Wall Street Journal
Tale of Two Docs:
Why Dentists Are Earning More
Dr. Bryson Focuses On Cosmetics, Not Insurance;
A Family Physician Lags
A $15,000 'Smile Makeover'
By MARK MAREMONT
Staff Reporter of THE WALL STREET JOURNAL
January 10, 2005
(See Corrections & Amplifications item below.)
YARDLEY, Pa. -- Randy Bryson and his brother-in-law Larry Fazioli are both medical professionals in their 40s who practice in Pennsylvania. The similarity ends there.
At Dr. Bryson's office here in suburban Philadelphia, a fountain softly burbles in the airy reception area, and patients are offered cappuccino or paraffin-wax hand treatments while they wait. Dr. Bryson works four days a week, drives a Mercedes, and lives in a 4,000-square-foot house with a pool. He and his wife, who works part-time in the same practice, together take home more than $500,000 a year.
At Dr. Fazioli's busy practice near Pittsburgh, patients crowd a utilitarian waiting room, and his cramped office is piled high with records awaiting dictation. Dr. Fazioli says he works between 55 and 80 hours a week, and his annual income of less than $180,000 has been stagnant or down the past few years. He drives a Chevrolet.
The key to their different lives: Dr. Bryson is a dentist, and Dr. Fazioli is a family-practice physician.
Once the poor relations in the medical field, dentists in the past few years have started making more money than many types of physicians, including internal-medicine doctors, pediatricians, psychiatrists, and those in family practice, according to survey data from the American Dental Association and American Medical Association.
On average, general dentists in 2000, the most recent year for which comparative data are available, earned $166,460 -- compared with $164,100 for general internal-medicine doctors, $145,700 for psychiatrists, $144,700 for family-practice physicians, and $137,800 for pediatricians. All indications are that dentists have at least kept pace with physicians since then.
Those figures are a sharp contrast to 1988, when the average general dentist made $78,000, two-thirds the level of the average internal-medicine doctor, and behind every other type of physician. From 1988 to 2000, dentists' incomes more than doubled, while the average physician's income grew 42%. The rate of inflation during that same period was 46%.
Factor in hours worked -- dentists tend to put in 40-hour weeks, the ADA says, while the AMA says physicians generally work 50 to 55 hours -- and the discrepancy is even greater.
"I feel so bad for Larry," says Dr. Bryson of his brother-in-law the doctor. "Especially when he's on call, he puts in some pretty long hours. Physically, it's really taking a toll on him."
Dr. Fazioli says he still gets a lot of satisfaction out of being a doctor and earns a comfortable living. But he admits he'd steer his children away from primary-care medicine as a career. Of his three sons, he adds, two might be interested in dentistry instead. "They see that Randy is doing OK," he says.
Many specialist physicians, such as cardiologists and radiologists, continue to rake in large incomes, generally exceeding those of specialist dentists such as oral surgeons and periodontists. But specialist dentists, too, have seen their paychecks increase at a much faster rate than their physician counterparts.
Healthier Teeth
Dentists have grown richer even as cavities, once the main cause for visiting them, have declined, largely because of fluoridation of drinking water and improved preventive care. According to a study published in the Journal of the American Dental Association in 1999, cavities in 6-to-18-year-olds dropped by three-fifths from the early 1970s to the early 1990s -- even though many children in lower socioeconomic groups still lack adequate dental care.
As people born in the 1960s and later have grown into adulthood, they tend to need fewer fillings than their parents did and are keeping their teeth longer. Painful disease-related procedures such as root canals are declining, too.
So why are dentists so handily outpacing doctors? In part, it's because dentists have avoided being flattened by the managed-care steamroller, and instead many have turned into upscale marketers. Dental care makes up less than 5% of the overall U.S. health bill, and hasn't been a major focus of cost-cutting.
Although some dental insurers have tightened up on reimbursements, most private dental insurance is still paid on a fee-for-service basis. Many optional procedures aren't covered by insurance, leaving dentists free to charge whatever the market will bear. About 44% of all dental care is paid by patients out of their own pockets, according to federal statistics for 2002, compared with just 10% for all physician and clinical costs.
