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

       Healthcare reform measures and the prevailing wisdom of industry visionaries tell us that the way we pay our doctors must change. In a nutshell, we're told that doctors paid on a "piecemeal" basis: have an incentive to order and do more work (at greater cost); treat the immediate condition rather than the whole patient; and are disconnected from any responsibility for the real, total cost of their patients' care. Thus, the push towards "accountable care" calls for remaking doctors' compensation models to discourage piecemeal work, reward patient satisfaction and instill awareness of total system costs. Government agencies, health insurers and hospitals that regularly deal with doctors' compensation are anxious to put this theory into practice.

 But be careful what you wish for.

        At least some evidence shows that patient satisfaction doesn't indicate the best medical care. Writing at KevinMD.com, Kevin Pho, M.D. acknowledges that patient satisfaction scores are a good way to identify ways to improve the patient experience, and that "happy patients" are far less likely to file malpractice claims. He also recognizes that patient satisfaction generally translates into higher revenue for hospitals. On the other hand, studies do not indicate a strong correlation between patient satisfaction and quality of care. In fact, the compulsion to make patients happy by "giving them what they want" may run counter to both quality and cost considerations.

       Another serious challenge to the prevailing wisdom comes from David Shaywitz, M.D., PhD, writing at The Health Care Blog (1/17/12). He questions whether it is appropriate and in the best interest of patients for doctors to be thinking about society's healthcare costs?

"The cornerstone of medicine, the most fundamental principle, in my mind, is the absolute, rock-solid belief that your doctor is your unqualified advocate and will work as hard as possible to provide you with the best medical treatment possible, as if you were a member of her own family...

 

Perhaps (and it pains me to say this), physicians have something to learn from our colleagues in the law.  It could be that we are better served by an adversarial system of some kind, where at least you can trust your doctor, rather than by a system in which physician’s role is to assess not only your disease but your relative value to society.

We’re not there yet, but when I read about the supposed moral imperative to be responsible stewards of the public healthcare dollar – yes, I worry.  And so should you."

 

I think David Shaywitz is right.

       So what does this mean for the prevailing wisdom? It may mean that the prevailing wisdom is as much about how to maximize payment under the coming ("reformed") system as it is about improving patient care. Could we be substituting a new set of flawed incentives for the old flawed incentives? As conflicts arise in the competition over the ever-shrinking pie, the players need to steer clear of false assumptions. The process of sorting out the allocation of limited dollars will be hard enough without paying for dubious improvements. 

[Image: Wish, November 22, 2009, by Jessica Tam]

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       The New Jersey State Bar Association's Dispute Resolution Section is offering a three part series of programs on decision making entitled "Judgments: How We Reach Them And How We Can Improve Them." The series will open with a presentation on January 24, 2012 by Randall Kiser, the principal analyst at DecisionSet and an expert on attorney-client decision making. He is the author of two books, Beyond Right and Wrong: The Power of Effective Decision Making for Attorneys and Clients, and How Leading Lawyers Think: Expert Insights Into Judgment and Advocacy.

       Randall Kiser's work first got my attention in 2008 when the study underlying his first book was released and covered by The New York Times. Most notably, his study revealed that in 85 percent of the cases that went to trial, the final outcome after trial was outside the last zone of settlement determined by the parties prior to trial. (In my view, this means that mediation offers much better odds than going to trial.)

       Participants in this program will explore whether our customary means of evaluating disputes is impeding or facilitating their resolution. The program will be offered at the NJSBA's Law Center in New Brunswick at 6:00 p.m., and will include dinner and 1.5 CLE credits. It is a great opportunity to hear a nationally recognized authority address a topic that is central to our professional lives, but not well understood. Pre-registration is available on the NJSBA website.

       Subsequent programs in this series will focus on decision making in the contexts of arbitration (February 28) and mediation (March 27). Details on these programs will follow in upcoming posts.

[Image: Deep In Thought, by Ben Pollard, March 16, 2008]

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       The Centre for Effective Dispute Resolution ("CEDR") has been a leader in dispute resolution and conflict management worldwide for over 20 years. Based in London, CEDR operates a dispute resolution service that offers a broad range of processes, including mediation, arbitration, early neutral evaluation and neutral facilitation. In addition, CEDR provides ADR training in a variety of skills. CEDR is widely recognized as the foremost trainer of mediators in the world.

       This summer, I was fortunate to join 10 other mediators in taking CEDR's Mediator Skills Training Course in New York City. Over four, full days, our group received the benefit of demonstration, practice and observation by a faculty of four very experienced CEDR instructors. The course culminated in a each participant mediating a simulated case, with professional actors playing the parties. Upon displaying satisfactory performance of a set of key competencies, participants were awarded the status of CEDR Accredited Mediator. This was the first time this accreditation course had been offered in the United States. 

