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Wednesday Jan 25, 2017

Holy Toledo! As Bad Ideas Go, Closing Residency Is a Whopper

Last week, an iconic staple of our American ethos, the Ringling Bros. and Barnum & Bailey Circus, announced its impending demise after 146 years of hosting "the greatest show on earth." The circus had quickly learned that after one of its main attractions -- the elephant act -- was retired, crowds dwindled, along with profitability.  

In the shadow of that announcement, ProMedica -- a locally owned, nonprofit health care organization serving more than two dozen counties in northwest Ohio and southeast Michigan -- announced it would be "phasing out" its W.W. Knight Family Medicine Residency Program at Toledo Hospital. The unanticipated announcement of the closure of yet another legacy family medicine residency program (established in 1974) sent shockwaves throughout the region.

Ripple effects from the news spread to other Ohio residency training programs that, like W.W. Knight, serve impoverished communities. As fiscal loss leaders, such programs are the "low-hanging" fruit for mega health care organizations, which often are not based in the communities they serve.

The announcement unleashed a flurry of outrage, as chronicled in The Toledo Blade and other local media outlets. The decision was also sharply criticized by the Ohio AFP, the Ohio State Medical Association and others.  

Sadly, I have seen this show before. In the late 1990s, another major nonprofit health care organization in Ohio announced it would phase out the St. Elizabeth Family Practice Residency Program in Dayton. That organization provided talking points eerily similar to those now being echoed by ProMedica. The decision set off a sequence of economic misadventures that resulted in the eventual closure of St. Elizabeth Hospital in 2000 after more than 100 years of service to the region.

What St. Elizabeth executives failed to realize was that they had gotten rid of their star attraction: the family medicine residency program. The decision has cost the community an estimated $17 million dollars per year ever since.  

Now the already disenfranchised community served by the W.W. Knight Family Medicine Residency will be further marginalized by corporate decisions that strategically shuffle residency program slots around the service area like pieces on a chess board. It has been reported that ProMedica will add new residency positions in Monroe, Mich., (roughly 25 miles north of the W.W. Knight facility) but that change would be of no value to the 5,000 patients already in need of more access to health care in Toledo.

Another local hospital, the University of Toledo Medical Center, has announced it plans to absorb an unspecified number of residency positions when W.W. Knight closes, but some of them likely will be converted to internal medicine slots. The net result will be a huge loss for family medicine in our state and the community this residency has served.

Transferring health care to any willing "provider" of care is not the solution, either. Family physicians are trained to take care of not only individual patients with a disease or chronic conditions, but entire families and the community in which they live. Mastering this component of the art of medicine takes time and relationship-building.

Those making critical decisions need to know both the "dollars and sense" of how much value these programs add to their overall bottom line.

  • Having access to a well-trained primary care physician lowers an individual's health costs by 33 percent through, for example, less use of emergency department facilities and decreased length of stays when hospitalized.
  • The Ohio Department of Health has designated Lucas County (where the W.W. Knight program is situated) as one of four priority health care shortage areas in the state. Moving residency positions out of the county (and state) exacerbates the problem.
  • In a 2016 survey, national physician search and consulting firm Merritt Hawkins reported that individual family physicians provide an average annual net revenue of $1.5 million for their affiliated hospitals. "Physicians typically generate considerably more in downstream revenue than they receive in the form of salaries or income guarantees," the report stated.
  • Direct and indirect graduate medical education Medicare pass-through payments generate an estimated $93,000 per resident. With 18 family medicine residents in the Toledo program, this translates to more than $1.6 million per year. Despite that figure, ProMedica claims the residency loses money each year.
  • The majority of W.W. Knight residents stay in the Toledo area after completing their training. Based on Merritt Hawkins' report, ProMedica's investment is more than recouped by adding to the number of family physicians whose patients ultimately benefit the organization's bottom line.
  • Finally, consultants cannot quantify the value of the long-term, trusted relationships patients have built with the residency's staff, faculty, residents and the community they serve.

