David Pate and his team at St. Lukes Health System think theyre on track to finding a cure for Idahos maybe even the nations health and health care spending woes.
They believe the systems rapid growth, its buyouts of independent physician practices, its foray into the health insurance business and its hundreds of millions of dollars spent on technology and construction will, together, pave the way to the triple aim: better health, better care and lower costs for Idahoans.
Some very powerful people disagree. Those people include the Federal Trade Commission, Idaho Attorney General Lawrence Wasden, and two St. Lukes competitors. In a lawsuit headed for trial this fall, they argue that St. Lukes is breaking federal and state antitrust and competition laws in pursuit of its goals, that a monopoly is brewing in the Treasure Valley, and that if St. Lukes grows unfettered, it will have a grip on the market and be able to charge whatever it wants.
In his own writings and in a recent two-hour interview with the Idaho Statesman, Pate defended his choices as chief executive of the Boise-based hospital system. St. Lukes, which has $1.44 billion in annual revenue and 11,000 employees in Idaho and eastern Oregon, is Idahos largest private employer.
Pate built a career in Texas, studying law and medicine and rising from a primary care doctor to CEO of a Houston hospital. At age 52, after more than 30 years in Houston, it hadnt occurred to him to move. But when a job opened in 2009 to run St. Lukes Health System, he visited Boise and saw potential to try new things that you couldnt even do in the largest medical center in the world, he said.
Physicians (in Idaho) understand things have to change, he said.
Fast-forward to last winter and spring. Three years into his tenure in Boise, Pate learned that St. Lukes was being sued by the FTC, Wasden, its rival Saint Alphonsus Health System, and Treasure Valley Hospital, a small Boise surgical facility.
The lawsuits claim that under Pates leadership, St. Lukes broke antitrust laws by buying a large medical practice in nearby Nampa, the Saltzer Medical Group, and employing most of its previously independent doctors. St. Lukes competitors said the acquisition would cost them money and jobs. St. Lukes countered by saying that Saltzer couldnt survive on its own and that the acquisition was essential to St. Lukes improving health care.
St. Lukes decided to buy the practice and fight the lawsuit at a cost of multiple millions of dollars to both St. Lukes and Saint Alphonsus, Pate said.
Pate knew lawsuits were a possibility. Wasdens office had asked St. Lukes not to close on the deal because it was under investigation for antitrust violations. Then, when the health system pushed on with its efforts, Deputy Attorney General Brett DeLange sent a letter telling St. Lukes that it seemed as though it was trying to get itself sued.
The St. Lukes leadership senior managers, the board, employees and others had talked about the fact that if we were serious, if were really going to transform health care ... we are going to hit resistance, Pate said. I never expected it would be this degree of resistance.
What exactly is Pates grand plan, if not to monopolize Idaho health care and make money? And is there evidence that St. Lukes is heading in that direction?
Pate said he wants the nonprofit health system to follow in the footsteps of the Mayo Clinic the renowned Minnesota-based system with clinics and hospitals in four states, a flagship clinic that has about 4,100 doctors and scientists on staff, educational and training programs, and $8.8 billion in revenue last year or Kaiser Permanente, a California-based organization that had more than 9.1 million health-plan members, 17,157 doctors, 37 hospitals and $50.6 billion in operating revenue last year.
Those and other large, integrated systems are held up as paragons of efficient, high-quality health care, and if not all of their physicians are employed, they have a core group of physicians that are employed, Pate said.
St. Lukes has hired independent doctors who, under the systems umbrella, charge more for the same services.
In the redesigned system, all St. Lukes providers would monitor and improve outcomes and be rewarded when patients are healthier. Pate said St. Lukes needs a base of doctors on its payroll so it can reward them. Though St. Lukes also has alignments with many independent doctors, Pate says looser arrangements dont give doctors enough incentive to stop billing for unnecessary procedures.
Tom Greene, FTC attorney for the St. Lukes lawsuit, said thats where there is a fundamental disagreement.
The basic fallacy at play in what Dr. Pate is trying to sell is that the only way to have integrated care is to have an employment model, Greene said. There are any number of situations in which ... groups of physicians are doing very integrated care, and theyre not employed (by) hospitals.
Essential to the redesigned systems success, Pate said, will be data-sharing among employers, insurers and health care providers. Thats one reason St. Lukes listed for bringing Utah-based insurer SelectHealth into the Idaho market. The other reasons were to create a St. Lukes-centric health plan that allows it to keep money left over from efficiencies, to then reduce premiums for that plan, and to boost competition in the Idaho insurance market.
St. Lukes kick-started SelectHealths Idaho membership by moving St. Lukes employees to that new plan.
Pates vision also involves St. Lukes spending money on construction and acquisitions of hospitals, clinics and physician practices in Idaho and eastern Oregon. St. Lukes has hired independent doctors who legally may charge more for the same services.