       The CEDR course was very effective for several reasons. First, the quality of the faculty was excellent, and the class size was small. Second, the course fostered self-awareness through attention to detail and significant coaching feedback. Finally, because the course culminated in an individual assessment of fitness for accreditation, the participants' level of focus and effort was notably higher than in the typical mediation training. For any mediator with basic training and some real life mediation experience, this course can be a valuable step in professional development.

[Image: U.S. Navy Photo by Mass Communication Specialist 2nd Class Jason R. Zalasky, 9/8/07]

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     Arbitration has been getting a bum rap lately. Many complain that arbitration has become litigation by another name, with its only advantage being the opportunity of the parties to select the arbitrator. The advantages of speed and lower cost have largely gone by the wayside, or so it would seem. Thomas Stipanowich, writing a guest post at the Disputing blog, recently analyzed this development quite well. Essentially, he argues that all stakeholders in the arbitration game, i.e., parties and in-house counsel, outside counsel, arbitrators and arbitration service providers, bear some responsibility for the shortcomings of arbitration today.

     Professor Stipanowich suggests that all stakeholders will achieve the advantages of arbitration when they cease to treat it like litigation. In the case of arbitration service providers, he urges them to reject a "one size fits all" approach, and to focus on assisting parties and their counsel in crafting an arbitration process that best suits their dispute.

     The American Arbitration Association ("AAA") clearly took this theme to heart in issuing its new Healthcare Payor Provider Arbitration Rules, effective January 31, 2011. These new rules will be available in AAA arbitrations between healthcare payors (e.g., insurers, HMOs) and healthcare providers (e.g., hospitals, doctors) if the parties agree to their use, or in the future, if parties specifically include reference to these rules in their contracts. Among the highlights of these new rules are features that should serve to restore the traditional advantages of arbitration over litigation.

1. The rules permit all claims and counterclaims between a payor and a provider to be combined in a single arbitration, even if they involve different contracts and different patients.

2. The rules provide for three different types of proceedings or "tracks" which may be used by agreement of the parties, regardless of the amount in controversy: desk/telephonic track; regular track; or complex track. Absent the parties' agreement, the regular track will be the default selection. Each of these tracks mandates procedural characteristics that are detailed in the rules.

3. The rules require the AAA to establish and maintain a national healthcare roster of arbitrators, and from that roster, the AAA has designated a subset of arbitrators with expertise in payor-provider disputes.

4. Regardless of the amount in controversy, the rules provide for the arbitration to be conducted by one arbitrator, unless both parties agree upon a panel of three.

5. The rules mandate that a preliminary conference be held regardless of the track selected. The arbitrator is given authority to resolve preliminary issues at that conference, including many that are common to payor-provider disputes.

6. The rules limit the number of depositions permitted by each party according to the track selected: desk/telephonic - 0; regular - 1; and complex - 2.

7. The rules prohibit dissemination or publication of the arbitration award (except as necessary for its enforcement) unless both parties agree in writing.

8. The rules provide that the arbitration award will have no precedential, res judicata or collateral estoppel effect, unless both parties agree in writing.

     Without question, arbitrations conducted under these rules should be faster, less expensive and more efficient than litigation of the same claims. Of course, as Professor Stipanowich points out, the other players in the game will have to do their part as well. The arbitrators on the AAA national healthcare roster for payor-provider cases (myself included) understand what these rules are intended to accomplish. As parties and outside counsel become familiar with these new rules, their use should go a long way towards reestablishing arbitration as the preferred means of resolving payor-provider disputes.

     [Image: A game of women's Aussie Rules Football]

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       Hat tip to John Goodman's Health Policy Blog for pointing out a recent Thomson Reuters - HCPlexus survey of U.S. doctors' predictions on the effects of the Patient Protection and Affordable Care Act, a/k/a the Health Care Reform Act of 2010 ("HCRA"). Among the highlights:

1. 65% of respondents said that the quality of health care in the U.S. will deteriorate over the next five years, while only 18% thought it would improve.

2. 78% of respondents thought that health care reform will have a negative impact on physicians, while only 8% predicted  a positive effect. The majority believed that the process for physician reimbursement will become less fair to physicians.

3. 58% of respondents predicted health care reform would have a negative impact on patients, compared with 27% who said it would be positive and 15% who said its effect would be neutral.

4. 45% of all respondents indicated they did not know what an ACO is, and no category or specialty had more than 17% of respondents who were actively participating in discussions to form an ACO.

       You can find an Executive Summary of the survey and obtain the entire report on the HCPlexus website.

