Wednesday, July 19, 2017

Why Does The Crowd Still Support Trump?


So, why does Trump still have so much support among Republicans and “his base?” When it's obvious to so many of us how ineffective and embarrassingly gauche he has been, when his paper-it-over lies are so obvious? Why?

Well, that's the way mass psychology goes. Take the stock market, which like politics is another exercise in mass psychology. In both politics and the market, you can go quiescently along for a while, and then you are forced to make a choice. Elections force a choice upon people, just as when you have money in your account and you need to be in the market, you need to buy something. Then, when you buy, you tend to hold. You tend to keep your bet until you are forced to make another choice. No one likes to admit a mistake; a naïf tends to hold a stock to the bitter end, and it can be bitter, hoping it will come back. For that matter, a naïf is likely to hold a stock even when it goes up, until it comes down to the level where it was bought, where it is sold so the holder doesn't suffer a loss. This is called a “round trip.” Lucky are they who have the fortitude to sell with a nice gain, or to sell with a mild loss before the collapse. All good things come to an end, but not everyone recognizes it in time. And there is always somebody who buys at the top.

It's not only the market. The Giants took fully half a season of being the second worst team in the majors to finally have a night with less than a sellout crowd, for goodness' sake. And Mr. Trump's supporters, who are inattentive to politics most of the time and who are often incapable of analysis even if they are attentive, are holding onto their stock even as it palpably weakens and the smart money is bailing, quietly, out of the limelight, leaving it to the public to take the hit.

Mass psychology, of course, is built on personal psychology. I've just been reminded that Danny Kahneman, he of the Nobel Prize, investigated this issue formally and brilliantly, and Dave Leonhardt in the NYT supplied this link:


Here is the introduction:

A wine-loving economist we know purchased some nice Bordeaux wines years ago at low prices. The wines have greatly appreciated in value, so that a bottle that cost only $10 when purchased would now fetch $200 at auction. This economist now drinks some of his wine occasionally, but would neither be willing to sell the wine at the auction price nor buy an additional bottle at that price. Thaler (1980) called this pattern-the fact that people often demand much more to give up an object than they would be willing to pay to acquire it-the endowment effect. The example also illustrates what Samuelson and Zeckhauser (1988) call a status quo bias, a preference for the current state that biases the economist against both buying and selling his wine. These anomalies are a manifestation of an asymmetry of value that Kahneman and Tversky (1984) call loss aversion-the disutility of giving up an object is greater that the utility associated with acquiring it.

It continues:

The Endowment Effect

An early laboratory demonstration of the endowment effect was offered by Knetsch and Sinden (1984). The participants in this study were endowed with either a lottery ticket or with $2.00. Some time later, each subject was offered an opportunity to trade the lottery ticket for the money, or vice versa. Very few subjects chose to switch. Those who were given lottery tickets seemed to like them better than those who were given money.”

In other words, do we really expect people, generally untutored in politics and ignorant of policy until it hits their paycheck or their lack of a health insurance card in their wallet, to give up on Trump in only six months? They don't see the failures yet, and were blind to the moral outrages from the beginning, blinded by anger at Hillary and her crowd, and blinded by what they took as business success riding to their rescue. It takes time, it just takes time. But just as in the stock market, when the weakness finally asserts itself, it will be unmistakable, even as the entrenched and the stupid hold to their convictions despite their depleted wallets.

To switch the analogy, getting people to change horses is never easy. It will be a trick to combine fierce resistance – necessary to stop the runaway – with gentle persuasion – necessary to get people into the other saddle. Obama could probably manage it, but he's ineligible; Hillary certainly can't, her voice rising with insistent ambition and now with I-told-you-so-how-could-you-reject-me-it-must-be-because-I'm-a-woman. As they say in the market, she's dead money. Obama can't rise again personally to the top, but his role as a kingmaker might just be starting. Meanwhile, we have to await the emergence of a new crop of leaders, those who have quietly doubled and tripled their value with the support of smart money, before the general public is even aware of them. The question will be, when will the old leaders have the grace to leave leadership to new leaders who can lead? Timing is everything.

The trick will be for the new leaders to make sure the current Republican party departs along with the Trumpsters. After all, he just crawled into their own rotting carcass and, lacking a vision of his own, simply adopted their eyes and the goals they had fixed on. He featured himself as a fixer, not a visionary. When it's clear he can't fix, he's dead meat. It will be the traditional Republicans' problem to find a way back from the ideological swamp they have created for themselves.

