I thought that I would take another break from our tour of the world health care systems to look at an evolving problem which may also affect the care to our patients who now supposedly have “insurance” so that they can get medical care. The following is part of a post by a family care physician.

“So here’s the skinny. I’m an FP at a university-affiliated multi-specialty practice. I make more than a Starbucks manager only when I cut my patients short and kill myself to exceed 85%ile in RVUs (which also means no vacation or holidays). I’m a good half million in debt (double that if you include the house and cars). Married. No human kids (yet?). Spouse went back to school and is taking out MORE loans. (No choice, the Evil Sequester eliminated her entire career but she’s going into health care so that’s a plus).

I’m kind of at the point where I’m thinking; screw “the right thing”, I want out of this debt! But simultaneously I want to work less and enjoy life more!

The only option I see is to sell out. (Or find new rich parents to adopt me at 40 and leave me millions.)

As an FP for the underserved and totally marginalized population, it would be a huge sell-out to work for big pharma or the profit-from-patients markets (insurance providers). But with more than 80% of every cent I make going to bills (and I’m on my 16th year of paying off student debt with no end in sight) it seems like such a tempting plan.

I should add, I tried letting go of my standards and seeing 4+ patients every hour to make the $$. But, honestly, I couldn’t do it. I just can’t practice crappy medicine, but clearly that’s what I’m incentivized to do! So if I’m seeing patients, I’ll be a kick ass PCP, but I’ll always make less because of it. (Have I said yet how much I hate our health care system?)”

I wish this were the exception, but it is becoming the usual case and it is worrisome. We are seeing the spectrum of physicians change. Now more and more physicians are becoming employees of the hospital or a large medical delivery system. I had also mentioned another strategy months ago, which is the conversion to a concierge practice where they charge the patients a yearly fee to become of the practice.

Just think of the cost of the medical education in this country and add the cost of maintaining a practice with office overhead, specialty medical waste disposal fees, malpractice insurance premiums, computers and software and staffing expenses.

I’m concerned about the erosion of the rural and private practice aspect of health care. Let’s also look at rural medicine where there is a large part of the patient population under Medicare, Medicaid or the Affordable Care Act/ACA exchange system.

•    Rural hospitals across the U.S. are closing down, including 14 rural facilities last year, according to the National Rural Health Association.
•    Observers disagree as to the reasons for the closures, with theories including the shift from cost-based to pay-for-performance payment, cuts to federal reimbursement, shifting demographics and states’ decision not to expand Medicaid eligibility.
•    Rural hospital operators say they’re closing facilities largely because they expect to lose disproportionate share subsidies as required by the ACA without expanded Medicaid dollars to replace them.

The closing of rural hospitals is only a symptom of a larger problem. The reality is, the ACA was destined to cause tremendous problems for any hospital treating lots of uninsured or underinsured payments if Medicaid didn’t expand. And in many cases, it hasn’t. While the legislation assumed that states would expand Medicaid eligibility, 21 states have failed to do so, courtesy of a Supreme Court ruling allowing states to opt out.

With the ACA still cutting back on DSH payments to hospitals despite the lack of new Medicaid coverage, many—especially those serving largely poor and rural communities—are likely to face very difficult decisions in trying to keep their doors open. This will prove an especially difficult problem for rural communities, whose citizens may have to drive long distances to get emergency care if their local hospital closes. At present, it seems, no solution is in sight.

But the non-profit organization Michigan Rural Healthcare Preservation, was formed in 2009 to address the critical stresses facing America’s rural healthcare providers.

Small rural hospitals typically have a poor payer mix, predominantly Medicaid and Medicare, accumulating bad debt, and over reliance on primary care and emergency services. “We came to realize that the small rural hospital in towns across the country are under tremendous stressors to survive and the general precursor to that stress is the hospital’s reliance on primary care and emergency care for the bulk of their revenue,” says Ethan Lipkind, JD, CEO of the Michigan Rural Healthcare Preservation Holding Co. Mr. Lipkind is a healthcare regulatory compliance attorney and the CEO of Michigan Clinic, a healthcare provider holding company. “Paradoxically, ER and Primary Care are services most essential to maintain locally, but also most difficult to generate revenues for local providers.”

The goal was to help these facilities avoid filing for bankruptcy and certain closure so that they could continue providing critical services to their communities. MRHP had a three-fold equation:

1. Fostering and building relationships with elite specialists in various fields to develop surgical service lines at remote facilities. “We hoped this would allow patients in rural communities to receive stellar specialty care close to home while simultaneously generating needed revenue streams for these providers,” says Mr. Lipkind.
2. Bringing superior operational efficiencies and management to these facilities. “We have found a tremendous amount of slack when it comes to rural hospital administration where the mentality is too often that we do things one way because they’ve always been done that way,” says Mr. Lipkind. “Such a mentality may have worked previously, but given the way our healthcare system operates today, and the myriad challenges facing rural hospitals, such attitudes are simply inappropriate and lead to tragic outcomes with little hope of long-term sustainability for these providers of care.”
3. Unify hospitals that are part of the MRHP program — and those that aren’t — to work jointly and share resources and services that will ultimately reduce operational costs.

“These hospitals are economic engines of their communities,” says Mr. Lipkind. “They are often the largest employers in town and they produce a sizable trickle down effect where other local businesses depend on the hospital thriving in order to generate business for themselves. Small businesses are grateful for robust patient flow and activity at the hospital since that results in desperately needed additional business for local restaurants, gas stations and B&Bs.”

