Sev Hrywnak, DPM discusses the future of healthcare and how it affects Podiatry. Dr Hrywnak discusses economic factors that affect practitioners and patients and the future impacts of a failing provider system that will consequently demand a huge increase in numbers of allied health practitioners.
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TAPE STARTS – [00:00]
Male Speaker: We’re going to bring up Dr. Hrywnak who’s DPM, MD graduate of University of Buffalo with degrees in molecular biology, physiology, electrical engineering. He did graduate from the William Scholl Podiatric Medical School in 1982 with the DPM and then went on to receive his MD in 1984 from the University of Juarez, School of Medicine. And that wasn’t enough, he went on to graduate from the Loyola Law School in Chicago with a JD degree. He is a former Assistant Professor at the Scholl school teaching in internal medicine; dermatology, immunology, physical diagnosis practice management and business law. In his free time, he’s also a clinical professor at the Northwestern School of Medicine in the Department of Family Practice and a visiting professor at Columbia University and lecturing on economics. He’s done over 200 lectures around the United States and Canada, appeared on CNN, MSNBC and Fox as referred to as a healthcare futurist. A member of the Clinton Global healthcare initiative and GOP strategist for healthcare reform. So, please welcome up Dr. Hrywnak to talk about Economics of Practicing Podiatry in 2019 and Beyond. Thank you.
Dr. Hrywnak: Good morning everyone. I think I can take the liberty to just walk around and mingle with everybody here because it’s such a small group. Thank you for the great introduction but you can scratch CNN off that list. I don’t think I’ll be appearing with them anymore. They’re pro or national payer model and they want you to steer and talk that way when you’re on their TV show, so I’m done with them. Why is this titled healthcare economics and podiatry specifically for 2019, that’s when the date is all going to come in from Medicare and they’re going to set all the new rules through what’s going to be happening.
But before we even start and I think, okay, first we have to come to an agreement as a group, a consensus. Since we’re talking economics, we’re going to be talking numbers, right? If we can’t agree on that simple principle, then we can’t talk any further. All right, because we’re using numbers. And these numbers are not Republican; these numbers are not Democratic, Communist, Socialist, Libertarian or whatever. We’re just going to speaking numbers and how they influence healthcare today in the United States. So we can pass that point, two plus two does equal four, true. We’re all in agreement nobody’s going to challenge that. All right, we can continue around here that.
Again, this is a four-hour lecture; I’m condensing into 25 minutes. There’ll be some charts that we’re going to just skip right over. But again, there’s a few, very important economic indicators that have a direct effect on providers in the United States of America. And these economic indicators that I pulled from the Wall Street Journal, that I pull from the American association of economists. That we pulled from all over that we only look at as far as what is the ability of a patient to pay for healthcare services in the United States.
And again, the Consumer Price Index has a lot of components to it. We’re not going to go through it all. But some of the more important relative factors that we need to be aware of. This is one of the major ones. The average amount in the checking account by the various different age groups of patients who need care in the United States. And as you see this average, this is an average from 2016, the whole year, the age groups, that’s not a lot of money in these age groups. Even though you see the 65 to 75-year olds have $6,000 has an average in their checking account, senior citizens do not want to pay for anything. So that’s a false indicator. They like to have money in the bank. They want to keep it there. And if you look at those 55 and below, that’s not a lot of money on the average in your checking account. And there’s going to be a point I’m getting to why we’re indicating or why we look at that all the time of what’s in the checking accounts. But we also take a look at what’s in the savings accounts. That’s a percentage of disposable income. And since 1980s up to now, people do not save money anymore. There’s no such thing as a savings account, very rarely does it exist. If you remember your parents might have belonged to a Christmas club, they would take $5, $10 every week and put it into savings. That does not happen anymore. As you see, by 2017, we’re going to be at zero. We’re probably at zero now, people’s taking cashing my check and I’m putting $10, $20 into a savings account, does not happen anymore.
Second major economic factor in patient’s ability to pay their providers. Now, what does this mean? Look what’s happening to deductibles. We all understand that within four, five, six years ago, 10 years ago, deductibles were $100, $125, $150, $250. And most of the time, what did physicians do, physicians do the following. You provide the service, the insurance would pay and you really didn’t try too hard to collect the deductible. Because that was an insignificant amount based on the total amount you are being paid. But look what’s happening? The purple areas and the black areas represent transitions in different parts of the United States. There are players now that are out there are $10,000, $7,000 deductibles, $5,000 deductibles. This is going to have a direct effect on paying your provider.
