Healthcare Neutral ADR Blog : New Jersey Healthcare ADR Lawyer & Attorney : Healthcare Neutral : Richard Webb : New York Metropolitan Area

     With all the media coverage of healthcare reform and its political ramifications, its easy to get caught up in the debate. Notwithstanding the recent setbacks, there will be some kind of reform in the not too distant future, if only because the sources of healthcare payment cannot keep up with the costs of providing care. Most healthcare economists agree that real reform will only come when the financial incentives of the current system are altered to reward quality and efficiency rather than volume. 

     A concept frequently put forth to address this objective is the "accountable care organization" or "ACO" (any reputable idea in healthcare must be reducible to a three letter acronym). Essentially, ACOs are associations of healthcare providers (typically, doctors and hospitals) that share responsibility for the coordinated care provided to a pool of common patients. ACOs can share clinical information and operate with some degree of financial integration. The providers in the ACO are then jointly "accountable" to the third party payers who fund the care provided to their beneficiaries by the ACO. (See the recent post in the Healthcare Economist explaining ACOs and some of the key characteristics of various ACO models.)

     Another concept aimed at the same objective is "value based purchasing" or "VBP."  Under VBP, the current system of Medicare payments to physicians (based on a per task menu of fees) would be converted to one based on efficiency and quality.  In order to assess a physician's efficiency and quality, the services provided to any patient would have to be grouped with all services within the same "episode of care." As noted in another post at the Healthcare Economist, this process of grouping carries with it a number of unanswered questions.

     Sooner or later, the use of ACOs and VBP in some form will become a reality.  There is no other politically viable approach on the horizon to reducing healthcare costs. But that will be only the beginning of a wave of conflict within the world of healthcare providers and third party payers.  ACOs, VBP and any other three letter acronym to come will only reduce healthcare costs by yielding a result by which the total dollars paid to doctors and hospitals for providing care to a group of patients is reduced. Otherwise, why bother? When the pie gets smaller, everyone's piece will get smaller, too. Those who provide the highest quality, most efficient services may get a larger piece, but that will only make everyone else's piece even smaller.

     Most doctors and hospitals do not believe they are overpaid under the current regime. Many have  experienced decreased net income over recent years. All will enter the new arena of ACOs and VBP firmly holding the "bottom line" position that they must at least maintain their financial status quo. The convergence of so many irreconcilable bottom lines will create conflicts that play out in a variety of scenarios. Who will lead the ACO? Who will be allowed in or kept out? Who will decide the internal compensation model, and what will it be? What effect will the ACO have on existing hospital-physician relationships? On existing medical practice agreements? How far will ACOs go to create, preserve and assert their control over patients in dealing with third party payers? How much of the benefit of their "efficiency" will providers share with third party payers?

 [Image: Thanksgiving pie aboard U.S. naval ship in the Persian Gulf, by Photographers' Mate Airman Rome J. Toledo, November 25, 2004]

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Holly Hayes Bovio and Victoria VanBuren over at Disputing were very kind to post Holly's Q&A with me on Mediation in Healthcare.  Disputing has become one of my favorite ADR blog reads, and Holly and I share both a Duke connection and a focus on healthcare. I'm looking forward to collaborating with them again on healthcare ADR topics of interest.

  [Image: Thank You for using the Garden State Parkway, June 5, 2006, via Wikimedia Commons]

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     On Wednesday, January 20, 2010, the New Jersey Supreme Court heard oral argument in Guido v. Duane Morris, a case focused on whether a client could sue his former lawyers for malpractice based on a settlement the client had accepted years earlier.  It was on appeal from an Appellate Division decision in favor of the client that was well covered by Mary Pat Gallagher on LAW.COM in July 2009.  The case will require the Supreme Court to reconcile two of its previous decisions, Ziegelheim v. Apollo, 128 N.J. 250 (1992) and Pruder v. Buechel, 183 N.J. 428 (2005).  The legal community is closely watching the case, and both the New Jersey State Bar Association and the Trial Attorneys of New Jersey participated as amicus curiae.