While resistance is pursued in the Congress and at the grassroots, leadership is likely to spring from the states where positive steps can be taken. It's hard to change an organization from within, easier to create a new alternative. The weaknesses of the small-state weighted Congress are well known; it's hard to get things done there, and the scope is too big for much experimentation. Maybe the progressive states – the Left Coast, Hawaii, Minnesota, the Northeast –can form alliances over issues like climate, minimum wage, retraining, education, health care, or even following Alaska's lead to a guaranteed annual wage. States can do what the feds can't, then threaten to either take over the presidency and Congress, or minimize the feds and just revert to a version of the Articles of Confederation and minimize the federal ability to tax. It's tempting to let the South go its own way and to reconsider the 19th century with expulsion rather than secession, but that's a pipe dream and anyway, there are so many good souls there and some nice vacation spots. Let there be a movement within those recalcitrant states to join the progressives in their policies, like Turkey seeking EU membership. Meet the criteria, dudes.

Change comes slowly, and big change comes only when pushed by crises, and we won't be there for some time, hopefully. Forced secession? A thought when viewing Jeff Sessions, perhaps, or Scott Pruitt, the anointed ignorami. But even if these idiots are with us now, it's just as sure that new leaders will emerge. They will. The question will be, what will the battlefield look like and who will be the contending forces? We can only hope that the current cadres of the Republicans will wither quickly and completely, and that the strong emerging forces will not have to wear too much of the old Democratic uniforms, and that the officer corps has some idea of progress that can whip the troops into shape to work together, without the old officers held over with their bad old habits, and just preserving what is best.

As in The Leopard, things must change in order that they can remain the same. We'll see what we shall see. And we must remember to observe the moral imperative of optimism.

Budd Shenkin

Friday, July 7, 2017

BNS Returns To HMS





There were 10 or 12 of us sitting in a circle on Friday morning, and Judy said, “It's just too bad we have to die, when this is the best part of life.”

I was startled. I said, “What do you mean?”

She said, “We've done all we have to do now.”

Yup, that was it. “That's just what I think!” I said. I was the only other one I had heard say that.

These were some of my closest friends in the Harvard Medical School class of 1967, which now seems both long ago and yesterday. We were lucky to be sitting together here in the lounge of Vanderbilt Hall, our dorm for the first two years, where we descended the 15 steps or so into the dining room, where my classmates had spotted me every morning in September of our second year, calling out, “What happened to your Phillies last night?” during one of MLB's legendary chokes – it had to be the Phillies, didn't it? Here in Vanderbilt is where we became so close. Not Judy and I, necessarily, which was one reason I was so startled. She had declared herself hell-bent on being a “five days a week psycho-analyst” from the very start, which was probably pretty intimidating to me, since I had no idea where I would be headed, and coddled as I had been, barely wanted a job. And she was a Jewish woman, which was just what my mother was, although from New York, while we were Philadelphians – big difference. But here she was, making my point.

HMS hadn't made it easy, then or now. Just to have access to this room to sit with each other, we had had to insist on our class listserve that the primary purpose of the reunion in our eyes wasn't as a donation opportunity, that we didn't necessarily resonate to the administration's declaration that “The World Is Waiting.” TWIS for HMS? Doesn't that really say it all? And the vacuous, fatuous declaration from the staff organizers, “The Best Reunion Ever!” Right, right. And just why would that be?

I had made the point on the listserve that what I really wanted was to sit down and be with my classmates, and that had gotten a lot of resonance. Judy had said, being practical, couldn't we just have a room? Someone else added, hey, you're sitting on a $23 billion endowment, think we could have a room? It took a lot, this was not easy thing, we were only notified at the last minute, but yes, at the end, we had access to a room where we could sit together, here in Vanderbilt.

I felt the same as Judy, all the boxes had been checked. Had a career, took care of people, accomplished some stuff, set up for retirement, raised the kids more or less successfully. Jimmy chimed in from the other side of the circle that he didn't feel that he had done everything. “I took that long trip to South America senior year, and I thought I had to write a report when I returned, but I didn't. But I still think I do, and I haven't done it yet.” Whimsically said, but then, we were all doers, all responsive to expectations, and it's strange to give that up. I remember when basketball and pursuit of women (girls, actually) were what life was all about and school was something to do well, but not for fun. Now here we were and professional progress had taken over first place, and finding fun for fun's sake had to be recovered, but on the positive side, work had become a lot of fun for so many of us. Isn't it too bad, having got this far, that we will have to call it quits at some point that we are closer to now than we were then?

