Healthcare Economic Reform and Physician Leadership

Dr. Knight shares key lessons gleaned from his long career to not only provide a review of how the healthcare system operates, but also to arm physician leaders with actionable information to reform the healthcare economy and satisfy their own motivations for entering the field of medicine.

This transcript of their discussion has been edited for clarity and length.


Mike Sacopulos: Dr. Ellis “Mac” Knight is a physician, executive, and thought leader of national importance on the topic of value-based care process design. Dr. Knight is author of the newly released book by the AAPL, Healthcare Economic Reform: How and Why Physicians Must Lead Change Within Our Evolving Healthcare Economy.

Dr. Knight, welcome to SoundPractice. What is value-based healthcare?

Dr. Mac Knight: I'm a big fan of Michael Porter at the Harvard Business School. I used to have a boss who said that there were about seven ways you could define value and there's probably even more than that. But Porter describes it as simply quality per unit of cost and to me, that's a very simplistic definition. One definition that's very relevant as the imperative across the healthcare industry these days is to hold down cost, hopefully even decrease the escalating cost of healthcare, and at the same time either maintain or improve quality. So, quality over cost to me is the simplest way to describe value-based healthcare.

Mike Sacopulos: I'm interested, before we get into the meat of the book, about you and your journey as a physician and leader. Could you please describe your professional journey?

Dr. Mac Knight: Sure. I grew up in a little town in Southern Idaho where my dad was the only physician in a rural farming community. Like a lot of wide-eyed idealistic youngsters in the late '60s, early '70s, I went off to college in medical school and probably said, I don't know if I remember uttering these words, but at my med school interview that I wanted to be a doctor because I like science and wanted to help people. I woke up about 10, 20 years later thinking, "You know? I still like science. I still want to help people, but I'm not sure I'm fulfilling either one of those motivations and ideals in the practice of medicine that I'm doing." At the time, I was an internist about halfway through my clinical career. At that time, I switched over to hospital medicine.

As I saw it, I was caught up in an industry that I very much admired. I think that the American healthcare system does wonderful things. But medicine was caught in this economic milieu that drove it away from, again, those very simplistic ideals of applying evidence-based science to patient care on a reliable basis and trying to take people who were in need and doing something to address that need. I just didn't see that happening in the type of healthcare that the economic drivers were pushing us towards. So, I wrote this book to describe those feelings, and to describe what I think physicians and providers of all sorts need to do to push back against that.

Mike Sacopulos: Do physicians and patients agree on what top-quality care looks like?

Dr. Mac Knight: I think, for the most part, yes. But there is a sea change in my professional life where my dad, for instance, practiced a very paternal kind of command and control of medicine. Over my professional lifetime, we have moved, thankfully, towards a patient-centric model. I think sometimes there's a risk where patients think that the ideal healthcare system is one of not just patient-centric, but on-demand healthcare.

Patients may read about a new treatment on Facebook, want the physician to prescribe that. They may designate the milligram they want and direct it to please place the order with the pharmacy so the patient can pick it up on the way home. That's probably as bad as the paternalistic healthcare that my father practiced. But I think, for the most part, most patients look to healthcare providers for their knowledge and their experience and mostly for their compassion and caring and desire to, again, render valuable services. Again, unfortunately, I don't see either side of that equation, patients or providers being satisfied that they're doing that.

Mike Sacopulos: It's hard to talk about anything in healthcare now without bringing up the pandemic. Can you give me a little of your thoughts on how the pandemic has impacted the healthcare economy?

Dr. Mac Knight: The effect of the pandemic has been to pull back the curtain and reveal the economic perversities, if you will, that were always there, but were not evident to providers or certainly the patient population. A good example of that is the large number of healthcare systems that had to curtail surgical procedures and other elective services because they had to devote so many resources to caring for COVID patients. It was revealed we had built this monster, if you will, of a healthcare system that was out there trying to capture the most volume they could get of lucrative, highly profitable services.

