business-2089534_1920by Glenn Sabin, Founder of FON Consulting 

I recently heard from the clinical director of a major academic integrative medicine program based in a large, progressive institution. His program is one of the originals with a steady following of patients. But the program had a problem: it was losing money.

It’s the typical story of 90-minute comprehensive new-patient consults, and extensive follow-ups; appointments that require time to hear a patient’s story and explore root causes, as opposed to the more expedient ‘name it, blame it, and tame it’ engagements with prescription pad at-the-ready.

When a private practice physician runs an integrative program through insurance and Medicare, that can be a challenging economic model. When a hospital or health system does—and by default most have to—it’s simply unfeasible.

Billing insurance and Medicare for time and medical complexity for integrative medicine consults results in meager reimbursements; it only works if the institution in which your program is housed subsidizes your program indefinitely.

If you’re a healer in private practice, in rural America, with low overhead and unambitious retirement plans, the economics can work. They do not work within high overhead hospital and health systems settings.

As for the situation with the academic integrative medicine clinic leader I spoke with, the math is straightforward: though revenue is generated from interdisciplinary practitioners and other provided services, the more patients seen by his physicians, the lower the net revenues, because there is an average monetary loss on overall patient load.

Shortly after our discussion, I learned about the closing of two leading academic-based integrative medicine programs. The Phoenix-based University of Arizona Integrative Health Center (AIHC), and Beth Israel’s 16-year-old Continuum Center for Health and Healing (CIHH).

Both programs seem to have fallen victim to the merging of large health systems. Though I do not know the exact reasons these programs were eliminated, I venture to guess it was purely economic.

Prior to mergers and acquisitions, analysts identify areas of cost-savings and economies of scale. The University of Arizona’s medical school and clinical operations have been combined under the $7B Banner Health organization, while CIHH fell under the new management of $3.5B Mount Sinai Health System.

A more troubling aspect of these closings is the AICH’s program with Maricopa County, announced with great fanfare in 2011. From the press release:

“The Phoenix Integrative Primary Care Clinic, as part of the UA College of Medicine-Phoenix, will allow AzCIM to study the health- and cost-effectiveness of integrative versus conventional medicine in Maricopa County’s 13,000 employee system. Medical outcomes will be compared between the patients receiving conventional medical care and those receiving integrative care.”

The study was called IMPACT for Integrative Medicine PrimAry Care Trial. The protocol for this comparative effectiveness study of the clinical and cost outcomes of an integrative primary care clinic model was impressive. (The results of this program are important to know, but were unavailable when this article was completed.)

It’s important to note though, that the small flagship Tucson clinic run by the University of Arizona’s Center for Integrative Medicine (AzCIM), and founded by Dr. Andrew Weil, is still in operation.

Fear of the Unknown

We have a new Congress threatening to repeal, replace, and/or rebrand the Affordable Care Act—it contains more than 20 clauses pertaining to wellness and prevention—which could turn Medicare into a voucher system, and slash Medicaid.

In a recent post I wrote the following in describing the Rise of integrative health and medicine and the current political environment:

“Since politics have always affected the speed of adoption of new policies that serve the greater good of ‘population health’, it has never been more important to remain proactive and diligent in advancing our collective goals.

Inevitably, there will be significant challenges and growing pains. However, steady consumer demand for health creation over disease care, and the positive economics of a healthy population, will ultimately win out over powerful industry and partisan politics.”

The provision of integrative health approaches as an overlay to standard of care at the institutional level has never been more important for the human condition, and as a pragmatic economic imperative for those charged to reduce healthcare spending.

Take appropriate actions now to mitigate the risk of your integrative health program being eliminated, marginalized, or put into a silo of the ‘poor cousin’ of institutional service lines.

Strengthening the Economics of Integrative Health Programs Operating within Institutions

The realities of third-party payer and CMS reimbursement, as mentioned above, are sobering. So how can integrative medicine programs run sustainably, and become a critical, must-have ‘service line’ within any institutional setting?

Importantly, how can integrative health and medicine physician knowledge and leadership become more valued across a hospital or health system?

We need to consider various ideas to generate further dialogue, and to better position integrative health concepts and programs as part of the fabric of institutions. Following are just a few.

Engage ALL Stakeholders

Get actively involved with all the stakeholders, not just physician leadership, but administrative leadership, including the financial folks. Find your champions wherever they live and:

    • Know the community and demographics your institution serves.
    • Understand the economic underpinning of your organization, the needs and goals of its executive board, and its foundation.
    • Recognize how internal and external politics, as well as legal and regulatory issues affect decision-making.
    • Informed by this assessment, create an effective strategy for engagement.

Connect the Economic Dots

Integrative health clinical services tend to be high-touch, low-tech, and low-margin. Several hospital service lines such as surgery, imaging, radiation oncology are low-touch, high-tech, and high-margin.

The high-margin interventions keep an institution solvent, and therefore vibrant. It allows hospitals and health systems to continually reinvest in their equipment, infrastructure, human resources, and community.

What I’m suggesting is that, because the mostly low-margin integrative health services provide excellent care, and empower patients to get involved in their own health, the program can take on the role of creating ‘brand’ ambassadors for your institution.

Over time, this creates significant downstream revenues for an organization’s higher-margin service lines. After all, where else would these patients go should they become sick? And, when they patronize the institution you operate within, you can bet they will sing your program’s praises to anyone who will listen; especially to their friends and family in need of your hospital’s higher-margin services.

This is called earning a patient’s lifetime value—while driving word-of-mouth referrals. It’s an incredibly important metric to pay attention to for any type of company or organization… because it costs a lot less money to retain a current client or patient than it does to acquire a new one.

When institutions support quality programs focused on community outreach, education, and engagement, trust and brand equity is created. Done properly and consistently, these efforts expand reach. They grow mindshare, and market share, for downstream revenue for an institution’s high-margin service lines.