I'm not one to come into events with expectations, although clearly I hoped to “reconnect,” to see where things had turned out, and what we thought now about what had gone on then. I noticed that everyone was now much more confident than before, which shows how tentative we were then. Now, we had done what we had done, and we had measured up more or less, I guess. There wasn't a lot of preening – there was some – but more like a common feeling that we had survived. I saw my old friends, and Larry said it was too bad we didn't live closer. That was nice to hear. John, old friend from undergrad and HMS and next door neighbor in Vanderbilt, who had nominated me for class VP where I had served (social chairman was a better functional description) for three years, mutual warmth after all those years. Doug from Alaska, always introverted, with whom I now could connect. Don from NYC still with his Arkansas lilt, bringing the message to get that LDL down and live into your 90's! Mona whose husband and daughter wrote “Fuck Feelings,” which we later saw featured over at the Coop in Cambridge, what a great bookstore.

Phil has been a big organizer of reunions, which is a surprise since he wasn't particularly a class leader, but somehow he volunteered and feels deeply about HMS. He and others established a scholarship fund “untouched” by Harvard administration. That's great, show's a healthy skepticism, but in the end money is fungible, but I honor what they have done and their feelings behind it, even if I do not share it. At our intimate dining experience at the St. Botolph's Club on Commonwealth Ave. Phil had observed that there were many who seemed not to appreciate HMS the way he did. “How can they not appreciate what Harvard has given us?” he said.

Well, that's an interesting question. I think fewer than half our class came – 10% are dead, but even half the survivors didn't show, I think – which tells you something. One thing is just technique. I've done this kind of thing, and what you need to do is call everyone personally and engage and let everyone know you, as the leader, want them to come. And make the objective to connect, which is what we want to do, to feel wanted. Instead of sending out a fund-raising letter with a little note in the margin that “we are hoping for a 'stretch' donation! And it will be great to catch up.” Figure it out. (I've compared us graduates with money to the pretty girl who wants to be loved for herself – you can continue with this comparison if you want.)

But in fact, there is a lot of resentment. I talked to Ira and George in front of Vanderbilt, and Ira talked about how he had been abused by housestaff (interns and residents, for you non-doctors reading) on the wards of the Brigham. He had made a rational decision at 2 AM not to awaken a patient to get the med student history for next morning rounds, which would have been in addition to the intern and the resident work ups, and when he was empty handed the next morning and explained his concern for the patient's welfare, the resident in charge had vowed to give Ira pure scutwork the entire next week. Ira went to the Dean of Students who had then called the hospital and complained in his behalf. Ira had had contretemps in his medical life thereafter, and wished that HMS had prepared him on how to deal with those who would take advantage.

I had had some similar hazing from housestaff at the Beth Israel. George, a soft-spoken upper midwesterner, related that he had wanted to set some goals for his daughter so she would have some direction, either towards where he suggested or maybe against, but something. So he thought, what about medicine? Then, from depths he didn't know he had, came out the conviction, “No! I don't want her subjected to that abuse!” He hadn't even known it was there, but there it was. And Phil wonders why everyone doesn't see things as he does. And Phil, these are the guys who showed up.

For myself, I didn't know this was going to happen, but somehow at this visit, I buried the hatchet with Harvard. Yes, they didn't tend much to feelings, they didn't help us understand the process we were going through to become doctors – there was some fake it before you make it, I think, in retrospect. And it's a very hard process, to some extent one that I still wrestle with. Doctors get a lot projected onto them, healers, authority, helpers, confidants, other stuff. They could have mentioned it.

But still, here were my classmates, and I appreciated them so much. Not only are these good people, they are my brothers and sisters, because we came in together undifferentiated, and as different as we are now, as much as reunions are exercises in observing the damage that time has wrought so some of us have to reintroduce ourselves to one another to be recognized, as much as we compare our health report cards like Miami Beach ladies on the park bench, still, we came from the same medical womb and here we are years later. So I found most of my resentments melting away, realizing also how much of it was me and not them. I was young.

Doug wrote to me and I hope we can get together when he's in town. I'm going to write personally to several others and tell them how nice it was to see them. I'll have lunch with Carol, who lives probably just a mile or two away. I'll go back for the 55th, God willing. And unexpectedly, I had a good time with my wife in Boston, despite it's being the home of the Celtics.

Rich said years ago that the strength of HMS is in the students. It was startling to hear at the time, and I was amazed to think that it might be true. I couldn't think in such terms while I was still in the minors. But it must be true. What HMS gets is permanent position for the lottery draft picks, and as Dean of the dental school Bruce says, they figure they do well if they don't screw us up. That modesty is quite possibly false, but still, it is engagingly far away from The World is Waiting.