St. Lukes officials say all of these decisions are meant to set up the system to become highly efficient a Mayo or Kaiser in Idaho.
IS IT WORKING?
The Boise-based system isnt the only one trying to hit that triple aim.
Saint Alphonsus Health System, which is based in Boise but owned by Trinity Health, a Michigan-based Catholic hospital network, has tried to do the triple aim one better: It created the quadruple aim (not to be confused with the quadruple aim moniker adopted for U.S. military health care). The fourth aim is service to the community, said Blaine Petersen, chief financial officer.
Petersen said Saint Alphonsus is taking different approaches than the larger St. Lukes but making similar changes.
One example Pate offers is back and neck surgeries. Idaho has among the nations highest rates of those expensive, complicated surgeries. The Dartmouth Atlas of Health Care ranks Idaho second in the U.S. after Wyoming with 6.7 hospital back surgeries for every 1,000 Medicare enrollees. The Boise region has eight surgeries per 1,000 Medicare enrollees, about 1.7 times as many back surgeries per enrollee as the U.S. average.
Is there something peculiar about us, why people should need more spine surgery than they do in other areas? Pate asked.
St. Lukes created a Center for Spine Wellness in 2009 on Americana Boulevard in Boise that sought more conservative treatments physical therapy, ultrasounds, heat, massage with the goal of not doing surgery.
If we acted totally in our self-interest, we wouldnt do this. It is much better for us to have people getting surgery, because surgeons get paid well for it, and hospitals get paid well for surgery, Pate said. But its not the right thing to do, and its not how were going to address this problem.
St. Lukes spokesman Ken Dey explained that St. Lukes doesnt have enough data yet to say how much it has affected surgery rates.
Dey offered a December 2012 presentation showing that 27 patients about 2 percent of the centers roughly 1,300 patients since it opened were sent to surgeons. The majority about 70 percent were referred to physical therapists.
The patients ended up feeling as good as their peers whod had surgery, Pate said.
Across town at Saint Alphonsus, executives and doctors also are targeting spine surgeries.
Saint Alphonsus recently put in place a protocol that requires any patient with lower back pain to have several weeks of physical therapy before having an MRI or being considered for surgery, said Petersen, the CFO.
That new protocol wont make Saint Alphonsus more money, he said, but it cuts down on back surgeries, which are riskier for the hospital and the patient, not to mention costing thousands of dollars.
According to the Health Care Blue Book, a medical online pricing website, the average negotiated price for surgery to remove a spinal disk is $2,451 for the surgeons fee and $9,496 for the hospital fee, including five days in the hospital, he said. The average price for nine sessions of physical therapy is $783, he said.
Based on the number of Idahoans who are on Medicare, Saint Alphonsus calculated that reducing the rate of surgery by one person per 1,000 would save almost $2.7 million per year.
Another example Petersen offers is the hospitals efforts to reduce early deliveries, such as when a doctor schedules a C-section for a woman whos 38 weeks pregnant. The risk of a baby ending up in the neonatal intensive care unit a massively expensive place to be goes down when the mother hits 39 weeks of pregnancy. So the health system built a protocol for deliveries to cut down on those scheduled births.
What was once a 5 percent to 6 percent rate of early scheduled births has been cut, at least in the past three quarters, to zero in all Saint Alphonsus hospitals, Petersen said.
ST. LUKES AS MICROCOSM
In many ways, St. Lukes is an example of whats happening around the country.
None of the St. Lukes initiatives is totally novel. Neither is the criticism of them.
Value-based reimbursement rewarding providers for quality instead of quantity has been around for years and is now built into the federal Medicare payment model.
Hospitals around the country are blurring the line between insurer and health care provider. Many, St. Lukes included, are creating insurance plans that put the onus of frugality on the hospital, instead of giving it what experts call a perverse incentive to make money on sick people.
About 20 percent of hospital networks now sell an insurance product, according to a survey of 100 hospital officials by The Advisory Board Co., a health care information company.
In a 2012 article, Kaiser Health News cited worries that hospital-insurer arrangements would limit consumer choice and access to other providers.
And though St. Lukes is ballooning in size, thats not unique, either. Consolidation is a nationwide trend, largely driven by changes from the Affordable Care Act. Fewer than four in 10 doctors are independent today, compared with almost six in 10 a decade ago, according to a 2012 report from consultants at Accenture.
We think weve been very thoughtful. We think the answer is not simple; it cant be do this, and health care will be fixed, Pate said. Its multifactorial.
Pate says it will be years before theres enough data to prove whether hes right. But he believes St. Lukes is one of the nations innovators a groundbreaker in efficiency, not the market-hungry behemoth it is accused of being.
I think that when the next president is in office, that he or she will be ... touting St. Lukes Health System in Idaho, Pate said. Look what theyve done to premium costs. Look what theyve done to improve care. ... In two or three years? This will be a whole different world here.
Audrey Dutton: 377-6448,Twitter: @IDS_Audrey