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POLICY/HEALTH PLANS: The future of health plans

I had fun writing this piece on behalf of health plan CRM and Business Outsourcing company Connextions to help launch their new series of Thought Leadership Profiles. Some of the really rude stuff hit the cutting room floor, but given what’s been said about some of their clients over here on THCB I’m pretty heartened that they asked me to contribute.

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  1. Managed Care; Anatomy of a Mass Medical Movement. 2000.
    The Rise and Fall of Managed Care: A Comprehensive History of a Mass Medical Movement. 2001.
    “The author documents that despite promises of managed care zealots, we have a sad healthcare landscape of crippled academic medical centers, dissatisfied patients, uninsured, chronically ill and elderly citizens, and demoralized physicians: with NO cost savings. Managed care produced, however, ‘monetarization’ of medicine, multi-million dollar consulting firms, and Wall Street riches. Dr. Smith wisely reminds us that the best way to care for patients is ‘care for the patient.’ It is not too late to rediscover that the most cost effective care is that which is competent and compassionate.”
    “Dr. Smith has given us a very readable but chilling chronicle of the rise and fall of the managed care era in medicine, [and] it’s demise in an avalanche of greed and bankruptcy. [The] tragic legacy of this ill-conceived plan: disgruntled patients, uninsured citizens, demoralized physicians, and crippled academic medical centers. All this with the burden of increased costs, as major resource went not to research of patient care, but to administration, regulation, and stockholders. Fortunately, the public has finally become aware of the failure of the mistaken social experiment.”
    Since the early 1970s, rising medical costs resulted in a profusion of healthcare plans and criticism of the profession of medicine: a confusing, chaotic, divisive setting for providing medical care. Little or no communication took place between those who purchased medical insurance plans and those who provided medical services—physicians, dentists, hospitals, and other providers. Promotion of managed care plans took on an excited, carnival atmosphere generating promise that a glorious, new era was approaching.
    Since doctors order most medical care, managed care proponents emphasized the importance of controlling practices of doctors. They claimed extensive changes were needed, that almost any criticism against the profession of medicine was warranted. Enterprising economists, entrepreneur consultants and a host of others became self-styled experts and advisers to hospitals and businesses over the issue of “cost containment” and invented the imperative “runaway costs.” Accusations leveled against physicians by advocates of managed care were puzzling, disturbing, and frustrating. We were told that “managed care is what’s out there,” “business likes managed care,” and managed care is “here to stay.” The new ethic became marketplace competition, cost containment, prevention, and control.
    Although most doctors at one time objected to the idea of managed care, rising sentiment against regular fee-for-service practice eventually took its toll to the point many physicians became convinced that it was up to doctors to make managed care work. Corporate benefits managers at first were opposed to the notion of managed care, but gave in to pressure from corporate management.
    Managed care advocates created fear, uncertainty, and division by telling physicians that the only possibility of survival in “changing climate of health care” was to “embrace” managed care. Economists and politicians charging outright criminal activity by all physicians became the norm. Doctors and public were told that a new age had dawned, the old order was out, we had better get on board or be left behind. By declaring managed care an “unassailable truth,” managed care was propelled into a revolution, a mass movement. Yet, physicians who “embraced” managed care found themselves in an ethical and practical bind.
    Enthusiasm that led to the managed care mass movement followed the same course as other mass movements—a restructuring of medical care was called for, the old was suddenly outdated, a “crisis” proclaimed, a social transformation declared!
    Contents
    Preface
    1. Beginnings
    A. Introduction
    B. Background
    C. Definition of Managed Care
    D. Criticism of Physicians
    2. Expansion
    A. Growth of Managed Care
    B. Sanction of Kaiser Permanente
    C. Enthusiasm. Contagion.
    D. Promise of Exceptional Return-Greed
    E. The Consulting Industrial-Complex
    F. The Press
    G. Rhetoric of Managed Care
    H. Fear
    3. Enthusiasm
    A. Momentum
    B. Supportive Data Turn Up
    C. Basic Concepts of Managed Care
    D. Prevention
    E. “Intellectual underpinnings”
    F. Contrary Data Ignored, Suppressed
    G. Failure to Develop Inherent Value
    H. Medical Technology
    I. Quality
    J. Competition—Folly
    K. From Miracle to Myth
    4. Finances of the Managed Care Industry
    5. Cautions
    A. Warnings Ignored, Critics Denounced
    B. Role of the Managed Care Industry
    C. Regulatory Agencies
    D. Movement Feeds on Itself
    E. Medical “Inflation”
    6. The Bind
    A. Captivity
    B. Behavior of physicians. Morale
    C. Some Legal aspects of managed care
    D. Money/Trust
    7. Early Warnings
    A. Breakdown—Early
    B. Kaiser Permanente in the 1990s
    C. Emerging Criticism of Managed Care Industry
    D. Role/behavior of Patients
    8. Late Signs
    A. Breakdown—Late
    B. Re-capitulation
    C. Historical Parallels
    D. Collapse
    E. Current Cultural Trends
    F. Difficulties of Thesis
    9. After the Fall
    A. Since the Beginning of Managed Care Mass Movement
    B. Continuing Problems
    C. Rebuilding
    Appendix
    Links:
    Wyndham Hall Press, Lima, OH
    Nova Science Publishers, Hauppauge, NY
    richardsmithmd.com

