Systemic Trauma:
The Troubled Prospects for Managed Care in California & the U.S.
Institute for Public Science & Art
1075 Olive Dr. #4, Davis California 95616 USA; (916) 753-0352; email: jli@yolo.com
prepared for the 1996 Annual Meeting of the International Society for the Systems Sciences (ISSS)
Theme: Systems Theory at the end of the Millennium: Revolution in Science & Transformation in Society
Abstract
Health care costs determine defacto health priorities. The U.S. health financing system is mostly private, profit driven. Insurance has historically evolved to managed care, which has some financial efficiencies but often include questionable quality, health professional dissatisfaction, and a significant percentage of uninsured in the larger population. As an alternative, we start with a goal of optimal care, and look for components of a delivery system which will most effectively encourage healthy individuals and communities.
Keywords: U.S. health systems financing; managed care
“Our leaders should reject market values as a framework for health care and the market-driven mess into which our health system is evolving. We gave up too easily; we must make another serious attempt to formulate a national policy that will provide health care to all”.
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Introduction
—Jerome P. Kassirer, editor, New England Journal of Medicine, 6/6/951
The U.S. spends $1 trillion annually on health care, far more per capita than any other country, and yet has inconsistent quality. At least 14% of the population is not covered at all. The U.S. is the only major industrial nation which does not have universal health care coverage and uses private, for profit insurance to allocate health care funds. Most other developed nations have stabilized their health spending at 9% or less of GNP, while U.S. spending continues to soar — climbing to above 14% of GNP. Canada spends about 1% of its health care dollar on administration; the U.S. spends over 10% (private insurance is 14%, Medicaid is 4%, Medicare is 2%).
During the past five years, Managed Care has replaced fee-for-service billing as the dominant financing structure in U.S. health care. During the 20th century, physician reimbursement has shifted from produce and chickens, to direct payment, to fee-for-service billing, to insurance with consumer co-payments, to Managed Care with fixed monthly premiums without regard to services provided.
While Bill and Hillary Clinton were not successful in implementing their dream of universal coverage, they deserve credit for putting health care high on the priority list of U.S. domestic policy. The fee-for-service insurance process has become so complicated that the health care industry is shifting to managed care even though they politically fought the Clintons’ proposal.
Americans are signing up for Managed Care coverage at a rate of 5 million more a year. But the U.S. shift to Managed Care has provided less than satisfactory results: duplicated local resource expenditure by competing health plans, poor consumer routing, lots of “lost in the cracks” cases, and exasperated health professionals - primary care providers doubling their burden while specialists lose their caseloads.
This paper examines the complexities of Managed Care, and then presents a model for comprehensive, universal coverage with a single payer financing structure. As comprehensive policy, forms of single payer have been proven to work in Canada and in Germany (since 1880). By comparison, Managed Care is still an untested experiment by the insurance industry. Its performance should be evaluated against the standards that define single payer policy: quality of care, cost containment, access, availability, and infrastructure support, as well as health professional satisfaction.
Information about money and quality need to be better intertwined. New economic models need to be developed around high standards of resource use and positive consumer outcomes. This paper explores a context for moving toward a more efficient administrative structure, and the use of computers to decentralize power to the individual health consumer and her or his local team of health professionals and special resources.
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Sources of Systemic Problems
Before Managed Care, most doctors didn’t like health administration complexities, and felt that society didn’t respect them enough for all their hard work. They would have felt ok, if their bills weren’t so high, if people didn’t complain so much about what seemed to be excessively high fees and if there weren’t so much paper work. The doctor kind. Ten percent plus of medicine is the paper work, and a nurse can tell a good doctor right away by how frequently they get behind in their chart notes. If a third of health care is what a doctor does, the billing kind of paper work takes you to a half, and the other half of medicine is a quarter nursing and a quarter every thing else. It is the boring paper work that is a challenge for general systems theory.
3. The Drive for Managed Care
A. Problems with Fee-For-Service
Fee-for-Service is a payment scheme that was designed by M.D.s serving on the boards of young health insurance companies. As the society became more urbanized, the customers no longer had a chicken or a basket of potatoes to give the doctor as payment for care. The insurance companies sold group policies to unions, and tried to spread the costs of care among a large, healthy population, which is the whole point of insurance.
Fee-for-Service developed problems that grew in severity. The first is the lack of control of costs. Health care cost increases have exceeded inflation most years since World War II, driving up the risks to insurance companies. Medicare brought doctors the right to bill whatever they want, allowing them to define the “usual, customary and reasonable fees” in their area. Health insurance companies rarely broke even, and were primarily a tax management agreement between the AMA, Congress and the management of corporate America concerned about the cost of health benefits for their labor force. Fee-for-service worked as long as the health insurance companies’ cashflow provided a fund to invest in the stock market for a high profit. During the 1980s, the chances of a health insurance company turning a profit disappeared as the cost of care skyrocketed (even though premiums were climbing in price at annual double digit inflationary rates).
