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Ann Thorac Surg 1998;65:1201-1206
© 1998 The Society of Thoracic Surgeons

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Presidential Address

Paranoia or Reality?

^a Division of Cardiothoracic Surgery, Department of Surgery, St. Louis University School of Medicine, St. Louis, Missouri, USA

Address correspondence to Dr Kaiser, Division of Cardiothoracic Surgery, Department of Surgery, St. Louis University School of Medicine, 3635 Vista Ave, PO Box 15250, St. Louis, MO 63110

Presented at the Thirty-fourth Annual Meeting of The Society of Thoracic Surgeons, New Orleans, LA, Jan 26–28, 1998.

	Introduction

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 

More than 30 years ago, I attended the initial meeting of this organization in the Khorassan Room of the Chase Park Plaza Hotel in St. Louis. When I subsequently became a member, it never occurred to me that one day I might have the honor of serving The Society as Secretary, let alone as President. Thank you very much for this privilege.

This past year has been eventful for our specialty. Changes requiring our response have occurred on an almost daily basis. Because these changes have been of critical interest to our specialty, it is appropriate to review the events that have occurred, how they have been addressed, and their current status.

In his book, Only the Paranoid Survive, subtitled How to Exploit the Crisis Points That Challenge Every Company and Career, Andrew S. Grove, President and Chief Executive Officer of Intel Corporation, detailed his company’s problems with a defective microprocessor [1]. In relating this experience he suggested how others might respond to crises that he labeled "inflection points" (Fig 1). He pointed out "... that a strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end." He further states "A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness."

View larger version (15K): [in this window] [in a new window]   Fig 1. Strategic inflection curve: the inflection point denotes a crisis facing an organization. Depending upon its response, the organization either rises to new heights or declines. (Adapted with permission from Grove AS. Only the paranoid survive: how to exploit the crisis points that challenge every company and career. New York: Currency Doubleday, 1996:3–35.)

Building upon the work of Michael Porter, who identified five forces that determine the competitiveness of an organization, Grove developed a "six forces diagram." Five of these forces were the power, vigor, and competence of a company’s (1) customers, (2) suppliers, (3) existing competitors, (4) potential competitors, and (5) complementors. The sixth was consideration that a product or service might be delivered differently (Fig 2). He designated a "10x," tenfold intensity increase of a force as capable of producing an "inflection point."

View larger version (17K): [in this window] [in a new window]   Fig 2. Six forces diagram illustrating the forces determining the competitiveness of an organization. (Adapted with permission from Grove AS. Only the paranoid survive: how to exploit the crisis points that challenge every company and career. New York: Currency Doubleday, 1996:3–35.)

View larger version (17K): [in this window] [in a new window]   Fig 3. Diagram of eight forces affecting thoracic surgery (see text).

	Funding

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

In 1989 Congress directed the Health Care Financing Administration (HCFA) to revise the Medicare system for physician payment using the resource-based method of Hsiao. The resource-based relative value scale was developed. At that time HCFA ignored the findings of the independent study by Abt and Associates sponsored by our Society. Abt found that HCFA’s relative value units for work involved in performing cardiothoracic surgical procedures had been considerably underestimated. For example, they were 20% less for pneumonectomy and 43% less for three-vessel coronary artery bypass grafting. This inappropriate evaluation of these work units by HCFA was the beginning of a steep downward spiral of reimbursement.

Typical distribution for the component parts of the resource-based relative value unit equation for most cardiac surgical procedures was 40% for work, 51% for practice expense, and 9% for malpractice insurance. It is significant that practice expense is more than half of the total. Because Congress initially had been more interested in developing the work value portion of the equation and conceding that there were no readily available resource-based relative value scale methods to calculate relative value unit practice costs, they directed HCFA to determine practice expense and malpractice cost components of the equation from historical charges.