       Whether the majority of this survey's respondents are right or wrong remains to be seen. But there is no doubt that their prevailing mind-set is driving much of the dialogue among physicians, hospitals and other providers today. Parties on all sides of negotiations and disputes over relationships to be played out over the next five years should take note.

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     The next meeting of the New Jersey State Bar Association's Dispute Resolution Section will feature a program addressing the implications of two recent decisions of the Superior Court, Appellate Division: Estate of Ruszala v. Brookdale Living Communities and Moore v. Woman to Woman Obstetrics & Gynecology. I previously offered my view that these decisions appear to endorse the possibility that pre-dispute arbitration agreements between healthcare providers and their patients can be enforceable in New Jersey.

     I  will moderate the program at the Law Center in New Brunswick at 6:00 p.m. on Tuesday, October 12th. The speakers scheduled to appear all had a direct role in the cases to be discussed.

Joel I. Fishbein, Esq. served as counsel for appellants (defendant) in Ruszala.

Robert Paarz, Esq. served as counsel for appellants (plaintiff) in Moore.

Michael Carcaise represents the insurer in Moore that advocates the use of pre-dispute arbitration agreements.

The program includes dinner and qualifies for CLE credits! Contact the New Jersey State Bar Association for registration information.

            [Image: The Doctor and His Patient, by Jan Steen, c. 1665]

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       In two rulings handed down over the last two weeks, the Appellate Division of the Superior Court of New Jersey removed any doubt that New Jersey healthcare providers can enter into enforceable, pre-dispute agreements to arbitrate medical malpractice claims.

        Estate of Ruszala v. Brookdale Living Communities involved an arbitration clause in a nursing home admissions agreement, which on its face violated a 2003 New Jersey statute barring such agreements. The Court found that the New Jersey statute was preempted by the Federal Arbitration Act (a result consistent with recent, similar rulings by the Supreme Courts of Illinois and Missouri), and went on to state that there is nothing about such agreements to render them unenforceable, per se. The Ruszala Court did strike down aspects of the arbitration agreement found to be unconscionable and against public policy in New Jersey, i.e., a cap on compensatory damages, limited discovery and a ban on punitive damages.

       Moore v. Woman to Woman Obstetrics & Gynecology concerned the ability of a physician to enforce an agreement to arbitrate signed by a patient as part of the physician's patient intake process. The Moore Court ruled that such an agreement was not, per se, unenforceable. Once again, the Court made clear that such agreements must be judged on a case by case basis to determine whether the patient's rights to due process have been preserved. Issues such as the patient's receipt of a copy of the agreement and the circumstances of her signing the agreement were remanded to the trial court for findings of fact.

       I wrote here previously about the growing practice among physicians to require patients to sign pre-dispute arbitration agreements. Ruszala and Moore make it clear that there is nothing to prevent New Jersey hospitals, nursing homes, physicians and other healthcare providers from requiring that patients agree to arbitrate future disputes, including malpractice claims. To be sure, providers choosing this path would do well to tailor their agreements to accomplish their primary objective: shifting the forum for the resolution of malpractice disputes from a jury to an arbitrator (or panel of arbitrators). Piling on other impediments to the patient's claim, such as limitations on non-economic damages, discovery and punitive damages remain suspect, and are ill-advised. Care should also be taken in assuring that the patient fully understands what he or she is signing, and has a realistic right to "opt out."

       Absent an appeal and reversal by the New Jersey Supreme Court, or federal legislation along the lines of the proposed Arbitration Fairness Act of 2009, pre-dispute agreements to arbitrate malpractice claims in New Jersey are here to stay. Two major providers of ADR services, the American Arbitration Association and the American Health Lawyers Association have policies against accepting medical malpractice claims arising under pre-dispute agreements to arbitrate. Accordingly, providers and counsel considering the use of such agreements must carefully address the language governing the arbitrator selection process.

[Image: Green Traffic Light, by TheGo Team]

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     Last week I was fortunate to hear a presentation to a group of hospital trustees and senior management by noted healthcare consultant Jamie Orlikoff. For three hours, Jamie shared his knowledge and predictions on what healthcare reform and related developments will mean for hospitals and doctors in the near (2-5 year) future. The audience was riveted, but to say the least, his comments were unsettling.

     In a nutshell, Jamie sees change coming not so much from what the recent healthcare reform statute says, but from the economic and political forces that inspired the new law. In his view, the implementation of the law through regulatory action, and the corresponding movement of private health insurers in parallel with the federal payors, will create irresistible forces, compelling hospitals and physicians to radically alter their current modus operandi.