A second cost problem is the increase in awards for medical malpractice. Awards have frequently been millions of dollars because juries have to assume that the victim cannot count on the health system to keep costs under control.
A third cost problem is complexity. On a case by case basis, billing by item made sense to justify each cost. But with each added bill or item, complications set in. As health services became more technological, and medical specialists charged more to supervise the technicians who ran the machines, the cost of producing the bills grew. The average cost of care in an acute care hospital rose from under a $100 a day to over a $1000. Billing became so complicated that a physician needed to have a billing clerk for each nurse, a computer, and hours of headaches trying to figure out how to get the forms back to the insurance company in the correct fashion so the physician would be reimbursed for services provided. Each insurance company was different, and there seemed to be new ones all the time. There are now around 1,500 health insurance companies, each with their own forms and idiosyncrasies.
A fourth cost problem is the worship of the profit motive, meaning that the prioritization of care is secondary to monetary considerations. In evaluating different health care proposals, the money filter is the first and last criteria for comparing proposed changes.
A fifth cost problem is the overbuilding of hospitals, which means that the cost of care is higher per unit because each hospital is underutilized. Standards of practice and new micro-technology now allow doctors to perform many procedures in the office or surgi-center where the person stays less than 24 hours. Break even for an acute care hospital is 70% occupancy. Hospitals lost patient days to the point where many for profit hospitals are at 50% occupancy or less, which means costs are higher than revenues, and there is a growing deficit.
Finally, the overall complexity of health care administration and the merciless time demands on individual doctors have forced most M.D.s into some type of group practice. What this means for 99% of the M.D.s is the end of the image/reality of the single individual free-enterprise doc working stand alone with his “black bag”; it had become obsolete. For these M.D.s, Managed Care was an appealing alternative: a comprehensive institutional relationship that was just around the corner.
3.B. Managed Care Roots before the Clintons
Managed Care is the direction health care is headed in the U.S., even though it has never been shown to work as a public policy, in this country or any other. There is a shift in emphasis in health care from being a service to being a commodity. The fundamental unit of Managed Care is the Health Maintenance Organization or HMO, which is the concept of integrating doctors, hospitals, and other health resources into one organization. Where the fee-for-service system scattered doctors’ responsibilities, the HMO coordinates resources more efficiently. The problem with HMOs is that they must be exclusive to be cost effective.
“Clinton’s pro-managed care, pro-competition strategy represents merely an intensification of government and corporate policies that commenced with Richard Nixon’s HMO Act of 1973. Indeed, Paul Ellwood coined the term “HMO” in the early 1970s, and personally sold Nixon on the concept as a counter to Ted Kennedy’s single payer national health insurance proposal”2-187
Ellwood wrote in 1971 that he hoped HMOs would create a “change in the health industry that would have some of the classical aspects of the industrial revolution: conversion to larger units of production, technological innovation, division of labor, substitution of capital for labor, vigorous competition, and profitability as the mandatory conditions for survival”.2-236
The HMO is a historical shift in emphasis from a “doctor and his black bag” and a free-standing hospital which legally could not hire the doctor; to an integrated set of doctors, hospitals, and other health resources that is coordinated financially and administratively to provide comprehensive modalities of care. The goals are improving the patient’s health knowledge and increasing the chances of preventing the need to use health resources and therefore saving costs.
The original HMO is U.S. military medicine: in the short run, help every body (but put effort into who can be helped the most).
The name “Managed Care” is an improvement in U.S. health care policy over fee-for-service (which rewards specialists and leaves the consumer without a primary provider). Managed Care shifts the responsibility to a primary care giver who is supposed to be the consumer’s advocate. Problems with this situation will be discussed later on.
Kaiser HMO offered an excellent role model for comparison within the U.S. Since most of Kaiser’s client pool consist of employed workers and their families, Kaiser can emphasize prevention to an already healthy group, and minimize their need for medical intervention. By and large, fee-for-service clients, even with insurance, tend to put off health care until the last moment, increasing the eventual cost of intervention. Recognizing this, Kaiser uses preventive care and education, to minimize the need for higher cost hospital care down the road. Health education is the most efficient use of the health dollar. Kaiser is stingy about using their resources. People wait a long time on the phone to get an appointment. But appointments seem prompt; when you need care, they are ready.
HMO fast facts:
• 10 insurers control 70% of the HMO market nationwide (including Aetna, Prudential, Cigna, Met Life, Traveler’s and Blue Cross)
• the minimum feasible population to support an HMO is 200,000 enrollees
• the profit strategy is to “cream off the top” the healthiest customers (who will cost the least) and ignore the rest
3.C. Clintons’ Proposal for Transforming Health Care: Managed Competition
Just before the New Hampshire primary in 1992, Bill and Hillary Clinton spent a Sunday in a hotel room in Boston with Ira Magaziner developing a health policy strategy which would dominate the first two years of their term. They decided to make health care the hallmark of their domestic economic policy. Costs had continued to rise, and the industry had grown so complicated that it seemed out of control. Insurance helps pay the bills for many, but over 14% of the population – the underemployed and working poor and their families – are without any coverage. The costs of care have grown so much as to take up 14% of the GNP, eating a chunk out of the profits of many corporations and an evergrowing share of the federal, state and local governmental budgets.