For these rural providers, another possible alternative to closure or MRHP is being acquired by a large healthcare system. “A large provider that runs a tertiary care center in the closest big city has no interest in maintaining an abundance of services in the rural hospital locally, but is all too happy to acquire the rural hospital cheaply and then convert it into a patient referral center for the centralized city hospital,” says Mr. Lipkind. “In essence, this option entails converting what was once a rural hospital into a glorified clinic sending patients out of the community.”

MRHP aims to reverse that patient flow; the specialists from larger hospitals go out to the rural hospitals to perform surgeries or cases a few days per week. Equally importantly, they are able to provide the same quality of care at the rural hospital, or perhaps even better care

“We found the quality of care of patients is actually better at the rural hospital relative to the larger healthcare system, which, I realize, may be counterintuitive,” says Mr. Lipkind. “With the advancement of medical science and medical engineering, we are able to safely perform a tremendous variety of procedures that may have been unthinkable for a smaller facility just a few decades ago.”

Minimally invasive techniques are available for many procedures, and medical technologies like surgical tools and implants are advanced and exceptionally mobile so that a small hospital OR can be essentially identical to that of its much larger peers. Moreover, in the smaller hospital environment, nurses and staff are able to cater to the specialists better than at the big hospitals and create a more intimate patient experience.

“For example, on the neurosurgery day at the rural hospital, the entire hospital converts into a neuroscience institute of excellence for that day,” says Mr. Lipkind. “Patients receive a lot of personal attention from everyone. You won’t find that at larger institutions where surgeons are fighting over OR time and trying to get their patient to the head of the line for an MRI or CT scan.”

After partnering with MRHP, many facilities have experienced tremendous growth and significant incremental financial improvement. But that doesn’t mean the hospitals are safe forever. The healthcare environment is constantly changing and could present new challenges in the future.

“There is a lot of work to be done in the industry and we have to be careful not to generate a sense of arrogance or worse, complacency, for our success; instead we need to focus on what we can still do better,” says Mr. Lipkind.

“Our country’s healthcare system is moving away from acute care treatment to chronic care management and fee-for-service is quickly diminishing,” adds Mr. Lipkind. “This transformation leads patients away from large hospitals and other expensive points of care into more cost-effective settings like ASCs and other outpatient environments.”

“I think hospitals in general are a dying business and I think that long term we are going to see certain academic medical centers where the most complex diagnoses are treated, but the vast majority of hospitals will need to adapt and transition into providers of urgent and emergency care coupled with trauma centers,” says Mr. Lipkind. “The bulk of the rest of patient treatment will take place in ASCs or other outpatient settings, perhaps even in the patient’s home.”

A flurry of pay cuts for doctors hit them recently as physicians struggle to implement electronic health records, deal with new measurements to improve quality and deal with myriad changes in Medicare and Medicaid reimbursement formulas.

The biggest pay decrease will be a return to the old rates paid by the Medicaid program for poor Americans when a two-year pay bump under the Affordable Care Act that increased reimbursement 40 percent or more expires. Under the health law, a primary care doctor – a family physician, a pediatrician or an internist – who treats Medicaid patients has been reimbursed to the generally higher level of the Medicare health insurance program for the elderly for scores of primary care services but only for 2013 and 2014.

“The Medicaid cuts are going to have an important impact on family physicians, particularly those who have increased the number of Medicaid beneficiaries in response to the parity with Medicare payment,” Dr. Robert Wergin, president of the American Academy of Family Physicians said in a statement to Forbes. “We took a quick snapshot of what our members were seeing and learned that nearly half of the survey respondents saw in increase in appointment requests from new Medicaid patients and nearly three in 10 saw an increase from their current patients whose coverage changed due to Medicaid expansion.”

Although not as steep as the Medicaid pay cut, many more doctors will be hit with a barrage of reimbursement reductions implemented by the Centers for Medicare & Medicaid Services such as cost and quality measurements and mandates related to treating Medicare patients. Doctors are also grapping with a 2 percent pay reduction from the Sequester. A document published by the American Medical Association said physicians could by 2019 be subjected to a set of penalties that reduce Medicare payments by 13 percent.

“No other segment of the health care industry faces penalties as steep as these and no other segment faces such challenging implementation logistics,” Dr. James Madara, the AMA’s CEO wrote to the Obama administration.  “The tsunami of rules and policies surrounding the penalties are in a constant state of flux due to scheduled phase-ins and annual changes in regulatory requirements.”

Among the most broad payment cuts will impact 257,000 eligible medical care providers who are largely physicians who they will be paid 1 percent less in reimbursement next year from Medicare because they failed to comply with so-called “Meaningful Use” of electronic health records standards in 2013.

The doctor payment cuts could indirectly impact health insurance companies that have contracts with Medicare and Medicaid like Aetna (AET), Cigna (CI), Humana (HUM), UnitedHealth Group. The cuts could impact what these insurers pay under government health programs.

In 2009, President Obama signed into law the Health Information Technology for Economic and Clinical Health Act, as part of the so-called “federal stimulus” legislation known as the American Reinvestment and Recovery Act. The law provides some $20 billion to get medical care providers to use electronic medical records in the form of bonuses if they are complying with meaningful use standards.

Even in our community we are seeing all these changes and I, as a practicing physician am concerned regarding the additional expenses on the horizon. Will the additional expenses and penalties force me to call it quits or sell out or cross over to the dark side?