Reimbursement for any rendered service was then calculated by multiplying the total relative value units by a conversion factor. The conversion factor was to be revised annually according to the actual costs of the services performed during a previous period. A separate volume performance standard was established for surgical procedures through the efforts of Paul A. Ebert, MD, and the American College of Surgeons. Subsequently it was demonstrated that surgical procedures have been performed at a consistently lower volume than had been anticipated. This has been in marked contrast to the volume of nonsurgical services, which has increased annually. Because of this observed difference in the number of services performed, the conversion factor for surgical procedures usually has been increased annually while the conversion factor for other types of services remained the same or decreased. Over the years the nonsurgical disciplines have lobbied intensively for a single conversion factor, and during this past congressional year they successfully convinced the executive and legislative branches that a single conversion factor should be instituted.

In 1994, Congress directed HCFA to develop a method to recalculate the practice expense component of the relative value unit system according to actually incurred practice expenses. This was to become effective by January 1, 1998. The Health Care Financing Administration evaluated several methods to accomplish this and executed a contract with one research firm, Abt and Associates, to develop a method. This was the same group that had performed The Society’s study to determine work relative value units 5 years earlier. Abt was unable to complete its work and HCFA turned to theoretical extrapolation techniques, some details of which have never been fully explained, but upon which HCFA nonetheless made its determinations. First projections were initially made public on January 22, 1997, with a modified proposal published in the Federal Register on June 18, 1997. A reduction in practice expense reimbursement for cardiothoracic surgical procedures of 40% to 50% had been proposed in the January 1997 projection. Due to the institution of a single conversion factor, an additional reduction of approximately 10% was to be superimposed.

The Society’s leadership responded rapidly to these potential changes. Consultants in congressional and public relations were engaged. Programs for carrying our message to the Congress were initiated. Visits to Capitol Hill by numerous Society members were undertaken. Letter writing and other informational campaigns were instituted. Focus groups of ordinary citizens who received their medical care both under Medicare and otherwise, when apprised of the magnitude of the proposed reductions, spontaneously determined that the proposed reductions were unfair, threatened access to care for Medicare recipients, and would make Medicare a second-class health care system. The Society participated in the Practice Expense Coalition and with the American Medical Association. The Practice Expense Coalition’s and American Medical Association’s views on practice expense were similar to those of The Society. Because the change to a single conversion factor was a fait accompli, the major efforts were directed toward the proposed practice expense reimbursement reductions. A Political Action Committee, STSPAC, was established also.

Four goals that have been achieved are (1) to obtain a 1-year delay in implementation, (2) to follow the delay by a 4-year phase-in, (3) to require HCFA to completely reevaluate its practice expense methodology, and (4) to require that HCFA or other organizations perform a more creditable practice expense study based on standard accounting principles. These objectives have not been accomplished easily. A timetable of these actions is available on our Web site for everyone’s review.

An unexpected late development, insisted upon by the Senate, was to transfer to those disciplines whose practices dealt with primary care codes a portion of their projected gain in practice expense reimbursement during the year 1998, the so-called down payment. This transfer, estimated to be $390 million, was to occur even before restudy and reevaluation had been completed. In spite of intensive efforts by The Society, the Practice Expense Coalition, and the American Medical Association, this decision could not be reversed.

Shown in Table 1 are the reimbursement changes for two representative cardiothoracic surgical procedures during 1997 and beginning in 1998.

While our attention this year has been focused upon reimbursement, the equally important matter of funding support of education and research has received less emphasis. Funding from government and voluntary agencies and philanthropic groups continues to erode. Reimbursement reduction for clinical activity has reduced the capability of support for education and research by clinical practice income. The Thoracic Surgery Foundation for Research and Education is an attempt to fill this void. It is an excellent beginning, and the Foundation deserves our support.

