Monday, February 21, 2005

Do Physicians Have "the Knowledge to Run These Hospitals?" - Maybe More than Do MBAs

In the LA Times, a story about how a group of doctors took over a struggling hospital, previously run (nearly into the ground) by Tenet. Midway Hospital Medical Center had once been owned and run by physicians, and in the middle of the 20th century, its patients included Hollywood celebrities. Like many other hospitals, it was sold in the 1980's to corporate owners, and wound up in the 1990's as a Tenet hospital losing more than $9 million a year.
Of course, leaders of local health care organizations expressed concerns. One, described as the executive director of a local health care not-for-profit, asked "do these people [the physician owners] have the staying power, the resources and the knowledge to run these hospitals?"
Actually, it looks like the physicians had a lot more knowledge than the former adminstrators.
The most interesting part of the story is how the new physician owner-operators were able to immediately spot ways to save money and/or improve quality. Some examples:
  • The hospital had been paying top dollar for two different "ulcer medications," because it could not order either in large quantities. Review by the physician owners found that the medications were similar, so they persuaded their fellow physicians to managed with just one of them, and ordered that one in bulk, reducing the price by about 90%.
  • The hospital had been paying much more for one medical device than it could charge for it. The physician owners got its supplier to reduce its price, simply by suggesting they might shop around for a new supplier.
  • The physician owners were able to assemble paper charts in a uniform manner by using simple color-coded tabs, making it easier to find clinical data.
It's kind of ironic, isn't it, that the physicians seem better able to find easy ways to save money without compromising care than Tenet's high-powered, and highly-paid executives?
But again, the question is, how many of the managers and executives who run large health care organizations actually know much about health care on the ground? And in the absence of such knowledge, can they determine whether any drug, device, or service is under-, fairly, or over-priced relative to its cost of production? Furthermore, can they determine the relationship of the price to the value (benefit/harm) it bestows on the patient? The answers appear to be "not many," "no" and "no."
(See my previous postings on the issue of health care managers' and bureaucrats' inability to judge price in relationship to cost and to clinical value here, here, and here.)


Anonymous said...

If the MDs had such great cost saving ideas, why did not they share them earier?

Roy M. Poses MD said...

In at least some cases, the physicians may not have been previously aware of the problems, because management did not entrust them with the relevant data.