Where is Health Care Going?

Richard B. Miles

Recent articles in Bay Area newspapers, as well as in professional and
general publications have asked about the future of a health care process
that is described as â?obroken.â?* Most of the focus of these articles
is on the continually rising cost of care and limited access to care for
the underinsured or non-insured. There are deeper questions needing
attention.

Community support service or corporate enterprise?

Not too many years ago, most, if not all, of the community health
district hospitals in the Bay Area - - Marin General, Sequoia, Los
Gatos/Saratoga, Mills/Peninsula, Eden, etc., - - were sold to hospital
operating corporations. This change, though not adequately considered at
the time, shifted the perspective of these facilities from community
support services (like the fire department) to fiscal assets to be
managed for financial improvement. This was partly a result of the vast
changes in health care brought forward by technological innovations that
required substantial fixed investments. It was also a result of the
larger social change undertaken at the time bringing primary focus of all
social activity into economic terms. Beginning in the 1980s, a latent
tendency of American culture became paramount and we no longer lived in a
society served by an economy, we now live in an economy served by a
society. Everything became evaluated in terms of economic potential and
â?ogrowth.â?* Because of the immense number of dollars flowing into
health care from benefit programs, health care became a â?ogrowth
industry.â?*

This created a profound shift of emphasis within the health care field.
Rather than how a service could best serve the needs of the community, a
more powerful motivation unfolded to figure out how best to gain access
to the cash flow offered by the benefit programs. This became a major
growth stimulus which fed upon itself. Regina Herslinger of the Harvard
Business School pointed out about thirty years ago that the massive flow
of funds in health care would cause a basic shift of authority and
control in the field from the professions to the money managers. The
professions apparently did not read her articles.

Community boards, hopefully by their local nature, will focus on range of
services, access to care, and meeting the needs of district residents.
Corporate managers, by their training and operating nature, will tend to
focus on access to cash flow, management of investment assets, and return
on invested capital. In the current hassles in Marin County regards the
future leases and management of Marin General Hospital, operated by
Sutter Health Systems, these motivations are cast as â?oconflicts of
interest.â?* This is mainly because the corporate model is based in
command and control of actions and assets. The community model can be
based in collaboration and community involvement. In this latter model,
there are no conflicts of interest, only varied perspectives that need to
be appropriately addressed. In the past, the community participants have
been naive about business aspects of management and have created
situations requiring â?ocontrol.â?* In step the corporate managers. Once
in control, their need for authority clashes with the community, because
control is at the root of their mode of thinking.

Should the health care system (actually a loose aggregate of services
frequently unrelated to the patient process) be an â?oindustry,â?* viewed
as a source of growing revenue? It is now the largest employer in the
eight Bay Area counties and seen as providing the best future career
opportunities for students seeking a direction. However, the emphasis on
expensive catastrophe care rather than public health and
self-understanding of health creates a dilemma. The most effective
health care system would see hospitals essentially sitting empty ready
for needs that unexpectedly arise rather than expanding facilities
competing for â?omarket shareâ?* of expensive surgeries and treatments for
major illnesses. This latter situation is essentially pathological at the
societal level. It requires a growing number of seriously ill people to
support the industry.

The basis of many of these struggles rests with health benefit programs
which pour vast amounts of money into health care. Unfortunately, these
funds were sold to the public as benefits, though they were labeled
insurance. Introduced during wage and price regulation during WWII,
benefits were, in effect, a device designed to get around wage controls
and offer employees an additional benefit for recruitment in a time when
labor was in very short supply. Health care was not utilized as
universally as it is now because many could not afford professional
advice, especially for routine care. Benefits were touted as â?ofirst
dollar coverage,â?* meaning the program paid for everything. This is not
insurance, but prepaid care. However, the companies that became involved
were insurance companies and tried to learn how to manage payments for
routine events, an expensive process..

When costs began to get out of hand in the late 60s, early 70s, a
movement for â?ocost containmentâ?* emerged. This movement did not assess
the effectiveness of the care system but primarily addressed how it was
paid for. The assumption was (and mostly still is) that people needed
â?ocoverageâ?* and inclusion in the payment system, which is basically
employment based. Thus, the employer, especially the large employer,
became a major player in health care policy.

A result was the HMO, the PPO, and other efforts to organize care. This
added another layer of administration and management to the payment
process, but did not necessarily address the original name of the HMO,
the Health Maintenance Organization. The process continued to be a
payment system for high-tech rescue medicine, not a community process to
improve and maintain health. There were two results of this process:

1. Health care costs continued to rise, partly because of the added layer
of administration;
2. The emergence of managed care, an attempt to organize the care process
to reduce costs.