There is one additional source of funding that we in this country, in contrast to elsewhere in the world, have largely eschewed. That is industry. We have common goals of developing devices, materials, and pharmaceuticals to improve the health of our patients. Industry is willing to assist us by contributing to education and research funding. Our destinies are related intimately and will become even more so in the future. An important corollary accompanying industrial funding for these activities is that receipt of this type of funding must be acknowledged publicly to dispel any conflict of interest, real or implied.

	Regulation

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
Historically, this country has been the world leader in discovery and development of new materials and devices. The current litigious nature of our society and convoluted regulatory processes have driven these activities elsewhere, with resulting delay or denial of the benefits of new technology to our patients. There always will be uncertainties when frontiers are explored. These must be acknowledged and where adverse responses are identified, appropriately compensated. Liability risk attendant to the development of new therapeutic techniques and materials should be controlled while public safety is preserved. Our capacity to develop new therapeutic modalities must be restored to its prior preeminence. The current approval process demands improvement. Tort reform is long overdue.

The Health Care Financing Administration has proposed that adjusting payment for postgraduate medical education could reduce the number of specialists [3]. Reduction of financial support for the training of specialists is proposed as a means of reducing the number of specialists in the future, resulting in lessened use of expensive technology. Medicare has been estimated to pay more than $7 billion annually nationwide to support postgraduate medical education. Implicit is the supposition that the institution of this policy will result in considerable savings to Medicare. If this program is pursued, it could result in denial of patient access to significant medical care advances. In contrast to other specialties, the number of practicing thoracic surgeons has remained relatively constant. Their competence has been assured through the influence of the American Board of Thoracic Surgery and the Residency Review Committee for Thoracic Surgery.

The recent decision restricting private contracts between physicians and Medicare patients denies Medicare patients the freedom of choice that is available to those not under Medicare [4]. Our patients and we should object strenuously to its inappropriateness and patent unfairness. This decision is being challenged in the courts [5]. Economic realities dictate that private contracting for medical care would occur infrequently. Physicians have in the past and will in the future continue to deliver medical care regardless of the patient’s ability to pay. The specious argument that private contracting would create a two-tiered Medicare system ignores the basic principle of denying, by economic regulation, to Medicare patients the freedom of choice of physician available to patients who are not covered by Medicare.

Cost containment is highly sought in health care delivery. The opportunity to accomplish this through development of efficient systems has been denied by the United States Supreme Court or the Federal Trade Commission. One example is the 1982 prohibition by the United States Supreme Court of medical societies in Maricopa and Pima Counties of Arizona from creating a medical foundation that would have set maximum but not minimum fees [6]. Justice Powell noted in the dissenting opinion, "Medical services differ from the typical service or a commercial product at issue in an antitrust case." This view recently has been echoed by Victor Fuchs, who stated, "No country does or will treat health care like an ordinary commodity, subject to the interplay of supply and demand in market fashion." He continues, "Neither competition nor government regulation can deal adequately with the complexity of medical care" [7].

Another example of regulation is the recent audit of billing practices of teaching physicians conducted under Physicians at Teaching Hospitals by the Office of the Inspector General of Health and Human Services. The American Association of Medical Colleges and the American Medical Association have filed a joint lawsuit contending that it was unfair to require teaching institutions to be accountable retroactively for standards not well defined or clear at the time that the services were delivered [8]. They further emphasized that every billing error should not be presumed to be fraudulent.

	Nonspecialty medical care

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
There is a widely held belief that healthcare in our county can be carried out cheaper by nonspecialists and other allied health practitioners without loss of effectiveness. Reengineering of our medical care system by influencing the distribution and number of specialists and nonspecialists will lead to destruction of a system that has taken decades to develop. Once this has occurred, the system will not be easy to reestablish; this is analogous to Grove’s description of the mechanisms of downfall of a successful business that never recovers its previous greatness [1].

