Business Intelligence

For young doctors, a lesson in finance

Tufts seminar helps residents navigate a changing industry

By Robert Weisman
Globe Staff / August 23, 2009

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WATERTOWN - They’ve slogged their way through medical school, mastering everything from biochemistry to diagnostic imaging. They’ve hustled through sleep-deprived hospital residency rotations, scrambling to treat trauma patients in emergency rooms.

Now comes the hard part: learning the business.

That means navigating a thicket of insurance reimbursements, strained resources, and disruptive technology. It means joining the fray of haggling providers, insurers, and employers just as the rules of engagement are being rewritten through health care reform.

About two dozen medical residents from Massachusetts, New York, and New Jersey gathered at the Tufts Health Plan offices last week for a four-day program titled “Practicing Medicine in a Changing Health Care Environment.’’ Sessions describing the morass of today’s health care system left some participants - medical school graduates who are operating under the supervision of trained physicians - more than a little bewildered.

“Idealistically, you like to think you’re focusing on patient care,’’ said Nicholas Nguyen, 28, a senior resident at Tufts Medical Center in Boston and the Cambridge Health Alliance. “But when you start seeing patients, you also start dealing with the business aspects. You realize how big a part of your practice the business is.’’

Last week’s event was sponsored by the Tufts Health Care Institute, which runs educational and training programs, at a key juncture for health care. Speakers advised the next generation of physicians to be “team players’’ in an increasingly interdependent industry that is being transformed by trends ranging from expanded health coverage to innovation in drugs and medical devices to new quality and efficiency initiatives.

And they were repeatedly reminded their chosen profession is not only a calling, but also a critical engine of the economy.

“You guys control, you write the orders for, the largest economic sector in the United States,’’ said Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector Authority, the agency responsible for implementing Massachusetts health reform and helping the state’s uninsured residents shop for health coverage. “It’s America’s biggest business, and it’s all about money.’’

Kingsdale asked the residents to remember their mission was not only to help patients “lining up for Dr. Famous at the Brigham’’ but also to move less affluent patients “from the ER to the community hospital,’’ where they can access better health services.

For those who will set up their practices in Massachusetts, the law that expanded health coverage three years ago is likely to be followed by some form of “payment reform,’’ changing the way health care providers are reimbursed, and ultimately, health care “delivery reform,’’ driving more quality and efficiency through the system.

Sarah Iselin, commissioner of the Massachusetts Division of Health Care Finance and Policy, told the residents the Legislature will likely take up a new law that will overhaul the state’s health care payment system. A special commission has recommended that Massachusetts insurers and public payers scrap their method of paying doctors and hospitals negotiated fees for individual visits and procedures.

Replacing it would be a system that would effectively put health providers on a budget, paying a set amount intended to cover a patient’s medical care for an entire year. Iselin acknowledged that this proposed global payment system bears “some methodological similarities’’ to capitation, a flat-fee system that was tried - and is considered to have been unsuccessful - during the 1990s.

In case this wasn’t confusing enough to doctors wondering how they’ll be paid, Iselin projected on a screen a chart offering a convoluted formula to explain the skewed incentives behind provider payments: “Cost per patient equals conditions per patient, times the number of episodes of care per condition, times the number and type of services per episode of care, times the number of processes per service, times the cost per process.’’ Pretty straightforward, right?

Oncologist Jack Evjy, a past president of the Massachusetts Medical Society, while noting the many health care advances over the past half century, said the current system is overdue for a change. He encouraged the residents to think of themselves as “coordinators and orchestrators’’ of a new health care system.

“Everywhere you turn, there is distress in the system,’’ Evjy said. “Everyone wants everything, and no one wants to pay. I happen to believe distress and tension is the way we make change. There’s a call for change, and all of you will be forced to respond to that.’’

Yet it’s far from certain the Obama administration’s push for national health reform will bear fruit. James Roosevelt Jr., president and chief executive of Tufts Health Plan, warned that Democratic leaders may have erred in trying to address the escalating cost of health care at the same time they were seeking to change the vehicle for delivering coverage. “Cost is absolutely critical to deal with,’’ Roosevelt said. “The question is: Should coverage be hostage to the cost issue?’’

Many of the residents attending the Tufts Health Care Institute program said they came away with a clearer understanding of insurers’ and employers’ perspectives, and of the larger economic and political context of their business, things they hadn’t learned in medical school. But they weren’t sure that would ease their frustration at aspects of the medical system they’re beginning to confront, from malpractice liability to the wrangling over insurance reimbursements.

“There are 10 different health plans that have 10 different ways of defining quality improvement,’’ said Alisha Kithcart, 29, a Tufts University senior resident at Cambridge Health Alliance. “Should I be dinged by a health plan for providing inappropriate care when I have uncooperative patients? Why should I be faulted?’’

Rosalie R. Phillips, executive director of the Tufts Health Care Institute and director of continuing education at the Tufts University School of Medicine, urged the residents to make the system more responsive - themselves and their patients.

“Those of us in the baby boom generation are going to need your help down the road,’’ Phillips told them.

Robert Weisman can be reached at