Who Benefits? - From the Mayo Clinic Explicitly Putting Commercially Insured Patients Ahead of Some Government Insured Patients?

Amidst all the chaotic noise emanating from Washington, DC, little snippets of news keep slipping out reminding us that the US health care system remains monumentally dysfunctional, and that the dysfunction serves the interests of the system's insiders.

Putting Commercially Insured Patients First

On March 15, 2017, the Minneapolis Star-Tribune first reported that the CEO of the august Mayo Clinic had stated in a late 2016 speech to Clinic personnel that henceforth the institution would preferentially accept patients with private insurance over those with public (Medicaid or Medicare) insurance under certain circumstances.

when two patients are referred with equivalent conditions, he said the health system should 'prioritize' those with private insurance.

'We’re asking ... if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so ... we can be financially strong at the end of the year to continue to advance, advance our mission,' [CEO Dr John] Noseworthy said in a videotaped speech to staff late last year. The Star Tribune obtained a transcript of the speech, and Mayo has confirmed its authenticity.

In response to the Star-Tribune, spokesperson Kari Oestreich stated:

Mayo remains committed to publicly funded patients — who make up half the health system’s business — even with the new policy.

'We can provide the care they require for complex medical issues,' he said. 'However, we need to balance requests from these patients with their specific needs — if it’s necessary for them to come to Mayo — as well as the needs of commercial paying patients.'

CEO Noseworthy felt that the problem was that publicly insured patients did not bring in enough money:

In his speech, Noseworthy said a recent 3.7 percent surge in Medicaid patients was a 'tipping point' for Mayo.

'If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,...'

Note that this tipping point was apparently reached under the US Affordable Care Act (ACA, or "Obamacare") and had nothing to do with any attempts to "repeal and replace Obamacare" by the current Trump administration.

Was the CEO Just Being Honest?

A variety of people interviewed by the Star-Tribune and other news sources suggested that other hospitals may have previously thought to subtly discourage patients whose insurance coverage was less lucrative for the hospitals. However, what was unusual was that this policy at the Mayo was expressed openly, at least to hospital personnel if not the larger world.

The Star-Tribune reported, without further comment:

'The most interesting thing isn’t that it’s happening, it’s that a high level executive actually said it out loud,' said Mat Keller, who monitors health care policy and hospital finances for the Minnesota Nurses Association.

StatNews reported,

'There is this thought that hospitals treat whoever comes to their door, but this is a statement that lays out what happens,' said Christine Spencer, a health economist at the University of Baltimore. 'It’s a surprise to hear it out loud like that, but hospitals, probably for decades, have engaged in these more subtle attempts to get privately insured patients over Medicaid or the uninsured.'

Maybe CEO Noseworthy is just more honest than leaders at other institutions?


A Violation of Mission

Similarly, some experts also raised ethical concerns about the new  Mayo Clinic policies. For example, as reported by Modern Healthcare,

'A cornerstone of our ethical thinking is you get the same care whether you're rich or you're poor, and we don't triage by the size of your wallet,' Caplan said. 'A wealthy leader like Mayo is sending a grim message not only to other hospitals but to those who rely on Medicare and Medicaid.'

Also, per the Rochester (MN) Post-Bulletin,

Dr. Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management who writes many national papers about health care funding, said Noseworthy's directive was like something from a Third World country.

'This is what happens in many low-income countries. The health system is organized to give the most affluent preference in receiving health care. It does not happen in most affluent counties,' he wrote in response to the Star Tribune article. "Hospitals spend nearly all the money they get. If private insurers pay less than public insurers, then it will appear that public payers are paying less than costs. However, what is really happening is that hospitals are spending all the money they receive and those that pay less are accused of not paying the full cost.'

 Putting more lucratively insured patients first seems to violate the Mayo  whose Mayo Clinic Mission 

To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.

and hence is an example of mission-hostile management.


Moreover, the new policy seemed to directly contradict other policies of the Mayo Clinic:

Mayo Clinic's nondiscrimination policy statement states, 'As a recipient of federal financial assistance, Mayo Clinic does not exclude, deny benefits to, or otherwise discriminate against any person” based on race, gender, religion and other characteristics, including “status with regard to public assistance.' This statement applies to 'admission to, participation in, or receipt of the services and benefits under any of its programs and activities,' through Mayo itself or any contractors.

The system also states on its website that it 'appropriately serves patients in difficult financial circumstances and offers financial assistance to those who have an established need to receive medically necessary services and meet criteria for assistance.'

Note that ideally, the whole purpose of a non-profit organization is defined by its mission.  Non-profit organizations ostensibly raise money, through contributions, and by charging for programs and services, to support that mission.  To repeat, the money is supposed to support the mission.  The money is supposed to be a means to an end.  The mission is not too make money.

So the explicit choice to go against the mission for the purposes of making more money should be a red flag, and should only be justified if there is real peril of immediate financial collapse threatening the whole mission.  I did not see any evidence suggesting such a danger in the articles describing Dr Noseworthy's speech.


A Violation of Non-Discrimination Policies, or Even Laws and Regulations?

It seems possible that the explicit policy to disfavor patients with government insurance vis a vis those with private insurance could violate existing regulations or laws.  For example, per the Rochester (MN) Post-Bulletin, the new Mayo Clinic policy was raising related concerns on the behalf of Minnesota state government.