In How the Mighty Fall, author Jim Collins outlines the five stages of decline for a corporation. The first stage is "hubris born of success." Once-great leaders often lose sight of what made them a success in the first place. When they begin reciting the rhetoric of success -- "no margin, no mission" -- this often is the first sign of danger. 

The second stage is the "undisciplined pursuit of more." In this scenario, organizations take giant leaps of chance away from the people, commitments and values that granted them their success.

The third stage is the "denial of risk and peril." For ProMedica and W.W. Knight, this is where the situation stands now. ProMedica is prepared with talking points to explain away the facts and weather a storm of community outrage, ignoring the reality that a poor strategic decision has been made.

Hopefully, this show will not end -- like Ringling Bros. -- with Collins' last two stages of decline: "grasping for salvation" and "death."   

If we passively allow top-quality family medicine residency training programs like W.W. Knight to fall prey to corporations who have not done their fiscal due diligence, others will follow. Corporations will simply convince themselves that their primary care health needs can be fulfilled by less appropriate interventions.

There is a reason patients remain loyal to family medicine residency programs and contribute generously to their affiliated hospital foundations. They know that the residents and their supporting staff are there in the community for good -- and not just when the bottom line is healthy.

Enduring care for a community will survive the inevitable threats of changing hospital administrations, fiscal shortfalls, mergers, consolidations, right-sizing, or the denial of risk and peril. We can only hope that ProMedica and similar health care organizations acknowledge the true value of a medical specialty that delivers complete physical, mental and social well-being for the entire life cycle. This show of commitment is priceless. When sustained correctly, it is among the greatest shows of service on earth.

Gary LeRoy, M.D., is a member of the AAFP Board of Directors.

Comments:

My life since the AAFP board experience has given me a literal 50/50 split of my time between the business and practice of medicine. The lesson in that experience is two fold. First point: there is no business of medicine. Second point: no one wants to admit the first point.
FM Residency programs are like hardwood trees, often times you plant one and others reap the harvest years later. Historically there was enough money in medicine that the health care system could afford the luxury of a heart and long term investment of training programs. Now that monitary wiggle room is vanishing and we hear the cold reality statement "no margin no mission" more and more. The truth is closing residency training programs is healthcare industry suicide. My job, our job must be to replace the mantra "no margin no mission" with "No Vision No Mission". Our business model needs to look like the lumber business. You plant trees that are a long term investment. That requires vision. That's what we must communicate to healthcare at all levels. We can't expect the hospitals to bear that cost alone. There needs to be a way for the cost of planting our future doctors to be born over the continuum of the healthcare industry. Clear cutting forests makes for higher profits today but that lack of vision makes for bankruptcy tomorrow. So it will be for healthcare if we don't temper "no margin no mission" with No Vision No Mission".

Posted by Lloyd Van Winkle, MD on January 26, 2017 at 08:54 AM CST #

The calculations that we most promote seem to work. It is easy to do regressions and demonstrate a 20 times multiplier for instate location when residency graduates are trained instate (based on AMA Masterfile 700,000 active graduates in 2013). You can also multiple by 1 million in economic impact a year per graduate (AMA).

But this also requires that Ohio supports existing plus future graduates in practice as well as retaining past graduates. Such a design does not exist due to limitations in revenue and accelerating costs of delivery (and fewer insurance payers with greater dominance, and greater cost increases for smaller practices, and lower payments where care is most needed...)

The future of family medicine in Ohio and across the nation requires a different support design.

It takes more than 6 billion dollars a year on primary care spending in Ohio (160 billion nationwide x 11.6 million / 320 million) to result in success for any primary care training intervention to work. States that have more primary care have invested more in primary care. This is not a "build more graduates" matter. It is a support more positions commitment.

The one time expansion of the newly created specialty of FM to 3000 annual graduates by 1980 required the substantial increased payments from the new and expanding Medicare and Medicaid programs to result in more family physicians and more primary care across the nation from 6 sources. Payments directive through elderly and poor were ideal for supporting more FM grads - especially in rural and underserved areas where payments increased support for more positions. The first decade of graduates had 30% rural distribution, declining over time to less than 20% - yet another indicator of payment dictating positions and distributions.