There is considerable evidence that supports the superiority of specialty over nonspecialty care. Patients with acute myocardial infarction hospitalized by cardiologists have a 12% better 1-year survival than that of similar patients treated by primary care physicians [9]. In a recent study of patients in South Carolina with lung cancer undergoing resection, the operative mortality achieved by board-certified thoracic surgeons was lower than that by surgeons not so certified [10]. A recent report indicates that generalists have significant misperception of cardiovascular risk, its prevention, and treatment as compared with cardiologic specialists [11]. One large health maintenance organization has recognized that the cost of care of many illnesses is less when directed by physicians specializing in an illness than when managed by primary care physicians [12].

The thesis that a single physician directing the overall care of a patient is best has merit. It can avoid potentially conflicting advice, which may be confusing to patients. Differences of opinion concerning treatment options are inherent in medical practice, particularly if there is no single clear treatment choice. Opinions change when new knowledge is acquired or the response of the patient is not as expected. These apparent inconsistencies must be explained to patients, and their input should be sought in selecting the most appropriate treatment for them. Our responsibility as specialists is to deliver this degree of care to our patients. Fragmented care delivered by focusing on a single system or disease process to the exclusion of its effect upon the whole patient should be avoided. Specialists are capable of delivering organized, compassionate care. The fundamental principle that Francis Peabody stated simply yet so eloquently 70 years ago still pertains, "... the secret of the care of a patient is in caring for the patient" [13].

	Alternative therapy

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
Logically, prevention should reduce the cost of health care, but some advocates of prevention programs acknowledge that the financial benefits may be overrated [14]. Preventive care should be an important component in total patient management. As Fuchs has stated "... health depends a great deal on what we do or don’t do to and for ourselves" [7]. Control or elimination of risk factors such as lowering the cholesterol level or cessation of smoking should be essential components in the overall management of patients, but specialty care will still be needed for those in whom serious illness, such as coronary artery disease, carotid artery stenosis, or carcinoma of the lung, develops.

It has been reported that one third of our population has tried alternative therapy, which usually had not been funded by third-party payers in the past [15]. In 1990 this was estimated to be $13.7 billion. It has been pointed out that those who seek alternative therapy generally have researched and evaluated the treatment options. The emergence of alternative care as a force has occurred because conventional medical care has failed to satisfy patients’ needs, be they real or perceived. As we have learned through the Internet and its chat rooms, patients and their families are becoming more sophisticated and knowledgeable. They are eager for education and explanations of their problems. They also are interested in influencing decisions made by legislation, regulation, or payers that affect their care or that of their loved ones.

	Database

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
The Society’s voluntary multiinstitutional database, initiated in 1987 under the leadership of Richard E. Clark, includes information on 1.2 million patients from approximately 540 participating groups. From inception it was recognized that development of a voluntary multiinstitutional database system would present a number of challenges such as verification of completeness and accuracy of data, and maintenance of anonymity of patients, surgeons, and institutions. As this program has developed several changes have been initiated. Mechanisms have been developed to achieve internal reporting consistency. Permission for validation and accuracy of their data by on-site visiting teams is included in the contracts of all participating sites. Risk stratification has progressed from Bayesian to multivariate techniques. An expert oversight panel of nationally recognized statistical experts, knowledgeable in data acquisition and analysis, evaluated The Society’s system in August 1997. The Database Liaison Committee has instituted changes advised by this panel for improving the database. As part of an ongoing review process, recent proposals have been sought from various vendors regarding the storage, analysis, and mechanisms of reporting the database information. These proposals currently are under evaluation by the Database Liaison Committee.

The Health Care Financing Administration, recognizing the quality of our operative cardiac database, has requested The Society and the American College of Cardiology to develop a database for results of all interventions for cardiovascular disease. Common agreement of definitions was necessary before amalgamation of databases could proceed. A Definitions Subcommittee chaired by T. Bruce Ferguson, Jr, has accomplished this initial step. Negotiations currently are under way to proceed further with this project. It is encouraging that HCFA has asked for our advice and help in producing a reliable, scientific, and statistically valid database and analytic system.