While dentists may be able to focus more on marketing costly optional treatments, many physicians can't make the same kind of switch in their practices.
In competing for patients' own dollars, dentists have become more entrepreneurial, tapping into today's image-conscious zeitgeist. Many dental offices are festooned with pitches for everything from $400 teeth-whitening treatments to $1,200-per-tooth veneer jobs.
There are even $30,000-plus full "smile makeovers" offered by a growing coterie of dentists who specialize in high-end cosmetic procedures. Public awareness of such techniques has been heightened by reality-TV shows such as ABC's "Extreme Makeover" and Fox Broadcasting's "The Swan."
L. Jackson Brown, an economist who is associate executive director at the ADA, says cosmetic procedures account for about 10% of the nation's $80 billion annual dental bill, and are rising fast.
Sally McKenzie, a dental-practice consultant in La Jolla, Calif., who has been in business for 25 years, calls it a "golden era for dentistry." The most common call she gets, Ms. McKenzie says, is to help dentists manage "uncontrolled growth."
The situation is a sharp turnaround from the 1980s, when dentistry seemed to be in decline. Falling rates of tooth decay and a glut of dentists produced much soul-searching in the profession. Several dental schools closed, while others slashed enrollment. Dentists wrung their hands over their inability to get more insurance coverage -- a failure that now looks heaven-sent.
Dentists also have taken advantage of new technology, some of it controversial even within the profession. One major advance was the invention of porcelain veneers, which are wafer-thin shells of material that are bonded to the fronts of teeth to repair chips or misalignment. Unlike older surfacing materials, porcelain resists staining and looks like a natural tooth surface. Some dentists claim the procedure, which involves an irreversible filing down of natural teeth, can create problems. But proponents say that, done right, such veneers can stay in place for years.
"Today, you can create a smile" from materials that people "can't tell are not real teeth," says Joe Barton, a Jacksonville, Fla., dentist who specializes in cosmetic procedures. He says he typically charges from $12,000 to $14,000 to put veneers on 10 front teeth, requiring about 3½ hours of his time. "We are competing with cars and vacations and jet skis and new homes, in terms of what people are spending their disposable income on," he says.
Some dentists use sophisticated software-imaging programs to show patients virtual before-and-after photos of what their teeth could look like with cosmetic help. Others have installed $100,000 computer-assisted design devices to make crowns in their own offices.
Intra-oral video cameras, tiny pen-shaped devices that can be used to display images of the inside of a patient's mouth, have become de rigueur. The cameras, which typically cost $2,000 or more, have little clinical purpose -- but there's nothing like seeing an up-close video of unsightly teeth on an overhead TV to persuade a patient that something needs to be done.
The turnabout in fortunes has made some dentists pity their physician colleagues. Robert H. Gregg, a dentist in Cerritos, Calif., says he had an operation for a snapped Achilles tendon a few years ago, which required him to go under general anesthesia for more than an hour. He was amazed his insurer paid just $2,000 to his orthopedic surgeon for the procedure. "I get about $3,000 for a three-unit bridge," Dr. Gregg says. "He's getting pennies on the dollar to what his skill level was."
Dr. Gregg says he offered to pay more out of his own pocket. The surgeon's office manager, he adds, "told me I was the first person" to ever make such a request.
The dentist and physician who are brothers-in-law, Drs. Bryson and Fazioli, both grew up in western Pennsylvania. They are related through Dr. Fazioli's wife, Robin, who is Dr. Bryson's younger sister. She sardonically refers to her brother and husband as "the prince and the pauper." She says she "definitely" doesn't want her sons to follow her husband into medicine. "I see how hard he works," she says. "I tell them, 'maybe you should go into dentistry. See how well Uncle Randy is doing.' "
Dr. Bryson, 44 years old, wanted to be a dentist from the time he was 5, his sister recalls. "We called him Rockefeller Bryson," she says. "He always liked the finer things in life."