I don't want to beat up on my cardiology or oncology or surgical colleagues, but most of these were procedurally based with reimbursements where physicians wanted to get the biggest piece of that pie, whether back surgeries or open-heart surgeries or neurosurgeries or oncological services. When they had to shut all that down because their resources were overwhelmed with COVID patients, then it revealed that we didn't have a healthcare system that could respond to a crisis like the pandemic. We had a healthcare system that was more designed to capture profitable business. If anything, the somewhat silver lining of the pandemic was that it revealed this. Now the big question is, do we go back to that same business model and those same economic drivers? Or do we say, "Wait a minute. Maybe the healthcare system needs to move in a different direction?"

Mike Sacopulos: Most of us would prefer prevention over treatment. Unfortunately, we see much more treatment than preventative medicine. Is this the fault of the healthcare system or unengaged patients?

Dr. Mac Knight: I think it's a little bit of both. I think that the powers that be, and I go into this in some detail in the book, whether you're talking about the resource value unit committee of the AMA or others that determine which services are really important and highly valuable and therefore can drive the highest price in the system. Those services are not primary care. They're not preventive services. They're not behavioral health services. They're services, again, that are mostly procedurally oriented and mostly geared towards things that can be done in a fairly standardized, for lack of a better term, assembly-line approach to healthcare.

Mike Sacopulos: Doctor, millions of our fellow Americans were now distrustful of the medical community. Does this lack of trust impact healthcare economic reform?

Dr. Mac Knight: Yeah, I think it does. The sad state of affairs and one of the reasons I've written the book is that I think my provider colleagues have, at some point, abdicated their role to advocate for the patient and to deserve that trust, which historically physicians, in particular, have been able to enjoy. Now you've got a situation where they abdicated the business side of healthcare to outside interests. They are but a cog in the wheel, a piece of that machine and that erodes the trust between the patient and the provider. Because they're like, "Wait a minute. I go to the doctor, but he's part of this big system that may be for profit or not for profit." Although I say in the book there's not much difference when you get down to the meat of the matter.

I go to this provider. They want to refer me for all these specialty procedures. They want to refer me for all these tests. They want to prescribe all these medications for me. At the end of the day, I don't feel like I'm getting much value out of all this, but yet I know the provider and the system he or she works for is getting reimbursed for doing all these things to me. That has a big erosion of the trust between the patient and the provider.

Mike Sacopulos: Medicine is, both art and science, and it seems to me that the value, at least from third-party payers, is placed exclusively upon the science. Do you agree with that? If so, is there any value to be placed on the art?

Dr. Mac Knight: Yeah, I think it's even worse than that. I don't think the third-party payers even put a lot of value on the science. They put a lot of value on, again, the process of care delivery that can be standardized, that can be very much expanded and delivered in a high-volume fashion. But you take for instance, and I haven't reviewed this literature in a while, but the kind of the poster child for this is back surgery. So, you go to the science, and you say, "Well, wait a minute. Is this a good thing to be fusing people's spines to treat what is probably one of the most common conditions in medicine," which is chronic or intermittent low back pain. There's never been science that says, "Yeah, if you intervene with these highly expensive, highly renumerated back surgeries, that's a scientifically good thing to do."

So, you've got a system that not only ignores the science and instead of the profit. They also ignore the art because the primary care doctor is sitting there saying, "Nobody wants to pay me to talk to people." The proverbial 15-minute office visit where you've got to do 25 things plus document it all on electronic medical record leaves no time for really the art of medicine.

Mike Sacopulos: Traditionally, physicians own their practices, I'm sure much like your father did. Today the majority of physicians are employees and are not practice owners. How does this fact impact physicians’ ability to bring about economic reform within the healthcare economy?