Other indicators those are very, very important. Look at the average credit card debt based on their household net worth, okay.
Now if you have a household net worth over $500,000, your average credit card debt is about $8,000 average. But look what it is when you hardly have any money. That’s a heck, heck, heck of a lot of balance to carry on a credit card which varies 21 to 28% interest. And again, that lower economic group, there’s a household net worth under $25,000, that’s an unsustainable amount. They will never ever be able to pay that off. The example I always use, if you go to McDonald’s, get a Big Mac fries and a coke and you’re charge and it’s 799. You’ll be paying for that interest only for two-and-a-half years. That’s how long it’ll take to pay off that one Big Mac meal. So you can imagine how long it would take to pay off a balance of about $10,000 – a long, long time. And people are making good money on debit in America. What’s that group called that makes a lot of money, they don’t do anything? Lawyers, lawyers make a lot of money, okay, because they contact people with debt, they wipe out your debt for pennies on the dollar, but what you don’t know is it hurts your credit. It knocks your credit score down to about 150 points. But we can talk about that another time.
So government, our favorite partner here in healthcare, governments. Private sector saves government barrels. The government is printing money all the time. We went into $9 trillion more debt the past eight years. We just went over $20 trillion in debt last week, when the president authorized another $20 billion for hurricane relief. These numbers are unsustainable. Find any economists out there that will tell you the truth. We are headed in the wrong direction. You cannot sustain an economy with that kind of debt.
So what happens as far as healthcare is concerned. About seven, eight years ago, a company developed a software program for the banking industry. The banking industry, who’s handcuffed and tied by all the regulations post-2008, needed to find out other sources of income. Banks survive now on fees and fees, but they needed data. So this company designed software where they would grab 27 million chase account holders. You take a sample of two-and-a-half million, out of those 100,000 you check their monthly balances, their transactions, their credit going on all the time.
Now, how did they get the right to do this? Everyone got a letter, privacy notice that you throw away. It’s a privacy notice for your bank saying, your credit cards, your information; we’re not going to tell anybody anything. You read two sentences, you thrown in the garbage. There’s a sentence in there that says, if you do not contact us, we can go into your accounts anytime we want to get information, called data mining. And that’s what they do five, six, seven, eight years using this program to find out who spends what, what time of the day, how much is their average daily balance for the day, for the month, for the week, what are they depositing? Very important information for the banking industry. This way they know what to charge.
Now, the American Banking Association has put forward that in 2019, for every $100 you deposit they’re going to take 10 cents. That’s what they’re proposing. Every $100 you put into the bank, they’re going to take a 10-cent fee. That goes through I don’t know, but this is an information they needed. So why do I bring that up? Another important statistic, starting January 1st, 10,000 baby boomers, 10,000 baby boomers turn 65 every day. Now we’re going to have an inequity going on. A lot of elderly people with a government system, it’s going to be very hard to finance their healthcare.
The annual projected Medicare expenditure is off the chart. We’re anticipating $900 trillion. Again, an amount that is unsustainable. They already know that Medicare, and they always say Medicare is going to run out of money. Medicare will never run out of money as long as there are people working. What’s going to happen between the years of 2028 and 2032, is they’re just not going to be enough. So we have to downsize the amount of providers although they say we need more. They’re going to have to regulate and scale down how much providers are getting paid and we need to replace high-paid providers with cost-effective providers. Somebody could do the same thing in a cost-effective price. You’ll need this, and again, you can see what the costs for Medicare are. Anybody after the age 72 to 75, when they enter the hospital, that’s where the costs go through the roof. It’s about 55,000 for the average patient over the age of 76 when they enter the hospital; every test under the sun is done et cetera, et cetera. That’s a big chunk of Medicare money.
So what did they decide to do? A few years ago, they came up with a great idea. Instead of paying fee-for-service for every act the provider does, we’re going to reverse it all and we’re going to say, we’re going to pay you for value-based results. A nice little catchall phrase.
In other words, we’re not going to pay you for everything you do. And there’s going to be a transition period, that’s why I didn’t put any time in the slide here. We don’t know how long their transition period is going to be, but it’s going to be. Groups are being formed. They started the ACOs four or five years ago, et cetera, et cetera. They’re looking for ways to form groups for medical providers so there’s not a lot of repetitive billing et cetera, et cetera, we’re going to pay you based on value.