Bill and Hillary decided that the U.S. was not ready politically for single payer health financing, so they decided to develop a goal of universal coverage, around the idea of Managed Care, then a foreign idea to most voters and the insurance industry. Bill explained his idea for risk pools, health alliances and other esoteric policy wonk terms. When the Clintons were elected, they took it as a mandate to tackle health care policy using Managed Care.
Managed Care is a California-grown idea. Managed Care was initially popularized in the early 1980s by Alain Entoven, a Stanford economist. It was developed as an excellent example of Reaganomics. The idea is to control costs by restricting how and where people seek medical attention by putting the emphasis on market decisions and competition. It is social darwinism which drives into prominence the HMOs with the best package for the lowest price. Less concern is given for the not-so-efficient, and there is no concern at all for the sensitivities of the consumer at large.
The Clintons’ wrinkle on Managed Care was to require the insurance companies to work together — to share the risk pool and coordinate the design of information forms. The Administration thought they could put together a package which enough interest groups would support that the insurance industry would buckle under and comply. They didn’t want to kill the health insurance industry, just make it more efficient and responsive.
In the name of less complexity, the Clintons introduced an 1100-page proposal which lost sight of its goal. In Congress and the national media (the TV ads with Harry and Louise), the health insurance industry battled back. With each proposal in Congress, they whittled away at the Clintons’ plan. And the seniors, nurses and other special interest groups from whom the Clintons had hoped for support instead were making new demands to specialize the proposal which would make it even longer and more complicated. Not one health care reform bill made it to the President’s desk for signature. Bill Clinton’s September 1993 speech on health care may have been the high point of his first term, but his threat to veto a lousy health bill became an idle threat.
3.D. Transition in the Marketplace
While the insurance industry was doing everything it could to kill the Clintons’ plan in Congress and the national media, they were implementing Managed Care in the marketplace. Their desperate need for cost controls was the driving force. The transition had two stages: (1) shift from specialist care to primary care via the gatekeeper, and (2) create an HMO oligopoly, and only pay for services given by preferred providers.
1) Gatekeeper/Costcutter: since World War II, most health innovation involved medical specialists and technology in hospitals, continually driving up the cost of care using the fee-for-service system. Health insurance is risky, even with a healthy pool of insureds who are hardworking premium payers. A few days in the hospital, surgery, and doctors bills can add up to more than all the paid premiums in a hurry. Health insurers have found that they must control their costs, so they keep setting limits. Sometime before Harry and Louise hit the TV airwaves, health insurance companies decided to shift to total cost control rather than itemized fee-for-service billing to control costs. They anointed a primary care doctor with all of a patient’s responsibility — for their care and the cost of their care, including hospitals, specialists, drugs and whatever other services the patient needs. The primary care provider, be it an internist, general practitioner, family practice, or obstetrician/gynecologist, was given the title of “Gatekeeper”. The insurance companies give the Gatekeeper the cost control responsibility, who in return receives a regular payment from the insurance company.
If the patient’s cost of care is less than the insurance payment, then the Gatekeeper comes out ahead. If not, the Gatekeeper eats it. This is a better deal for the insurance company because they can manage their financial risk. But for the doctors, it is terrible — the primary care doctors are at the low end of the M.D. income scale, and they have become burdened with inevitable bankruptcy-level risk. If a patient needs a referral to a specialist, the Gatekeeper must arrange, coordinate and pay for it. So it is in the best interest of the Gatekeeper to minimize referrals. It has the docs shaking. The specialists have found their consulting and referral income drying up, with primary providers unwilling to refer patients when the cost comes out of their own pockets, not the insurance company’s.
These Gatekeeper responsibilities were forcing free-standing individual doctors into an increasingly difficult administrative work environment with more paperwork and reduced job satisfaction.
2) Shift from Solo and Small Group Practice to PPOs and HMO Oligopoly: In reaction to the scattered chaos of the fee-for-service system, the larger insurance companies like Blue Cross/Blue Shield created “Preferred Provider Organizations” (PPOs) which are pools of physicians who are willing to accept an established lower rate of reimbursement in exchange for being part of the designated pool of available physicians. If the physician is not a part of the pool, the patient has to find a different insurance company, pay out of pocket, or find a new physician from within the accepted pool.