The Database Committee has been cooperating with members and agencies in California, Ohio, and other states to assist them in developing databases patterned after The Society’s system, which has been employed effectively by Minnesota thoracic surgeons for their state. Current analyses of The Society’s national database largely have been limited to determination of 30-day mortality and morbidity, length of stay, and comparison of annual trends. There has been increasing demand by patients, payers, and regulatory agencies for comprehensive information regarding outcomes of patient management, including other end points such as quality, cost, efficiency, and satisfaction. In the future everyone involved in health care delivery increasingly will demand longitudinal outcomes data. It is essential that we supply data and analyses that are valid and appropriate to those who request it. To do otherwise may invite others to collect data inappropriately and analyze them in a possibly unscientific manner with spurious information resulting.

This increased demand for longitudinal data will require identification of patients, physicians, and institutions. This is a necessary step if our database is to advance and maintain its preeminence. Demand for confidentiality and high financial and personnel costs associated with the follow-up process are current impediments to achieving this. We must be prepared to present results of our therapy in the long term so that they may be compared with results of other types of treatment. Operative myocardial revascularization has undergone intense documented evaluation and serves as the standard for evaluation of alternative methods of management. For the majority of conditions and their treatment, little information is available regarding cost, quality, duration of benefit, and functional health of individuals who have received treatment.

	Internet

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
Robert L. Replogle, MD, recognized the great potential of the Internet as a medium of education, discourse, and rapid dissemination of information, a communication system of incalculable value to our specialty. Starting with the development of The Society’s Web page, this activity has rapidly expanded.

CTSNet, born 1 year ago, currently contains Web pages of ten worldwide cardiothoracic surgical organizations with Web pages in various developmental stages from five additional organizations. Community of Science, a venture capital organization, was recruited to assist in developing and managing this worldwide endeavor. Peter S. Greene, MD, was recruited as Web Site Editor. Thomas B. Ferguson, MD, Editor of The Annals of Thoracic Surgery, has been an important force in placing The Annals of Thoracic Surgery on The Society of Thoracic Surgeons Web site. Considerable effort has been expended to instruct those interested in using this important communication medium through instruction sessions at annual meetings. These sessions were offered again this year.

	New technology

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
Over the years, our specialty has been intimately associated with technological advances in medicine. It is inherent in our specialty. Thoracic surgeons continue to evaluate new or modified procedures and techniques to deliver the most advanced care. The ad hoc Committee on New Technology Assessment, a joint effort of The Society of Thoracic Surgeons and The American Association for Thoracic Surgery, was created to monitor this activity. The development of new technology has been incriminated as one of the major causes of the increased cost of medical care. Fuchs has suggested that "... we must tame but not destroy technologic change because such change is the most important force behind the escalation of health care expenditures" [7]. Cassell, in his essay, "The Sorcerer’s Broom," has addressed the positive and negative effects of technological advances on health care [16].

	Modus operandi change

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
There have been marked changes in The Society’s activities over the past 8 years. Our size has increased 37%. During this period, annual meeting scientific presentations have increased 43%, committee activity has increased 90%, the number of committee members has increased 70%, and The Annals of Thoracic Surgery has published 62% more pages accompanied by a 26% circulation increase. Essentially no increase in our Chicago office personnel but a 100-fold increase in total expenses have accompanied these changes. This has been accomplished by increased annual meeting income and without raising the dues since 1993. It is unknown how this will be affected in the future by changes in the economy and different methods of communication that will be employed by patients, membership, and industry.

An ad hoc Management Evaluation Committee chaired by W. Gerald Rainer, MD, has been evaluating the human and financial resources necessary to continue to accomplish The Society’s goals in the future. It is intended that with reorganization, our function and structure will become the leanest and most efficient possible to continue to achieve our objectives.