And the new rule is going to be the following. As you see, payments are going to be outcome based, incentives, keep them healthy and make a living supposedly. Your focus is going to be on populations. And all the providers going to be team based and the information is going to be predictive. When the government gave you 44,000 a few years ago to get electronic medical records as an incentive that was a warning sign. Since when does the government ever give you money, especially doctors? But they needed the data to hang you with and that’s what they’re doing. They are data mining now, getting all the information.
If you go by the Consumer Price Index, what’s the most expensive thing? Again, medical care. That’s the red line that’s shooting up to the moon. Again, same thing breaking down the Consumer Price Index, what is it? It’s medical care. Breaking down Consumer Price Index, which is another direct effect on providers is college tuition. We had the big meltdown in 2000, 2007, and 2008 on real estate. The next big meltdown is college tuition. We’re in the trillions in debt for student loans. They’re trying to figure out a way to handle this. This is a bad thing, all right.
Colleges, again, they know they can get government money for nothing. There’s a college out there in South New Hampshire University, you can write your own degree. There’s a big story on a kid who did four years. He made himself a degree in rock and roll history. Tuition was $62,000 a year. Now he’s peed off because he can’t get a job. But guess what, it cost the taxpayer $240,000 that he could not pay back.
Changes, they’re going to be coming. It’s going to be networks; it’s going to be virtual, not proprietary anymore. All right, I’m not the best doctor in town; I’m not the best provider on the block et cetera. It’s going to be innovation oriented, not replication focused. It’s going to be system centric, not profession centric. You’re going to have to belong to a group of providers where you all interact. It’s going to be global and aggregated, not segmented as it is now. Medicare reimbursement in 2009 became the gold standard for insurance companies, why? Very easy, doctors would bill a procedure and if it was private insurance, they’d say they bill a thousand. But if it was a Medicare patient, they would bill what was allowable was just $200. The insurance company say well, wait, if the doctor is willing to take a lot less of their Medicare, why are we paying a thousand on our fee schedule and slowly they started scaling down the reimbursement based on Medicare fee schedule. The worst thing about it is now when you don’t negotiate a contract, contractors or healthcare are saying, we’re going to pay you a 120% of what, of Medicare. Or we’re going to 90% of Medicare.
So as you see, the arrows started going down, we’re going to the negative, below the standard Medicare level. Good example is, the worst Medicare out there, ready, Medicare Advantage, Medicare Gold, Medicare United. Those are horrible Medicare programs where the provider gets zero almost, but the incentive is to the patient because where they advertised on TV, you can get dentures, you can get glasses, you’re going to pay nothing. You can pay nothing if you sign up. And the program that was set up through our last administration was Medicare Advantage and Gold, United is a default program. You’ll automatically be enrolled in it unless you say I want to stay with regular Medicare. That’s why a lot of these management companies are making big dollars managing Medicare Advantage, United, Gold et cetera, et cetera.
Allied health professionals, something as I’m going to be more podiatry specific here now, is what we have to watch out for going forward. The government has allocated millions of dollars to create more physician assistant programs and nurse practitioner programs. These will have a direct effect on family practitioners and practitioners of internal medicine, in other words primary care providers. The laws and rules are changing daily, who can have a PA and who has to watch a PA or an NP. Most states now nurse practitioners or advanced nurse practitioners, can provide care independently. They do not need a collaborative physician. Same thing with PAs. PAs, now have started a program, started two years ago, not too many know about it. There are now PA orthopedic surgery residencies. It either can be a year or two years.
There’s one here at the Resurrection in Chicago. There’s four PAs doing an orthopedic surgical residency. Did anybody know who’s funding it? Who do you think? No, you’re from Chicago, who do you think’s funding that orthopedic residency. It’s $55,000 a year for the physician assistant resident, in orthopedic. I’ll tell you who’s funding it, Rosalind Franklin University. Okay, so where the school is located at, but that’s just another topic putting it out there. Same thing, they want to increase 200,000 PAs, 225,000 for nurse practitioners by 2020.
A colleague of mine, his name is Stan Blondek. He’s an MD, DPM. He’s chairman of pediatrics and neonatology in Pennsylvania, but he’s also the medical director and curriculum developer for physician assistant programs in the United States. And what the curriculum is, it’s developed into a page to 12 pages. And the PA by 2019, has to know how to do nail avulsions, flexor tenotomies, extensor tenotomies, the neuroma injections, neuroma excisions, taking care of plantar fasciitis, et cetera, et cetera. So don’t be alarmed because PAs are doing shoulder scopes, knee scopes. At Saint Francis Hospital here in Evanston, the PA harvest the vein from the leg and hands it to the cardiothoracic surgeon. That’s where it’s going. That’s you have to know what’s going on because it’s very, very vital for our profession.
