Mike Sacopulos: My guest today is Ron Howrigon. Ron is President and CEO of Fulcrum Strategies. He was a senior level executive with managed care companies such as Cigna, Kaiser Permanente, and Blue Cross Blue Shield. Ron is the author of, Clear! Reforming Healthcare to Save the U.S Economy, and Flatlining: How Healthcare Could Kill the U.S Economy. Ron Howrigon, welcome to SoundPractice.
Ron Howrigon: Thanks for having me.
Sacopulos: Could you tell our audience a little bit more about your background? I gave the briefest of brief introductions, but I am sure people would be interested in your path as a healthcare executive.
Howrigon: I have been working in healthcare for almost four decades now, so I have seen an awful lot of changes. I started my career working for various insurance companies: Kaiser, Cigna, and Blue Cross. What I did for those insurance companies was what they call network management. I negotiated contracts against doctors and hospitals. I would negotiate how much they were going to get paid for providing the services they did. I did that for about 18 years. I started to get a little disillusioned with what the for-profit, stock-traded health insurance companies were doing to the practice of medicine and the disincentives or the conflicts that were created there.
I will tell you a really quick story. My wife was pregnant with our second child. I was working for a Blue Cross plan. I had reduced the reimbursement for her obstetrician about six weeks prior to her delivery, not something she was thrilled about. My wife had a C-section. I am holding a beautiful baby boy. I am thanking everybody in the room, every doctor there. And the obstetrician did what doctors do every day, didn’t take a victory lap, he didn’t pat himself on the back. He said, “Hey, it is all part of the job. I am glad it all worked out.” But then as he was leaving, he stopped and he turned around and he said, “Hey Ron, the next time you take money out of a doctor’s pocket, please remember tonight, because I am the guy that was here.” I was crushed. I decided to take paternity leave and switch sides and start a consulting company.
I started Fulcrum Strategies to spend the rest of my career helping doctors and hospitals with their managed care contracts. That baby boy is now 21 and will be a junior in college next year. I have spent the last 20 years working for doctors and hospitals, trying to help them navigate what is a very complex system and environment. That is what I can do with 40 years of my career in about a minute and a half. That may be a little concerning, but that is my background.
Sacopulos: Very interesting. Now, in some previous interviews, I have heard you say that when it comes to third-party payers, it is really all about the money. I assume that that is both an explanation and a criticism of our healthcare system. Is the capitalist economy just a bad fit for quality public healthcare?
Howrigon: It has some inherent flaws and problems. First of all, you have to understand, the for-profit insurance companies — Cigna, Aetna, United, those folks, Anthem — are doing what they are supposed to do. In a pure sense, if you are a stock-traded for-profit company, your job is to maximize shareholders’ investment. Period, hard stop. If you are not doing that, you can actually be sued by your shareholders. The problem with healthcare, as opposed to other markets or other industries, is that in most other industries, the best way to maximize the shareholders’ investment is to build a better product or service for the customer. Apple maximizes its shareholder by providing good products, by providing a great phone, a great computer. The problem with healthcare is the customer is not the purchaser. The patient typically is not who is buying the product; that is usually either the government or an employer. The way to maximize the shareholders’ investment for somebody like a United Healthcare or Cigna often is often to do something that is not good for the customer, to deny care or to make care harder to provide or get.
There is this inherent disconnect that is not present in other industries. It is not that the insurance companies are inherently evil, it is that their goal is sometimes at odds with that of the patient, and we either need to figure out a way to fix that incentive or have a different system. This is a long-winded way to say our current system, our current capitalistic for-profit system, yes, is a problem for healthcare and that is why it is so broken.
Sacopulos: In your lifetime, has the patient experience with healthcare changed?
Howrigon: I think it has changed dramatically, and I think every physician out there would tell you the same thing. I have many clients who have been practicing medicine for a long time who will say, when I started doing this, the medicine was the hard part, keeping up with changes in technologies and drugs, etc., that was the hard part, and now the hard part is how do I get the patient what they need? How do I navigate this horrible system of prior authorization and denial? It is the bureaucracy of healthcare that is the hard part. That to me is telling and sad and tells me that the patient who is on the other end of that has a very different experience. Now they have got the same problem, how do I get the drug I need? How do I get the service I need? How do I get it paid for? I think it has changed pretty dramatically over the last 30, 40 years.
Sacopulos: In my time in practice, I have seen physicians go from being self-employed to being employed by organizations not run or controlled by physicians in large numbers. Do you think that that interferes with the physician–patient relationship?