However, managed care does not manage care, it manages payments, assuming
that choosing the supposedly approved procedures for designated diagnoses
and limiting their approval will reduce costs. This is a â?oone size
fits allâ?* approach to health care in a biological world of individual
relationships between professionals and patients and individual responses
to treatment. Hence, the system is driving conscientious professionals
and hopeful patients into upset and despair. The professional motivation
within this system to is provide procedures, since that is what can be
billed, rather than provide consultation and care which may relieve the
patient. Professionals who base their practice on relating to their
patients are seen as problems causing financial distress, even if their
patient outcome experience is positive.

The basic failure of this entire process is that it â?obreaks the market
integrity.â?* While business jargon is used to describe health care as a
â?omarketplace,â?* and efforts by professionals and hospitals to succeed
in it are â?omarket driven,â?* this is deeply suspect thinking. In any
true marketplace, there is a direct relationship between the person who
provides the service and the person who receives it. This direct
relationship is payment and warranty. The receiver pays for what is
delivered, and expects warranty for the value of the service.

In the current benefit system, the person who receives the service has
little or no involvement in the financial transaction, except for recent
co-pays. The financial transaction is between the providers and the
insurers, whether they be HMOs, insurance companies or government
agencies. Hence, the allegiance of the providers is toward the payers,
not the patients. In some fraud cases, there are major instances in which
services are billed for that have never been performed. In many cases,
the effectiveness of the services has little effect on how payment is
made. Thus, the feedback loop of the â?osatisfied customerâ?* is
completely missing. One of the major results of this break in the market
integrity is constantly rising malpractice costs, since this is the only
true recourse patients have for unsatisfactory care. An attorney friend
of mine leads workshops in which he points out that the majority of
malpractice cases are really â?obreach of contractâ?* cases rather that
torts (serious practice errors). Patients become angry, hire a lawyer,
then look for the error to pursue. The breakdown of the provider-patient
relationship is at the heart of the matter, not necessarily provider
negligence.

A major hospital in Kentucky, against its lawyers advice, began open
dialogs between angry patients, the physicians, and hospital
administrators, and subsequently reduced its malpractice costs by more
than fifty percent. All the patients really wanted was to be heard in an
indifferent system.

So we have some mixed metaphors:

1. Insurance that is seen as benefits, hence building expectation of
entitlement to more or less free services. (One does not usually think of
collecting benefits on home or auto insurance, limiting expectations to
recovery of losses not routine or anticipated)

2. A high-tech system driven by fear of patient anger and malpractice that
overuses expensive services to cover its potential liabilities.

3. A inadvertent merging together of prepaid primary care and catastrophe
â?oinsuranceâ?* in one payment system, leading to massive administrative
costs for each procedure and activity.

4. A breakdown in the fundamental relationship in health care between the
physician/provider and the patient. (A colleague and I once charted out
the elements involved in one doctor visit and illustrated between fifteen
and twenty persons/organizations involved in one transaction)

5. Questions about the whole philosophy of thinking of health care as a
profit industry.

How can these issues be addressed?

First, separate routine care from insurance. The risk of catastrophe is
what concerns most people about â?olosing their benefits.â?* Catastrophe
insurance is available and can be estimated actuarily, which is almost
impossible to do for routine care, which tends to grow simply because it
is available at low cost.

Second, in routine care, design a process in which the patient chooses
his/her care directly, selects appropriate providers, and pays them
â?oover the counter.â?* This reestablishes the integrity of the
â?omarketplace,â?* and makes the payment somewhat dependent upon
â?ocustomer satisfaction.â?* The provider becomes beholden to the
patient, not the insurance payer. This simple reorganization of payment
will fundamentally change the quality of care, eliminate the mountains of
paperwork required by third party payment, and support local assessment
of providers.

If routine care is to be â?ocoveredâ?* by a benefit program,
procedures can
be designed that allow the patient to regain decision making power.
Vouchers or other techniques can give the patient control of these funds.
Limits on monthly or annual withdrawals from the program can easily be
established. People not in employer based programs can be enrolled in the
voucher program and operate independently without stigma or prejudice in
selecting care and providers. Complementary practices can be easily
included as patient choices within the benefit limits. In any cases,
spending beyond those limits would be the responsibility of the patient.

Conditions under which the catastrophe insurance would come into the
picture can be described, with specified thresholds (deductibles). This
is truly insurance and can be much more easily administered as such.

A major discussion will have to take place about utilization of expensive
high-tech diagnostic procedures, which appear to be seriously overused to
reduce potential liability. These costs are, in a sense, in between
routine care and the catastrophe case.

Without this deeper exploration of the philosophy and organization of the
entire health care field, and an open discussion about the supposed
conflict between the â?obusinessâ?T of medicine and its role as a
community health resource, the conflicts at the local levels will
continue most likely without resolve. Single payer systems will not
necessarily resolve the problems now faced, but will simply shift the
â?omanaged careâ?* problem from corporations to public agencies, who will
still be faced with the daunting task of â?oapprovingâ?* payments. The
provider/patient relationship will still be in jeopardy.