So, economics and return on investment for podiatry. The CMS data mining started back in 2015, 48-month study to determine cost-effective providers and cost-effective places of service. That year the bundled payment system was introduced, which they’re adjusting. But do you want to pay him $125,000 for him or her, yes-- between nurse practitioners and podiatrist being able to be their bosses are right for him. But again, if you can pay that kind of money, the average PA now makes between $90,000 and $120,000. By 2020, the average PA will be making $175,000 on a 32-hour work week. Dr. Blondek’s daughter that I just mentioned, she’s an orthopedic PA residency in Los Angeles. She’s in her sixth month, the seventh month or whatever. She’s already got a job when she is done, with an ortho group in LA and they’re going to pay her $225,000 a year. That’s just to you know that.
So, bundled payment systems came into evolve and the first group, the first data mining results came out and it was for interventional radiologists. They used to do their vein work, their arterial work in the hospital. Hospital charge would be $45,000 to $65,000. That’s the OR, that’s the anesthesia, et cetera, et cetera. They said, you know what, CMS says, take your veins, do them in the office and we’ll pay you $7,280 on a bundled payment. That’s what they’re getting, although they just downscaled at July 1st down to $6,400. But still that means anesthesia room, which is your office and professional component, that’s where it’s gearing for. And they’re going to start picking other professions to see who can go into an office.
Plastic surgery, high mortality rate, it could be done in an office. GI scope, endoscopy, colonoscopy, now being done in the office. Interventional radiology now being done in surgery centers in an office because CMS needs to start scaling back and cutting reimbursement all the way across the board. So podiatry’s choice is going forward. Those who are residents, and again, I’m going to ask you a question. How many here have done a lapidus? You done a lapidus? Lapidus, yeah, you’ve done a lapidus all right? So you know how to do a lapidus but how much is a lapidus plate? Anybody know? Wouldn’t you want to know?
So Blue Cross nationally has an adjusted network average of paying a facility, a hospital, surgery center, a facility fee and a set amount of $2,600, it’s the average, some places are higher, some places lower, you know the lapidus plate cost. It’s cost $2,200. So if not the hospital, it should be the surgery center saying, hey doc, you’re booking a case, what are you doing here? Okay, don’t do it. I was president of the Independent Surgery Center Society of America. I met with United and had done Prudential a number of times and I kept saying you keep lowering what we’re getting reimbursed while our costs are going up. Their answer was the same every time. You’re the owner, control your surgeons.
All right, why is this podiatrist doing a first stray osteotomy and using an external fixator? We’re not going to pay for that anymore. Why are they using six screws to fixing that first metatarsal osteotomy, we’re not going to pay you. What happen to the $8 K-wires? You’re not cost-effective, so you better get those surgeons off your surgery center.
So that’s the message as president I have to bring back, which is not a good message to bring back but guess what. And guess most surgery centers are starting to do that, followed right behind by hospitals. And you’ll see in the next year or two, you guys are in training, you don’t know what the costs are, but you should follow what’s going on out there.
So the choices we have here, again number one. Podiatry has to enter mainstream medicine. We are on an island. We are self-regulated and that is not good going forward. CPME means zero to the Medical Society. ACGME means everything, who is under ACGME? MDs, DOs, PAs and NPs okay. So if we would join them, I think we’d have a lot of better chance to be in these groups going forward providing care.
There also is the following; a need for a full licensure. If you haven’t heard, I’ve been a big promoter here in Illinois, pushing and pushing for last year and a half for podiatry to get full licensure. You can’t have a PA with two years to post college education, you know, writing scripts for opioids antibiotics, GI meds the whole nine years and we can’t. There’s an equivalency here in the training. We have to push forward but we have to push unified. What we have to do is based on the Illinois Medical Society is this. We have to get people certified at history and physical. We have to have so many hours and continue education in medical therapeutics. Then we could go to the licensing board and say hey, 50.1% of the podiatrists at Illinois want full licensure. Now, right now the Illinois State Medical Society as of this date says the following. We’re not going to be for you, we’re not going to be against you. We’re going to take a neutral stand. Politically understand if Illinois State Medical Society takes a neutral stand, that’s a win. Because if they say they didn’t like the idea, it wouldn’t go any further. So again, get into the group with everybody else going forward, we need full licensure.