Minnesota Department of Human Services Commissioner Emily Piper, who oversees the agency that manages the state's MinnesotaCare and Medicaid programs, said she was surprised and disturbed to read the comments that Noseworthy made in an internal message to employees.

'Fundamentally, it's our expectation at DHS that Mayo Clinic will serve our enrollees in public programs on an equal standing with any other Minnesotan that walks in their door,' she said Wednesday afternoon. 'We have a lot of questions for Mayo Clinic about how and if and through what process this directive from Dr. Noseworthy is being implemented across their health system.'

Fear of Catastrophe, or Inconveniencing the Rich?

The new explicit Mayo Clinic policy to disadvantage patients insured by Government programs compared to those insured by commercial insurers has caused some experts to question whether Clinic leadership has proposed mission-hostile, discriminatory, unethical, or even illegal behavior.  Is the threat the Clinic faces justify  taking such actions?

As noted earlier, the Mayo Clinic CEO implied the institution was in danger of running out of money at the end of the year "if we don’t grow the commercially insured patients,..." But was that a serious concern?  Or when he said "we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,..." was he really worried about the ability of the Clinic to pay its top leadership in the style to which they have become accustomed?

The CEO did not present and evidence that the Clinic is in such dire straits that it is likely to go bust this year.  The Clinic does not rapidly disclose details of its finances.  However, the latest Mayo Clinic Facts stated that total revenue from current activities is approximately $10,315,000,000.  The most recently available detailed financial report in the form of a Form 990 filed with the US Internal Revenue Service by the Clinic  in 2014, covering 2013, stated 2013 total revenue as $4,560,196,033. This suggests a greater than 100% increase over four years.  That seems to be an impressive growth rate, not suggesting imminent risk of bankruptcy.

On the other hand, the Mayo Clinic leadership does seem accustomed to living in style.  While Mayo Clinic executive salaries since 2013 have not been disclosed, the same 2014 990 form showed that in 2013 CEO Noseworthy received $2,336,662 in total compensation.  Other executives receiving more than $1 million in total compensation included Trustee and VP Dr William C Rupp ($1,049,333), Assistant Treasurer Paul A Gorman ($1,117,598), Treasurer Harry N Hoffman III ($1,835,134), and former CAO Shirley A Weis ($1,530,320).  In addition, the form included statements that trustees received reimbursements for first-class travel for themselves and spouses; the institution purchased the former chief administrative officer's (CAO) house when she relocated; many leaders received lucrative supplemental retirement plans (whose value was included in total compensation);  inventors including named employees are "entitled to a share of royalties received by Mayo, including instances where such royalties are in the form of equity-based instruments;" named employees received "tax -indemnifaction and gross-up payments," and that named employees included personal services (e.g., maid, chauffeur, chef). This seemed to be pretty rich living for leaders of a non-profit institution whose mission, to repeat is

To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.

So is the Mayo Clinic about to go bankrupt if it does not move selected patients with less lucrative government insurance coverage to the back of the line?  Or are its executives so used to their remunerative bubble that they simply cannot conceive of trying to control costs to uphold the mission if such stringencies might reduce the money flowing to management?

Similarly, StatNews quoted [Chief executive of the Center for Healthcare Quality and Payment Reform Harold] Miller.

'True leadership would be to figure out how to deliver high-quality services at the lowest cost possible,' Miller said. 'If institutions are simply going to say, ‘I’m not going to serve patients unless I get paid more,’ that’s only contributing to the problem.'

Summary

 But these days, the actual leaders of health care organizations have become accustomed to the pay and perks of top executives of big commercial firms.  We have documented again and again the ever rising and increasingly monumental pay of health care CEOs, even of ostensibly non-profit organizations, seemingly out of proportion to their organizations' abilities to help patients' and the public's health.

This has gone on in an era of ascendant neoliberalism.  Krimsky summarized the tenets of neoliberalism in his review of Science-Mart by Phillip Mirowski.

The term neoliberal, which arises from the work of post–World War II economists such as Friedrich Hayek, Milton Friedman and others belonging to the 'Chicago school' of economics and law, has little in common with what is usually thought of as liberalism. The important tenets of neoliberalism, Mirowski says, include such propositions as the following: 'The Market' is a better processor of information than the state; 'politics operates as if it were a market'; 'corporations can do no wrong'; 'competition always prevails'; the state should be 'degovernmentalized' through 'privatization of education, health, science and even portions of the military'; a good way to initiate privatization is to redefine property rights; 'the nation-state should be subject to discipline and limitation through international initiatives'; 'the Market . . . can always provide solutions to problems seemingly caused by markets in the first place'; 'there is no such thing as a ‘public good’'; 'freedom' means economic freedom within the Market. 

The logic appears to be that leaders of organizations that can do no wrong should be entitled to market levels of compensation, however high they may be, and without concern of whether the market is perfect (because all markets are by definition, perfect).  Also, the logic appears to be that corporations that can do no wrong should be immune from questions about actions that appear to not put patients first.

All the distractions in Washington, DC should not put us off how the commercialization of health care in an era of neoliberalism (and managerialism) has led to ever worsening dysfunction, and ever increasing advantages to the insiders within the system.

But where will patients end up in such an era?

We need true health care reform that would enable leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.  What we will get is endless resistance to such reform from those who personally profit from the current dysfunctional, and increasingly corrupt system. And the current chaos and dysfunction in government at large is making it easier for those who personally profit to profit even more.