And you know what? I'll give them some money they don't need, just as a token. For my classmates, who it turns out, I probably love.

Budd Shenkin

Tuesday, July 4, 2017

A Liberal's Dilemma


It's always been tough being a liberal on crime and gangs. It's true that these miscreants have had really hard lives in many instances. Being raised in a poor and disorganized family with a history of failure is hard for me to understand fully, and I'd guess it's the same for most of you reading this. The social and educational resources offered to the poor are dreadful, as we all know, and prejudice makes it all the harder in every way.

And in addition to circumstances, there's the problem for many of not having much personal potential. We have some elements of a meritocracy in this country, more in theory than in fact, but it's there. So, what about the 50% who are below the mean in various measures? Those afflicted with poor brains or poor bodies or illnesses? Sure, many are not good in one thing but good in another, that's true. We make a mistake if we are unidimensional. Sure, hard work and persistence will get you a lot, and just reliability gets you a lot. But as Bernie and Elizabeth and Barack and others aver, the deck is stacked. Jared Kushner didn't get to be worth billions because of his innate brilliance, I think we can agree and think that this will become all the more clear as events unfold.

So, what are you going to do if your way is blocked by so many obstacles? Some are gifted with optimism and happiness and relilience and succeed despite the obstacles. But most don't. And pressures can mount, from here and from there. In the end, the rule of law and the arms of the police are necessary. And some of these dudes are really bad, too, let's not bleed our hearts for them. My stepson Brian is a prosecutor in Santa Clara county, and had the same job in San Francisco, working on gangs in both venues, and the evidence he sometimes brings to the court is video taken by the accused of he himself torturing and murdering a victim. Not much ambivalence on display there. If we are weighing influences vs. free will, it's pretty hard to gather up the sympathy when you hear Brian talk about these guys.

Perhaps you wonder where I'm going with this. Amazingly, I'm meandering over to the subject of abject victim of circumstances Donald Trump. We all know the problems that the rich may encounter. No one is immune to illness, and Donald is no doubt a victim of both ADHD and learning disorders (probably reading deficiency, possibly from dyslexia), and it would seem from the vision we have been offered of the prime source of his medical care (Dr. Harold Bornstein) that none of this, plus much else, has been properly dealt with. We can also imagine the circumstances of his upbringing. Having a slumlord for a father probably did not introduce liberal, understanding values to young Donald, and one doubts that his medical deficiencies were sympathetically considered. Plus, he was probably pretty much as much of a prick then as he obviously is now.

At the time he was growing up we understood so much less about it medically. My high school friend Jonny couldn't finish homework until 1 AM, and his neighbor and intimate friend John joked that that was when we didn't even have anything assigned. We viewed it as a deficiency of organization or of self-discipline or something, although we all loved him. It was only in later adulthood that amphetamine medication made him functional, and even now reading puts him to sleep. But, Jonny persisted and is a radiologist. He had something going for him, however: a supportive family. His father was a religious scholar, and his mother one of those warm, Jewish mothers who overflowed with affection for her son. When Jonny appeared on the front page of the Philadelphia Bulletin as a soldier who was refusing to be shipped off to Vietnam, the Bulletin interviewed his mother, who said “he is such a wonderful boy!” And not only did Jonny benefit directly from this family, he passes it on and lives his life the same way he was treated, thoughtfully, warmly, compassionately. He should be taking some amphetamines but I don't think he is. Luckily, those xray films don't put him to sleep the way books do.

Donald, we can imagine, got none of what Jonny did. He got shipped off to military school, and instead of standing up for himself during Vietnam, he got deferred, as did so many who could. But there probably was very little humanism from his family to introject. From the way he bullies, one can imagine he was bullied. His father probably found him wanting. Donald always made sure he had a great looking date at school functions. He certainly learned to compete in sports. That was him, trying to measure up, trying to have a positive self-image from the outside in. That usually doesn't work too well.

So here we are with a President Trump who reveals himself everyday as an awful human being. Let me not count the ways; who can't do it for himself or herself at this point? No videos of torture and murder, but he edges up to it. Not just a horrible President, who has the opposite of grace, the opposite of understanding, who knows little and learns little and who is unlikely to ripen in office. He has already shriveled, a fitting twin for Jeff Sessions. Once you're there, there is no going back.

So, we once again confront the Liberal's Dilemma. Do we understand and excuse, or do we capture and prosecute? It is a testament to their hypocrisy that the Republican Party of today says – excuse! He's new on the job, he means well, etc. Of course, it's a load of horse-diggy. They will say just anything, won't they? What a collection of losers, devoted to Wealth Care. They decry the lazy (and the sick, for that matter) while they defend the Loser In Chief.

