Dear all,
 
I have recently written an article on the changes being made by
health insurance companies, many of which are unknown to the many
who think that they are properly "covered" and have full choice of
doctors and hospitals.  This article has been submitted to a number of
national publications (including New Yorker, Atlantic Monthly, and
Readers Digest) and so far, nobody seems to be interested.  It is
still "out" to several other media; but since it appears that it may
not "see the light of day" in the public media, here is a "pre-
publication" [:-)] look at "The Decapitation of Health Care" for
Listmembers.  Feedback appreciated.
 
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            Robert A. Fink, M. D., F.A.C.S.
              3011 words
            2500 Milvia Street  Suite 222
            Berkeley, California  94704-2636
            Fourth Draft:  September 26, 1994
            510-849-2555
            FAX: 510-849-2557
            Copyright, 1994: Robert A. Fink, M. D., F.A.C.S.
 
 
 
            Robert A. Fink, M. D., F.A.C.S. -
 
 
 
 
 
            The Decapitation of Health Care
            by
            Robert A. Fink, M. D., F.A.C.S.
 
 
            Americans are about to experience a cataclysmic change in
            the way that they receive their health care. Forces,
            operative for more than a decade (since 1984 in California),
            have been relentlessly progressing which, if they are
            carried to their logical completion, will result in the
            virtual total dismantling of the American health care system
            as we have known it. Sadly, the public, the so-called
            "consumers" of health care, are, in most instances, totally
            unaware of how the way that they are treated for illness or
            injury is about to change.
 
            Political issues such as the Clinton Health Care Plan (which
            surely appears destined for either defeat or severe
            "watering down" by Congress and the politicians), and
            Proposition 186, the "Single-Payer Initiative" before the
            California voters this November (which is projected as a
            "loser" as well), periodically awaken the interest of the
            lay public. I have learned, both as an interested and
            politically aware individual, and as a practicing physician,
            that most of the general public has virtually no idea of
            what the politicians, bureaucrats, and multimillion-dollar
            insurance companies have in store for us in the near future.
            Occasionally, an article or two appears, often in the
            "alternative media" (such as two excellent articles which
            recently appeared in Children's Advocate, an independent
            publication produced by the Action Alliance for Children)
            which discuss the sweeping changes which are about to take
            place in health care. Often, these articles, as correct as
            they are, become couched in the complicated terminology of
            the healthcare industry and  political organizations. The
            result is that the ordinary layperson cannot decipher the
            "bottom line", a line which will reduce the much-vaunted
            American health care system to a level of mediocrity and
            compassionless regulation that will shock the average person
            accustomed to the "glory days" of American medicine,
            formerly the envy of the world.  An oft-repeated comment at
            some of the many meetings of health care people which I have
            attended recently is the thought of having a health care
            system "with the efficiency of the Post Office and the
            compassion of the Internal Revenue Service"!
 
            We have had, at least in California, examples of "prepaid
            health care", for many years. This dates back to the
            revolutionary ideas of the late Henry J. Kaiser, who
            established the original Kaiser health care system at the
            Richmond, California, shipyards, this to care for his
            workers during World War II.  This system of prepaid health
            care has evolved into the present Kaiser Health Plan, a plan
            which has become the largest such system in this country;
            and which, in my opinion, is probably the best of such forms
            of health care delivery.  One can state that there is a
            "downside" to this type of prepaid health care; but, in
            general, those people who obtain their care through the
            Kaiser Plan are satisfied with the system; and besides, one
            was not required to participate in such a system. One could
            opt for health care under a more "traditional"
            fee-for-service system, this with the aid of health
            insurance, paid for either by one's employer, or by oneself.
 
            I will not, in this article, even begin to detail the
            sweeping changes in the health insurance industry since the
            advent of the "Blues" system (Blue Cross and Blue Shield),
            or even the changes brought about in the sixties by the rise
            of the Medicare and Medicaid systems.  Neither will I here
            address the geometric rise of health care costs of the last
            several decades, partly due to the proliferation of new
            technologies which, although they are expensive, are
            frequently life-saving. If one considers the cost savings in
            the preservation of productivity of individuals saved by
            this technology, one witnesses a true miracle of science.
            Part of the escalation of costs is due to the increasing
            proliferation of facilities designed to utilize these
            technologies resulting from the trend, stimulated by
            Government, to "decentralize" the delivery of health care
            and provide such in "our own communities".
 
