Healthcare- controlling doctors’ behavior

Controlling doctor behavior is path to controlling costs
Milwaukee dermatologist Kathleen Stokes listens with envy when her father-in-law reminisces about practicing medicine in “the good old days” before managed care.
He made house calls and treated patients “with no one looking over his shoulder, judging his efficiency, or checking his treatment outcomes,” she recalls.
Traditional indemnity insurance of his day paid practically any bill submitted, allowing him to try whatever he thought best to cure his patients’ maladies. Even patients with no money and no insurance were no problem. Before managed care, doctors could “cost-shift” by charging their insured patients rates designed to cover their overall costs. Consequently, everybody could trust his or her doctor to provide the best medical treatment available.
Managed care changed the rules and fundamentally changed the way doctors practice. While most doctors say they still strive to do whatever is in the best interest of their patients, managed-care organizations have finally succeeded in controlling costs primarily by influencing doctors’ behaviors.
Managed care has tightened the purse strings through financial incentives, administrative strategies such as utilization reviews, referral requirements, and profiling systems linked to administrative sanctions.
Medical directors for managed health-care organizations say they are forcing doctors to consider economics when making medical decisions rather than giving them a blank check.
Doctors say the economic pressures do impact the quality of health care provided.
Booming health-care inflation heralded the new era of managed health care which began in Wisconsin with the introduction of HMOs in 1972.
Since then HMOs and their off-shoots (an alphabet-soup of health-care options including HMOs, IPA-HMOs, open HMOs, PPOs, and POSs) continue evolving as they strive to answer the market’s demands for cost-effectiveness and quality service.
The array of managed care options grew from the original staff-based models that pioneered the state’s managed-health frontiers. Staff-based HMOs use salaried doctors at specified medical centers. They bring several systems under one roof: medical, financial, and administrative. With their closely-knit operations, these HMOs have proved most effective in controlling costs and maintaining low monthly payments.
However, for consumers who were used to seeing any doctor they like whenever they wanted, the controls seemed too restricting. To keep their employees happy, employers asked for more options. What they got were new HMO structures aimed at bringing in more health care professionals, such as IPA-HMOs and group and network HMOs.
Preferred-provider organizations (PPOs) sprang up in the mid-1980s as an alternative providing more choice while controlling costs. Employers found that groups of hospitals and doctors would be willing to cut prices in return for assured volume of patients. For employers, they provide a cost-saving compromise for workers who resist joining HMOs.
Soon hybrids of those forms appeared, among them open HMOs or point-of-service plans. They allow patients to go outside the plan’s HMO providers when they choose to share in the cost through co-payments and deductibles and take responsibility for filing claims.
Today managed care accounts for 85% of employer-based insurance enrollment. Traditional indemnity plans are down to 15% of active employees.
Evidence shows managed care has succeeded in controlling costs. For the fourth year in a row, the 1997 costs of providing health benefits to active and retired employees by US employers with 10 or more employees increased more slowly than the medical component of the Consumers’ Price Index (2.8 in 1997).
While some predict premiums will rise this year and next, managed care controls are expected to keep tight reins on increases. Thanks to managed care, more companies can afford to provide health benefits to employees.
Employers, who foot much of the bill, are glad someone has lassoed runaway health care costs. But lower medical inflation doesn’t necessarily mean better value. As one doctor put it, “you wouldn’t buy a Yugo and think you’re getting a Mercedes-Benz.”
Consequently, concerns are being voiced about the quality of medicine available under managed care. State and national initiatives to regulate managed-care organizations are being debated.
June 1998 Small Business Times, Milwaukee