But what do we do, we who are more enlightened, who can understand how people can go wrong, and can empathize with their hardships and dilemmas? Do we want to be hypocrites, too?

Well, let me tell you where I come out. Personally, I support Brian's point of view. Whatever the background explanation, whatever the mix of determination vs. freewill, I'm coming out with a judgement. Gang member killers? Gotta lock'em up, no? What other way is there? Try to rehabilitate when inside – tragedy and scandal how that doesn't happen – but condemnation is necessary.

Consistency demands that we judge the afflicted Donald the same way. It's very hard to grow up with the family we intuit that he had, the pressures, and the illnesses that he still seems not to recognize, but in the end, he has to be condemned as a terrible human being, and I would be far from dismayed if, in the end, the judge were to say, “Lock him up.”

Budd Shenkin

Saturday, June 24, 2017

Death of the ACHA? Senatorial Politics


One of the less elevated reasons I started writing this blog was to get it on the record. “Do you remember, this is just what I said, just what I predicted?” How many times had I said that? Predicting is hard, especially about the future, said Yogi. Right. But I flatter myself to think that that's one thing I'm not bad at. And it just so happens that one of my foibles – yes, I have to say, it's a weakness – is the need to be recognized.

“Shenkin's smart!” Ahhhhh, music to my ears. Yes, it's a foible. But hey, I'm not a saint, God knows, and so do a lot of other people.

So, with the “blog of record” self-designation in mind, here's what I think is happening and will happen in the Senate vis-à-vis health care. I think the American Health Care Act – also known as the I Hate Children And Anyone Less Privileged Than I Am Act – is doomed. No way to square that circle. The moderates, such as they are, can't be brought along. Murkowski and Collins can't vote to eliminate funding for Planned Parenthood, the Right won't stand for abortion funding, and the whole thing is a time bomb for the Republicans if it were to be passed with so many becoming worse off, so those interested in power in the future – McConnell especially – don't really want it to pass. The tax-cutting aspects are a problem, but the rich will get something, don't worry about that, and getting something will be better than getting nothing, which was their alternative under the Dems. Also, even if they have not been way out in the open, the hospitals need that Federal money that comes in via Medicaid and subsidized private insurance. Not to mention the insurance companies. Not to mention the academic centers. Not to mention the jobs figures. So, it's a loser.

Given that prospect, imagine that you are Mitch McConnell. What would your objectives be? You would want to use the situation to strengthen your own power. You would want to show the party members that you tried as hard as you could to do it – promise kept. Then, you would want to help out each member of your Senate delegation in a way that made them more indebted to you. How would you do that?

You would make sure that each individual senator knew that you understood his or her individual self-interested situation. Dean Heller in Nevada, in deep trouble for re-election, which he probably will not achieve in any event. He can't lose all the votes he would by voting against the law that gives so much to so many. “Dean, I understand. You're going to have to vote against it. That's OK, I understand.” Think of the undertaker and the Godfather – someday, and that day may never come, I may need a favor, Dean ol' buddy.

To the Gang of Four on the Right: “Fellas, I understand who your voters are, and how they have to see you. Ted, you asshole, do what you have to do. You others, I understand how your voters have to see you. If it comes down to where I need you because it will actually pass, I'll call on you as a group to come in, but otherwise, you can vote against it as a group, if you want to. That includes you, too, Rand. But I'll let you all make your statements, and if we do pass it after all, then you can come in as a group and defend yourselves that way, and explain all you got by hanging tough.”

To the ladies on the middle (can't say Left with these people): “I understand that you have voters, and I understand that your gender might have some feelings about Planned Parenthood and all, and I know you have to do what you have to do. I don't know if the others can go for something that continues with PP – they have a lot of religious voters – and I don't know if they can spend all that money on Medicaid, it's a lot of money, but I'll try to get them to move. But if I can't, I'll protect you so that you are not the ones who alone push it down. We'll make sure that it loses by a lot and not a little, so you won't be primaried. I am hoping, though, that when the tax bill comes up, that you'll be flexible there.”

So, they will all owe Mitch for tending to their own vulnerabilities. And then when it comes to taxes, they will all owe him, and since tax-cutting gives more than it takes away, and since it's not obvious at the time to Joe Schmo that he's getting screwed, McConnell will wind up a winner.

So, my view: ACHA goes down to defeat, the Dems crow, the hard Right grouses, but it all comes out in the wash with filthy lucre and taxes.