            In 1984, two bills were passed in the California Legislature
            which, at the time, went almost unnoticed by the general
            public.  These two bills, in simplest terms, removed from
            California Law, a restriction which had existed, both de
            facto and de jure, since the last century.  Prior to 1984,
            the practice of medicine had been restricted to those
            professionals who possessed a license, issued by an
            examining Board only after the applicant had demonstrated
            his or her competence by way of a review of credentials and
            an examination.  The laws passed in 1984 repealed this
            restriction, and essentially said that hospitals, insurance
            companies, and others, not licensed on the basis of
            professional competence, could engage in the regulation and
            provision of medical care, the making of medical judgments,
            the establishment of guidelines for care, and the selection
            of "approved" drugs and technology.  A few of us saw how
            this change could radically affect the care of patients. It
            is interesting to note that this was also the time when
            "physicians" became known as "providers" and "patients"
            became known as "consumers" of health care. Yet none of us
            realized how cataclysmic these changes would be only a
            decade after the enabling legislation was passed.
 
            The impetus for the writing of this article was engendered
            by what I heard at a recent medical staff meeting at one of
            the local hospitals at which I practice.  The subject of
            this meeting was "Understanding and Evaluating Capitation",
            and the guest speaker was an physician who, although he had
            practiced primary care medicine in the past (internal
            medicine), his present position was that of a senior
            actuarial executive for a nationally-known firm specializing
            in developing prepaid health care coverage on a "capitated"
            basis.  What I heard at that seminar both angered and
            saddened me. Since the age of six, I had wanted to be a
            physician, and had spent almost two decades in rigorous
            study and training in order to achieve this goal. I have
            been a physician for the past twenty-eight years, and have
            practiced specialty medicine in the San Francisco Bay Area.
            At the age of 56, I am probably at the "peak" of my
            professional abilities and experience; and yet, I envision a
            time very soon where I shall consider retirement rather than
            participate in what appears to me to represent a perversion
            of the tradition of excellence that has been the bulwark of
            American medicine.
 
            Capitation, what does that mean?  The word is based on the
            Latin word Caput, meaning "head".  Capitation, in a
            medical/economic sense, means practice of medicine by head
            count, or, as the insurance actuaries say, "per life per
            month". Please read life as "person".  A health care system
            based on capitation is an economic scheme; most of these
            programs pay but lip-service to quality of care, and are
            purely systems of cost control. A group of actuaries, after
            looking at the "at risk population" (the persons covered by
            the insurance plan), decides what it will cost, "per life
            per month", to pay for the health care required by these
            individuals. After deducting a percentage (the figure given
            at the above seminar was 20%) for "administrative costs"
            which include the often highly inflated salaries and
            benefits of the senior management personnel, the Plan
            develops a "capitated rate of reimbursement" to the
            "providers" participating in the plan.  Thus, a primary care
            physician, a family practitioner or internist, with a panel
            of 1000 patients, would be paid a figure, for example, $4.50
            "per life per month". The physician would be paid each and
            every month, whether or not those patients needed medical
            care.  Thus, the primary care physician would receive $4,500
            per month on a regular basis whether or not he or she saw
            any patients, or whether all 1,000 of the patients required
            major medical care during that month.  The beauty of this
            system is that it would be to the physician's advantage to
            supply the least amount of health care that he or she could
            get by with. The more care he or she delivered (because it
            costs money to supply health care), the less the physician
            would "clear" in the form of earnings.  I recall, many years
            ago, hearing the Chief Executive Officer of an early (and
            successful) capitated health plan attribute the fiscal
            success of his organization to the "secret" of having
            "learned how to supply the minimal amount of medical care
            that the public would stomach".  Thus, this system of
            capitation reverses the old trend where a physician was
            allegedly encouraged to supply care because the more care he
            or she supplied, the higher the income. Now, under
            capitation, a physician is encouraged to withhold or
            postpone care if guidelines of "medical necessity" (another
            new "buzzword") are equivocal.  In the old days, if there
            was a question as to whether a patient should be seen and
            cared for, the benefit of the doubt went in favor of the
            care; now it is the reverse.  Now, if a physician practicing
            under "managed care" guidelines supplies care to a patient,
            and the "managed care entity" (often represented by an
            Administrator with little or no contemporary medical
            experience) decides that the care provided was "not
            medically necessary", the physician is not paid. Under the
            capitation schemes, if the physician supplies "too much
            care", he/she will soon find that the overhead of supplying
            the care will result in a net loss to the practice.  It is
            also likely that the physician's contract with the capitated
            plan will not be renewed because he/she is "inefficient" or,
            in the newspeak of "managed competition", is a "cost
            outlier".  I could continue on and on as regards the
            implications of capitation on the relationships between
            physicians and their patients; but space does not permit
            such in this article.
 