     As reported by Michael Booth in the New Jersey Law Journal online edition, the oral argument found counsel and the Court struggling to parse the holdings in Ziegelheim and Pruder, with a heavy overlay of public policy considerations involving the attorney-client relationship. Although the outcome will likely be an important milestone in the law of attorney malpractice, its potential effect on the use of mediation should not be overlooked.

     Guido's underlying cause of action was settled after mediation. The settlement was placed on the record in the trial court, and included questioning of the parties to confirm their understanding and agreement to be bound by the settlement. Nonetheless, the Appellate Division found that the plaintiff's later alleged realization that his lawyers had not explained the long-term value and marketability implications of the settlement was a sufficient basis for a legal malpractice claim.  There was no question raised about the propriety of the mediation or the enforceability of the settlement itself (other than an argument by Duane Morris that Guido should have to ask the trial court to reform the settlement before suing his former counsel).  But a Supreme Court decision in favor of the client in Guido should cause lawyers to think differently about how they settle cases in mediation.

     Parties and their counsel often work long and hard in mediation sessions to hammer out a resolution to complex issues. Along the way, each party spends bargaining chips and gains concessions, the implications of which are, of necessity, evaluated on the fly. At the end of a successful day, the parties memorialize their settlement, sometimes subject to a formal agreement and court approval, sometimes not. Along the way, counsel will help their clients understand the legal consequences of their negotiation moves, and usually will take some time to review the final proposed settlement before sealing the deal.  But how much of such good counsel is enough?

     If parties to a settlement can look back with 20-20 hindsight, years later, and successfully assert that legal malpractice occurred based on their counsel's failure to fully explain issues such as those alleged in Guido, the parties' ability to settle many cases in mediation will be significantly hampered. This is not because parties will need to be better informed about their settlement decisions than they are now, but because counsel will need to be prepared to prove that their clients were well informed. Today, counsel can reasonably rely upon a brief conversation, or even a nod, to confirm the client's understanding on a given point. Often, that conversation or nod will follow hours of previous conversations and nods that unfolded during the course of the mediation. Will the awaited Guido decision effectively require all of that to be written down, and fully draped with the litany of disclaimers that characterize formal opinion writing?  If so, each mediation session should be scheduled to include an extra day, post-settlement, for the "c.y.a." exercise.

     One way of dealing with this problem is to have counsel provide a written cover letter to the client in connection with a formal settlement agreement prepared following the mediation. But this option raises the possibility that the client will balk at the formal settlement agreement and allege that the lawyer's explanatory letter came too late.  If the essence of the settlement reached at the conclusion of the mediation is already enforceable, the lawyer is still in the soup.

  [Image: Home-made Hungarian goulash soup, by Hu Totya, October 12, 2008]

     The Bar will anxiously await the Supreme Court's decision. In the meantime, if you have thoughts about how this issue affects your participation in mediation, please share your comments.

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     [Image: King Arthur and the Knights of the Round Table, via Wikimedia Commons.]

     I was delighted to see my comments on the use of "the mediator's proposal" included in a roundtable on that subject hosted by Steve Mehta over at Mediation Matters. Others weighing in on the topic were Lee Jay Berman, Don Philbin and Jeff Thompson. It is interesting to see how much agreement occurred among four mediators who did not discuss their answers to Steve's questions in advance.

     If you are interested in mediation and do not already read Mediation Matters, you should.  Steve Mehta regularly turns out well written posts on interesting mediation subjects from a very practical perspective.

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[Image: Anselm Feuerbach's painting of a scene from Plato's Symposium, 1869.]