You heard it here, with all the forecasting that's fit to print.  Or, I hardly need to mention, this analysis could be all wrong, AHCA could pass, compromises could be made in the end, in which case, of course, McConnell's stock would be higher than ever, with a great feat of legerdemain.

Budd Shenkin

Thursday, June 22, 2017

Policy for Emerging Organizational Structure of Health Care

I continue to think that this issue needs attention!  Government policy needs to focus on organizational structure, and not just blandly accept the increasing concentration that is more and more pervasive.  Here is a 2,000 word version of the paper I presented last time, and which has gotten excellent reviews from readers.  For those of you who skipped the first version, this should be more digestible. (I apologize for the difficulties in line formatting -- Word and Open Office get mixed up on my Apple and Windows computers.)



A Problem in Search of a Policy: The Emerging Organizational Structure of Health Care
Budd N. Shenkin, MD, MAPA
June, 2017

The organizational structure (OS) of health care delivery is changing rapidly and profoundly, as both horizontal integration (HI) and vertical integration (VI) are producing larger and more centralized units of production.  This is important, because if we want health care with the Triple Aim of lower costs, higher quality, and more impact, the OS must be conducive to improved functioning.  Yet, amazingly, public policy seems not to have taken an overt stand on OS, and in practice, in concert with the most powerful political and economic forces that currently dominate the industry, has notably favored agglomeration and centralization. 

In fact, however, there is scant evidence that larger units are particularly conducive to theTriple Aim, and in practice both patients and professionals often prefer smaller units.[i]  If one accepts that the problem of scope and scale has not been solved, then it should be clear that an intelligent policy guiding OS will be even-handed in allowing best solutions to emerge rather than forcing a foregone conclusion.


Agglomeration Is Increasing

Both HI and VI are ubiquitous.  “Sixty percent of hospitals are now part of health systems.”[ii]   Independent physician offices are morphing into single-specialty groups and community clinics.  Health insurance companies are fewer, larger, mostly for-profit, and richer.  Multi-specialty groups abound; hospitals employ over half of the physician force, and have absorbed aftercare units.[iii]  The completely integrated system (IS) Kaiser Permanente continues to dominate California's market and similar systems are growing.  Accountable Care Organizations (ACO's) are VI creatures.  Large hospital centers are increasingly partnering with insurance companies or trying to bring the financing arm in-house.  Insurance companies are buying practices and extending into clinical services such as care management and telehealth.  Pharmacies own and run urgent care clinics.  Clearly ownership of the means of production is shifting from professional dominance to corporate control.[iv]


Evaluating Agglomeration

For agglomeration

Mid-20th century liberals derided the traditional decentralized system as a “cottage industry,” proposing its replacement by more modern industrial model “prepaid care” organizations.  The business-oriented Nixon Administration agreed, renaming “prepaid care” as Health Maintenance Organizations.  Later, Alain Enthoven suggested that “the provider community must be divided into competing economic units” with his concept of “managed competition.”[v] Today, the argument for larger integrated entities has become orthodoxy.

The hope is that larger organizations will:

·         Rationalize and economize by internalizing operations
·         Improve operations by utilizing administrative professionals
·         Relieve rank and file physicians from administrative operations, while identifying others for administrative leadership roles
·         Shift priorities to prevention and efficiency by unifying costs
·         Introduce economies of scale
·         Use concentrated resources to foster innovation and cushion the risk of failure
·         Utilize lesser-trained professionals rationally
·         Adjust securely to new payment schemes by payers.

In addition, larger size organizations can use increased market power to:

  • Negotiate better terms with payers and suppliers
  • Influence government policies
  • Facilitate recruiting and advertising 

Against agglomeration

Less talked about, however, are the equally compelling minuses of agglomeration and the diseconomies of scale:

  • “In companies with lots of divisions and product lines, it’s hard for executives to concentrate on the core business.”[vi] 
    • In academic centers the research agenda may trump clinical service
    • Within VI entities highly profitable specialties can trump the attention paid to non-procedural care. 
  • Large organizations can cushion the competitiveness of individual units – a specialty unit with built-in referrals from the network needs only to be “good enough” rather than outstanding.
  • Bureaucracies experience careerism, turf battles, and information withholding.
  • Administrative overhead can expand needlessly
  • Bureaucracies can induce conformity and stifle creativity
  • Promotion of clinicians can depend on deference to administrative leaders.[vii] 
  • Profit-driven and power-driven leadership can drive out the medical ethic. 
  • Clinicians in large groups may seek approbation from colleagues rather than patients.[viii]
  • Patient service can become a bureaucratic afterthought
  • IS physicians benefit financially from in-network referrals, which may violate kickback norms

