The severe, very weird recession… in health care. And what it means to our wallets.

Dan: Hey there. You’ve probably noticed the US economy is crashing. Lots of us have seen it in our own lives. Our families, jobs gone, sometimes whole workplaces done. Government figures show unemployment is hitting great depression levels, and here is something you may not have noticed, and that may sound really weird.

Almost half of that economic devastation comes from just one sector and that sector. It’s healthcare. And if that sounds completely backwards, it’s except in the world of how we pay for healthcare in this country, this is an arm and a leg show about the cost of healthcare. I’m Dan Weissman. Last year, New York Times ran an essay by one of my journalistic heroes, Elizabeth Rosenthal.

She’s the editor in chief of Kaiser Health News. There are co-producers for this show, and she wrote the book. And American Sickness, how healthcare became big business and how you can take it back. In this essay last year, she said one thing we should look at about a policy like Medicare for all. A lot of people would lose their jobs.

She cited a number, 1.8 million people. I called one of the people she quoted in that essay, Robert Poland. He’s an economist at the University of Massachusetts. And are you one of the sources of the number I’ve seen? Like 1.8 million.

Elizabeth Rosenthal: I, I am the source. I’m the one and only source. Yeah. So your colleague, Elizabeth Rosenthal, once she put it out and it was in the New York Times, then of course Fox News and Yeah.

I’m quoted more for that one statistic,

Dan: 1.8 million. It’s from a study he did in 2017.

Elizabeth Rosenthal: You know, it’s, it’s a 200 page study with all kinds of things. But that’s the one thing the study is best known for.

Dan: He’s a fan of Medicare for all, but he wanted to be honest. People would lose their jobs, lots of them.

And he was talking about people who work for insurance companies, processing claims, and the people who work in hospitals and medical practices filing them. But now. When we’re actually seeing all these layoffs, that is not who’s losing their jobs now, it’s doctors, nurses, occupational therapists, the folks who sit at the front desk.

Elizabeth Rosenthal: The people that are getting laid off are the people that are not directly involved in the types of work that involve emergency procedures around. COVID. Anyone who has anything to do with elective surgery and elective surgery has been the cash cow in the medical profession, I guess, for decades.

Dan: It’s like your hip replacements, your nip and tuck.

Elizabeth Rosenthal: Yep. Cataract surgery, knee replacements, hip replacements, facelifts, all of those things are down to zero.

Dan: And it’s not just that it’s really anything. People don’t absolutely have to come in for it in a life or death right now kind of way, like pediatricians.

Elizabeth Rosenthal: Yeah, so it’s actually the opposite of what I described.

Dan: I mean, what it seems to me, the way I’ve been thinking about it is that, you know, this is a result of running our. Healthcare system like the restaurant industry.

Elizabeth Rosenthal: Fair analogy. Very good.

Dan: People stop showing up for Sunday brunch and uh, you got, you got big problems right away. Yeah. As opposed to running it like the fire department.

Elizabeth Rosenthal: Uh, that’s good. Uh, if you don’t mind, I’m gonna, I’m gonna use that.

Dan: I mean, obviously it is not funny. It is super weird though. And we are gonna look at some of the extra weird details, like how a couple pieces of it are working and what they could mean. These things are just not obvious, even to people who have been full-time healthcare nerds for years.

Like Jenny Gold, she’s a reporter for Kaiser Health News, been there for more than 10 years covering healthcare. She wrote a story about how pediatrician’s offices are hurting and how do you think she found out about it?

Jenny: Good old Facebook.

Dan: Wow.

Jenny: Actually, it was sparked by a pediatrician. Reaching out to me.

Um, someone that I knew from my childhood but hadn’t been in touch with, reached out to me knowing that I was in the news and told me about how much her practice was struggling.

Dan: And how did you know each other? Back in the day,

Jenny: we went to middle school together.

Dan: Oh, wow.

Jenny: We were friends in junior high.

Dan: And you were like, huh.