While attending dental school in Philadelphia, Dr. Bryson met his wife, Toni Margio, a fellow student. They soon opened a joint practice in affluent Yardley, about a half-hour north of the city.
By the late 1990s, their practice was booming. But Dr. Margio says they both felt like they were "always on roller skates." They worked 10-to-12-hour days, and had to rely on Dr. Margio's mother to care for their son, now 8 years old. Dental insurers were forcing them to discount fees.
Five years ago, after attending classes at the Las Vegas Institute for Advanced Dental Studies, a school known for an aggressive brand of cosmetic dentistry, they dramatically changed their practice. They stopped accepting insurance -- patients are billed directly and can wrestle with insurers on their own -- and started plugging veneers, whitening and other elective procedures.
"We shifted from needs-based dentistry to wants-based dentistry," says the youthful-looking Dr. Bryson, who has a dazzling smile. "It has totally transformed our practice and our personal lives. We see a much smaller number of patients, at a slower pace. I can't wait to get in in the morning."
At their open, two-story office, large photos of patients with gleaming smiles adorn walls painted light blue. Classical music plays in the background, and the air is filled with a pleasant smell. "Aromatherapy," says Dr. Margio, a petite, dark-haired woman with a perfect-looking set of teeth.
On a recent afternoon, a patient is sitting in one of Dr. Bryson's exam rooms with small electrodes attached to her face. The nerve-stimulating device feeds data about the patient's jaw muscles to a computer system.
"Move your lower jaw forward," Dr. Bryson instructs, peering at the computer screen. "Perfect."
The patient, who complains of jaw pain from grinding her teeth, is being fitted for a night mouth guard, or orthotic. Although many dentists charge from $200 to $500 for guards, Dr. Bryson sells one he says is designed to keep the patient's jaw more relaxed. The price: $2,200, little or none of which is likely to be covered by insurance.
'Smile Makeover'
To help patients afford such treatments -- or the $12,000 to $15,000 they charge for a partial "smile makeover" of eight to 10 teeth -- Drs. Bryson and Margio offer financing plans that allow patients to borrow from a bank and pay their bills over as long as five years.
The couple say their practice's gross revenues are up about 60% to about $1.6 million a year since they shifted their focus five years ago. Costs have also risen, to close to 65% of revenue in some years, mainly because of outlays for computers and continuing dental education.
Since changing their practice, Dr. Bryson says he has cut back from 60-hour weeks to 32 clinical hours a week, plus some paperwork time. Dr. Margio now works 18 clinical hours, giving her more time with their son. Both take every Wednesday off. "I coach my son's soccer team," Dr. Bryson says. "I don't miss a practice."
The work, he says, is also more satisfying. "I get patient letters, I get hugs. People cry when they see their teeth. I never got that before."
Across the state in New Castle, at 2 p.m. on a recent Wednesday, Dr. Fazioli was scheduled to have left his office an hour earlier. "This is supposed to be my half day," says Dr. Fazioli, a compact man with a mustache, graying temples and a self-deprecating manner. "But I'm lucky if I get home at 3 or 4."
An overflow of patients has left him behind schedule, and his desk is piled high with records to dictate. "Patient canceled colonoscopy," Dr. Fazioli says into his tape recorder, recounting his exam of an elderly woman. "Says she didn't feel comfortable with the procedure. She's still smoking cigarettes. Had a discussion with her about the need for total cigarette cessation."
He groans as a nurse brings in another armful of charts. "No more. I gotta get out of here."
Becoming a doctor once seemed like a dream job for Dr. Fazioli, who grew up in a mill town about 10 miles from New Castle. His father had operated machinery for a U.S. Steel mill until it closed in the 1970s. After working as a pharmacist, Dr. Fazioli attended medical school, and in 1990 hung out his own shingle as a family practitioner.
