Looking forward – May 2019

David B. Hoyt, MD, FACSThe American College of Surgeons (ACS) recently surveyed the membership to determine how surgeons are reacting to changes in the health care marketplace and whether they believe the College is being responsive to their changing needs. In this column, I provide an overview of our findings and describe what the ACS is doing to address the very real challenges facing surgeons, particularly those of you in private practice.

Survey findings

Of the 5,068 survey respondents, slightly more than half (53 percent) have shifted their mode of practice at some point in their career, and more than one-third of the respondents (36 percent) have moved from private practice to employment-based practice. Respondents indicated that their primary organizational/professional concern is improving patients’ clinical outcomes (67 percent), and private practice surgeons (that is, surgeons who own or are partners in a group practice or are solo practitioners) say that a major challenge is improving their practices’ business performance. Although surgeons face a host of operational issues, the most commonly expressed is insufficient reimbursement (61 percent), followed by clinical documentation requirements (52 percent). Private practice respondents also reported concerns about overhead expenses (68 percent) and denial of payment (62 percent).

With respect to satisfaction with the College, surgeons who are employed are more satisfied with the ACS than practice owners or partners (61 percent versus 47 percent). Surgeons in solo practice report the lowest satisfaction level (43 percent) and the highest dissatisfaction (28 percent). Despite somewhat soft levels of satisfaction with the College, most respondents (57 percent) feel the ACS is the one organization that is best positioned to represent their concerns.

Rest assured, the ACS is committed to helping all surgeons, regardless of their practice setting, to maintain their autonomy and to thrive in the modern-day practice environment.

How did we get here?

Past-Executive Director of the ACS Thomas R. Russell, MD, FACS, identified the root cause of the problems that plague private practice surgeons in a 2003 Archives of Surgery article, noting that surgery has moved from a cottage industry of independent business owners to an industry that is dominated by large conglomerates.1 Big business’s propensity to swallow up independent firms has affected other industries for more than a century. The federal government first recognized that it needed to turn the dial in favor of small, independent businesses and the spirit of entrepreneurship when it passed the Sherman Anti-Trust Act of 1890.2 Subsequently, the Federal Trade Commission (FTC) in the 1920s developed rules that actively encouraged the government, trade associations, and labor unions to work together to manage the terms of market competition.

Early in his presidency, Franklin D. Roosevelt signed the National Industrial Recovery Act (NIRA), which encouraged organized private industry and labor to develop codes of fair competition on an industry-by-industry basis. In 1935, the U.S. Supreme Court declared the NIRA unconstitutional, but let stand an extensive body of free trade laws enacted at the state level. Roosevelt responded by turning up the dial on antitrust enforcement. Under this system, which kept corporate concentration in check and encouraged cooperation among small competitors, the U.S. created a balanced economy that resulted in an unprecedented burst of innovation and a thriving middle class.3

In the 1980s, however, some economists waged a campaign against the government’s use of antitrust laws to restrain corporate monopolies. At the same time, other economists cast trade organizations—from those representing taxi drivers to those representing health care professionals—as colluding and anticompetitive. This mind-set resonated in other circles as well, which argued that certain professionals, including lawyers and physicians, were charging too much for their services and needed to be reined in.3

These forces combined to turn up the dial on the corporatization of health care and begot the mega-insurers and hospital networks that dominate the health care landscape today. In fact, by 2013, the four largest insurers in the U.S. controlled 76 percent of insurance market.4 Payor consolidation has been greatest at the state and local level, and in some locations a single insurer controls more than 90 percent of the commercial health care market.5

To more effectively negotiate with insurers, many hospital networks have merged and, in the process, pushed private practice physicians out of business because, unlike hospitals, physicians are unable to engage in collective bargaining. The FTC and the Department of Justice (DOJ) view collaborative negotiations between physicians as price-fixing and, therefore, illegal per se under the Sherman Act. Hence, private practice surgeons have found themselves in a “take it or leave it” position at the negotiating table.

The College’s proposal

To respond to these concerns, the ACS Division of Advocacy and Health Policy (DAHP), under the leadership of Patrick V. Bailey, MD, MLS, FACS, Medical Director, Advocacy, is crafting model state legislation that would permit private practice surgeons to jointly negotiate with payors, increase physicians’ bargaining power, and allow collaboration-driven innovation. This legislation would be introduced at the state level because, under the State Action Immunity Doctrine, established in the 1943 Supreme Court ruling on Parker v. Brown, anticompetitive action that is sanctioned and overseen by a state is immune from federal antitrust law.

The ACS model legislation has been carefully drafted to comply with the State Action Immunity Doctrine, but to pass joint contracting legislation, the College will need to identify state legislators who are willing to champion the bill. State chapters will likely need to work closely with the DAHP to hire lobbyists and political consultants to counter what we anticipate will be strong resistance from the insurance and hospital industries. In addition, the College anticipates that the FTC and DOJ will likely challenge the state laws in federal court.

This battle will be hard fought and will require the active involvement of all ACS members who are committed to improving the position of private practice in today’s concentrated health care marketplace. The ACS leadership will be calling upon each of you to assist in this effort to preserve your ability to remain competitive and provide quality care to your patients. Together, we can turn the dial in favor of private practice.


References

  1. Russell TR. What is the future of surgery? Arch Surg. 2003;38(8):825-831.
  2. Sherman Anti-Trust Act, July 2, 1890. Enrolled Acts and Resolutions of Congress, 1789-1992; General Records of the U.S. Government; Record Group 11. Washington, DC; National Archives.
  3. Longman P. The case for small-business collusion. Washington Monthly. Available at: https://washingtonmonthly.com/magazine/november-december-2018/the-case-for-small-business-collusion/. Accessed April 1, 2019.
  4. American Medical Association. Competition in health insurance 2018. Available at: www.ama-assn.org/delivering-care/patient-support-advocacy/competition-health-insurance-research. Accessed April 1, 2019.
  5. Kaiser Family Foundation. Market share and enrollment of largest three insurers—large group markets. Available at: https://bit.ly/2VGSN9L. Accessed April 15, 2019.

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