Hadn’t thought of that

Jenny: exactly. So I spoke with her and a colleague of hers and they just sort of laid out all of the issues that they were having. Basically overnight, their patient visit volume dropped. 90%.

Dan: 90%. Jenny says they quickly, like overnight, learned to do telehealth. Hey, it’s Dr. Skype, it can work.

And that brought some visits back, but they were still down 60%. Imagine suddenly losing 60% of your business. Imagine losing 60% of your income. I mean, maybe you don’t have to imagine it.

Jenny talked with other pediatrics practices in the Bay Area. They were all experiencing the same thing. They’ve

Jenny: laid off staff members, they’ve cut hours for everyone. They’ve done furloughs, the pediatricians, um, I spoke with, many of them had taken a 40 or 50% pay cut or even. But, you know, not gotten paid at all.

Dan: And none of that made things sustainable.

Jenny: The practices I spoke with said, you know, we can, we can survive this way for a month, maybe a couple months. But not for that much longer.

Dan: One practice manager gave Jenny an especially memorable quote.

Jenny: She said, I’ve been practicing for a long time. I’ve seen a lot of things.

This is a very different beast I’ve never seen in a week. The entire thing fall apart.

Dan: And the woman who said this was actually Jenny’s childhood,

Jenny: My middle school friend had gone to work at my old practice and that doctor, I loved Dr. Ann, Mary Franks as a kid, which is pretty wild and, and actually that was really kind of crazy to hear that from my old doctor.

You know, of course, as a kid, I never really thought about the business side of my pediatrician’s practice that

Dan: exposes. That the things we think of as, as kids we think of as like immutable, they can’t go away. She’s telling you, oh no, this could go away.

Jenny: Some of these practices that have really been holdouts as independent practices who’ve resisted going to work and being bought by the big hospital systems in the area might sort of have to cave and go be part of a large system.

Which you know, in the long run could lead to higher prices.

Dan: Yep. Could lead to higher prices. This is one of the reasons I especially wanted to talk with Jenny Gold for this story. She was one of the first people I interviewed for this show back in season one, and she taught me, her reporting taught me how when independent docs get bought by big hospitals, it means prices go up, health insurance premiums go up.

We pay. This is from a story she did about obstetricians in the Bay Area. Jenny dug up data that showed insurance companies paid independent obstetricians about 2000 bucks to deliver a baby. But if the doc worked for Stanford Medicine Insurance paid 5,000 bucks for the exact same service if they work for the University of California.

8,000 because those big systems have leverage. They can say to the insurance company, you don’t like the price. Hey, have fun trying to sell a policy that doesn’t include any docs from Stanford Medicine or the University of California. See how that goes for you?

Jenny: Those hospital systems are must haves for the insurance companies.

They have to, on some level, give the systems what they want.

Dan: And then the insurance companies turn around to their customers, like maybe your employer or maybe you if you buy your own insurance and they’re like, eh, I guess we’re raising premiums this year. We’ve got no choice. Providers are charging more, so that’s one possible outcome.

Those big fish will eat more little fish and the big fish have more leverage to charge more. Our insurance rates go up, and even if your employer pays your health insurance premium, that’s money your employer could be paying you. And this isn’t just pediatrics. Everything, physical, therapists, gynecologists.

I saw a headline the other day that said one out of every five primary care practices could close. A reporter in Boston had a story that community clinics were laying people off. ’cause all of these places operate like, well, like a restaurant or a car wash. It’s fee for service. Nobody comes in for service, nobody gets a fee.

So that’s a whole fun potential outcome from this pandemic. Actual doctors and nurses and other frontline staff go on unemployment and then the bigger fish get bigger and they maybe end up charging us more. That’s weird, but you know what’s really weird? Well, who are the last people you’d expect to be hurting financially during a pandemic ER?

Docs who treat coronavirus patients and actually. Some of them are getting hit too, thanks to some of the same forces. Big fish, hungry for money. A lot of these docks actually work for big operators, and these big operators are making clear they’re not the good guys. That’s right. After this.