At first, the practice grew quickly. His income early on was more than $130,000 a year, and he added a couple of partners. Being a doctor in a small city, he says, means "you get a lot of respect. It's nice when you help people. They're grateful."
The trouble started with the managed-care reforms of the mid-1990s, Dr. Fazioli says. Signing managed-care contracts provided him with easy access to new patients. But more patients meant more office visits at the cut-rate fees demanded by insurers. The federal government's Medicare program has been another headache. Medicare patients make up at least a third of his practice.
"Our reimbursements have stayed flat, but our overhead is up," says Dr. Fazioli, 47. "My take-home pay has definitely gone down." He says he had hoped to slow down a bit as he neared 50, "But I definitely can't do that right now. I've got to keep seeing patients."
Although his typical work week is about 50 to 55 hours, every third week he's on call, pushing the work load closer to 80 hours and often requiring him to go to the hospital in the wee hours.
Dr. Fazioli and his family live in a colonial-style house in a wooded area outside of New Castle. He won't give his exact income, but says it's between $150,000 and $180,000 a year. If he had to do it all over again, he says, he'd still consider being a primary-care doctor, but "I'd look hard at other areas, other states."
As for his brother-in-law the dentist, Dr. Fazioli says, "Randy certainly did his homework. People who come to him want his service. He can charge as much as he can."
Dr. Fazioli recently went to a local dentist to get a bridge put in. The procedure, he says, took about 1½ hours over two visits. The bill: $1,200, all of which he had to pay from his own pocket. "I was thinking, 'How many people do I have to see to get that?' " Dr. Fazioli says. "If I made $200 in that amount of time, I'd be lucky."
Corrections & Amplifications:
The total number of root canal procedures performed in the U.S. rose 13% from 1990 to 1999, according to the American Association of Endodontists, a trade group of specialist dentists who focus on that treatment. But the rate among people 45 years and younger is declining. This article incorrectly said the total number of root canals is falling.
Monday, April 14, 2008
Sunday, April 06, 2008
Medicare having difficulty saving money
NYTimes
April 7, 2008
Health Plans
Medicare Finds How Hard It Is to Save Money
By REED ABELSON
An ambitious three-year experiment to see whether the Medicare system could prevent expensive hospital visits for people with chronic conditions like congestive heart failure and diabetes has suggested that such an approach may cost more than it saves.
The test borrowed a practice long available through private health plans. Nurses periodically place phone calls to patients to check whether they are taking their drugs and seeing the right doctors. The idea is that keeping people healthier can help patients avoid costly complications.
After paying eight outside companies about $360 million since mid-2005 to try to improve such patients’ health, Medicare is still trying to figure out whether the companies were able to keep people healthier. But the preliminary data indicate that the government is unlikely to save money.
The experiment, meanwhile, is proving something else: how difficult it can be, politically and practically, to make fundamental changes in the sprawling $400 billion federal Medicare program, which now covers some 44 million Americans.
With health costs soaring, few would dispute that the government needs to find better ways to spend its Medicare dollars. But because the system relies heavily on private industry and is subject to Congressional oversight, few changes come easily, and even experimental programs can take on lives of their own.
Several of the companies, including two that specialize in disease management, Healthways and Health Dialog, are pressing Medicare to continue the project in some fashion beyond the end of this year, saying the government mishandled the experiment.
The senators from the home states of those two companies, including John Kerry, Democrat of Massachusetts, and Lamar Alexander, Republican of Tennessee, have taken up their cause, demanding that Medicare rethink ending the experiment.
“Stopping this program,” the senators wrote in a letter to Medicare last month, “creates serious health risks for the Medicare beneficiaries already enrolled and heavily reliant” on the services provided by the experiment.
Medicare, for its part, says the experiment so far has not reduced medical bills enough to offset the fees the companies are charging the government — as much as $2,000 a year for each patient. A final accounting of the experiment is likely to come no sooner than next year.
About 160,000 people have taken part in the test, known as the Medicare Health Support program, and some 70,000 are still receiving calls from nurses employed by the companies.