Howrigon: Absolutely. I think one of the things in our system that is starting to fail is the independent practice of medicine. When I am in the exam room with my physician, they are working for me. There is nobody above them telling them what they can and cannot do. Once that goes away and a physician either is sold to or sells to a hospital, or — I mean the second largest employer of physicians in this country is an insurance company, United Healthcare — then you’ve got a question, are they doing what’s right for me or are they doing what’s right for their owner? That to me is a huge problem.
Also, most of the physicians who either have been surveyed or whom I’ve talked to want to be independent. They are not selling to a hospital or to United or whatever because they want to; they feel like they have to, like they have got no other choice. And that is another problematic scenario. Again, I am not saying every hospital-owned physician provides bad care, but it raises the question of who they are really working for. Is it me or whoever cuts their paychecks, so to speak?
Sacopulos: As long as we are looking at the dark underbelly of things, Ron, let’s talk about demographics of our physician population. We are in the midst of an enormous wave of retirement of physicians, are we not? Do you think that that will impact reimbursements? Traditional economics would say supply–demand, that as the supply of physicians goes down, they should be able to command more money, but that may not apply in this model. What are your thoughts on where we are headed healthcare-wise, both as far as providing healthcare and as far as reimbursement for physicians?
Howrigon: I think it will eventually happen, but I think some things are going to happen before then. You are absolutely right. More than 50% of all practicing physicians right now are over the age of 55. Most of them are going to retire in the next 10 years, so we are going to lose more than half of all the practicing physicians in this country. We already know we don’t have enough physicians in training to replace them. What is even more concerning is this: in a recent survey of nursing students and medical students — people who are currently in training — over 60% of them said they had no plans to use their education for direct patient care after they graduate. That is staggering. We already don’t have enough in training to replace those who are leaving, and if even half of that, if only a third of them don’t go into direct patient care, we are in serious trouble. We are going to have a massive supply problem.
I think one of the first ways we’re going to feel it is in what you would call the most needy of the populations who have a hard time getting care, Medicare and Medicaid, which typically are the worst-paying payers out there. I already see a lot of physicians who limit or end or have stopped providing care for Medicare and Medicaid patients. Our elderly and our poor and disabled, who you could argue need care the most, are going to have a hard time finding it. I think eventually, after we have some of these access problems, it will start to drive up reimbursement, but it will be slow, and we will face some serious access issues before that happens. The problem with that is it will take a long time to recover, because you cannot make a doctor on a six-week course. You are talking 12 to 14 years of training from start to finish. So, once we realize we have got a supply problem and an access problem, it will not be solved overnight.
I spoke with one doctor who reminded me that it is a little bit like . . . He said, “Making a doctor is a little bit like making fine bourbon. It has to age in the barrel for 10 or 12 years before it’s ready.” He said, “You can’t speed that up,” And he is right. So, if you have a supply problem, it is going to be that way for a while.
Sacopulos: You touched on Medicare, Medicaid. What do you expect to see out of CMS concerning reimbursements in the next few years?
Howrigon: I think until it gets really bad, we are not going to see anything different than what we have seen before. We are on the end of five straight years of Medicare reimbursement cuts, five years in a row. Over the last five years, they have cut reimbursement to physicians by 10%. During those five years, inflation, just general inflation, has gone up by 23%. In real dollars, doctors have lost a third of their reimbursement from Medicare. And the reimbursement level was not to begin with. I don’t think Medicare is going to change that until things get really bad. And by “really bad,” I mean doctors will stop doing it. I had one doctor ask me, “Why does Medicare keep cutting us?” I answered, “Unfortunately, it is a little bit like the abused wife who says, ‘Why does he keep beating me?’ The answer is because you don’t leave, because you keep seeing the patients, you allow it.” I think it is going to be bad until that happens. Because physicians are so dedicated to helping people, they will take the beatings for a while.
Sacopulos: It is sad that we have a system that, at least in part, preys upon the provider’s goodwill.
Howrigon: Yes, absolutely.
Sacopulos: This is becoming overly depressing, Ron. We have to talk about some solutions, my friend.
You had an idea that I really liked, and that is that medical directors for third-party payers should be held to the same standard as practicing medicine when approving or denying claims. I have to tell you; I really like this idea. Can you talk a little bit more about it?
Howrigon: Yes, so one of the incredibly frustrating things in healthcare is you go see your doctor, your doctor says you need X, Y, or Z. Then they have to ask permission for that to be paid for by the insurance company, and someone who is unfamiliar with you as a patient, or as a doctor, says yes or no. They often do so with very little review. Some stories have outlined Cigna medical directors denying things once every 1.2 seconds. Well, I have met some really gifted physicians, and none of them can do a diagnosis in 1.2 seconds. Or, after something happens, somebody looks retroactively and says, “I don’t think that we should have paid for this,” and then they deny it retrospectively. My idea is this: if a doctor is going to say that you shouldn’t get a certain service or that it’s not medically necessary, which is how they deny things (we’re not talking about you don’t have a benefit for it, we’re saying this is not medically necessary), and that doctor’s going to sign off on it, that should be the act of practicing medicine.
