Industrialization of Medicine Has Already Started

The Mayo Clinic, which pioneered general surgery and group medical practice a century ago, is reaching out to acquire or affiliate with family doctors.

So is every other research-oriented medical complex from the UCLA Medical Center to Boston’s Leahy Clinic. Consequently, the value of family practices is going up, but that of specialists’ practices may decline as we proceed to reform health care in America.

Rejiggering the system has already begun in earnest. Individual states are instituting health reforms of their own, anticipating the Clinton Administration’s program--to be released in September.


And a pattern is developing. Ultimately we will see large purchasing organizations in each state responsible for buying medical care and insurance for millions of people, either through employers or the tax system.

The aim of such powerful groups will be to rationalize delivery of care, from routine doctor visits up through critical treatment. And the focus will be on the primary care provider--the doctor that individuals or families choose for initial treatment, whether that person is called a family practitioner, an internist, an obstetrician-gynecologist or a pediatrician.

Those primary care physicians will be the “gatekeepers,” referring patients on, if necessary, for secondary care--ordinary surgery and hospital treatment--or tertiary care--the high powered diagnostic and advanced medicine one receives from centers like Mayo, Cleveland Clinic, USC Norris and others.

Decisions about referrals, care and the financing of treatment will be subject to the purchasing groups. So while the U.S. system will retain individual choice of doctor, oversight of that doctor’s choices and governance of the whole system will shift to the purchasers. “The system will be cooperative and interactive, representatives of patients will sit on the purchasing groups, too,” notes Dr. Richard Tompkins, a Mayo Clinic specialist in treating arthritis.

The consequences are profound.

First, family practices are becoming more valuable as big medical centers bid to buy or affiliate with a primary link and assure themselves referrals in an integrated system. There is no standard price for a practice. Legal restrictions on purchase and payment for medical services differ in each state, explains Carl Weissburg, of Weissburg & Aronson, a Los Angeles law firm specializing in medical questions. “But intangibles are most important, such as the age of the patients, location of the practice and the length of the physician’s service contract.”

It’s a case of the last becoming first. The 261,224 family doctors, who make up 40% of all physicians in the United States, have held lower status and often made less money than the other 391,837 or 60% of physicians who specialize in hearts, lungs and other parts of the human system and its diseases such as cancer and arthritis.

But now specialists could be in oversupply as the new system limits their use as it will certainly limit--or rationalize--the purchase and use of expensive medical equipment. Small diagnostic clinics may close as medical services consolidate into integrated groups.

The aim will be to provide care as needed but to emphasize all that can be done at the level of the family practice and in home care. The new system will be good news for visiting nurses. But it may be bad news for makers of CT scanning and medical resonance imaging equipment, such as General Electric and Siemens.

What’s happening is that medicine, now a fragmented cottage industry even though it accounts for more than $800 billion in annual expenditure, is consolidating. “It’s the industrialization of medicine. We’re finally beginning to function like industry, with each stage adding value and handing up to the next,” explains Dr. Schumarry Chao, medical director of Aetna Life & Casualty Co.

And, as in any industrial consolidation, the race is on to be a survivor. That’s why Mayo Clinic and others are trying to put together integrated groups. Mayo, the Rochester, Minn.-based group practice with 1,000 specialists on its staff has affiliated with small town family practices in Minnesota, Wisconsin and Illinois. Cleveland Clinic, with 500 physicians, has affiliated with Kaiser Permanente of Ohio, to assure itself referrals for specialized care.

Both Mayo and Cleveland have also branched out to distant states. Mayo Clinics have opened in Scottsdale, Ariz. and Jacksonville, Fla., and there is a Cleveland Clinic in Ft. Lauderdale, Fla.

Meanwhile, community hospitals such as Little Company of Mary in Torrance and Huntington Memorial in Pasadena are under competitive pressure from local medical centers like UCLA, which want to affiliate with family practices to form their own integrated groups. So the community hospitals are reaching out also, affiliating with other medical facilities and contemplating relationships with emerging national chains such as Mayo.

Where are patient interests in all this? The hope, of course, is that consolidation will bring down medical expenses for all. Beyond that, the promise of reform is that more people will get more rational care. One certain improvement is that with state-run purchasing groups, health insurance will now be available to all and portable from one employer to another.

But shakeout is another word for consolidation. Clearly, there will be pain, dislocation and possibly unemployment as a result of all the changes. Therefore a little perspective is in order. When Charles and William Mayo founded their clinic 100 years ago surgery was still routinely fatal. Today, thanks to the advance of medical science, it is routinely successful. The reason for reform is to make sure we can go on paying the bill for such wonders.