	Conclusion

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 
During these turbulent times, we have learned very powerful and often painful lessons. While others had been promoting their contrary views to our detriment, we have devoted our efforts to taking care of patients, improving their care and enhancing the quality of their lives. Clearly this alone is no longer sufficient to document our worth as a specialty.

These new challenges facing us are as great as any clinical ones we have faced in the past. To confront them requires the development and application of new skills for which we previously have not been formally trained. Ours is a great and intellectually stimulating specialty with creative, talented, tireless, and undaunted members. If we are to succeed in addressing these new challenges, it is essential for us all to acquire the necessary new skills. We must become as facile with them as we have with video-assisted thoracic surgery, microvascular techniques, and immunosuppression.

For the immediate future I believe we will have a hybrid health care system. Its heterogeneous character will make solving its multiple problems even more difficult. Addressing these issues will require our collective wisdom. We all must become involved. If we do, I am confident we will resolve them for the benefit of our patients and those who come after us.

Thank you for your attention and again thank you for the honor of serving as your President this past year.

	References

Top Introduction Funding Regulation Nonspecialty medical care Alternative therapy Database Internet New technology Modus operandi change Conclusion References

 

1. Grove A.S. Only the paranoid survive: how to exploit the crisis points that challenge every company and career. New York: Currency Doubleday, 1996:3-35.
2. Wilbur R.H. "Resource-based" practice expense: how we got where we are today. Ann Thorac Surg 1997;63:1821-1823.[Free Full Text]
3. Winslow R. Teaching hospitals in New York State to cut doctor training slots up to 25%. Wall Street Journal 1997;Feb 18:Section B, Page 6.
4. Glassman JK. Medicare without choice. Washington Post 1997;Dec 23:A17.
5. Martin S. Private contracting heats up. American Medical News 1998;41(Jan 19):3.
6. Gale A.H. 1982 Supreme court decision destroys fee-for-service fosters HMOs with financial incentives. Missouri Medicine 1997;94(12):687-689.[Medline]
7. Iglehart JK. Physicians as agents of social control: the thoughts of Victor Fuchs. Health Affairs 17;1:90–6.
8. Cohen JJ. AMA sues the government regarding audits of teaching physicians. Academic Physician & Scientist 1998;Jan/Feb:8.
9. Jollis J.G., DeLong E.R., Peterson E.D., et al. Outcome of acute myocardial infarction according to the specialty of the admitting physician. N Engl J Med 1996;335:1880-1887.[Abstract/Free Full Text]
10. Silvestri GA, Handy J, Lackland D, Corley E, Reed CE. Specialists achieve better outcomes than generalists for lung cancer surgery. Chest (in press).
11. Friedmann P.D., Brett A.S., Mayo-Smith M.F. Differences in generalists’ and cardiologists’ perceptions of cardiovascular risk and the outcomes of preventive therapy in cardiovascular disease. Ann Intern Med 1996;124:414-421.[Abstract/Free Full Text]
12. Winslow R. Oxford to give more control to specialists. Wall Street Journal 1997;Mar 25:Section 13, Page 12.
13. Peabody F.H. The care of the patient. JAMA 1927;88:877-882.[Abstract/Free Full Text]
14. Rosenthal E. The HMO catch: when healthier isn’t cheaper. New York Times 1997;March 16:Section 4, Page 1.
15. Sharpe A. One physician designs his practice to avoid managed care’s hassles. Wall Street Journal 1998;Jan 5:Section A, Page 1.
16. Cassell E.J. The sorcerer’s broom: medicine’s rampant technology. Hastings Center Report 1993;23:32-39.

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This Article Full Text (PDF) Alert me when this article is cited Alert me if a correction is posted Citation Map Services Email this article to a friend Similar articles in this journal Similar articles in PubMed Alert me to new issues of the journal Add to Personal Folders Download to citation manager Author home page(s): George C. Kaiser Permission Requests Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Kaiser, G. C. Search for Related Content PubMed PubMed Citation Articles by Kaiser, G. C.