Because, much like a doctor ordering something incorrectly for you or missing a test, that can have a negative impact on your care. So, if you defined it as the act of practicing medicine, then suddenly that medical director has a certain amount of responsibility. One, they have to be practicing with a license, they have to be practicing within their field, they have to be practicing in this state where they have a license, and they would have to create a medical record. If they are going to review something for you and say you should or should not get it, they should have to create a medical record just like the doctor who ordered it. Finally, if they are wrong and if they are negligent in that, they should be held responsible for malpractice, just like the doctor who ordered something wrong or who did the wrong procedure or whatever.
If we did that, first of all, it would clean up a massive amount of these auto denials where it is just a computer denying it, and it would still allow the carriers to look for inappropriate utilization or support care. They would just have to do it with a whole lot more review than is done now and it would get rid of a lot of that frustration. It would drive a lot of administrative costs out of the system, and it would make the doctor’s life so much easier because they hate that stuff. You’re a board-certified subspecialized neurologist in multiple sclerosis, and you order something for your patient, and you have to get on the phone, hopefully with another physician but one who’s never seen that patient, maybe doesn’t specialize, maybe isn’t even a neurologist, who’s telling you what you can and cannot have. That is something that would be an easy legislative fix, because you add a definition and it would solve an enormous problem within our system and patients would get better care faster.
Sacopulos: We have seen a similar use of the definition of practice of medicine with expert witnesses testifying in that a number of states, I think the majority of states now, consider offering testimony in a malpractice action as the practice of medicine, thereby subjecting the physician to penalty. I think it is a great idea, and boards of medicine could really do some good for the physician community. Great idea.
Howrigon: It is not unusual. Your profession has a similar issue. You cannot practice law without a license. There are certain things that you can and cannot do without it being considered practicing law. CPAs have the same thing with their licensure. This is not an unusual hurdle — to say, if you are going to practice that which you went to school for and you are trained for, it comes with some responsibilities, and that is fine. Again, I don’t want to take away an insurance company’s right to look at bad actors. There are bad doctors out there. But the insurance companies should do it with care and responsibility for what they are doing, because they can impact patient care. Sometimes it is just ... the stories are horrendous.
I will not go into the whole story, but I got in touch with a physician, an ENT physician who ended up dying of cancer, a horrible diagnosis. He was trying to fight against this stuff in his last days. His wife also is a physician, and I was talking to her after his passing and she said, “Yeah, six weeks after he died, I got a letter in the mail from our insurance company retroactively denying $80,000 of chemotherapy.” Now, that is just morally reprehensible. She is still dealing with the loss of her husband, raising her children on her own, and somebody somewhere looked retroactively and said, “I don’t think this chemotherapy was necessary. We’re going to deny this claim.” That is indefensible.
Sacopulos: It certainly has engendered a lot of hostility in the general public, and we saw that with the murder of the United Healthcare executive. Were you surprised by the public reaction to that shooting?
Howrigon: You know what is sad? I had met Brian a couple of times, and when the news first came out about the shooting, my wife and I were seeing it and I said, “That’s a disgruntled patient.” She said, “No, it’s not.” And I said, “I’ll bet you dollars to doughnuts it is.” She said, “Why?” I answered, “To be honest with you, as horrible as it is, and it was murder and no one will ever tell me that it was acceptable for whatever reason, it’s not. But,” I said, “I am kind of surprised it hasn’t happened before.” Then the public reaction to it, the complete lack of, in social media or whatever, of empathy for his family! I don’t think the people who were making those comments, they didn’t know him, and it was not personal, but it was an opportunity to vent global frustration with the system. That backlash and that vitriol and that complete lack of empathy should show us that there is an enormous problem here, because it was just huge.
If anything positive can come from an individual’s death, maybe it is if it starts and continues a discussion about how we change this, because clearly something is wrong.
Sacopulos: You have been surprised by the lack of legislation on this whole general topic. We have had the No Surprises Act, some prompt pay kind of thing, but to me it all seems around the margins. I have been surprised. What are your thoughts?
Howrigon: Well, I am, and I am not. I am surprised because it is such a problem. I am not surprised, because of how much money is involved. There’s serious lobbying to keep the status quo for the people who are making money out of it. I tell people to get their money involved. If you had invested $100,000 in United Healthcare stock (and it is very similar numbers for the others, I am not picking on United) — if you had invested $100,000 in United Healthcare stock 25 years ago, today you would have over $15 million. Okay: 25 years ago, United Healthcare was trading at about $7.50 a share. It split three times in the last 25 years. So the shares you bought then, the roughly 14,000 shares, would be split three times. It would be over 100,000 shares now, and it is trading over $500 a share. That is how much money is involved. That is enormous.