Under the current design, massive expansions of primary care sources have not significantly increased primary care delivery capacity. The 7 times expansion of NP graduates since 1980 and the 6 times expansion of PA have simply replaced the collapse of primary care result from internal medicine with PD and FM stagnant.

The last PA doubling did not result in any increase in primary care. This 100% expansion resulted in 200% more entering non-primary care with only 30% more entering primary care - a figure completely depleted in a few years of departures after training.

DO primary care contributions have not changed since the 1960s as the family practice contribution has declined from 60 - 70% to 18%. Each time DO grads doubled the FM contribution was cut in half for no change.

Increases in MD grads have also not changed the 3000 annual graduates from FM. The payment design has completely collapsed internal medicine primary care with a final assist due to the loss of 40,000 to hospitalist workforce - that now claims more IM grads per class year than primary care. Pediatric graduates have increased 30% but this did not change 1400 general pediatricians per class year.

Then there is the decline in the legendary family medicine retention for decades of class years from 95% retained in family medicine positions down to less than 75% due to 12% in ER, 4% each in urgent and hospitalist, and additional losses to other specialties and activities.

More family medicine graduates requires a different financial design with greater revenue compared to cost of delivery.

More primary care delivery capacity with more primary care team members requires a different financial design.

Higher primary care retention requires a different design.

Make a difference and look forward to practice every day requires a different design.

More and better team members requires a different design.

General surgeons arising from surgical residency and filling positions where surgical care is most needed and is increasing in demand the most requires a different design - and the same is true for all general surgical specialties and mental health care. All have been stagnant to declining for the past decade because of payment design. All of the specialties that family physicians and their patients need most now and in the future require a different financial design.

Better outcomes in health care require a better financial design with better distributions of spending such as would be found with better payment support of the generalists and general specialties that provide 90% of local services in the counties where 40 - 50% of Americans are found. Clinical interventions cannot accomplish the changes that improvements in local spending, jobs, cash flow, and social determinants can do. Reversing decades of increasing concentrations of health spending where few Americans are found is the route to addressing disparities. Health, education, and other basic support spending are the routes to improving outcomes not only in health, but also in education, economics, and other outcomes in places where such outcomes are lowest.

Rural practice, underserved practice, and practice in 2621 lowest physician concentration counties where family physicians are 3 times more likely to be found can only be increased by a much better financial design. No Pay for Performance or Value Based Design can resolve these deficits in workforce and access because P4P actually results in even less payment in these places where patients are more complex and have less resources and are more likely to have us giving their care.

The designers that fail to understand the number of dimensions of complexity of patients left behind, the same designers that pay the least where patients are most complex, are not going to be able to correct for the time, effort, and cost required.

The future of past, present, and future residency programs as well as their outcomes requires a different financial design - as does the Future of Family Medicine.

It is true that better functioning counties, states, and nations have higher levels of primary care - but it is a mistake that you can produce more primary care and resolve gaps in outcomes. Counties, states, and nations that invest in people and community have better functioning in many areas and also tend to support more basic services in health, education, etc.

The future does not look good for primary care where needed. There has been no departure from marginalization across the past 35 years of payment designs. Block grants, hundreds of billions in cuts from Medicare and Medicaid, and high deductible plans all have common ground in being least supportive for local workforce, generalists, and general specialties. Obtaining higher payments is likely to be more difficult, but is more essential for FM and for our patients. Reductions in costly regulation may or may not come. Most assuredly we will have to fight for a better financial design and not be distracted by promises that promise more and deliver even less.

Our allies have always been our patients and those across 2800 counties where we are most important. We are most important for the elderly and numerous other populations. All together we are most important for greater than a majority of Americans left behind. Coalitions with those who represent most Americans represent a better future for them and for family medicine.

Working with true allies is far more important than agreeing with those who design against us and against most Americans.

Posted by Robert C. Bowman, M.D. on January 26, 2017 at 11:31 AM CST #

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The opinions and views expressed here are those of the authors and do not necessarily represent or reflect the opinions and views of the American Academy of Family Physicians. This blog is not intended to provide medical, financial, or legal advice. All comments are moderated and will be removed if they violate our Terms of Use.