This season of an Arm and a leg is a co-production with Kaiser Health News. Kaiser Health News is an independent newsroom reporting on healthcare in America. It’s not affiliated with the giant healthcare provider, Kaiser Permanente. There’s a little more detail on Kaiser Health News at the end of the show.

So emergency room docs. We see pictures on TV on the news of emergency rooms overflowing. But here’s one thing to know. Emergency rooms in a lot of places, they’re seeing fewer people overall. Same as the pediatrician’s office. People who would usually come in are staying away, and in a lot of places, even when they get COVID patients, the total number of people coming in, it’s lower.

And it’s not just people with weird ouchies that are staying away, they’re seeing fewer heart attack patients. And that means even ER docs, even ER docs who see a good number of COVID patients. A lot of them are getting paid less. Isaac Arf is a reporter for ProPublica. He’s been following the money trail.

It is ugly and weird. Totally fascinating way. In his first story about ER docs, he noted a very simple thing. A lot of them were getting paid less during a pandemic.

Isaac: This is not just for providers in, you know, quiet places where there’s no one in the hospital. This is happening. With providers who are on the front lines, treating coronavirus patients, putting themselves at huge risk.

Dan: The deal was outside of those overflowing emergency rooms in the red hot zones, in places like New York, the total number of people coming in was down, and that meant less money. So the docs were on the schedule for fewer hours. Isaac first reported on this at the end of March, and some of the companies the doctors worked for pushed back.

Isaac: Some of the companies were trying to be a little cute with saying we’re not cutting the pay rate, um, which was technically true. Obviously, if you’re getting paid the same rate for fewer hours, then you’re making less money.

Dan: I mean, ask anybody who’s had their hours cut. It’s hard to believe this even needs saying

Isaac: in some cases they were taking salaried employees and converting them to hourly employees

Dan: and then assigning them fewer hours.

Isaac got hold of a memo from one company that said Anyone not willing or unable to share the burden will need to be terminated to preserve employment for those who really feel a part of our team and care about their coworkers. So there’s that. And you might be asking who’s doing this cutting anyway, and this is where we get to a second layer.

’cause in a lot of emergency rooms, the doc doesn’t work for the hospital. They work for what’s called a medical staffing firm. These companies tell hospitals, you got these ERs that run literally 24 7. We’re gonna make sure you’ve always got somebody, a doctor calls in sick, not your problem. Scheduling around vacations.

We got you. And you can imagine what a load off that would be if you were running a hospital. And these companies, they don’t bill through the hospital either. They bill the patient directly and. The next layer is this. This is the place where the big fish enter the scene. In the last bunch of years, big private equity companies have been buying up these physician staffing firms, and for some of them they’ve been like, Hey, nobody said our docs have to take insurance.

It’s not like people are shopping around. We’ll just bill patients for. Whatever we want. And this is why we hear stories about surprise bills. Like you went to the ER at a hospital that takes your insurance, but the doc there didn’t take your insurance. So surprise you get a giant bill. So some of the companies that are cutting hours, cutting benefits for the ER docs, risking their lives, this is their business model.

Surprise billing. And last year Congress started thinking hard about limiting surprise billing. Like committees in both the Democratic controlled House and the Republican controlled Senate voted in favor of bills that would do exactly that, and then those companies hit back. They funneled money into a group they called Doctor Patient Unity, and they started running political ads all over the country.

Really well crafted political ads.

Isaac: The best part about being a doctor is helping people when they need it most.

Dan: They argued the proposals to limit surprise billing ideas. They called government rate setting would lead to doctor shortages and even hospital closures. They funneled a lot of money into these ads.

$57 million.

Isaac: I mean, this is the largest political ad campaign. Except for the Bloomberg, Steyer and Sanders presidential campaigns, they spent the most on political ads more than anyone else, um, besides those three presidential campaigns.