            Some time late in 1994, or perhaps in early 1995, a large
            number of Californians, with health insurance provided for
            by their employers, are going to receive a rude shock.  Just
            recently, one of the large pre-paid HMO entities, Qual-Med
            of California, entered into a merger with HealthNet, another
            large health insurance carrier.  Qual-Med is the product of
            yet another earlier "buyout" of an organization called
            HEALS, an Health Maintenance Organization founded by a group
            of physicians in Berkeley, California more than a decade ago
            in an attempt to provide high-quality prepaid care to a
            large segment of the local population. HEALS, an "HMO/IPA"
            organization was designed both to preserve patients' rights
            to choose physicians of their choice, and to afford good h
            ealth insurance with minimal "out of pocket" outlay.
            Physicians who agreed to participate in the HEALS/Qual-Med
            organization saw patients in their own offices, subjected
            their non-emergency treatment plans to a panel of their
            peers for review, and agreed to accept a "discounted" fee
            for their services. This was in return for a larger
            patient-base and a system which allowed for reimbursement
            without having to bill and collect from patients.  While
            there were some problems with some of the mechanics of this
            system, it generally worked well, and, up until recently,
            both patients and physicians were reasonably happy with the
            system.  In effect, the HEALS/Qual-Med system was a great
            deal like Kaiser, but had the added advantage of allowing,
            for the most part, free selection of both physician and the
            hospital.  I (although this was considered radical and
            smacking of socialized medicine by some at the time) was one
            of the initial members of the HEALS panel of physicians and
            continued on in this capacity when Qual-Med, a Colorado
            corporation, purchased HEALS several years ago.
 
            Now, with the acquisition of Qual-Med by HealthNet, Qual-Med
            is about to convert to a capitated plan. Both primary care
            physicians and specialists will be forced to affiliate with
            several large medical groups, previously contracted with
            HealthNet on a capitated basis to accept a "flat rate"
            reimbursement based on "per life per month" schedules. If
            physicians do not wish to accept a "capitated" system, they
            will no longer be able to care for patients enrolled under
            the plan.  Patients of mine who I have seen for many years,
            often for serious and chronic illnesses, will suddenly find
            that they will either have to pay for continued care out of
            their own pockets, or they will have to select a new
            physician who is a member of the capitated medical group
            affiliated with their "new" insurance.  Each "layer" of this
            construction; the parent carrier, the "contracted medical
            group", the individual physicians' offices; will have their
            respective administrative costs, this further diluting the
            funds available for the actual care of patients.  Since
            many, if not most, of these patients will have their
            insurance provided for by their employers, they will have no
            choice. Even if they wished to obtain private individual
            insurance in order to retain their freedom of choice of
            physician and/or hospital, their pre-existing chronic
            condition would result in a refusal of any new insurance
            carrier to accept them due to "risk factors".
 