Dr. Mac Knight: In full disclosure, I ran a large employed physician network for a large healthcare system. We had two buckets of providers that we employed. One was primary care providers who just simply would pound on my door and say, "Please, can you take me on because there's no way I can cover the overhead and do primary care and make a living that I think justifies all the time and that I put into to go into medical school and residency training."

Then the other group was made up of specialists who said, "Well, I'm getting a little bit squeezed by the economic changes, but what I think is probably a smart thing to do at this point is to sell out to those that consider me a very, very valuable commodity." So, you had a lot of orthopedic surgeons and neurosurgeons and cardiac surgeons, also seek out employment arrangements because they knew they could demand high salaries. You've seen the billboards in every city in the country. Come to us, we got the best heart surgery team in town, and we got the five stars for this or that. Everybody's competing for those specialists.

Mike Sacopulos: Well, Mac, you anticipated my next question. Do you believe that certain federal laws, such as the Stark laws that you mentioned, distort the healthcare economy in harmful ways?

Dr. Mac Knight: One of my favorite authors, Atul Gawande, wrote about the Wild, Wild West in McAllen, Texas where there are no regulations and there's an outpatient imaging center on every block and it's just a free for all. I think there are some regulations as needed in any business, whether that's banking or healthcare, that need to kind of guard against the extremes and the perversities that can come along. Healthcare is just overburdened with regulation to the point where, again, take the electronic health records. So, you've got financial penalties for not using and implementing an electronic health record system.

The rationale for that was, "Oh, wow. It's going to make it such a better system safety-wise. The doctor's handwriting is illegible, so we're going to get them to put everything into a legible health record system." It's not built for that. It's not built to communicate between providers. It's built to document for billing purposes. It's never delivered on the promise of interoperability, which providers like me who did hospital medicine for years would love to be able to get those outpatient records from the doctor's office down the street. But you can't do that because the systems won't talk to each other, and yet you're sitting there having to devote half your time of any visit to the documentation process. If you don't do that and if you don't do that properly, you're subject to financial penalty.

So just one example of the regulations that I think drive down the quality and the value that healthcare can provide for people.

Mike Sacopulos: Dr. Knight, as we wrap up our time together, I'm interested in your thoughts on how physicians can move from being the fungible commodity into leadership roles and bring forth change in reform in the healthcare economy.

Dr. Mac Knight: Well, it's going to be tough, and I'll tell you. I think the medical-industrial complex, as I call it whether that's large healthcare systems, whether that's the health insurance industry, whether that's big pharma, all of that is so powerful and just monolithic that I think for physicians to push back and try to fight against that and reestablish some of the more noble ideals that sent them to medical school and were realized by people like my father, I'm not sure how much of that is going to happen. But I think, and again, maybe this is where my wide-eyed idealism comes into play, but I think if physicians and other providers, frontline providers, can band together, as I say in the book, clinically integrate so that they overcome some of the defects in the healthcare system.

There are defects in the healthcare system. We're not perfect. Then focus on delivering high quality at low cost, there is a market out there for that. It seems to be a market that, again, those other players that I mentioned, pharmaceutical companies, insurance companies, and large healthcare systems don't seem to be interested in trying to play in. I think if physicians can step up and say, "Hey, if we can build this kind of a better mousetrap,” especially with government payers, for instance, who are going to say, "Wait a minute, it's almost 20% of GDP now with inflation. Who knows what it's going to be in a year or so?” And when you look at our performances as a country in terms of most indicators of health and wellness, we do not perform well compared to other economically developed countries. So, what are we going to do about that?

I don't think we're going to have a national health service, but I do think maybe Medicare for all, or Medicare Advantage for all type system may be the only way kind of out of this quagmire. I think physicians would be smart to argue and push for a move to a more value-based model of care delivery and reimbursement.

Mike Sacopulos: Let that be the last word. The book, which is a fascinating read, is Healthcare Economic Reform: How and Why Physicians Must Lead Change Within Our Evolving Healthcare Economy. My guest has been Dr. Mac Knight.



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