A better model for health care

September 24, 1996|By L. David Taylor

THE LOVE-HATE relationship with managed care continues. The market shares of HMOs, PPOs and other managed-care entities is rising across the country. Employers continue to favor managed care for, at long last, denting the previously inexorable rise in health-care costs.

At the same time, public criticism, too, is rising. Citizens fear that the quest for efficient health care may cut their care. Physicians bemoan the micro-management that health-plan directors exert over the science and art of medicine. Responding to these concerns and a few horror stories, legislatures impose piecemeal restraints on HMOs.

One would think that the provider community would be looking for another way. After all, not all that long ago, providers were resisting managed care. Some physicians labeled it ''socialized medicine'' or worse. Perhaps the providers could do what the managed-care plans do -- skipping the middle man -- and produce a better result.

In Baltimore and many other places, new organizations are forming to take over all or most of the job of managing health care. A new group of acronyms is appearing, among them PHOs, or physician-hospital organizations; POs, or physician organizations; and IHDS, or integrated health-delivery systems. All are launched with scarce capital, great fanfare and high expectations for providing health care unencumbered by silly HMO rules, and efficiently using health-care dollar free of the stock-market demand for continual profit increases.

At face value, these new experiments make sense. Why not let providers have a crack at it? At worst, they would create additional competition and exert further pressure to hold down medical and insurance costs.

They become the other

The problem is that the providers are expending tremendous amounts of money and, in the process, becoming what they are revolting against. These new provider organizations create a whole new set of administrators and expensive projects, duplicating the costs for people and systems who already operating in the HMOs or insurance companies.

Perhaps the providers will do a better job than the existing resources. But those working for the insurers aren't stupid or uncaring; they have worked over the years to create the systems we have today, and if there are problems, the reason is that these systems are difficult and expensive to build and change. The provider organizations, with few exceptions, are not capitalized well enough, nor are they large enough, to reinvent a better wheel.

So what is an alternative to the status quo and to reinvention of what exists today? A better idea starts with the definition of a new kind of health-delivery organization that would have the following attributes:

It would provide effective and efficient care and sufficient income to develop and renew the organization -- but not profit maximization.

Physicians would be significant owners and leaders.

Physicians would set the standards for care.

Providers would be accountable and rewarded on the basis of their results in caring for populations of people.

Providers who met expected standards would have clinical freedom.

The emphasis would be on prevention, information and incentives -- for members, employers and providers.

Such an organization would be an amalgam of insurers/HMOs, third-party administrators and today's provider organizations. One side of the organization could deliver medical care and set medical policy, quality and management, while the other offers of benefit administration, information systems, marketing and finance. Alternatively, the insurer or provider organizations could establish contract relationships or joint ventures with their counterparts.

Establishing this kind of alliance will not be easy. But we can ill afford the waste of all parties actively engaged in attempting to duplicate and compete against each other.

L. David Taylor is a health-care consultant. He has been the president of two Baltimore-Washington managed-care plans and was deputy assistant secretary of Health, Education and Welfare.

Pub Date: 9/24/96

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