“Medical-Industrial Complex” Feels The Summer Heat

Posted on | August 8, 2014 | Comments Off on “Medical-Industrial Complex” Feels The Summer Heat

Mike Magee

It’s been quite a week for the “Medical-Industrial Complex”. This interwoven series of governmental, non-profit, academic and corporate relationships rivals the countries “Military-Industrial Complex” in its relentless consumption of America’s human treasures and financial capital, its’ non-transparency, its’ capacity to resist reform in an orderly and responsible manner, and its’ wide range of coordinated lobbyists in support of an unholy alliance of players.

This week, we witnessed President Obama’s attempt to break through one historic pillar of the Medical-Industrial Complex, the VA health care system. Viewed properly for practical purposes as a near wholly owned subsidiary of the major Academic Health Systems, this reliable governmental funding stream has been a bulwark of graduate medical education, faculty procurement, medical technology and medical research. AHC’s have been happy to have the asset since the active partnership was first proposed in the immediate post-WWII period. It has served them well. As for the vets – not so much.

This last scandal – one of many over the past half century – was apparently the last straw for the President. His plan includes the usual bump in funding and proposal to expand human resources which, as in the past, will be sucked into the system and rapidly disappear without trace of patient benefit. But in addition, in a matter similar to the injection of charter schools into the nation’s broken public education sector, the President allowed for the first time for vets whose care is delayed or is poorly matched to need to opt out, and seek care at the public’s expense from non-VA hospitals of their choice. This for the first time will have the effect of challenging the AHC-VA system and its non-performance based revenue stream. While only a start, it suggests that in the future the money will follow the vet, rather than the other way around.

In a similar attempt to break the status quo, a second pillar of the Medical Industrial Complex shook at its base this week with the release of an IOM report on future funding of GME. As the report states, “Since the creation of the Medicare and Medicaid programs in 1965, the public has provided tens of billions of dollars to fund graduate medical education (GME), the period of residency and fellowship that is provided to physicians after they receive a medical degree. Although the scale of government support for physician training far exceeds that for any other profession, there is a striking absence of transparency and accountability in the GME financing system for producing the types of physicians that the nation needs.”

The report proposes that:

Federal GME funding be maintained at about $10 billion a year with Medicare the major source for the next decade.

The Office of the Health and Human Services Secretary create a GME Policy Council and a new GME Center to guide and administer the new system.

Separate funding streams for direct and indirect costs of GME disappear and with it the history of gamesmanship. In its place would be an Operational Fund to support existing GME programs, and a new GME Transformation Fund to support innovation and equitable distribution of physicians throughout the country (a stated priority for the past five decades that seems no further along today than when it was originally flagged).

GME payments would no longer be pegged to Medicare inpatient days, the resident to bed ratio, and other factors. Rather there would be a flat per-resident amount (PRA) with some (hopefully few) geographic adjustments.

PRA funds would actually go to the institutions doing the education, not automatically to the teaching hospital for disappearance into a general operating fund. Educational institutions, Community Health Centers, or GME consortia could all qualify.

Between the two events this week, we see an attempt to break through the status-quo. Both carefully avoid a frontal attack on the Medical-Industrial Complex whose financial and political assets are formidable, to say the least. Rather, each in its own way offers a third way. In the case of the vet, he or she has the option to opt-out to a non-VA hospital, which ironically in many cases could be that VA hospital’s sponsoring AHC university hospital system. In the case of GME, OK we’ll let you continue to draw down the federal budget for another 10 years, but you’ll be capped. And during that time, as a measure of good faith, you will participate in the building of a new performance based system that will supplant the system you fought so hard to defeat in 1965, but learned to love so well.

As Eli Ginzberg so perceptively observed in his 1990 book, The Medical Triangle, “Over the twenty-year period from 1946 to 1965, academic medicine was totally reshaped. Only the medical school curriculum…remained relatively unchanged.”

The resultant Medical-Industrial Complex has effectively resisted change ever since. And yet – America, and the needs of her citizens, have continued to change nonetheless. As Ginzberg laid out 25 years ago, the challenges for GME were real and remain largely unaddressed.

In his words:

“They will need to hone problem solving abilities and understand the role of uncertainty in medical decision making; to gain access to, and to use effectively, the ever larger pool of medical information, which means acquiring computer literacy; to talk to patients and even more important, learn to listen; to develop a greater understanding of the role of the physician in today’s society; to be sensitive to the moral and ethical issues that affect responsibilities toward the medical system; to have the technical competence to practice medicine; and to continue training to keep abreast of the expanding knowledge base and the technology of medicine.”

“…tertiary care hospitals have become increasingly inappropriate sites to carry on the larger part of their clinical training. Many patients are being worked up before admission; diagnosis related groups have shortened the number of days that patients spend in the hospital; and much of the treatment that once went on in the hospital is now performed in ambulatory settings. Medical schools need to identify ambulatory settings in which to carry out much of their teaching function.”

With such pressing and chronic needs, it hardly seems unreasonable these days to be asked to perform if you wish to be paid.

For Health Commentary, I’m Mike Magee