Experts say that Medicare and the companies alike were too optimistic about how easy it would be to prevent costly complications and hospital visits by patients who are very sick.
“Everybody shares some blame,” said Dr. David B. Nash, a health policy professor at Thomas Jefferson University in Philadelphia, who at the outset was enthusiastic about the program’s prospects for transforming Medicare.
On the experiment’s front lines are nurses like Jill Coker, who works for Healthways and makes 25 to 30 telephone calls a day, trying to ensure that each patient receives a call every few weeks. Through dozens of such nurses, Healthways, based in Nashville, is overseeing the care of 16,000 people in Maryland and Washington.
Ms. Coker said she spent most of her time on rudimentary issues, like explaining to patients what prescription drugs they are on and helping them devise ways to make sure they remember to take their medicine. She may also arrange a conference call with a patient’s doctor if there are some worrisome new symptoms, or she may direct someone to a specialist to get better care.
“There have been numerous diabetics who didn’t even know what an endocrinologist was,” she said.
Medicare has not finished studying how well patients do under the program and whether patients are satisfied with the help. Three of the original companies — Cigna, McKesson and LifeMasters — eventually dropped out.
The program has failed to meet the government’s original financial target: an overall savings to Medicare of 5 percent after factoring in the companies’ fees and the patients’ medical bills.
Initially, the companies were supposed to return their payments if they did not hit that target. Late last year, Medicare relaxed its standard, requiring only that the experiment not end up costing the government money.
The agency says that it will consider keeping any promising pieces of the program. But it says it cannot legally extend the experiment beyond December if it is not budget neutral.
“We want to lift up the seat cushions to find every nickel and dime we can find,” said Herb B. Kuhn, the deputy administrator for Medicare. The agency says no final decision on the fate of the program has been made.
But some health care experts say Medicare should move on to seek other ways of managing the care of the chronically ill, if alternatives seem to hold greater potential to deliver both cost savings and better care.
“Medicare is doing exactly what we should want Medicare to do — to test different life forms of disease management and see what works best,” said Dr. Arnold Milstein, the chief physician for Mercer Health and Benefits, a consulting firm. But, he said, “This particular form of disease management is not looking promising.”
Medicare is already exploring other ideas, like the development of so-called “medical homes,” where a doctor with a team of other professionals oversees a patient’s care. A few doctors’ groups involved in a separate Medicare experiment have reported some success in saving the government money by more actively managing their patients’ care.
Dr. Mark B. McClellan, who was the head of Medicare when the experiment began and is now a policy analyst at the Brookings Institution in Washington, says the point of Medicare’s experiments is to find out which approaches might work. “This is a hard problem that is not going to be solved all at once,” he said.
Many of the companies involved in the program say the experiment was flawed in the way it was designed and that Medicare has failed to work with them to make the program a success.
“We haven’t proven anything,” said Dr. Jeffrey L. Kang, a former Medicare official who is now the chief medical officer for the insurer Cigna.
The companies say Medicare signed up patients who were much sicker than they had expected. Instead of giving companies a chance to intervene before someone went to the hospital, Dr. Kang said, most of the patients were already so ill that it was “no longer a preventive program.”
The companies also say Medicare failed to make good on its promise to give them timely information about the use of prescription drugs, for example, or lab results that would have allowed them to help direct the patients’ care.
“We overestimated the real desire expressed by the organization,” said Ben R. Leedle Jr., the chief executive of Healthways, who has been an outspoken critic of Medicare. His company’s stock fell by 16 percent in a single day after the agency announced the experiment’s preliminary results in January.
Mr. Leedle says that Healthways will probably be able to demonstrate savings from at least some of its Medicare efforts, although the company also says it is projecting a loss on the experiment because it may have to pay back federal fees. Medicare has not made public data on the results for individual companies.
For its part, Medicare said that it had worked extensively with the companies to address their concerns and that its final analysis would take into account how sick the patients initially were.
