A video surfaced last week of Mayo Clinic CEO John Noseworthy, MD, giving a speech in 2016 in which he said the system would prioritize patients with private insurance over those with Medicare or Medicaid in non-emergent cases, but the health system would continue to take all patients regardless of insurance source.
Dr. Noseworthy faced criticism after the video was made public, but he contended the health system needed to increase the number of patients with private insurance to continue making payroll and providing pensions, along with other benefits. Mayo Clinic issued a statement in response to the negative reaction, which in part stated:
"Balancing payer mix is complex and isn't unique to Mayo Clinic. It affects much of the industry, but isn't often talked about. That's why we feel it is important to talk transparently about these complex issues with our staff," the statement reads. He also released a statement on March 17, clarifying that Mayo Clinic will continue to treat Medicare and Medicaid patients and they will receive the same level of care as patients with private insurance.
The Minnesota Department of Human Services has since launched an investigation into the health system for possible violation of civil and human rights over the policy.
Here, seven current and former healthcare professionals address Dr. Noseworthy's comments and respond to the broader financial challenges facing hospitals and health systems that provide care for Medicare and Medicaid patients.
Responses have been lightly edited for length and clarity.
Michael Coords, MD. Clinical Fellow at the University of California San Francisco: "I can completely understand where they are coming from. With all the gross inefficiencies within medicine, increased expenditure on administration, increased workloads with decreased compensation, medicine has to become more business-like or hospitals will at the very least experience huge cuts which will significantly affect patient care or, in the worst case, hospitals will fail. I see more hospitals and private physicians going this route soon.
There is a solution for this but unfortunately it's quite political and not what people what to hear. If we were able to cut down on the amount of non-physician staff in the hospital and redirect funds to the actual care of patients, such decisions wouldn't have to be made and healthcare would improve. Unfortunately the best way to do this is a single-payer healthcare system and people don't want this. What people fail to realize is we don't turn patients away from hospitals even if they don't have insurance, so the hospitals eat the costs and one way or another we are all paying for people who don't have insurance. The simplest solution is to make it an efficient system, cut down costs and improve healthcare for everyone which is possible."
Patrick J. Gless. Associate Director of Graduate Programs in Healthcare Decision Analysis and Adjunct Professor of Pharmaceutical and Health Economics at the University of Southern California Leonard D. Schaeffer Center for Health Policy & Economics (Los Angeles): "Healthcare delivery costs are increasing faster than Medicare and Medicaid reimbursement. The Medicare Payment Advisory Commission's March 15 report to the Congress projects a -10 percent Medicare margin for hospitals in 2017. Capital shifts to areas of higher return when margins decline — such as from public payers to private payers. As one of the world's premier healthcare organizations, Mayo Clinic employs highly specialized staff and offers access to novel medical technology but also incurs high costs per unit of service. Reimbursement rates must exceed costs in order to maintain these special service offerings.
Although Mayo Clinic holds exceptional market power, empirical evidence suggests less selective providers with smaller market share and greater financial constraints are able to reduce costs and yield profitable margins from public payers. Additionally, trends such as baby boomers becoming Medicare-eligible and the increasing prevalence of care-intensive chronic conditions will likely exert upward pressure on demand, offering a large volume of patients for efficient Medicare providers."
David Kashmer, MD. Trauma and Acute Care Surgeon and Associate Director of The Surgical Lab (Center Valley, Pa.): "As a physician, I never look at the type of insurance a patient has before giving care, which means it never affects the type of services I provide to my patients. At an administrative level, I realize that payer mix is extremely important when it comes to the profitability of a hospital. While I have never heard of the model that Mayo Clinic is suggesting, I believe quality improvement projects are the best way to save costs — not prioritizing patients based on their payer source.
In other words, I do not agree with this policy. Instead, I urge hospital administers to take the opportunity to improve quality and decrease waste by focusing on value instead of patient volume. Once a hospital has a quality system in place, the payer source becomes less important, which means no one has to be 'prioritized.'
