A Very Brief History of Time

Very early in my blogs I wrote about FFS (Fee for Service) vs Capitation especially comparing Australia as a model of FFS and UK as a wholly capitation based system where provision of GP services are concerned. That post and my blog in general look at this issue from a provision of service perspective- the advantages and disadvantages of one system compared to the other on a day to day level.

I would now, however, like to examine this from a completely different angle. A contractual angle. To examine the nuts and bolts of the contract(s) that underpin either system. This is very topical as Australia is now embarking on a self confessed "biggest shakeup of GP Funding". We are going to be adopting a Medical Home model and this will introduce Aussie GPs to capitation, albeit in what is being described as a 'blended system' comprising of FFS+Capitation.

For those unfamiliar with the NHS GP contract, here is a wikipedia entry on the same. I'm not sure it's entirely accurate on some assumptions it makes, but the timeline of the various changes is accurate. Have a read here.

I left the UK 2 years ago. I was a partner in a Practice. Let's examine this from a contractual perspective based on the timeline above.

I was a partner in a practice with a list size of 4200 patients. I was working Full Time (FT) by doing 9 clinical sessions a week. My partner, a female was doing 6 sessions. Remaining 3 sessions were covered by a salaried GP or long term locums. So a practice with 2 WTE Drs.

Imagine this happened in 1946. No problem for anyone concerned. Coventry would have lost a GP and the remaining GPs would have had more patients to see. As all patients paid a private fee, they would decide whom they would see. Logically many would want to see my partner as she happens to work out of the same building. My partner may have got busier (and richer) or could have carried on as usual and not taken on any new patients. There would of course have been no 'salaried' GP back then.

Between 1948-2004, the patients I was actively seeing before my departure would have been capitated to me. Since the capitation payment came from the Govt and not the patients, the patients and their notes (NB- the notes belong to the Govt, not the Dr) could be traded and bartered - by the govt and the remaining partner in my practice.
The Govt through its various Avatars during this period would have 'sold' this enbloc to another GP. My partner, could have advertised for a new partnership (in the building and as a trading partner) and the Govt would most likely hand the patients to whoever would choose to take the partnership. This encouraged the partnership model of General Practice. If my practice chose not to, or failed to find a new partner, the patients would be sent elsewhere, i.e no partner, no patients.
Remaining partner would have still got her own patients, but would now have higher overheads (building and staff etc).

2004 onwards however, the situation changed drastically. All the patients registered at my practice, were now registered to the practice and not the individual drs!.

This change had a profound and deeply detrimental effect on General Practice in UK. Yet, this was also the turning point for many GPs, especially single handed GPs (solo GPs with no partners). This contract allowed GPs to opt out of Out of Hours services. So, solo GPs who, believe it or not,were technically on call 24/7 throughout their working lives, were now working 8:30- 6:30pm, 5 days a week for very little drop in the capitation payments they received. This massively improved the profile of the job and profession and numbers of applicants skyrocketed. At the same time the Govt introduced something called QOF, a value added optional service, if you like. Extra payments were made to those who signed up. Everyone did, and soon QOF payments were contributing 20-25% of a surgery's gross income. So, why was this a bad thing?

Simply because it killed off partnerships. Practices had no incentive to take on partners- they could keep the patients, regardless of how many partners they had as long as they provided the services they were contractually required to. So, upon my departure in 2004, the remaining partner in the practice would have simply taken on a salaried Dr and her profit share from the surgery would have gone up dramatically. In a small practice, as a 0.7 WTE she might have opted to get a new partner as she would have struggled with the non clinical work. But, in a larger practice it became common to replace retiring partners with salaried Drs or even Nurses. ANPs, physician assistants etc all became ways for a practice to increase their profitability. So, partners got richer and partnerships became rarer.
As long as the profession was desirable and there was a steady supply of Drs and other staff, this wasn't necessarily a problem. But, it opened the gates for corporates to step in (no GP principal required to attract a capitated patient base). The Super Surgery had arrived. Owners weren't necessarily corporates; many GPs were on the hunt too.

The patients, too were starting to get  a raw deal. Imagine my practice. I leave. Remaining partner chooses to replace me with a mix of a Nurse and a salaried GP. Patients have poorer access to a Dr but the remaining partner is now earning more than she ever did. Or there is a succession of locums covering for my absence.