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Problems with Emerging Managed Care Industry in California
What we are now seeing is a market industry squeezed by the big players in the oligopoly. It is an interesting social problem because oligopolies create the worst of Jungle Capitalism. The antiquated governmental regulatory structure was designed to police individual doctors who have free-standing businesses, and hospitals. HMOs have emerged in the 1990s and are swamping the health industry with a new set of problems the government is not set up to deal with. The regulation of HMOs is a side-action, even though it is eating up a growing portion of the U.S. dollar.
At the same time that the Clintons were promoting this new idea of HMOs, large insurance buyers were cutting deals to lower the cost they pay for their members to receive hospital, doctor and pharmaceutical services. Most famous is the California Public Employment Retirement System (CalPERS) which is able to negotiate significant savings because they have such a large pool of fairly healthy members. In California in the greater Sacramento area, the San Francisco bay region and Southern California, Kaiser has been around for years, so many people feel comfortable about signing on. In the Sacramento area, it is estimated that 80% of the population is now covered by one of 12 HMOs or 15 PPOs.
As the Clintons were losing in the Congress, their idea was taking hold as the only hope for the insurance industry. Of course, the industry wasn’t worried about Universal Care, or covering people with prior conditions. They were mostly interested in the wealthy well who are willing to pay high monthly premiums and rarely need to use the services.
Onus on the Gatekeeper: The Gatekeeper forces the fiscalization of health care. While the financial decisions were a competing concern for the clinician, now too often the primary decision is “Can we afford this cost ?” The change in orientation to monetary accounting forces the primary care providers to be the fiscal watchdogs even if they only keep silent about the patient’s options outside their particular HMO.
HMOs governed as corporations, not health providers. In California, the fledging HMO industry achieved a major victory in 1974 when the law governing HMOs put the regulation of HMOs in the state department of Corporations rather than Health Services. Called the Knox-Keene law after its two authors, the legislation focuses government regulation on the paperwork requirements of a large public corporate business, and virtually ignores service and quality of care issues.
Public Sector Efforts. At the same time (mid-1970s), California tried an experiment with public HMOs to provide services to MediCal recipients, called “Prepaid Health Plans” or PHPs. A major concern was to provide the same consistent quality to low income individuals as is provided to the rich or people with regular insurance. Started during Governor Reagan’s administration, the effort was considered a failure and was killed halfway through Jerry Brown’s 8 years. Questionable business and marketing practices during Reagan’s term tainted the experiment.
During the 1980s, California set up a committee with a MediCal Rate Czar, who negotiates secret rates with hospitals for MediCal patients. This has resulted in enormous savings for the state.
In the past two years, California has embraced Managed Care as the best way to offer services to low income people. Most counties with large populations are now part of an experiment to offer competing Managed Care plans. The results so far are not pretty. Thousands of people forced to change doctors, and go to giant confusing clinics and wait long hours. It is cost savings by burdening the patient. The State Department of Health Services has jurisdiction and they are developing program and outcome audits.
Consumer evaluation: low income health consumers are being asked to evaluate the quality of service they received, and many consider it unsatisfactory. Within the egocentric profession-driven health industry, the opportunity for a consumer to actually criticize medical care is heresy. The following table identifies the results of a recent survey of some of the 150,000 public aid recipients in Sacramento County who were shifted from MediCal to HMOs. These HMOs are being paid $200 million in state and federal funds to provide care. There is lots of room for improvement, even with Kaiser, which is clearly the best in the bunch.
Rating the Health Plans; Sacramento Bee
Welfare families’ level of dissatisfaction with their health care in Sacramento County is measured in a spot mail survey conducted by the California Department of Health Services. Between 383 and 675 surveys were mailed to participants in each health plan. Responses ranged from 16 percent to 30 percent. Most who responded indicted that they were generally satisfied or very satisfied; levels of dissatisfaction varied by health plan and by the specific question.
BC: Blue Cross; HR: Health Reach; K: Kaiser; M: Molina; O: Omni; RC: River City; UCD.
Percent dissatisfied with:
Medical Exams:
BC: 12.5; HR: 22.5; K: 6.0; M: 28.0; O: 11.9; RC: 11.8; UCD: 11.5
Follow-up care:
BC: 17.4; HR: 21.7; K: 9.4; M: 25.7; O: 13.4; RC: 14.0; UCD: 10.4
Getting prescribed medicines:
BC: 12.3; HR: 24.1; K: 3.9; M: 15.8; O: 13.6; RC: 10.7; UCD: 15.4
Resolving complaints:
BC: 20.3; HR: 25.1; K: 6.1; M: 32.6; O: 14.1; RC: 23.2; UCD: 18.3
Care from specialists
BC: 12.8; HR: 19.2; K: 6.1; M: 15.1; O: 10.4; RC: 13.8; UCD: 7.6
Welfare families’ enrollment in health plans
Enrollment in health plans by welfare families in February, 1996 in Sacramento County
Blue Cross 35, 885
Health Reach 24,341
Kaiser 18,595
Molina 14,916
Omni 21,566
River City 21,595
UCD 11,518
Health Reach has been purchased by Molina Medical Centers and River City has been purchased by Foundation Health Corp.