Number two, what’s happening is this returning out or churning out contracted employees. You finish your residency all right. Family practice at Saint Joe’s where I teach, nine family practitioners graduated this past June, three-year residency. Out of those nine, how many went into private practice or were out of practice? How many do you think out of nine? None, none, what do the all nine do? Salary, they just took a job someplace. Okay, that’s this new generation. They’re looking for a job and you’re an employee, when you’re contracted employee, that’s what you are. You can be let go any time, and you might make good money initially but you can be let go any time. But if you’re ready and you can service your debt, the average podiatry student’s debt is $296,220 as of last year. You can manage at $3,100 a month loan payment and God bless you. But if you want to be a contracted employee, that’s another choice.
Third, borrowing nothing happens. You have to get into the understanding. That if you want to survive, and be a patient provider going forward, you have to be an all-inclusive office setting. Means you’re going to do palliation. You’re going to do orthopedics and you’re going to do surgery in your office. Because of data mine and they say, guess what, we’ll pay you $3,000 to do the bunion in your office, you better be ready to do it.
Now, as a caveat to this, I lectured last year at the American Ambulatory Foot & Ankle Surgery. These are guys who do minimally invasive stuff in New Orleans. There were 800 people registered. And there was a Cadaver Lab at the Louisiana Medical School. If they’re data mining and I don’t know if you’re familiar with minimal incision surgery, but these are the doctors who can do an osteotomy in three seconds. Make a stab incision, make the cut, put the stitch and whatever. That data is being collected by Medicare also. So you’re going to have someone who’s doing it an hour-and-a-half base wedge osteotomy in a hospital and you have somebody who’s doing it in the office. Well, sooner or later Medicare’s going to say, whoa, wait a minute; there can’t be the bigger discrepancy under the assumption they’re going to be paying for elective foot surgery. That’s another assumption because things are changing.
I lectured two days ago at the Anti-aging Conference in Chicago. It was at Michigan Avenue. There was maybe a thousand people there; NPs, PAs, a lot of DOs, MDs, switching to practice of anti-aging. And the first two rows, first two rows, there’s a lot of nurse practitioners they had nametags on, had their name and P and a little heart attached to their badge. I’m thinking what’s that heart for? Maybe they’re collecting money for the hurricane victims whatever. So after I finished lecturing, I went down to talk to them and say, what’s that mean that little heart on your badge? And they said well, we’re all from United Healthcare. And United Healthcare paid for us to come to this, because our future job starts January 1st. What’s your future job, I thought you’re nurse practitioners? No, we’re going to be working for United Healthcare.
And our job title will be Medical Necessity Consultants. Okay, what do you get paid as a medical necessity consultant? Two hundred thousand dollars a year. So wait a minute, you’re getting paid now but you’re not doing it yet? No, we’re going to different conferences, we’re learning ortho and family practice and cardiology. Now we hear the anti-aging to get an idea as we see cases to review. So how are they going to keep their jobs at $200,000 a year? When a request comes in for something the provider needs to do, it’s going to be a necessary. That’s their title, Medical Necessity Consultants, to keep the job and going to say that was it medically necessary. That’s the way it goes. So you learn something every day.
My point being going forward, you’re going to be a surgeon. I always say, the best surgeon out there is the one who’s cut out the following letters out of surgeon, O, G and E or going the other way, E, G, O. Cut out the ego, okay, don’t worry about putting your scrubs out and looking good in the mirror at the hospital and parking in the doctors’ parking lot. Okay, we’re going to the surgery center, learn your trade, learn what you can do, you know your limitations. Learn to set up your office as a full-service functioning office going further and you’re going to have a more than better chance to survive economically. Otherwise it’s not going to work.
Your value is $250 an hour as a doctor, podiatrists. Why would you get in the car and drive 12 hours to a hospital to do a hammered toe, when they’re doing facelifts in the office? Okay, the plastic surgeons stop and think. All right, want to satisfy your ego, you’re going to be in the negative, you’ll be in bankruptcy court before you know it. But if you want to be a provider going forward, make a good income, start gearing your thoughts going to the office. I always tell students when you’re in a residency program; follow the attending that just finished the case. If you still see they’re attending in the hospital, ignore them. But the attending who just finished the case if you can’t find them, do they jumped in the car and ran to their office, that’s a successful provider. That’s a businessman or businesswoman. They know what’s going on. Not the doctors strolling the halls with their cup of coffee. You know, 9 o’clock in the middle of a Tuesday, makes no sense.
How am I doing, 12:30 on the button, any questions? Yes.
TAPE ENDS - [27:23]