit-california-hospital- consolidation/474742002/

2 https://www.wsj.com/articles/justice-department-nearing-antitrust-approval-of-health-mergers-combining-cvs- aetna-cigna-express-scripts-1536171360 https://www. healthcarefinancenews.com/news/aetnaceo-mark- bertolini-resign-post-after-merger-cvs-health

3 https://nypost.com/2018/06/04/kkrmakes-final-offer-for-envision-healthcare/ https://www.bizjournals.com/nashville/ news/2018/06/06/report-hca-makes-finalbid-to-buy-envision.html

4 https://dfw.cbslocal.com/2018/05/23/pediatricians-losing-jobs-health-clinics-close/

5 “Kaiser Permanente Partners with Emory Healthcare” Modern Healthcare by Alex Kacik June 13, 2018 https://www.modernhealthcare.com/article/20180613/ NEWS/180619960 https://www.kaufmanhall. com/news/2018-hospital-merger-and-acquisition-activity-continues-rapid-pace-30- announced-transactions

6 https://www.npr.org/sections/healthshots/2018/09/06/644935958/hospitalsprepare-to-launch-their-own- drug-company-tofight-high-prices-and-shor

7 NEWS RELEASE For Immediate Release

Contact: Daron Cowley Intermountain Healthcare Daron.Cowley@imail.org 801-442-2834 Intermountain Healthcare Reaches Agreement in Principle to Acquire ARI Ownership in Amerinet Salt Lake City, May 18, 2015

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