But, this goose did not lay golden eggs for long. Govt got it horribly wrong with QOF. They ended up paying a lot more than they anticipated. So, they froze the 'global sum'. Then, they made the QOF payments harder and harder to achieve. Since, practices owned the patients rather than individual Drs the Govt introduced more and more complicated contractual levers to monitor the practice.  Mystery shoppers, patient panels, compliance to various regulatory standards and bodies (each accompanied by a hefty fee) became the norm. Partnerships became less attractive and partners even if they earned more, were an increasingly harried lot.

Then came Andrew Lansley's White paper in 2010. This laid bare the fallacy of accepting the new contract in 2004. Since Drs no longer owned the patients, the market could be opened to "any willing provider". Clinical commissioning was the latest craze - Darzi Centres, Virgin Helath etc etc all got into the game. Recruitment and retrenchment became real issues in many parts of UK.

Compared to 2004, where my departure could have a blessing in disguise to the remaining partner, imagine I left after 2010 like I did.

Now, the remaining partner, even though she is only a 0.7 WTE Dr has to ensure adequate services are provided to all patients registered at the practice. So, a 0.7 WTE Dr shoulders responsibility for a patient list intended for 2 WTE Drs.
If she can't recruit a new partner to share the increasingly onerous contractual, non-clinical work, tough luck. If she can't find a salaried GP or even locums, tough! She is now legally, morally and more importantly contractually bound to provide these services. Even closing your list requires approval from the powers that be. Locums want and get higher rates. The partner is haemorrhaging money and tied up in keeping the practice running. Seeing patients is almost a distraction. Many partners emigrate or take early retirement. Some hand in their contracts. General Practice in UK is imploding. Is anyone surprised?

So, where on the timeline described above, do you think General Practice in Australia is now?
Is is gonna be boom or bust? Or is it going to a 'blend' of the two?

Think long and hard my friends

Gaurav

Let's get graphical

As doctors and indeed human beings we are often flummoxed by that most imponderable of imponderables- human nature.

Human beings by their very nature are unpredictable. So, how does one plan a business model or services that caters to Human beings and more so with their health. Lot of people have made stabs at this. There is veritable treasure trove of information available on  variation in patient numbers, peak periods, seasons, the effects of charging for services etc.

Yet, I find that no one in my practice can reliably predict what will happen to the workload during school holidays, for example. Surely, given a stable demographic and years of trading in the same spot, we should be able to say that demand will go up or down and how many Drs we should need to match it. But, never happens. We can have very quiet days and then 1 day can be extremely busy.

So, I thought perhaps Drs are not the best people to be analysing this. We are, in the thick of it and may lack the objectivity or indeed even the skills to analyse this.

At this time I came across a blog by esteemed marketing guru Nirmalya Kumar. I suggest you read this before going any further - it shouldn't take more than 5 mins:
https://nirmalyakumar.com/2016/08/07/pricing-why-make-things-worse

I would urge you to ignore the buzz phrase 'make things worse'. He is talking of products in his blog whereas we are talking about services and no one is suggesting we provide medical services that are deliberately inferior.

To stop you from having to go back and forth to the blog I'll reprint the 2 relevant graphs from the blog here

So, what is the relevance to us as General Practitioners?

I'll tackle this on 2 fronts- one at an independent Dr level and second at a Practice Level from an organisational, marketing, provision of service perspective.

As a GP wherever you are working now look at graph 1. The blue box represents your workload or income. What can you do to increase it- if that's what you wanted to do? 

In my experience, most cannot look beyond graph 1. The only way on that graph to increase your income is to shift the red line to the right, i.e provide more services, work more and thereby increase the size of the blue box. This might work on pure numbers but is it the most cost effective and efficient way to do things? 

Numerous studies link burnout to overwork exist and we as Drs are always advising patients on the value of work- life balance. Costs, go up too. If you work 6 days instead of 5, commuting costs are up. The medical indemnity may increase too. There are various clinical implications too. Will you have enough time to review results, follow up on hospital letters, telephone calls etc. if you are seeing patients all day long?

So, look instead to graph 2.  No matter where you work and how good you are, there will always be consumer surplus and deadweight loss. This is true even if you bulk bill all your services, i.e services are free to the patient. 

How can there be a consumer surplus if services are free? Well, we all have patients whom we refer to specialists for things like annual skin checks to dermatologists, for heart checks to cardiologists etc. These patients can and do pay to see the specialist, so clearly the capacity to pay more, the definition of consumer surplus exists, even in deprived areas. Apart from that there is always demand for cosmetic work. Patients who demand they be bulk billed at every consultation will willingly pay for botox injections!

