The failure of Geisinger Health System, which lost $842 million in 2022 and disappeared into a new Kaiser subsidiary called Risant, sent shockwaves through the health care network in the spring of 2023. Founded in 1919, Geisinger was at the forefront of what is known. such as the “value-based care” movement. It sponsored a regionally significant fitness plan with 600,000 members and housed a multi-specialty medical organization of exceptional quality of 1,600 people. While Covid-related monetary pressures, fateful control decisions, and difficult regional economic situations all contributed to Geisinger’s demise, the federal fitness policy would have arguably played a role, and may also bring down other multi-specialty teams in 2024 and beyond.
Geisinger is just the latest member of an elite organization of gigantic multi-specialty regional medical teams that lost their independence and joined gigantic hospital systems or corporations. Virginia Mason, in Seattle, was fatally affected by the unhappy end of her decades-long collaboration with Group Health in 2016 and is now a member of CommonSpirit. Wisconsin’s Marshfield Clinic agreed to merge with Duluth-based Essentia Health in October 2022 after a long string of operating losses, even though the merger recently collapsed. Scott and White, of Central Texas, were absorbed through Baylor in 2013. Everett Clinic in Seattle, Atrius and Reliant (formerly Fallon) in Massachusetts, HealthCare Partners (along with Everett Clinic, both components of DaVita Medical Group), Kelsey-Seybold in Houston, and many others are now part of UnitedHealth Group’s extensive network of Optum Health physicians. The Billings Clinic in Montana, the Carle Health Clinic in central Illinois, and the Guthrie Clinic in north-central Pennsylvania are experiencing monetary hardship and possibly would not be independent organizations.
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Many of those elite multi-specialized teams were founded by academics or admirers of the Mayo Clinic in the 1920s and 1930s. They evolved despite opposition from classical medicine, particularly the American Medical Association and state medical societies, which viewed organizational practice as a malignant form. form of medical socialism. Physician graduates have been drawn to those special physician-led organizations through the spirit of collegiality, collaboration, and conservative, high-quality clinical decision-making. They were also drawn in through the charismatic medical leaders who recruited them. Although most of these teams operated hospitals and some subsequently submitted fitness plans, high-quality medical care was their core business.
Multiple factors have contributed to the rapid demise of those teams over the past decade. One of the main participants has been the economic decline of the rural economies that surround many of them. This decline has tilted the composition of its payers toward Medicare and Medicaid. , while increasing the number of uninsured and underinsured patients. In addition, rural labour markets have been hit hard by the post-Covid shortage of doctors. They would also have arguably lost business to richer competition in regional educational fitness centers, which they have won. market share over the past 12 years.
One of the reasons two major players in this elite peer group, Mayo and Cleveland Clinic, have survived is that they have effectively established a foothold: Mayo Clinic in the developing markets of Phoenix and Jacksonville, Fla. , and Cleveland Clinic in the Northeast. Ohio, South Florida, and the United Arab Emirates.
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But federal fitness policy has also played a decisive, even destructive, role. As their local communities and regions, the elderly and the young drifted further and further away, those multi-specialized teams became more reliant on the Medicare Part B payment schedule, whose bills to doctors had fallen behind. 26% inflation since 2001. Medicare Part B bills also play a huge role, as popular gold for advertising insurance and Medicare Advantage (MA) tariff negotiations. Therefore, Medicare’s under-adjustment for inflation has impacted the delay in advertising and MA insurance. Invoices for fees.
Updates to the Part B price table, well below inflation, have not only hurt the giant groups; They also made individual or association medical practices untenable, forcing them to work in hospitals or sell their practices to non-hospital companies. Because Medicare gave hospitals the ability to qualify payment for a facility in addition to the doctor’s payment for a visit, a doctor’s time was worth more in a hospital than in a doctor-owned office. Because many of those elite multi-specialty clinics had low hospital capacity for intensive care, they may simply not offset the inflationary ravages of emerging physical care prices in their operations with hospital facility payments, as their giant regional hospital competitors can.
The normative assumption of Medicare policymakers has been physicians will simply increase their volumes — i.e., perform more services than patients actually need — to make up the shortfall. This assumption has become a self-fulfilling prophecy, as many of the new owners of many physician practices — private equity firms and hospital systems — indeed heighten volume-based incentives in physicians’ compensation plans, as well as raise rates to private payers to cover the shortfall.
Health care policies have also played a role in the demise of independent medical groups. Unlike the hospital sector, which has been a unified and tough voice on Medicare payment policy, the defense of paying doctors has fragmented and relied on dozens of specialty medical societies (and harmed by the fact that some medical specialists make $1 million a year (year or more). Fragmented advocacy has particularly hurt “poor” subspecialties such as pediatrics, psychiatry, family medicine, and general internal medicine, which will face even more difficulties in the coming years.
The failure of elite multispecialty medical groups, which practiced values-based care long before it became a political touchstone, is a critique of the federal policy of paying physicians. One conceivable policy justification for keeping Medicare’s payment program low over the past decade was to make fee-for-service medicine less attractive compared to “value-based care” and to set the bar for the end of Medicare’s fee-for-service. Organizations like Geisinger and Virginia Mason, whose core values favored conservative medical practice, were the losers, and they paid with the loss of their independence. The political network has vigorously denounced the corporatization of medical practice, ignoring the catalytic role of physician remuneration policies it has supported. The slow throttling of the Medicare Part B payment schedule has been the root cause of the demise of those vital groups.
While Congress appears to be gearing up to reduce bills for on-site services and hospital facilities, it makes sense to invest every penny stored in expanding Medicare Part B payment schedule bills for number one cognitive medical and care services, if possible through capitation. instead of payment. It remains to be seen whether this modest increase will be enough to halt the net decline in the number of doctors in those all-important specialties, or to save suffering multi-specialty groups.
These elite multi-specialty teams have disappeared from the scene, but they are no longer governed by the doctors themselves, and it remains to be seen what their new owners will do with their proud legacy of clinical excellence.
Jeff Goldsmith is president of Health Futures Inc. and is an independent strategic advisor and policy analyst. You have earned some remuneration for this essay and are engaged with or advising any of the corporations listed above. He would like to thank Glenn Steele, Robert Berenson, Don Crane, and Trevor Goldsmith for their comments on the article.
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