            Capitation is even becoming a threat to the poor, the
            unemployed, and the elderly.  Federal Medicare has recently
            set up pilot projects with capitated entities ("Senior
            Security", "Secure Horizons", and others) which have
            contracted with Medicare to assume liability for the care of
            Medicare-covered individuals. Prospective patients are
            enticed into these plans with promises of "no deductibles",
            "no co-insurance" (the partial payments required under
            standard Medicare); yet these same patients do not realize
            that, by contracting with these other entities, they are
            giving up their freedom of choice of physician and hospital,
            and are binding themselves to future care by physicians who
            are contracting members of the medical groups affiliated
            with the outside insurance companies. Such entities'
            contracts with participating physicians are almost always on
            a capitated basis, and the "utilization review" controls are
            often relentless.  Imagine an elderly individual who has
            just required a major operation and who finds that the
            "guidelines" dictate a hospital stay of 48 hours or less.
            Under a capitated plan, you will be forced to go home
            (interesting if you are elderly and live alone), or,
            perhaps, be sent to a Nursing Home to recuperate, when a few
            extra days in an acute hospital setting may be the most
            effective way to get you back to good health and
            independence.
 
            The recent article in Children's Advocate also pointed out
            that, later this year, or in early 1995 at the latest, the
            state Medicaid program (called Medi-Cal in California) is
            also going to join the ranks of "managed care" and
            "capitation".  Thus, the already deeply-discounted
            reimbursements in the Medi-Cal system will be reduced even
            further, and yet another layer of bureaucratic management
            will be inserted between patient and physician.  In the case
            of the Medi-Cal system, there are already too few physicians
            who are willing to accept the low reimbursements. Physicians
            are currently reimbursed in the range of 30% of what would
            be considered a "reasonable" fee.  A further erosion of the
            reimbursement rate, along with yet another level of
            paperwork requirements, will most likely result in even fewe
            r physicians being willing to accept Medi-Cal patients. This
            will result in a further reduction of accessibility of care
            for the poor and disabled.
 
            As one who has been involved in the practice of medicine for
            most of my adult life, I have no illusions as to the
            "perfection" of the old fee-for-service, indemnity-based,
            insurance system.  There are many problems with the old
            system, and the cause of these problems cannot be blamed on
            any one of the many sectors in the health care environment.
            There are instances of avarice and insensitivity, prejudice,
            ignorance, and other negative factors operating in the world
            of American health care; but, at root, our system of caring
            for the sick and injured has been the best of many in the
            world.  The time has come for true reform in the delivery of
            health care, so that all Americans will have an "equal
            playing field" in the matter of health. I believe that,
            indeed, in our rich and advanced country, health care for
            all is a right.  There are ways to provide this right to all
            without denying the equally moral right of health care
            professionals to receive fair recompense for their work. At
            the same time, it is repugnant to most good people to have a
            few highly-paid administrative types profiting from the
            bureaucracy which is dismantling American medicine in a way
            which would shock and sadden the great pioneers in medical
            science. During the last hundred years, the advances in
            health care have raised our quality of life to a level which
            our ancestors could not have imagined.
 
            Proposals such as Proposition 186 on the November ballot in
            California (which I support) are a beginning in our attempts
            to extend the benefits of modern medicine on a universal
            basis.  I also believe that the proposed Clinton Health Care
            Plan falls short of the mark. I do not support it mainly
            because it encourages the very type of health care which I
            have written about. I feel that some form of universal
            health care coverage, and probably with a "single-payer"
            infrastructure, is an idea whose time has come. This will
            put a stop to the ill-advised, unfair, and morally
            reprehensible schemes of capitation now being foisted upon
            an unsuspecting public in the name of "managed care",
            "managed competition", or managed anything.  Do patients
            really want an administrator to "manage" their medical
            treatment?  Capitation, carried to its logical conclusion,
            will lead to the "Decapitation" of health care in this
            country. It is essential that the general public become
            informed on this vital subject and act to pressure their
            elected representatives for change before the heart of
            American medicine shares the fate of the "decapitated" head
            and leads us into a world of medical mediocrity and
            business-driven health care.
 
 
            The End.
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Robert A. Fink, M. D., F.A.C.S.   Phone: 510-849-2555
Neurological Surgery              FAX:  510-849-2557
2500 Milvia Street  Suite 222
Berkeley, California 94704-2636
USA
 
E-Mail:  [log in to unmask]
CompuServe:  72303,3442
America Online:  BobFink          "Ex Tristitia Virtus"
 
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