And deadweight loss? If everything you provide is free, how can you go any lower to attract the deadweight loss? A product can be made cheaper, but how can you make a service cheaper than free? A bit of lateral thinking and you will realise that there is unmet demand for free services, which we routinely ignore. Isn't there a demand for Home Visits or visits to Nursing Homes? For opening at weekends or early mornings/late evenings?

So, if your income is the blue box in graph 1, I suggest rather than expanding that and making it bigger, a bettter option would be to tap a little bit into the consumer surplus and a bit into the deadweight. This always requires some planning and time management. The patients in box p1q1 in graph 2 for example may require more time during their appointments. They may even expect a different, posher, quieter environment. Would you have your botox injections next to the nurse's room where screaming children are having their vaccinations? Unlikely. So, a dedicated day or slot to cater to these patients when the nurse is off would be suitable. The waiting room will be quieter and the receptionists better able to handle any queries.

Opening weekends or unsocial hrs to attract the deadweight is another option. This can be done in hours too. If you are busy and there is waiting list to see you, you could dedicate a few hours a week to a walk in clinic. Patients can see you without an appointment in this clinic for simple problems like script renewals or BP checks. This will stop them from going to another Dr. If you are privately billing consults, you could Bulk Bill this clinic to capture the deadweight. So, the bigger your p1q1 portion, the less onerous your workload will be. To me this is a continuum. You start at the right early in your career at graph p2q2 and move left. Most people unfortunately get stuck in the middle portion and rarely move to the left most portion of the graph. Towards retirement, many practice exclusively in a pattern that mimics the left most portion, but they tend to be using a thinner slice of the main pq box - seeing more complex patients, spending more time with each patient and working less. They haven't truly moved to the p1q1 portion either.

So, approaching this at a practice level. From the above, it is clear what I would suggest. Rather than concentrating on making the main pq box bigger, practices should look to moving from graph 1 to 2.

Expanding the size of graph 1 is fraught with problems. You need to either work your Drs harder- work more days, longer hours or see more patients in the allocated hours. Drs are perhaps the most difficult people to work with. The more you have, the problems you face. More Drs means more support staff required. What happens if a Dr leaves or goes off sick. You now have support staff but no one generating income to support them. What happens if another centre opens up and your deadweight patients move to them. They may do so just because of shorter waiting times for example. 

In my experience, especially in Metros and outer metros of Australia there is cut throat competition in this arena. Surgeries are opening up; chasing the same market. Universal Bulk Billing (UBB) Centres are mushrooming. When services provided are free (to the end user, not to the tax payer) this also leads to what is called over servicing. A very simple example- most UBB practices I know, do not give out blood test results on the phone. So, have a blood test and then go back to get results, even if they are all normal. This is called 'churn and burn'. Pointless medical consultations purely to meet the needs of a model of service. Wouldn't it be better to charge the patient a small premium at first consult, then text them or email them to say "all ok" if results are normal? A fee of $5-$10 can easily be offset by the savings made in not traveling to and paying for transport and parking for example. This could be sold as a value added service to patients.

What of those who can't afford it? They come to your walk in clinic- simple!

The UBB model also promotes what's been described as a bums on seats model. High throughput of patients requires all drs to be present and actively seeing patients; to keeping waiting times down and to compete with other centres in the area. Hence, no one does home visits or sees patients in Nursing Homes. Some don't even do Work Cover. Continuity of care is lost and the potential for mistakes are high. Abnormal result not acted on because the patient didn't come back for a review for example.

My recommendation to anyone owning a centre is simple. Don't expand on the square pq. Go to graph 2 and look into moving into p1q1 and p2q2 instead. Employ Drs with varying skillsets and skill levels. Why would you Bulk Bill a mirena insertion for example purely because the Dr happens to work in a UBB? This service can & should attract a premium of $50-$100 minimum. 

Consultants would charge up to $300 for this. 

Remember the consumer surplus - if you don't value it, neither will the patient.

Have some Drs doing Home visits. Encourage them to do this by reducing your management fee for this service. If the Dr is out of the surgery, not using your room, electricity, receptionist etc then they pay you less management fee and thereby earn more. You gain what you might loose on management fee by expanding your patient base as opposed to trying to overservice your existing base. The latter is always unpredictable too.  It's a win- win situation. Encourage some to acquire new skills (dare I suggest even pay for courses). Having someone with an interest in dermatology performing procedures or minor surgery etc can really move you into higher margins. Bulk Billing procedures is a loss making exercise due to the complexities of Medicare.

I have heard it said before- Drs make very poor business persons. There is a grain of truth in there.

We pride ourselves on practicing evidence based medicine (EBM). Shouldn't our business models follow evidence too?

Gaurav