Anything that goes at that profit margin — and many of these changes would — is going to be met with resistance. In addition, anything that goes at increasing the cost for Medicare and Medicaid to the government has a huge impact on the budget. That is the resistance. Going back to that, doctors are by nature good-hearted people who will continue to do things, they just sort of continue to take it, which has made it difficult for legislation to get passed. I am hopeful that it will happen more now, but we have not seen enough yet. It has been Band-aids on bullet wounds up until now.
Sacopulos: Public perception of the medical profession post-COVID. What do you think?
Howrigon: I was really happy with the public perception of the medical profession after COVID. Much like, I like when people walk up to somebody who’s served in the armed forces and say, “Thank you for your service.” There was an appreciation for what these people went through. I don’t think people fully understood how difficult it was. I recently have watched the show, “The Pitt,” about an ER. It makes me cringe just to watch it, and I think that the public needs to watch. Everybody should watch it and appreciate what doctors do. They are not gods, but man, they do a hard job, and I cannot imagine what they go through. But I have seen that sort of — and we have got a short memory — sort of tail off a little bit, and I don’t think we took advantage of that perception when we should have. There was a time when we could have struck when the iron was hot and get some legislation, but we were too busy just recovering from the worst pandemic we had seen in a hundred years.
I think the public still appreciates, trusts, physicians. I don’t think they fully understand just how much they do, how hard their job is, and how much we are potentially doing damage to that profession.
Sacopulos: I’m interested in your thoughts on the foray of private equity in the last few years into healthcare. What are your thoughts? Is that going to be to the benefit of physicians?
Howrigon: Let me explain it in this manner. Private equities are like firearms, okay? They can be a useful tool in the hands of a trained professional, and can also be a horrible thing in the hands of somebody who’s not trained. It is not the item that is the problem, it is how it is used. I think the same is true with private equity. Private equity can be, and has been, in some situations, an incredibly valuable way for medical practices and other delivery of care to finance, to collect capital for growth, et cetera. There are organizations out there who are private equity–backed, who do a wonderful job. Once, I heard somebody say private equity is like giving guns to children: we are not sure what is going to happen. It can also be incredibly dangerous because it can inject the very thing that we don’t like about insurance companies, which is a profit motivation on healthcare.
You can have an owner who says, “I need an X percent rate of return, and so you doctors have to start prescribing this drug because it has a better margin.” Then it can put the doctor in a position of, “Well, that’s not the best drug for my patient.” Or start doing more of certain procedures even though they are not necessary. To me, private equity is not in and of itself good or bad; it depends on how it is used. I would like to see more controls on it, more guard rails for the bad actors. I think the people who are doing it well get painted with a bad brush sometimes, because of the bad actors.
Sacopulos: Interesting. And you are correct on that. Tell me about Fulcrum Strategies.
Howrigon: Well, you heard the story of how I started. I decided that I wanted to sort of devote the last part of my career to trying to help doctors. We represent physicians in their negotiations with carriers, try to get them equitable reimbursement, fair contractual terms. I tell people my job is to try to help doctors be doctors. If I do my job, they don’t have to worry about some of the stuff, and they have enough revenue to care for the patients they want to care for. I have a client who was looking at dropping Medicaid. They lost money on Medicaid. Every patient they saw, they lost money. They didn’t want to do it because they said, “Where are these kids going to go?” It was a specialty group. One of the doctors said, “You know, because you’ve gotten us enough reimbursement on the other stuff we see, it allows us to do this and take a loss and still be able to have a decent living.”
That is exactly what I am trying to do, because they really wanted to care for these kids, and because we were able to get them effective contracts on the other side, they could continue to do so.
Sacopulos: Do you have a specific geographic area of the country that you work in or a specific area of medicine?
Howrigon: No, we work in all specialties. We have worked in 30 states so far. We have people, I think, in 18 or 19 states right now. Yes, we do only physicians and a few rural hospitals. I don’t do anything with payers or anything like that, so we try to stay sort of pure from that perspective. But yes, we will look at anything.
Sacopulos: As our time together draws to a close, I know some people listening would certainly like to connect with you, how may they best reach you?
Howrigon: I would say they can go to our website; it is fsdoc.com, but we are more than happy to talk to them and try to help them out.
Sacopulos: My guest has been Ron Howrigon. Ron, thank you so much for being on SoundPractice.
Howrigon: Thank you. I enjoyed the discussion.