Source: Bee Analysis of California Department of Health Services records
Consumer Abuse: This transition to managed care is forcing many patients to change doctors, and to change doctors again, and often in the future. It is inherently unstable and not conducive to good longterm care. Most patients do not get to choose their new doctor, only which plan they are channeled through like cattle. The structure of care is away from small offices towards larger impersonal clinics.
Loss of Full Freedom of Choice: Doctors have always prided themselves on their independence. But now we find, in terms of both physician autonomy and consumer independence, single payer is far better than fee-for-service, and Managed Care is the most restrictive of all.
M.D.s Squeezed: For most of this century, doctors have commanded economic control of their own work environment more than people in most other areas of the economy. But with Managed Care, the insurance industry bean counters have taken control of the doctors’s daily lives. Doctors are forced to spend less time with patients, use specialists sparingly, and limit the use of health resources.
Primary care providers accustomed to serving about 250 patients a year in individual practice are expected to serve 400 to 600 patients a year, and some are expected to serve as many as 1200 patients - in which case there is no way a doctor can remember one patient from another.
It is almost impossible now for a new M.D. to start her or his own free-standing private practice. Most solo and small group practices are being swallowed up by HMOs which control the insurance income flows to the doctors. Without regular income from several insurers, a doctor must sign on with one insurer in particular and become a cog in the corporate machine. Suddenly M.D.s are finding themselves in a flooded labor market, which they had never even imagined possible. Perhaps doctors are hurt even more than consumers by the insensitivities of Managed Care.
Insurance Companies buy into HMOs: The HMO gets around the whole doctor-hospital legal problem by being an organization the hires both. Basically the HMO internalizes all the fee-for-service costs, and charges one monthly premium per person (often with a copayment). It ties together what the insurance company does and what the hospital and doctors do. Before the Clintons’ national proposal, most HMOs were started by labor groups and were inherently consumer responsive. The Clintons sold the HMO concept to the insurance industry which went out and bought hospitals, hired half the doctors, and created integrated delivery systems exclusively for their population of service. The idea is a consumer could get all their lifelong health care needs met by one organization. Single payer for the few.
Actually, the HMO is a descendent of the oldest form of socialized medicine in the U.S., military medicine. Why is Congress so lackadaisical about health care ? Because they are covered just like the military. They go to Walter Reed Army Hospital. Many HMO doctors and administrators come straight out of the military.
The idealized objective of the insurance industry is to expand Managed Care: to create 10 Kaisers which provide good care for everyone. Instead, according to longtime professional health policy advocate Emery Soap Dowell, we have seen the quality of Kaiser lowered, and the creation of 9 Walmarts - cheap imitations of Kaiser that claim to have Kaiser level services without the quality control, the range of coverage, the institutional experience, memory or tradition. (See the consumer evaluation table shown.)
No proof of HMO cost control: In California, HMO costs “are 19% above the national average and rising more rapidly. Massachusetts and Minnesota, the second and third highest penetration states, have similarly undistinguished cost records”.2-188
Non-health costs of Managed Care: As economics columnist Robert Kuttner has pointed out, “Every entrepreneur who profits from a new Managed Care company or network, every case reviewer who second-guesses the doctor, every billing clerk who struggles with insurance forms, every TV commercial trying to divert market share is one more cost to the system that adds nothing to medical care.”4
Quality gives way to the Profit Motive: Kaiser and the other early HMOs worked because they emphasized primary care and efficient use of health resources by good communication among an organized team of health professionals. The bottom line of the profit motive for any quarter is much less forgiving, sensitive or responsive than a health professional making an on the spot decision.
Who Wins: the investors looking for a short term profit, insurance executives and the HMO marketing people are raking in quick money. As much as 1% of the U.S. Gross Domestic Product is being shifted from health care to the marketing and profits for HMOs (7% of 14% of the GNP). This is money coming in the front end for services expected. If the services are not needed, and the resources are not expended, then a minimal health delivery system is necessary for the people covered by that HMO. Minimum cost, maximum profit.
Who Loses: if the services are not provided, or there is great demand for limited services, the consumers lose big time, as do the doctors and nurses. If several HMOs are in the same area, the duplication of service and resource is an added expense, a waste of scarce resources, and a source of greater complexity. Managed Care may be a success in terms of cost containment and being a short term profit engine, but as a policy with a social purpose, Managed Care is a failure because of denial of care, frustration by health professionals, duplication of services and waste of resources, and confusion among consumers. Compared to universal care provided in most modern countries, U.S. care is disorganized and inefficient.
5. Other Countries by Comparison: Germany and Canada
Other countries do not have the U.S. problem of inconsistent service and poor quality.
