Park Nicollet gets sobering lesson in Medicare

By its own calculation, Park Nicollet Clinic loses money on its Medicare patients.

That's a problem, because Medicare accounts for 30 percent of the business at Park Nicollet, the large medical group based in St. Louis Park.

So last year, the company asked Dr. John Misa, the chief of primary care, to run an experiment. Could he design a clinic that would be able to deliver care at Medicare prices?

Misa and his team thought they had the solution: a "concept clinic" that uses doctors for only the most complex cases, and steers most patients to nurse practitioners and physician assistants.

It's a concept that's starting to bubble up around Minnesota and the nation, as health organizations prepare for what is expected to be a significant crackdown on Medicare and Medicaid costs.

But when Park Nicollet ran the numbers, Misa and his colleagues were shocked: At current Medicare rates, even the "concept clinic" would still lose money.

"The assumption was always that this would be, over the long term, more affordable care, and maybe we could be profitable at Medicare rates," said Misa.

Instead, it was a reminder that in health care, cutting costs is more complicated than it looks.

Misa, who led the project, said it's obvious that something has to change. Right now, Medicare and other government programs pay about 60 percent less than private insurance, Park Nicollet says, and it has to make up its losses on other patients. Yet "Medicare is a growing part of Park Nicollet's business," he said, especially with baby boomers aging into the program. And the pressure is on to find ways to deliver care for less.

"Right now, everybody in the health care community is trying to understand the changes that are coming," he said.

New role for doctors

At Park Nicollet, which has clinics throughout the Twin Cities, they decided to do a "virtual" exercise: Imagine if all the primary care clinics were organized in teams, with five nurse practitioners or physician assistants for every M.D. (Currently, it's the reverse: one nurse practitioner for every four to five doctors.)

In the new model, patients with routine complaints, such as sinus or bladder infections, would be treated by the less expensive caregivers, sometimes by phone or e-mail.

Only the most difficult cases -- such as people with chronic or multiple conditions -- would go to a physician.

"In this model, the big difference is the physician becomes more like a consultant," Misa said. The doctors coordinate care, but see fewer patients. "They're seeing the most complex [cases] ... which is what they're trained to do."

In the concept clinic, doctors would see nine to 12 patients a day (about half as many as they do now), allowing them to spend more time with each patient. Meanwhile, nurse practitioners and physician assistants would each see 20 or more patients a day.

The plan wasn't cheap: It would mean hiring more nurse practitioners and physician assistants, as well as expanding office hours. Still, Misa estimated that this model would shave 10-15 percent off the cost of delivering care.

Then they did the calculations: What if Park Nicollet had used this model in 2009, when it had about a million total patient visits to primary care; and if everyone had paid Medicare rates?

They discovered that the concept clinic would have run at a 40 percent loss; about the same as the current model.

"It was a surprise to me, quite truthfully," said Misa.

The problem, in part, is that Medicare payments also drop under this kind of model; it pays less for visits with nurse practitioners than doctors. That ate up any savings.

"You can imagine that depth of disappointment around the table when we started to look at the final numbers," said Misa. "The good news is, we saved money ... the bad news is, it isn't viable for us."

Winds of change

Yet to Misa, the experiment wasn't a failure. It merely showed that it wouldn't work under Medicare's current payment system, which is in the process of changing.

Today, doctors are paid for seeing patients and providing services. But under last year's landmark federal health overhaul, the Affordable Care Act, Medicare is creating a new payment model, which will reward doctors and clinics for holding down the overall cost of care.

That's how the concept clinic, or something like it, could flourish, say Misa and others.

Already, HealthPartners and Fairview clinics have switched to a "team approach" that uses some of the same ideas, and others are moving in similar directions.

There's a growing realization that it's a more affordable, and better, way to deliver care, says Dr. Dave Moen, president of Fairview Physician Associates, who headed its care model innovation program. But the real savings are long term, he said; ultimately, by finding ways to keep patients healthier and avoid unnecessary visits to the clinic or hospital. "It's not about redesigning the price of the clinic visit," he said. It's about "reducing unnecessary, inappropriate and futile care."

Misa says the pressure to cut health costs is forcing Park Nicollet, like all medical groups, to rethink how it does business.

"The bottom line for Park Nicollet is, we want to do well as an organization by doing what's right for our patients," he said.

At the same time, patients, who may be used to seeing a doctor for everything, "are going to have to prepare themselves for different methods of care delivery."

"This is a huge mind-shift," Misa added. "We'll figure this out. But it's going to take a lot of creative energy to get to the other side."

Maura Lerner • 612-673-7384