While the future of healthcare is unknown pending the House vote on Thursday, many Americans are worried that they could lose their care. Knowing they could be deprioritized over others (even if they keep their insurance) doesn't provide hope for when they need medical attention in the future. Prioritizing is not the right solution. Hospitals worried about their financial health should consider eliminating waste and improving quality care to save the most on costs. When this takes place, payer mix will not be an issue."
Paula Muto, MD. Director and CEO of the Vein Center at Muto Surgical (North Andover, Mass.): "The healthcare dollar is precious and should not be squandered. Insurance companies traditionally spend an amount that is not insignificant on administrative costs and marketing. Medicare, on the other hand, had a fairly low overhead — but since the ACA, costs have ballooned. Moreover, expansion of Medicaid with federal subsidy has diverted dollars away from patients toward supporting the newly created bureaucracy.
Private insurance companies increased their premiums across the board, citing the need to cover everyone, but even states like Massachusetts, which already had universal coverage in place, saw significant increases. Its private enterprise doing what it does best, optimizing their margins at the expense of those providing the care."
Shawn Sheffield. Chief Strategy Officer of Keck Medicine of USC (Los Angeles): "In California broadly and at the Keck Medical Center, payer mix is something we watch carefully. We are balanced about it; our location is in East Los Angeles, so our area catches a large Medi-Cal population. We don't prioritize private payers over Medi-Cal patients. One of the things we've worked on is successfully making sure we have the letters of agreement in place with medical providers and insurers so we are reimbursed for care. It can be a challenging balancing act to ensure we provide the right care for all patients, but I'm proud of what we've done at Keck.
As a healthcare services provider, we are closely watching what happens with the legislation and how future healthcare laws will roll out. In California, the ACA was positive because it extended coverage for uninsured patients considerably. At the end of the day, we are an academic medical center with the unique opportunity to provide tertiary and quaternary care for patients who have limited options for where they can go.
In the future, we are going to keep doing what we're doing now: demonstrating we provide value regardless of the patient population. If we can be the provider that most meets the price point and provides good outcomes, that's where we need to be. Given the ACA noise, as long as we are focused on the fundamentals of providing value-based healthcare, we can have a huge impact."
Kristy Taylor, DHS. Founder of Heka Healthcare Consulting (Palm Beach, Fla.): "I disagree with this policy on a personal level, because patients should not be prioritized based on their ability to pay. As a healthcare business professional, however, I understand the necessity of having to make decisions that will keep the business financially viable. Hospitals are a business, although we are ultimately here to help individuals, we have to sometimes make uncomfortable decisions that will lead to increased profits. We have to keep our doors open if we want to be able to help patients at all.
The decision from the Mayo Clinic seems to have been made with this understanding in mind. Unfortunately, due to the low reimbursement rates from Medicare and Medicaid and the growing costs of healthcare, hospitals are being faced with these sorts of decisions every day. Many will argue the ethics of this, but ultimately as a business, all leaders are faced with similar questions and will have to make such tough decisions. With all of the red tape associated with Medicare and Medicaid reimbursement, some healthcare organizations, may be asking, is it really worth it? In my opinion, the Mayo Clinic has made the difficult decision that comes with having to grow and sustain a healthcare business, while trying to remain patient-centered."
Deane Waldman, MD. Director of the Center for Health Care Policy with the Texas Public Policy Foundation (Austin): "[I believe] every hospital that still has not closed its doors cherry-picks patients. It makes the practice moral because without doing that, they couldn't make nurse payroll. The costs of the massive federal bureaucracy and compliance costs combined with the cost of uncompensated care (mandated by the Emergency Medical Treatment and Labor Act of 1986) requires either you cherry pick or go out of business. At my last university hospital, uncompensated care made up 24 percent of a billion dollar budget. That's a quarter of a billion dollars they need to 'find' somewhere. The only unusual element is a major CEO's willingness to speak the truth."