One thing that already seems clear is that after the fees are paid to the contractors, any cost savings may be elusive. In late January, the agency estimated that to meet their targets the five remaining companies would need to reduce their monthly claims by an average of $300 to $800 per patient for the remainder of the experiment. That would represent a 20 to 40 percent reduction in the patients’ current medical bills.
George B. Bennett, the chief executive of Health Dialog, which is overseeing about 15,000 Medicare patients in western Pennsylvania, favors continuing the experiment, but with adjustments. He wants Medicare to give the companies more flexibility to manage patients in ways they say have already been proven to work among the employees they cover in commercial plans. Such measures, he said, include giving the insurer a bigger role in selecting the patients, with an eye toward identifying the ones most likely to be helped.
“Medicare actually has the possibility of saving $20 billion to $30 billion,” Mr. Bennett said, “if they undergo what is being done in the private sector.”
Whatever happens with this particular program, Medicare says it wants to keep experimenting. “We’re not giving up on this stuff,” said Mr. Kuhn, the Medicare deputy. “We definitely want these programs to work.”
April 7, 2008
Health Plans
Medicare Finds How Hard It Is to Save Money
By REED ABELSON
An ambitious three-year experiment to see whether the Medicare system could prevent expensive hospital visits for people with chronic conditions like congestive heart failure and diabetes has suggested that such an approach may cost more than it saves.
The test borrowed a practice long available through private health plans. Nurses periodically place phone calls to patients to check whether they are taking their drugs and seeing the right doctors. The idea is that keeping people healthier can help patients avoid costly complications.
After paying eight outside companies about $360 million since mid-2005 to try to improve such patients’ health, Medicare is still trying to figure out whether the companies were able to keep people healthier. But the preliminary data indicate that the government is unlikely to save money.
The experiment, meanwhile, is proving something else: how difficult it can be, politically and practically, to make fundamental changes in the sprawling $400 billion federal Medicare program, which now covers some 44 million Americans.
With health costs soaring, few would dispute that the government needs to find better ways to spend its Medicare dollars. But because the system relies heavily on private industry and is subject to Congressional oversight, few changes come easily, and even experimental programs can take on lives of their own.
Several of the companies, including two that specialize in disease management, Healthways and Health Dialog, are pressing Medicare to continue the project in some fashion beyond the end of this year, saying the government mishandled the experiment.
The senators from the home states of those two companies, including John Kerry, Democrat of Massachusetts, and Lamar Alexander, Republican of Tennessee, have taken up their cause, demanding that Medicare rethink ending the experiment.
“Stopping this program,” the senators wrote in a letter to Medicare last month, “creates serious health risks for the Medicare beneficiaries already enrolled and heavily reliant” on the services provided by the experiment.
Medicare, for its part, says the experiment so far has not reduced medical bills enough to offset the fees the companies are charging the government — as much as $2,000 a year for each patient. A final accounting of the experiment is likely to come no sooner than next year.
About 160,000 people have taken part in the test, known as the Medicare Health Support program, and some 70,000 are still receiving calls from nurses employed by the companies.
Experts say that Medicare and the companies alike were too optimistic about how easy it would be to prevent costly complications and hospital visits by patients who are very sick.
“Everybody shares some blame,” said Dr. David B. Nash, a health policy professor at Thomas Jefferson University in Philadelphia, who at the outset was enthusiastic about the program’s prospects for transforming Medicare.
On the experiment’s front lines are nurses like Jill Coker, who works for Healthways and makes 25 to 30 telephone calls a day, trying to ensure that each patient receives a call every few weeks. Through dozens of such nurses, Healthways, based in Nashville, is overseeing the care of 16,000 people in Maryland and Washington.
Ms. Coker said she spent most of her time on rudimentary issues, like explaining to patients what prescription drugs they are on and helping them devise ways to make sure they remember to take their medicine. She may also arrange a conference call with a patient’s doctor if there are some worrisome new symptoms, or she may direct someone to a specialist to get better care.
“There have been numerous diabetics who didn’t even know what an endocrinologist was,” she said.