     The number one driver of change is the unsustainable growth in U.S. healthcare costs. Although the healthcare reform law, on its face, does almost nothing to reduce costs (and increases costs by covering many now uninsured), it sets the stage for future regulatory action that will decrease the amount of money the federal government spends on every covered person. Once everyone is covered, and private insurers are following the federal government's lead, there will be few places for hospitals and doctors to shift their costs. They will have to learn to get by with less, much less.

     Slashing reimbursement rates will be part of this process, but the primary focus will be on using economic incentives to create improved quality and outcomes. Whether through accountable care organizations ("ACOs") or value based purchasing ("VBP" - bundling payments for episodes of care), these measures will require hospitals and doctors to actively cooperate with respect to the economic consequences of their patient care decisions, and to be prepared to accept smaller slices of a smaller pie. This has been unheard of in most places outside of the Mayo Clinic and Geisinger Health System. That is about to change. According to Jamie Orlikoff, many hospitals around the country already have doctors on their medical staffs banging on their doors, asking to be acquired and "integrated" into a larger network of providers. I don't disagree that when the money starts to shrink, many physicians will seek safety in numbers and a bigger tent.

     Where I disagreed with Jamie Orlikoff was on the inevitability of this process as it concerns well established, successful physicians. In my mind, physicians who have been in practice for 20-25 years, who have a loyal patient following, strong referral sources and a sterling reputation, will look at ACOs and VBP and ask themselves, what does this mean for me? Many of such physicians will have the ability to retire in the next 5 to 15 years. What will be their incentive to embrace changes that, when all is said and done, translate into lower incomes than they now enjoy?

     Jamie Orlikoff would argue that such physicians will have no choice - they must either get on the bus or get run over. I'm not so sure. No matter what the government does, whichever physicians are thought of as the best in their areas will not change, and patients will still want to see them. Patients will pay out of pocket, complain to their insurers and call their Congressmen if they are denied that opportunity. This may not last forever, but it may last for enough of that 5-15 year window to make successful physicians less than eager to jump on the reform bandwagon. In addition, such physicians may easily overestimate how long they will be protected by this phenomenon.

     What does this mean for those attempting to construct the relationships and systems that healthcare reform seems to require?  It means they need to identify how many highly successful physicians they have to work with, and how many of those "old dogs" will learn new tricks.

     For some hospitals/health systems, there simply may be too many old dogs that will not learn new tricks, at least not in their current environment. Jamie Orlikoff advised that such hospitals/systems, regardless of their current financial performance, would be wise to seek a merger or affiliation with a larger system, thus gaining the ability to better absorb or manage physicians unwilling to accept the changes required by healthcare reform. For those with fewer such old dogs, or for the hospitals/systems with no ability or willingness to merge, the challenge will be formidable.

     Hospitals/health systems should resist an extreme response to their old dogs in either direction, i.e., neither write them off nor capitulate to their every demand. Integrating successful physicians into the relationships and systems mandated by healthcare reform will require understanding their view of the world, a commitment to collaboration and skillful conflict resolution.

[Image: Gloria Swanson and Teddy the dog, from the film "Teddy At The Throttle," 1916]

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     Earlier this year I wrote about the oral argument before the New Jersey Supreme Court in Guido v. Duane Morris. The case concerns the plaintiffs' right to sue their former lawyers for malpractice based upon a settlement the plaintiffs accepted after mediation two years earlier. It required the Court to reconcile two previous opinions, Puder v. Buechel, 183 N.J. 428 (2005) and Ziegelheim v. Appollo, 128 N.J. 250 (1992). In a decision handed down last week, the New Jersey Supreme Court ruled that the former clients could overcome a motion for summary judgment and proceed to trial - essentially to attempt to prove that the settlement agreed to by them could have been better but for the negligence of their former lawyers.

     Despite assurances in the Court's opinion to the contrary, Guido paints a large bullseye on every lawyer whose client has second thoughts about a mediated settlement after the ink is dry. Significantly, the Court emphasized that when putting the mediated settlement in Guido on the record,

"unlike in Puder, plaintiffs did not represent to the court that
they were satisfied with the settlement, or that the settlement
was fair and adequate. (emphasis added) The entirety of the colloquy between the court and plaintiffs concerning the settlement addressed but two questions:  whether plaintiffs understood and agreed to abide by the settlement terms, and whether plaintiffs were subject to any impediments in understanding those terms.  Glaringly absent is any representation by plaintiffs that the settlement was 'fair' and 'adequate,' a representation deemed crucial in Puder."

 

      Did the Court really believe that the plaintiffs in Guido v. Duane Morris would not have answered "yes" if asked whether they were satisfied with their settlement, and whether it was fair and adequate? Apparently these are now magic words that all counsel would be wise to include in written acknowledgments from their clients upon approving any mediated settlement.

     [Image: Kitano Odori kabuki dance, by Onihide, April 18, 2009]
 

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