     The Cardozo School of Law Journal of Conflict Resolution will hold its 11th annual symposium in New York City on Thursday, November 5, 2009, entitled "Conflict Resolution at Work, ADR in the Private and Public Sectors."  The full day program will include panels on the use of ADR in real estate, federal government and healthcare.  I will be part of the panel on healthcare along with moderator Ellen Waldman, Jerry P. Roscoe, Chris Stern Hyman and Joan Ilivicky,  The symposium is free, and includes breakfast, a reception and CLE credits! If you attend, please stop by and say hello.

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       Dan Ariely's Predictably Irrational blog pointed me to a recent article in Economist.com called "Malice Aforethought."  The article reviews a study in Psychological Science by Drs. Kurt Gray and Daniel Wegner of Harvard University that essentially asked the question:

"If someone accidentally steps on your toe, it hurts.  But does it hurt more if you think he did it deliberately?"

According to The Economist, their answer is that it probably does.

       The article describes the tests administered by Drs. Gray and Wegner to 43 students, who assessed levels of discomfort associated with tasks that were in some cases stated to be intentionally inflicted by their study partner, and in other cases the result of random selection and contrary to the will of their study partner.  Discomfort was rated by the participants on a scale of one to seven. 

"...the students rated the strength of shocks they thought had been intentionally administered at 3.62 on average; those they thought unintentional averaged 3.00.  The researchers also found the apparently unintentional shocks hurt progressively less as the experiment went on, whereas those perceived as deliberate continued to hurt as much."

        Whether this research can be extended to non-physical harm remains to be seen.  But I am willing to bet that it can. The lesson for parties in mediation is clear:  When you really didn't intend to inflict the "harm" being experienced by your adversary, let him know it.  This is related to, but different from the often touted value of an "apology."  Apologies carry implications of fault, guilt and regret that may not be appropriate or possible at every stage in a mediation. Convincing the other side that you did not intend a result to occur is more limited and easier to do.

       The greatest benefit of communicating an absence of intent is its capacity to build a bridge of understanding that is often required for a successful mediation.  Without admitting fault or responsibility, one party can often say, "I understand how this makes you feel, and I just want you to know that it was never my intent for you to experience that result."  This can be followed up by an explanation of what the offending party was trying to do or say, thus giving credibility to the denial of intent. Particularly in cases based upon or motivated by a perceived injustice or betrayal, this approach moves the mediation to a different level, where realistic and constructive solutions can be reached.

[Image: Car vs. motorcycle accident in Pisek, Czech Republic, February 1, 2008, by Chmee2]

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          Yesterday's Wall Street Journal Health Blog had a post by Jacob Goldstein on the potential struggle brewing between primary care physicians and specialist physicians over the need to free up more money for primary care -  a widely accepted element of necessary healthcare reform.  Earlier that day, the American College of Physicians called for more federal funding for primary care, not through "budget neutral" adjustments in the Medicare physician fee schedule (i.e., by reducing payments to specialists), but simply by paying more upfront for primary care.  The WSJ Health Blog interpreted the primary care position paper this way:

"Congress could try to pay primary care docs more by cutting Medicare payments to some of the rich specialists.  But the rich specialists would fight that tooth and nail, and nothing would ever get done."

          Reading this, I couldn't help but recall a time in my former life when I heard a newly proposed law firm partnership compensation system described by one of its proponents this way: "It will work well because some partners will make more, and everyone else will make about the same."  Regrettably, law firm profits are a zero sum game.  There may be enough "stimulus" mania (i.e. printing of money) in Washington these days to save the primary care docs and the specialists from a zero sum fate, but probably not for very long.

          More than two months ago, this primary v. specialist conflict was predicted and thoroughly dissected by Maggie Mahar and Niko Karvounis in The Health Care Blog, where they dubbed it the "Spread the Wealth Controversy."  In the end, they concluded that money alone would not be the answer to the problem:

"Ultimately, we will probably need to grapple with primary care as a cultural issue within the medical community....in medical schools, students are sometimes looked down upon for choosing to specialize in cognitive care.  Further, research has shown that the medical school curriculum actually drains students of empathy, which may contribute to de-valuing communicative, interpersonal care....The bottom line is that we need to take a multi-faceted approach to the primary care crisis."