Germany, for example, has had a national health care system written into law since 1880. Each patient is allowed to choose her or his own physician who is given a voucher by the patient which records details of every visit. Every three months, the doctor sends these vouchers to a regional physicians association and is paid a lump sum. Hospitals get a fixed amount for every day a patient stays, no matter the diagnosis, from a regional non-profit insurance group. Costs grow only 3% more than the GNP. The comparable U.S. figure is 33%, Japan 15%.3
Canada has socialized insurance: universal comprehensive coverage under a single publicly administered health insurance program in each province. The government pays about 80% of the cost of care for everyone out of taxes, and the government sets all fees charged by doctors and hospitals. People choose their own doctors and hospitals. Canada spends 40 percent less per person on health care than the U.S., yet Canadians visit their doctor more often than people in the U.S. And far fewer Canadians go without care. Furthermore, nearly all expectant mothers in Canada receive prenatal care. In the U.S. recently, only 76% of women who had live births received such care starting in the first trimester.2-91, 255
Most Canadian consumers are satisfied, most American consumers are not. Eighty-five percent of the Canadian doctors prefer the Canadian system over the U.S. non-system.2-265
Canadians requiring attention within 24 hours receive care at least as quickly as Americans. For elective surgery, Canadians have consolidated many procedures to a limited number of regional hospitals. So, while there are waiting lists for elective surgery, the quality of care is superior because each center performs a large number of procedures and so is better able to maintain competence, while minimizing the costs by avoiding the unnecessary duplication of expensive facilities.2-99
6. Changing the debate to Quality & Establishing Standards for Organized Care
While Americans claim to have the best health care in the world, there is open debate. According to U.S. health policy analyst Roger Bolger, “there is embarrassing little the U.S. or any other country can say on this point. Even though this is the information age, we have scant information to determine whether individuals, groups or the nation as a whole are getting a level of care commensurate with the amount we spend on it.
“What this nation sorely lacks is a reasonably comprehensive source of information that will enable us to detect unmet health needs, identify cost-effective providers and services, document expenditures on inappropriate procedures, and, ultimately, evaluate and improve our health care. This kind of information is essential if health care reform is to succeed.
“Advances in information technology offer a way to meet this need. A network of health data organizations is being established that would collect medical information in states and regions across the country. This information could then be used to keep tabs on the health of the health system.
"These organizations would gather secondary health data - not the primary data in physicians’ records - from such sources as insurance claims, hospital discharge records and pharmacy records. The data would be used to understand and improve the performance of the health care system.
“Topics of investigation could range from the national to the individual, from the effectiveness of a new heart medication to the performance of individual clinics, hospitals and physicians.”5
It used to be that the accreditation of the American Hospital Association for a hospital and the renewed license of an M.D. were accepted evaluations of the quality of care. The inadequacy of fee-for-service and HMOs raises serious questions about establishing higher standards for organized health care.
And we must balance our wants and wishes with the reality of finite resources. If the health system in the U.S. is inefficient and extravagant, what would work better ? Especially keeping in mind economist Jane Bryant Quinn’s observation that “as more and more people are swept into cost cutting HMOs, there will be more lawsuits over denied high tech treatments. Any kind of a health care system can give all possible treatments to a limited number of people or limited treatment to a large number of people. But we can’t afford all possible treatment for everyone. No system can afford that. This is the American delusion right now that we can afford that”.
A coalition of national church groups developed a group of principles to apply in evaluating any proposals: “access to quality health care for everyone in the U.S.; comprehensive coverage, including long-term care; progressive financing based on ability to pay, through a special tax program involving personal and corporate income; cost containment through simplified administrative procedures; advance budgeting for hospitals and other health institutions, providing them with dependable income based on their past and prospective levels of service; and solutions to reduce the malpractice costs now passed on to consumers.”3 And some choice by physicians and other health professionals about where they work and what they do, and by the consumer about which health professional they get.
7. Best Possible System
Management Scientist Stafford Beer (British/Welsh/Canadian) gave a lunch talk called “Health & Quiet Breathing” at the Hospital Centre in London which is recorded in Platform for Change: “If you were starting from scratch, knowing the current state of the art,….do you think you would come up with a system remotely resembling the one we have today ? We have an organization frozen in the past; we have institutionalized a set of historical accidents.
“The health service should be redesigned in terms of information about healthiness, and see the health service as an indicator of societal health.”6
What are the optimum characteristics of a health system ?
The Neighborhood Health Clinic (NHC): You are welcomed; you receive immediate attention, your comforts matter. The health professional already knows you and your history, lifestyle, occupation, preferences, and they assume that you take responsibility for your own body (and theirs is a second opinion). If you need special care, you get it. This would require shifting resources to small neighborhood clinics and closing hospitals, empowering nurses, and focusing on primary care, prevention and health education. Most places in Cuba have this type of primary care, which is arguably the best in the world.