  2. The best part about the Herzlinger interview in Health Affair is how Bob Galvin (a person with actual considerable knowledge of the topics discussed in the interview including GE’s efforts at P4P and measuring efficiency) consistently refutes or subtly corrects Herzlinger throughout the entire interview.
    Another thing I don’t understand about Herzlinger is her insistence on constantly comparing the auto industry to the health care industry. It is probably just because she did some much research on the auto industry and can recycle the content – a trait way too common with senior academics.
    It would have been hilarious if Galvin would have asked Herzlinger about how her constant praise of American automakers and their response to American customers’ needs in her 1999 book, Market-Driven Healthcare, turned out. Less time I looked, American automakers now possess less than 50% of the U.S. market. Guess she flubbed that one.
    Oh, and let’s hope she got an editor for her new book who actually edited the book. Readers, myself included, should be eligible for a refund for her Consumer-Driven Health Care book. Basically a jumbled mess with no clear structure.
    There is a big difference between being controversial and thought-provoking vs. just spouting off without any real insight.
    It would have been hilarious if Galvin would have add

  3. > And didn’t I hedge it … enough for you Tom?
    Oh Matthew, of course you did. I’m just surprised you conceded the usefulness of a price signal at all after the recent “conversation”.
    The Harvard professor’s got a coherent framework: deregulate health services and financing after the fashion of the communications industry in the 1980s and let the chips fall where they may. This is a framework and its coherent. It simply presumes desiderata we don’t share.
    t

  4. Guys…thanks for the comments but regarding “consumerism works” — It’s a “wildcard” which means that it’s a very low probability event. And yes it is possible that I am wrong, which is why scenario planning is a good idea.
    And didn’t I hedge it with enough “ifs, buts and maybes” for you Tom?
    Finally I wish that I knew WHAT the Harvard professors point is. I just don’t understand it. But apparently pointing out that she hasn’t created anything like a coherent framework for consumerism in health care in her decade plus of spouting off about the topic just means that I’m a “jealous blogger” who’s a sexist pig! At least I assume that’s what she meant in that Health Affairs interview.

  5. Matthew;
    That was a very lucid interview, and I even got to see your picture for the first time! (: I especially agree with you about the recession scenario, or something similar that sinks the comfortable employer-sponsored insurance currently making many people complacent. Thanks for the link.

  6. “3) Transparency and consumerism
    works.”
    The reality:
    “Many cynics, me included,think that CDHPs aren’t likely to have a great impact on the provider
    market.”
    The Fantasy:
    “But if enough consumers are aggressive about chasing better experience in their health care services, and better outcomes, with their dollars, just maybe there’ll be that tipping point and providers en
    masse will be forced to react.”
    Tom, I wonder how far behind universal single-pay care would be if we all had to buy single plan health insurance – with our own dollars? I bet the insurance industry would be the first to compel the government to provide large enough subsidies to individuals (universal care?) to maintain the present cost/profit/cash flow structure.

  7. Matthew says something I never thought I would hear him say:
    > if enough consumers are aggressive about chasing
    > better experience in their health care services,
    > and better outcomes, with their dollars, just maybe
    > there’ll be that tipping point and providers
    > en masse will be forced to react.
    It is one thing to let the really rude stuff hit the cutting room floor, but this is quite another thing. Could it be that certain Harvard professors have the least little bit of a point?
    t

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