A seminal paper warned against VI, asserting that the difficulty of management usually trumps the advantages, and observing that VI usually seeks increased market power rather than improved performance and efficiency.[ix] 

For decentralization

The conservative American Medical Association was the earliest defender of the decentralized status quo, citing a better doctor-patient relationship and the positives of professional dominance.  In 1971 a brilliant article by physician Michael Halberstam surprisingly supported the AMA anti-corporate position from the Left, citing authentic person-to-person relationships in smaller organizations.[x]  Today, a contemporary business theory supports decentralization in the form of the Centers of Excellence (COE) model.[xi] 

COE envisions competition among smaller independent units of care connected by information and communication technology, rather than by VI's ownership and overt direction.  In the Patient Centered Medical Home (PCMH) version of this model, for instance, the patient and primary care provider (PCP) would together choose referrals among competing specialists, procedural centers, and hospitals, rather than being tied into a mandatory network.  This model overcomes the medical market problem of poor patient knowledge, and enables clinicians to best serve their medical-fiduciary responsibility of seeking the best for their patients.   

The hope is that smaller units may:

  • Reduce bureaucracy and administrative overhead, substituting modern information and communication technology
  • Expose all units to true competition
  • Improve quality of implementation by each unit’s having a narrow mission
  • Incentivize professional and financial performance by ownership
  • Allow unfettered innovation
  • Increase the quality of personal connections for both employees and patients
    • Improving the caring function
    • Fostering patient centered care
    • Easing communications
    • Enhancing personal understanding
  
Against decentralization

The fear is that smaller units may:

  • Become isolated and adopt new knowledge slowly
  • Have less capital available for investment in innovation
  • Administer inexpertly
  • Enhance quality inexpertly
  • Be unable to promote and retain excellent staff
  • Indulge in poor medical practices to maintain popularity
  • Refer on other bases than quality and cost
  • Communicate poorly if there is no EMR inter-operability
  • Be unable to muster leadership in the practitioner community
  • Suffer from lack of market power.

Theory vs. Reality

The point is this: no model is preordained to be ideal.  Although highly specialized services will generally be centralized and primary care will most often be decentralized, it will be hard to prescribe whether it is better to put them in the same organization or keep them separate.  Most local solutions will probably be hybrids, often using intermediate organizations such as IPAs in variable combinations, and building on strong organizations with favorable cultures and capable leaders where they are found.[xii]  There must be room for the brilliant individualist as well as the consummate leader, and often these shining lights will not fit into the same system.  If patterns are allowed to vary from place to place, that will be a very American solution. 


Policy Implications

Since no single model is ideal, government should facilitate development of these varied models by leveling the competitive playing field, and focusing on outcomes that promote the Triple Aim. 

Acknowledging, refereeing, self-assessing

The first policy step is clear: government should openly declare itself neutral of the question of scale and scope of organizations.  Implementing this policy will be difficult, as government will need to:

  • Resist efforts of entrenched interests to predominate
  • Resist its own tendency to favor large size
  • Continuously monitor and referee the competitive marketplace
  • Regulate concentrated markets

Government should then adjust its own current policies accordingly, for instance:
 
  • Balance ACO encouragement of large institutions with equal funding for decentralized solutions. 
  • Adjust Medicare APM programs that currently reward larger practices over smaller ones.[xiii]
  • Adjust Federal Trade Commission and state agency policies that allow concentration of hospitals and insurance companies which can then overwhelm decentralized clinical practices. 

Government should also adopt policies to ensure neutrality of future programs.  New programs or policies should be required to develop an agglomeration impact statement prior to adoption, and an oversight group should assess periodically whether or not overall balance has been achieved.

Distinguishing centralized effectiveness from market power

Operational advantages of size – such as economies of scale, administrative specialization, improved internal coordination, investment in innovation, etc. – may benefit both the company and the public.  Market power advantages of scale, however, may confer advantage only to the company.  Governmental regulation needs to retain the former and abolish the latter. For example:

Clinical service pricing

Large “must-have” hospitals extract higher payment rates than independent practices providing the same services can (plus “facility fees”).  Federally Qualified Health Centers are similarly advantaged.  These economic rents are translated not only into profit and high administrative and clinical salaries, but also into inducements for independent entities to be acquired and for new clinicians to seek employment at these larger facilities (clinician capture). 

Possible solutions would be:

·         Establishing all-payer rates for equivalent services in a locality or state, allowing balance billing so that more desirable practices could benefit from the market. 
·         Allowing non-integrated clinical associations to negotiate collectively.