Dan: More than Biden, more than Warren,

Isaac: more than, yeah. And more than any, more than any Super pac.

And so that campaign has continued, uh, you know, even in the past few months since the pandemic.

Dan: Yep. Isaac is a Washington DC digger. He found more than a million bucks worth of ad spending since the pandemic started.

Isaac: You know, that’s continuing. Even while these same companies are, are cutting pay and benefits for doctors and they actually stand by that, you know, they say that the legislation’s gonna be bad for.

The doctors that they employ, so they think that’s a good use of their money.

Dan: Yeah. Although it’s not like they think it’s such a great idea. They’re taking out these ads in their own names.

Isaac: Right. It’s how stuff like this is usually done,

Dan: how it’s usually done in DC. So what are we supposed to do about this?

Well, first of all, stay safe. Wash your hands. Take good care of yourself. I mean, we cannot turn into rage machines. That is not healthy. So what next then? I mean, I don’t know exactly, but it cannot hurt to call your elected representatives. Tell them what you know about groups like Doctor Patient Unity. We talked about them in an episode from last December called Can They Freaking Do That?

And if you haven’t heard it, check it out. We’ll have a link to it wherever you’re listening to this episode. And meanwhile, tell your friends what you’re learning. Tell them about this show. Build up this community. You’re not imagining things and you’re not dumb. This stuff is complicated and we gotta keep learning about it.

We cannot let ourselves get bamboozled or discouraged. Thank you for listening to this show, and thank you for supporting us on Patreon. As I was writing the script for this episode, I got a note from Kathleen. She had just signed up to support us, and this is what she wrote. Thanks so much for making this show.

I can only listen sometimes ’cause I have to manage my rage at the system. I have chronic illness, so I’ve fought a few insurance battles in my time. I’m actually on hold with United right now calling about why the same blood tests from the same doctor at the same lab were covered last year and this year they charged me $177.

I called the number on the back of the card and they said. We are closed now. Please call back between the hours of 8:00 AM and 8:00 PM in your time zone. Um, it’s 4:00 PM Thanks for sharing information and investigating. I feel like I can’t do anything about this horrible system by myself and your show gives me a little bit of hope.

Kathleen, thank you so much for this note. You have totally made my day. I’ve been hearing from more of you and we’ll be sharing more of what I’ve been hearing next week till then. Take care of yourself. You can share stories and questions at Arm and a leg show.com/contact or call and leave us a message.

We might play it. The number is 7 2 4 2 7 6 6 5 3 4. That is 7 2 4 Arm N leg, and you can join Kathleen in supporting a show by going to Arm and a Leg Show. Dot com slash support. This episode was produced by me, Dan Weisman, edited by Anne Heliman. Daisy Rosario is our consulting managing producer, and Adam Raimundo is our audio wizard.

Our music is by Dave Weiner and Glue dot sessions. This season of an arm and leg is a co-production with Kaiser Health. That’s a nonprofit news service about healthcare in America. That’s an editorially independent program of the Kaiser Family Foundation. Kaiser Health News is not affiliated with Kaiser Permanente, the big healthcare provider.

They share an ancestor. This guy Henry j Kaiser, he had his hands in a lot of different stuff. Concrete, aluminum ship building. When he died more than 50 years ago, he left half his money to the foundation that later created Kaiser Health News. You can learn more about him and Kaiser Health News at Arm and Leg show.com/kaiser.

Diane Weber is National Editor for Broadcast and Tanya English is Senior Editor for Broadcast Innovation at Kaiser Help News. They are editorial liaisons to this show. Finally. Thank you to some of our new backers on Patreon pledge. Two bucks a month or more. You get a shout out right here. Thanks this week to folks who joined us for the first time and some who increased their pledge.

Thank you so much. To Joe De Blassio, Sally Kervin, Christopher Larson, Catherine Harkins, Davina Del Firo, Chris Clark and Petia Rojas. Thank you. Stay safe, be well. Take care of each other.