'A Primary Care Perspective on Global Payments' by Bill Walczak

This article is more than 12 years old.

About a dozen years ago, there was a significant segment of the health care system that believed that the future of health care was going to change to be a system in which primary care providers held the key to all other services, with primary care “gatekeepers” managing the care of “covered lives” (i.e., patients) and ensuring lower cost, higher quality services. This group believed that insurance companies really just wanted to make money, and didn’t want to be in the business of determining what and how much health care would be allowed. So why not just turn the decision making (and a set dollar figure per patient) over to doctors and let them take the risks (and gain the rewards by managing care) with the insurance companies taking their share off the top?

Sound familiar?

In the 90’s, the system that is now being called a “global payment system” was largely represented in what was called “capitated managed care.” It required a transference of power from hospitals and specialists to primary care providers, and required primary care systems to invest in lots of technology and support services to effectively manage care and cut down on cost while ensuring quality care.

The problem with this type of system was manifold.

The primary care system has never been funded well enough to allow for such expensive support systems to be created. As a result, many primary care organizations that decided to sign on to the capitated insurance systems didn’t have the infrastructure to succeed and just flew blind. The two risk products that Codman Square Health Center signed on to eventually presented such high risk spread over only a few hundred patients that it became financially foolish to stay within that system. In one case, a patient covered by a capitated system who had experimental surgery wiped out the entire year’s funding for all patients in that insurance.

This form of managed care didn’t catch on and eventually disappeared. The only good thing that came out of it in the case of Codman Square Health Center was the decision to create a management services organization with the Dorchester House, now called DotWell, which has created a high quality IT/EHR (electronic health record) system and provides lots of support to both health centers as we tackle the many problems in the health care system.

The Globe article on the new proposed “global payment” system said that, to be successful, primary care doctors, specialists, hospitals and other parts of the system will have to form “accountable care organizations (ACOs)” and patients would choose primary care doctors to manage their care through these organizations, with insurance companies paying an annual capitation to cover it all.

What’s different this time that might make this effort successful? I’ll comment on the part of the system I know best - primary care, which is the core element of the new system. On the positive side, most health centers (though apparently not many private PCPs) have EHRs, which would make data collection much easier, though the state’s experience with GIC tiering has exposed lots of problems with using such data to make decisions on how providers are paid.

The bigger problem is that primary care providers are at the bottom of the medical totem pole. The American health care system has been pushing the creation of specialists for so long that in a recent survey only 2% of medical students said they were planning on going into primary care. In short, there are too few primary care doctors, and the number is in decline.

Beyond that fact, although primary care providers have been working to create aspects of a system that might work, such as helping to create the “medical home” concept, and experimenting with new ideas such as group holistic visits for patients with similar chronic diseases, the notion that health care’s powerful interests, such as hospitals and specialists, would willingly allow the kind of power transfer that would put the dollars in primary care hands is not credible.

Because primary care providers by and large do not exist in practices large enough for them to take on the huge risk anticipated in this system, it is the “accountable care organizations,” that would hold the contracts and therefore the power. Under capitated managed care, many hospital systems attempted to control the primary care system via purchase of them. Remember all the purchases of primary care groups in which the primary care doctors sold their interest in their practice for, in some cases, a lot of money, then went to work for the system that purchased it the next day?” In the proposed global payment system, I’d guess that ownership will not be necessary, and the most likely system would be to create vertically integrated systems, with control over the actions of the providers through the purse, a bit like creating multiple private single payer systems aligned to large institutions and controlled by payment agreements.


Though these payment agreements will not be difficult to develop once it’s clear that the money will be allocated via the ACOs, the big problem will continue to be the lack of primary care providers and their ability to exert control over the services that are delivered to patients. This is where the struggle will be, and unless the system reverses its direction to create fewer specialists and more primary care doctors, the goal of the global system will not be reachable. Other countries control costs by having the government decide what is covered and what is not, but in our state and country, it looks like our officials have decided to do this via managed care through primary care doctors.

I think it will take a lot longer than 5 years to create this system, if only because it will take a lot longer than that to change directions in how doctors are trained. We’ll know the state is serious when you see the average salaries of primary care doctors equal the average salaries of specialists, and when you see primary care organizations getting funded well enough to create the infrastructure to manage managed care.

Considering the fact that the health care system won’t even pay the cost of delivering care to the poor (BMC gets 64 cents on the dollar caring for the poor), I think we’ll be waiting quite a while for the new system to take effect.

Bill Walczak
CEO, Codman Square Health Center

This program aired on July 22, 2009. The audio for this program is not available.

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Martha Bebinger covers health care and other general assignments for WBUR.