Communication and information

The Electronic Medical Record (EMR) is becoming the keystone modality not only for patient record keeping, but also for communication and coordination of care, including referrals and consultations.  It is tempting for large medical centers to purchase an enterprise-level EMR and restrict operability to network membership, thus steering patients preferentially to network members and restricting competition on price and quality (patient capture,) as well as incentivizing practices to join the network (clinician capture.)[xiv]  Enforcing the technically-feasible full inter-operability of EMRs and effectively forbidding patient steering would level this area of the playing field.

Free substitution of services

Systems protect their less-desirable in-network components by refusing to pay for out of network services.  Mandating reasonable out of network payment, even if discounted and with patient out of pocket payments – even for IS's – would advantage patients and provide incentives for progress for both independent and in-network components. 

Improving Evaluation and Feedback

Evaluating the achievements of competitive systems is essential for progress.  Government should invest far more in this mission, mandate non-disruptively obtainable standard quality and cost evaluation mechanisms, and establish regular feedback channels to professional and popular audiences.  Government also should establish a reward system for quality and cost advances that provide sufficient incentives for systems to benefit even while they lower costs, perhaps by new licensing rules for cost-savings developments (analogous to scientific advances) or a prize system for developers.[xv]

Building leadership capacity

Companies often prosper by finding leaders who are adept both professionally and administratively, and educating workforces to be participative in organizational guidance.  Health care professionals are rarely trained in organizational skills. Government should invest in training all professionals in the basic principles of organizations and organizational behavior, with enhanced pathways for potential leaders. 

Conclusion

OS is not the only influence on the performance of the health care system, but it is arguably the most significant.  Government needs to develop policies that will nurture the abilities of communities and professionals to develop systems that accommodate to local strengths.  The United States has traditionally welcomed local variation.  Government would be well advised to follow that American tradition and adopt policies that treat alternative organizational structures equally, and to focus its attention on measuring cost, quality, and service outcomes in local areas, with the aim of feeding back these findings to the areas in question, as well as identifying local solutions that can be either adopted or avoided elsewhere .


[i] Goldsmith JC, Burns LR, Sen A, GoldsmithT. Integrated delivery networks: in search of benefits and market effects [Internet].  Washington (DC): National Academy of Social Insurance: 2015 Feb [cited June22, 2017]. https://www.nasi.org/sites/default/files/research/Integrated_Delivery_Networks_In_Search_of_Benefits_and_Market_Effects.pdf

[ii]    Cutler DM, Morton FS, Hospitals, market share, and consolidation.  JAMA 2013;310(18):1964-1970.
[iii]   Ibid.
[iv]   Alford RR, Healthcare Politics: Ideological and Interest Group Barriers to Reform.  Chicago: University of Chicago Press, 1975
[v]    Enthoven AC, Managed competition: an agenda for action.  Health Affairs 1988;7 (3): 25-47.
[vi]   Williamson OE, Corporate control and business behavior: An inquiry into the effects of organization form on enterprise behavior.  New Jersey: Prentice Hall, 1970.
[vii]  Marsh H, Do no harm, London: St. Martin's Press, 2014.
[viii] Freidson E, Profession of medicine: A study of the sociology of applied knowledge.  New York: Dodd Mead and Company, 1973.
[ix]   Stuckey J, White D, When and when not to vertically integrate.  McKinsey Quarterly, August, 1993 (Accessed June 14, 2017 at http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/when-and-when-not-to-vertically-integrate)
[x]    Halberstam MJ, Liberal thought, radical theory, and medical practice.  N Engl J Med 1971; 284:1180-1185.
[xi]   Porter ME, Teisberg EO, Redefining health care: creating value-based competition on results.  Boston, Harvard Business School Publishing, 2006.
[xii]  Shenkin BN, The IPA in Theory and Practice: Notes from the Field.  JAMA 1995; 273(24):1937-1942,.
[xiii] Casolino LP, The Medicare Access and CHIP Reauthorization Act and the corporate transformation of American Medicine.  Health Affairs 2017; 36(5):865-869.
[xiv]   Allen A, Connecticut law bans ehr-linked information blocking.  Politico 10/30/2015.  (Accessed June 14, 2015 at http://www.politico.com/story/2015/10/connecticut-law-bans-ehr-linked-information-blocking-215400)
[xv]  Kellerman AL, Desai NR. Obstacles to developing cost-lowering health technology: the inventor’s dilemma.  JAMA 2015;314(14):1447-1448.