Medicare has not finished studying how well patients do under the program and whether patients are satisfied with the help. Three of the original companies — Cigna, McKesson and LifeMasters — eventually dropped out.
The program has failed to meet the government’s original financial target: an overall savings to Medicare of 5 percent after factoring in the companies’ fees and the patients’ medical bills.
Initially, the companies were supposed to return their payments if they did not hit that target. Late last year, Medicare relaxed its standard, requiring only that the experiment not end up costing the government money.
The agency says that it will consider keeping any promising pieces of the program. But it says it cannot legally extend the experiment beyond December if it is not budget neutral.
“We want to lift up the seat cushions to find every nickel and dime we can find,” said Herb B. Kuhn, the deputy administrator for Medicare. The agency says no final decision on the fate of the program has been made.
But some health care experts say Medicare should move on to seek other ways of managing the care of the chronically ill, if alternatives seem to hold greater potential to deliver both cost savings and better care.
“Medicare is doing exactly what we should want Medicare to do — to test different life forms of disease management and see what works best,” said Dr. Arnold Milstein, the chief physician for Mercer Health and Benefits, a consulting firm. But, he said, “This particular form of disease management is not looking promising.”
Medicare is already exploring other ideas, like the development of so-called “medical homes,” where a doctor with a team of other professionals oversees a patient’s care. A few doctors’ groups involved in a separate Medicare experiment have reported some success in saving the government money by more actively managing their patients’ care.
Dr. Mark B. McClellan, who was the head of Medicare when the experiment began and is now a policy analyst at the Brookings Institution in Washington, says the point of Medicare’s experiments is to find out which approaches might work. “This is a hard problem that is not going to be solved all at once,” he said.
Many of the companies involved in the program say the experiment was flawed in the way it was designed and that Medicare has failed to work with them to make the program a success.
“We haven’t proven anything,” said Dr. Jeffrey L. Kang, a former Medicare official who is now the chief medical officer for the insurer Cigna.
The companies say Medicare signed up patients who were much sicker than they had expected. Instead of giving companies a chance to intervene before someone went to the hospital, Dr. Kang said, most of the patients were already so ill that it was “no longer a preventive program.”
The companies also say Medicare failed to make good on its promise to give them timely information about the use of prescription drugs, for example, or lab results that would have allowed them to help direct the patients’ care.
“We overestimated the real desire expressed by the organization,” said Ben R. Leedle Jr., the chief executive of Healthways, who has been an outspoken critic of Medicare. His company’s stock fell by 16 percent in a single day after the agency announced the experiment’s preliminary results in January.
Mr. Leedle says that Healthways will probably be able to demonstrate savings from at least some of its Medicare efforts, although the company also says it is projecting a loss on the experiment because it may have to pay back federal fees. Medicare has not made public data on the results for individual companies.
For its part, Medicare said that it had worked extensively with the companies to address their concerns and that its final analysis would take into account how sick the patients initially were.
One thing that already seems clear is that after the fees are paid to the contractors, any cost savings may be elusive. In late January, the agency estimated that to meet their targets the five remaining companies would need to reduce their monthly claims by an average of $300 to $800 per patient for the remainder of the experiment. That would represent a 20 to 40 percent reduction in the patients’ current medical bills.
George B. Bennett, the chief executive of Health Dialog, which is overseeing about 15,000 Medicare patients in western Pennsylvania, favors continuing the experiment, but with adjustments. He wants Medicare to give the companies more flexibility to manage patients in ways they say have already been proven to work among the employees they cover in commercial plans. Such measures, he said, include giving the insurer a bigger role in selecting the patients, with an eye toward identifying the ones most likely to be helped.
“Medicare actually has the possibility of saving $20 billion to $30 billion,” Mr. Bennett said, “if they undergo what is being done in the private sector.”
Whatever happens with this particular program, Medicare says it wants to keep experimenting. “We’re not giving up on this stuff,” said Mr. Kuhn, the Medicare deputy. “We definitely want these programs to work.”
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