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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