Friday, October 4, 2013

The Dog Quadrant

Before anyone gets the wrong idea, this post is not about pet therapy.  It is not about the purported advantages of owning a dog.  It is not even about the new research on dog intelligence that I was frankly surprised by, especially the research showing how easily dogs can beat non-human primates on specific tasks.  So much for that massive frontal cortex conferring supreme advantage over the animal kingdom.  No - this is about managed care and using the term "dog" in its pejorative context.

Several years ago, I was burned out and suffering from the type of large scale mismanagement that is so common in organizations that run on managed care principles.  I attempted to approach the problem with humor by reading Dilbert cartoons.  Read the first few pages in the Dogbert Management Handout to see what I mean. I soon realized that this stuff was too close to the truth about health care management and decided to look for other management styles.

I happened across the work of Peter Drucker and his ideas about managing knowledge workers that were considered revolutionary.  There was certainly nothing like that going on in health care.  The managed care approach to managing physicians was to actually treat them like they were not knowledge workers but assembly line workers.  Drucker's stroke of genius was in recognizing that managers know much less about products and processes than knowledge workers and that the business was essentially the product of the knowledge workers.  Managed care techniques are diametrically opposed and are based on the fact that business guidelines are somehow relevant to medical care and even may actually be called medical quality.  There is no health care process more autocratic and primitive than managed care. I have reviewed how this bizarre set of circumstances evolved in several posts on this blog.

Along the way, I also interviewed a health care business management expert and asked him if there were any definitive texts that are used to train business people about managing health care and he referred me to the text Strategic Management of Health Care Organizations.   I started to read and study the text, initially trying to find out why Drucker was completely ignored by health care managers.  That was when I encountered the BCG Analysis for a Health Care Institution (p 254).   BCG is an abbreviation for Boston Consulting Group who came up with this technique for analyzing products and services.  In this case, there was a four quadrant graph that differences in market growth rate and relative market share position.  I don't have permission to reproduce it here so I will do my best to describe it briefly.  The high growth/high market share quadrant was termed "Stars" and contained services like orthopedics, cardiology, oncology, and women's service.  The medium/high and high/low quadrants were called "Cash Cows" and "Problem Children".  The lower right hand quadrant of the graphic were the "Dogs" and they included psychiatry, ENT, pediatrics and others.

I am no financial analyst, but what is wrong with this picture?  Let me give you a hint.  If you have a portfolio of medical services and one of them is selected for rationing and the others are not - it should easily end up in the Dog quadrant.  The selective rationing of psychiatric and mental health services is a known fact for the last 30 years.  When you ration a service you naturally slow its growth and reduce the market share.  The market share is reduced even more precipitously when you start shutting down bed capacity and hospitals.  Early in the course of all of these events some high profile teaching units in hospitals affiliated with prestigious medical schools were shut down and it was described as being secondary to a lack of reimbursement from companies using managed care models.  If you are in a business that severely distorts the market by controlling growth and market share it makes little sense to pretend that you can analyze portfolios across an imaginary market and make decisions about resource allocation in an organization.

If you were a physician unlucky enough to be trapped in this process it played out in several ways.  There were endless meetings that formed the base of misinformation.  There was the suggestion that productivity was the only fair way to reimburse physicians and the implication that some physicians were much less productive than others.  That was a good way to provoke the competitive, even though in practically all cases that was not true.  Then there was the usual barrage of financial information.  Overhead figures from who knows where.  The suggestion that physicians may need to cover the salaries of any physician assistants working with them.  It was an unending painful process designed to give the appearance that physicians had a say in the business, except at every critical decision they did not.  In the end all there were was a long series of Dogbert management PowerPoints.

I have not seen the latest edition of the book and I wonder if there have been any additional pejorative classifications for mental health or psychiatry.  One thing is for sure.  You don't end up in the Dog quadrant because of lack of real demand or free markets.  You end up in the Dog quadrant because of managed care and their supporters in the government.

And then they can use this analysis to remove even more resources.

George Dawson, MD, DFAPA


  1. I experienced this as part of the private practice arm of the University of Tennessee Medical School faculty, UTMG. When I first started, the administrators worked for us, but it eventually turned into the other way around, especially when "Tenncare" - Medicaid as managed care - was implemented by the state, and UTMG entered that business.

    Even though the clinicians in psychiatry were bringing in significantly more money than the costs they incurred (The University covered the practice group's rent and phones!), they started to divide up the "overhead" (including million dollar CEO salaries) among all the departments. We were each told that we were always "losing money" because the department could not pay our share! Under the old system, if you brought in more than you agreed to, you kept a percentage of every additional dollar you brought it, so many doctors (not me) worked extra hours to bring in more money. After the change, the were told that they were "expected" to bring in as much as they did before the change, but without getting the bonus!

    I told them I don't do double binds, and I was making them money. Luckily I kept the terms of my original hire - I had to bring in 160% of my UTMG salary and I was in fact making 200% of my UTMG salary. I had tenure, so I dared them to fire me.

    They left me alone and kept me quiet by slowly increasing the university percentage of my salary and decreasing the UTMG part. That way, their books "looked" better with me because I did not decrease my practice hours accordingly.

    1. The "losing money" strategy is a familiar one. Our group morphed from a physician centric self insured clinic with a mission to treat anyone who walked through the doors irrespective of their ability to pay to an HMO. One day our group was given a presentation that showed only 1 doc (out of about 25) was covering their salary (the productivity argument). That seemed amazing to all of us considering the years we had been in business. Further examination showed that the graphic plotted our work RVUs versus a total RVU expectation! Making the correction showed an entirely different story. New management also introduced a number of strategies for increasing micromanagement of physicians. The group I was working with contained highly competent and highly motivated physicians. There is no better way to destroy morale than to chronically suggest they are not working hard enough or coming up with a system to "incentivize" people that is inadequate and amounts to much more unreimbursed work. Morphing into a system where docs are told what to do clinically was just a matter of time.