Using Stafford Beer’s Viable System Model, Clare Strawn has built on this idea: “The neighborhood health center (NHC) would be geographically distributed similar to the elementary school system. NHCs would be autonomous but cooperative with the schools to facilitate health education efforts, connection with families and access to the community. The centers would be responsible for primary care in conjunction with local doctors, midwives, dentists, mental health counselors and holistic practitioners. The centers would have a coordinating function between their different services, with other community agencies such as the schools and welfare, with primary care providers and the regional hospital centers. They would be autonomously administered and maintained. They would also function to channel feedback from the community to develop proposals to meet its needs through continuous and future development. The NHCs would be directed by community boards comprised of local professionals and representatives of the community base, ensuring community control of health care. The community control board would set goals and direction for the center.
“The next level of service would be the Hospital Service Centers (HSC), which would be distributed according to demographics similar to the high schools. The outpatient burden on the hospitals and expensive inappropriate use of emergency rooms would be alleviated by the decentralized services of the NHCs. In addition to the operational functions of the hospital, the HSC would serve as technical and resource support for the NHCs, for instance providing diagnostic services and health education resources. The HSC would serve as areawide inter-NHC coordination centers and have programs addressing regional concerns such as occupational and environmental health. They would utilize a participatory management system and a minimal administrative staff to maintain operations. HSCs connected with their serviced community directly and through their area NHCs would also have a research and future development function which would make proposals to the national budgeting and coordinating facility. HSCs would be directed by boards comprised of delegates from the community, hospital staff and regional representatives. The board’s primary responsibility would be to ensure that the practice of the system was coherent with its philosophy and goals.
“The third subsystem of the Viable Health Care System would be focused on human, scientific and technological development of health care services. This function would be associated with the universities and would also be geographically dispersed. The operations of this function would be on educating doctors and other medical personnel, medical and technical research and development, and specialty high-tech care. These centers would be connected with NHCs and HSCs through coordination of services and exchange of personnel. A scholarship-for-service system would feed ethnically diverse peer-providers and community educators from the NHCs into the medical schools and bring resident doctors from the medical schools back into the communities.
“The entire system would be directed by state and national level boards who would administer and appropriate funds. The state and national boards would have cross-level representation. They would be charged with carrying out the philosophical imperative of the system, accountable to and in response to the communities which it serves. They would be responsible for appropriation of funds on the state and federal levels to ensure services. Where ethical considerations arise as a basis for decision making, they would initiate a participatory educational process throughout the system to the neighborhood level in order to delegate the decisions to the appropriate lower level or to come up with a regional or national consensus.
“This proposal demands democratic participation; integration of health, education and welfare services; human rather than technological focus. According to the Viable Systems Model of Stafford Beer, each level of the system has an operations, coordination, internal/maintenance, external/development, and identity cohesion function. As a whole system, the NHCs represent the operations function, the HSCs cover the coordination and internal maintenance functions, the medical centers do the future development function, and the state/national boards provide whole system cohesiveness and identity. These recursive functions maintain a homeostasis between the system and its environment, attend to immediate and future needs, and also create autonomy and coordination within the system.”7
8. Pressing Concerns
— Personal Health Information: Currently, information about a person is considered the proprietary property of the doctor and the hospital, not the person. If you want to know what the doctors wrote about you in their medical records, you have to get a good attorney to ask your insurance company to get a copy of the records - because the way the current law is interpreted, that may be the only way to get them. Asking the doctor would be easier, and your doctor actually giving you your own medical records is such a radical idea that I think it should be a consumer’s right. To their own medical record. The consumer would walk in, usually, give the clinician a computer diskette in a uniform format, and the consumer gets an updated copy of their record. What if they try to spare or deceive the consumer ? Those are always critical ethical questions, which the health insurance industry has made necessary, as well as perverse and bizarre for an M.D. who has to try to manipulate the insurance information to match the consumer’s particular situation.
If the consumer maintains a master file at home, they can always add to it. If they lose the master, they can go beg their individual health providers to give them another copy but it is the patient’s responsibility to retain their own master. We have designed health information for hospitals and insurance companies with paper approval rather than for electronic information and fund transfers. The patient is essentially assumed to be anonymous. By redesigning the structure for protected universal information sharing, better data can be maintained.
— Aggregate Health Information: putting aside the privacy and confidentiality issues for only a sentence, wouldn’t it be interesting if one could access the health information of most of the people of say, the State of California, or even a small town ? The census tracts are large enough that it is hard to figure out who an individual is, and any aggregate methodology would need to build in some lower limits. Using a statistical cohort for each actual person would allow some types of realistic longitudinal studies, as well as provide a database for cases with similar symptoms. Assume that as much as 60% of the population might be willing to use the full range of connection with the Information Superhighway, and would allow some of their own self-selected demographic information to be retained as part of the larger information base. The potential for research by clinicians and the public is enormous. And so are the ethical questions. These questions must be faced, because the information net is inevitable. It will only be controlled if people politically figure out how to manage the system.