          For a more provacative treatment of the need for systemic reform of primary care, see "Mythology and Healthcare Reform" by Monte Uyemura, M.D., also in The Health Care Blog.  Better yet, just subscribe to The Health Care Blog - its a great read on all matters concerning the health care system.

          I have friends and colleagues on both sides of this primary v. specialist conflict.  Most of them don't see it as their conflict at all, and find it unpleasant to talk about.  Unfortunately, it won't likely go away.

[Image: "Artwork" with 20 Dollar bills]

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       I recently learned that Betsy Ryan, the President and CEO of the New Jersey Hospital Association, has started a blog called "Healthcare Matters."  It appears as part of the New Jersey Hospital Association's public website. 

"Healthcare Matters eamines the many issues confronting New Jersey's hospitals and their patients. Readers are encouraged to join the discussion, because healthcare matters- to all of us."

       For those not familiar with Betsy Ryan, she was recently appointed to the NJHA's top management post after years of service as the organization's Chief Operating Officer and General Counsel.  She has extensive experience in the legislative, regulatory, financial and operational issues facing New Jersey's hospitals.  As a result, her blog is well positioned to address a subject not currently covered directly in the blogosphere.

       So far, Healthcare Matters has captured some of Betsy's personal perspectives on current events affecting New Jersey's hospitals.  She has already attracted some lively discussion.  Subscription by RSS is easily done, and I encourage all to join in and expand this dialogue.

[Image: welcome kitty, by Portraitlady4306, August 27, 2007] 

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[An astronaut training in the Neutral Buoyancy Laboratory at the NASA Johnson Space Center]

       I recently read an excellent commentary in the New Jersey Law Journal (195 N.J.L.J. 95, January 12, 2009, page 19) by retired New Jersey Superior Court Judge Harvey Weissbard entitled "The Myth of Judicial Neutrality."  Available online by subscription only, it's worth digging out your old hard copy if you missed this when it first appeared.  In Judge Weissbard's view:

"The notion that a judge is neutral is one of many legal fictions.  The concept presumes that the judge is a tabula rasa, a clean slate."  Instead, Judge Weissbard suggests, "every judge is a product of life experiences, which result in an indelible imprint we may call the judge's personal philosophy...We all know that a lifetime of practice in a particular area cannot be shrugged off when the robe is put on.  And personal world views, derived from family experience or religious indoctrination, are no less likely to influence the judge."

       Judge Weissbard's central point is that judicial neutrality exists only as the result of a conscious struggle by judges to recognize and subordinate their personal values and beliefs to the objectivity that all litigants are promised.

       So, too, is the neutrality of the non-judicial "neutral" in arbitration, mediation and other forms of alternative dispute resolution.  There is no denying the "personal philosophy" one acquires through a lifetime of professional practice, business and personal relationships.  In the course of a friendly conversation or barroom debate, that "personal philosophy" would likely show itself rather clearly.  But like a judge, the ADR neutral must face what Judge Weissbad calls "the proverbial elephant in the room" and handle each case fairly and objectively.

       Unlike a sitting judge, the ADR professional's "neutrality" as perceived by the parties is subject to a higher test in the form of the opinion of the marketplace.  Although judicial forum shopping can and does occur to a limited extent, ADR neutrals are subject to immediate and lasting negative consequences if any party believes the neutral is "biased."  Parties and their counsel will simply vote with their feet. 

       This is the reason why "subject matter expertise" can coexist with "neutrality" on the ADR professional's resume.  Very few neutrals have had a legal practice that was evenly divided among the representation of parties on all sides of the disputes in which they now claim to have subject matter expertise.  In selecting an ADR professional, parties can attempt to figure out whether a candidate's legal experience potentially predisposes him or her to that party's point of view (i.e., a neutral with a shortsighted business plan), or they can select someone who has a reputation for being fair, open-minded and neutral. 

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