Archive for November, 2014


Tuesday, November 11th, 2014

My native Scotland had a momentous vote in September. Scots were asked a very simple question: “Should Scotland be an independent country…Yes or No.”

Well you probably know what happened: 85% of the electorate including 16 and 17 year olds turned out and voted 55% No, and 45% Yes to the question. I happened to be in Scotland twice in the last few months, once in June in the run up to the vote, and again in late September just days after the polls closed. While emotions ran high it was a largely civil discourse except for a bit of a sectarian skirmish along class and religious lines in Glasgow after the vote (which was not covered much in the US media). Overall, the vote, while an interesting curio to outsiders, was a bit awkward and divisive in the country. It still is.

The “Yes” side had a vision of Scotland as a brave wee country going it nobly alone like a 21st century Braveheart, although practically it was really an attempt to get an even more generous welfare state supported selfishly by a higher share of North Sea Oil revenues: basically Norway with whisky.

“Yes” voters were much more visible across Scotland in the summer which led the silent majority to be a bit worried that they were going to be taken out of the United Kingdom.

Public opinion polls tightened as the vote neared and showed weird and conflicting preferences among the “Yes” voters. For example, they wanted to be independent but preserve the monarchy…”Aye, keep the Queen, get rid of the English.” Not so easy.

The same kind of tricky questions came about the currency, could Scotland keep the pound and not join the Euro group? The best answer to that was Scottish comedian Kevin Bridges’ suggestion that the Scots would start a new currency, the smackeroony.

Don’t even start talking about how an independent Scotland would disentangle its defense infrastructure, realign medical education, pension and housing subsidies and deal with the many, many non Scots in Scotland and the millions of expatriate Scots abroad.

Mercifully, the “No” vote won, but the forces favoring independence are still there, and the British government will still have to deal with the demands of the many Scots who favored more independence. For the record, I canvassed for the Scottish Nationalist Party in the late sixties as a student, and my local MP was Winny Ewing, only the second SNP member to go to Westminster. I believed then and now that Scotland should have significant devolution of power, (and indeed it has), over health, education, welfare, housing, transportation and other important domestic policy matters.

But a small independent Scotland trying to make it alone in an increasingly weak Europe, that in turn is competing in a brutally competitive global economy, in a divided and dangerous world seemed like a stretch to me.

Across the world, in Spain, Canada, Norway, France and throughout the Middle East, Asia and Africa there are groups, regions, peoples, tribes, and whole countries who see a better future being independent and isolated from the trends around them.   In many of these cases the aggrieved parties see a world that is complex, increasingly globalized and interdependent, and controlled by factors, forces and stakeholders that they have no influence over. They see independence as a pathway to control their own destiny, (especially if they can get the oil revenues to support it).

So what has this got to do with American healthcare?


Does Independence have a Future?

In America, independent doctors and hospitals feel threatened. They see the relentless growth of large regional systems of care coming to dominate the landscape. They see doctors running to hospital-owned practices to huddle for warmth in this uncertain future.

The independents may realize that they are sub-optimal in scale for delivering high quality and cost-effective health care services. They may recognize that they are woefully ill prepared for the move from volume to value. They may even fess up that they are completely out of their depth in a world of big players. But even if they have this self-awareness they often cling to independence because of the very real fear that they will lose control and autonomy. Why?

  • Preserve the Deal they Currently Have.   Like the Scots, many are convinced that if they stay independent they have the best shot at preserving the deal they have. Most economists and oil experts anticipated that North Sea Oil revenues would eventually decline over the decade ahead. Yet the forces advocating independence assumed they would be able to cut a favorable deal with rival governments and massive global oil companies even in the face of predicted future declines in production. The same could be said for independent hospitals, and those rural critical access hospitals that believe they will still be able to preserve the deal they have in the face of fiscal pressures to the contrary. Similarly, many of the less aligned solo physicians simply refuse to deal with payers like Medicare or Medicaid or narrow network exchange plans, and believe that they can make it as a free agent or a concierge doctor. And some of them may be right. But it is unlikely all of them will be OK, and most are likely to be blind-sided by larger forces creating consolidation and integration in healthcare delivery. For example, I was advising a national group of ophthalmology leaders and many of them flatly stated that they would no longer take Medicare patients because of inadequate reimbursement.