— Consumer Evaluation: Consumers should be able to provide feedback to the system in a way that is taken seriously. Simple questions could include: was your care good or poor ? How could it have been improved ? Were you treated with courtesy ? Promptly ? How would you rank your caregiver ? The receptionist ? The place ? The very best ? Just good enough ? Not Acceptable ? Not Available ? Not Affordable ? Problems ? If we evaluate every single unit of health care provided, and then tabulate the results with a monthly and annual report, much of what is male-domination and misinformation will become identified and stop. The current methods of policing hospitals and M.D.s are not good enough.
— Looking at the bigger picture of the Administrative structure, an alternative to what is being discussed is a radical version of the Single Payer plan. Successful options of national single payer abound. (Unlike Managed Care, which is an unproven experiment.)
Nothing is said in the U.S. media about the German or Cuban systems, which are both quite different from Canada’s and yet all work quite well to provide universal coverage for a third less GNP per capita than the U.S.
— A central issue is control and management of the resources and money. I recommend locally elected health boards, which elect regional boards and a state board. Groups of health workers, or individuals, would contract to provide services and coordination. All hospitals and labs would contract with the local boards.
— The Expenditure Side of the Ledger: Funding would need to be an alternative to the fee-for-service system. An equitable alternative is per capita payments to the local board with some kind of group responsibility for populations of people to assure universal coverage and promotion of prevention.
— The Income Side of the Ledger: The most equitable financing would be a progressive payroll tax, to include paying for the quarter of the population who cannot afford to pay for their own health care. I think there should still be tax breaks if the employer pays for a substantial portion of the employee’s health care.
— Single Payer encourages cost containment: “A single payer system facilitates cost containment in three ways. First, it can achieve substantial administrative savings that are not attainable under a multi-payer system. Second, the single payer is easily able to set and enforce overall budgetary limits, which is extremely difficult under our multi-payer system. Finally, a single payer system facilitates health planning to eliminate duplication of facilities and expensive technology that often wastes money and sometimes worsens quality”.2-118-9
“As reported in the New Yorker, this is a case where you can get more, better, and cheaper, all at once”.2-248
Conclusion: The politics of getting from here to there
When Bill and Hillary Clinton started, they rejected Single Payer as politically unacceptable to Corporate America in general and the insurance industry and the medical profession in particular. But as their Managed Care proposal was being soundly rejected in the Congress as not being good enough, more and more of the Administration’s subtextual message was “This is not quite Single Payer, but…”
Many consumers are hearing for the first time that Canadian care is considered quite satisfactory by a majority in Canada, as well as a majority of their health workers, and a majority of the country’s employers. In the U.S. there is less than 10% satisfaction.
Then the market place quickly shifted to Managed Care for the affluent and wealthy, and now government is using it for low income people to control costs. Doctors are finding that large HMOs are insensitive to their needs and wishes. Doctors are realizing that we will never go back to the single practitioner with just a black bag. Recent polls suggest that a majority of the members of the AMA are not satisfied with the working conditions provoked by HMOs.
Some states may move to single payer, with potential the greatest in California, Minnesota, New York and Massachusetts because they have the highest HMO enrollments. Ultimately, organized health care will only happen in the U.S. when doctors are willing to help by working with consumer groups. The key is to network the families of the U.S. to demand restructuring of the entire health care non-system. “Grassroots community organizing would be necessary to win any political campaign to establish such a system. The community organizing would develop a base for the community participation necessary to implement this system. While the medical and corporate establishment are split on their support of reform based on their own conflicting interests, to the users of the health care system it is a life or death issue.”7 (Emphasis added.)
Physicians need an institutional environment in which they can nurture health as well as battle illness. We need a system that works.
Jon Li has been writing about health policy and general systems theory for over 20 years.
References:
1. “The Dangers of Managed Care”, by Dr. Jerome P. Kassirer, editor of the New England Journal of Medicine, in the SF Chronicle 8/14/95, adapted from the 7/6 edition of the Journal
2. The National Health Program Book: A Source Guide for Advocates; David U. Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H., Common Courage Press, 1994
3. “League study focuses on national health insurance crisis”, Berdyne Musolf, in the Davis Enterprise
4. “The doctors and Medicare”, Robert Kuttner, Sacramento Bee, 10/9/95
5. “How healthy are we? No one knows”, Roger Bulger, Davis Enterprise, 3/20/94
6. “Health & Quiet Breathing”, in Platform for Change, Stafford Beer, 1974, Wiley (reprinted in 1994 by Wiley Chichester with Jon Li’s Reader’s Guide)
7. “A Viable System for Health Care”, Clare Strawn, a response to Jon Garfield “Crisis in Health Care: Prospects for Change”, 1/14/1990