“Which patients typically get eye disease? I asked naively.

“Old people.” They told me.

“Well that should work really well”.

  • Old Dog, New Tricks. Remaining independent seems attractive because it is assumed that it liberates you from having to change. The Scots who voted “Yes” genuinely believed that this was their best hope to preserve and enhance a welfare state and obviate the need for government austerity favored by more conservative English politicians. While there may be legitimate arguments that austerity is overrated and perhaps dangerous as a macro-economic strategy, remaining independent does not insulate anyone from the global forces of change. Nor does it give you a pass on change.
  • Uncertainty over The Future.   You can blame tough times on irresponsible global bankers, or English politicians, or Obamacare and argue that this will blow over and go back to the way it always was. You might even be right once or twice but you cannot eliminate uncertainty entirely.
  • We May be Gone. Scotland will never lose its cultural identity, it has shown that over centuries. Being independent is not a requirement for maintaining traditions or preserving unique cultural quirks from haggis to the Glasgow accent. But in the case of American healthcare there is a legitimate concern that losing independence may threaten the very existence of the organization or its culture. I have seen this deep concern in the faces of board members of critical access hospitals, of sisters as they contemplate turning their missions over to secular leaders, of department chairs of academic medicine contemplating throwing their lot in with the system and giving up some departmental autonomy.


Facing a Vote on Independence

American healthcare stakeholders will be asked to vote on independence in the years ahead. There are examples everywhere. Faith based institutions and smaller systems are being brought into larger mega systems like Ascension or Catholic Health Initiatives, and some have been acquired by for profit actors such as Daughters of Charity hospitals recently being acquired by Prime Care.

Similarly, Banner Health’s acquisition of the University of Arizona’s Health Center in Tucson is an example of a large independent academic medical center becoming part of a much larger community based system.

The Vivity deal announced in Los Angeles is receiving national attention where six southern California hospital systems including UCLA, Cedars-Sinai and Memorial Care have joined with health plan partner Anthem Blue-Cross to offer an HMO product to compete against Kaiser.

These are the high profile examples, but in every state there are scores of hospitals and hundred if not thousands of physician practices who have to ask themselves whethe they can and will be independent in the future.  And if not independent then who do they partner with and on what basis?


Advice on Independence

As you all confront your own vote on independence consider the following:

Get Real. Hoping things go back to some imagined past golden age is not my idea of a smart strategy. Dude, these are the good old days. Make a realistic assessment of how your market is going to unfold and know that the big dogs in your marketplace (wherever you are) are trying to grow in scale. They will be aggressively managing referrals to keep more business flowing to their team, and they will be stepping up to compete more aggressively on value, both on a fee for service and (eventually population health) basis. And many of them have the financial heft or backers to make the necessary investments to win a sustained fight.

Fight for what Matters. If you are the chair of an independent rural hospital that is the largest employer for miles around and the anchor of your community, you probably worry about the future of your community if your institution were to disappear. But maybe the real fight is to ensure that there is a continued high quality presence in the community, that services and facilities are repurposed and transformed with the help of committed partners to serve your community better. And that future may be better realized with partners rather than as an independent institution.

Vote with Your Head, Not Your Heart. My fear with the Scottish Independence vote was that a majority of Scots would get weary of hearing whining, nasal speeches by ineffectual condescending English politicians then get drunk the night before and Vote yes….”we’ll show you English, (expletive deleted).” Similarly, leaders of independent institutions in American healthcare need to be clear-headed and honest, about what is the best solution for the stakeholders and communities you serve. And don’t get carried away with a romantic notion of independence that may be unrealistic and unattainable.