Not What The Doctor Ordered
Feeling poorly? Too bad. The kind of treatment you get isn’t up to you or your physician. In medicine today, insurance companies call the shots—and the companies are more worried about their health than yours. A Texas doctor’s story.
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Insurance company executives say that the old indemnity system exercised no discipline on either doctors or patients. It rewarded the greediest doctors—the more tests, the more hospital stays, the higher the fees, the bigger the profits—and, in the process, turned us into a nation of medical junkies, hungry for any and all treatments, no matter how ridiculous or expensive. Managed care, then, restores sanity. HMO doctors must decide how to “manage” the fixed fee per patient that they receive, called a capitation. In addition, a portion of the doctor’s income may be held back until the end of the year as an incentive to keep costs down; doctors who overspend never see their “bonus” and risk being dropped from the plan. PPO docs have to keep their fees low to stay in the insurance company networks—that is, to hang on to their patients. Patients who don’t want to participate in managed care can, employer permitting, choose an indemnity plan, but they must pay higher deductibles, and the reimbursements are lower—60 percent to 70 percent and dropping, instead of the once-standard 80 percent. It is insurance industry doctrine that with managed care, everyone learns to be a responsible medical consumer, and costs go down. “Managed care works,” Cryer insists, not with fervor, but calmly and with complete assurance. “Quality medicine is cost-effective medicine,” Blanford declares. “You don’t overtreat or undertreat. You do the right thing.”
And, according to them, the benefits are enormous. Blanford and Cryer talk cheerfully of the “new environment,” of “seeking a balance of cost and quality.” Medicine is being practiced in a whole new way now, a near reversal of the way money was made just fifteen or so years ago, when doctors gave the orders. Medicine is now demystified. “You’re going to see a change in the way you receive care—and you’ll want it that way,” says Cryer. Hospital stays, once the gravy train of the medical system, are out. Not only are they expensive but, says Cryer, you can get sicker while you’re there. The new trend is toward cheaper—and far more comfortable—at-home care. No longer are patients at the mercy of gobbledygook-speaking specialists and their exorbitant fees; managed care has restored the generalist—the so-called primary-care physician—to power. In managed care, the insurance companies will approve no procedure unless the primary-care doc, who understands the whole patient, has signed on. (According to Cryer, too often the specialist knows his disease but not his patient. “Someone needs to be the coach,” he says.) For the patient, managed care also means an end to burdensome insurance forms and, even better, an end to out-of-pocket expenses. No matter what happens at the doctor’s office—a standard visit or minor surgery—the price is about $10. People can afford preventive care, such as immunizations, mammograms, and pap smears. “We want to take care of people, and we’re just doing it on a different avenue,” says Blanford.
Both men insist that their company wants to work with doctors. They are looking for ways to reduce the paperwork and approval procedures that physicians find so laborious; doctors fired from Aetna plans, they say, always have an appeals process through which they can contest the company’s decision. Cryer and Blanford do admit, with professional concern, that it’s “unfortunate” that firing doctors from plans sometimes disrupts the lives of the seriously ill, who, at a time of crisis, must then get used to a new doctor or revert to much costlier deductibles on indemnity plans. Cryer further believes that the public can’t always tell the difference between good and bad care. “What they perceive as high quality is not really quality at all,” he suggests. Aetna and its corporate cousins—such as MetLife, Sanus, PruCare, Cigna, Humana, and others—know best.
"It’s going to be managed care,” Blanford insists, ready to move on.
“You can’t go back from this,” Cryer declares, getting up to offer his hand, as if the new era had begun at that very moment.
The Pendulum
THE CERTIFIED LETTER ARRIVED in the middle of last year. Opening the envelope and reading its contents, Dr.B. felt his face growing hot with shame. It was from the Great Beneficent Life Insurance Company (a pseudonym that further protects Dr. B.’s identity), informing him that he was being terminated from its health care plan. The company didn’t give a reason—and according to Dr. B.’s contract, it didn’t have to. What had happened? In the three years Dr B. had worked for Beneficent, he never saw any sigh that the company had been unhappy with his performance—no finger wagging, no warning letters, no ominous phone calls. And yet now he was being told, in company parlance, that he had been “deselected.” He would be terminated by the end of the year, and the 350 patients he saw through Beneficent would have to find a new doctor. Though he still belonged to four other plans, the loss of his Beneficent patients would be devastating financially—he’s lose about a fifth of his practice—as well as emotionally. Over the years, many of his patients had been shifted to managed-care plans by their employers, which was why Dr. B. had signed on in the first place. To lose those on the Beneficent plan now meant losing patients who had become his friends.
But that was not Beneficent’s concern. The letter explained that Dr. B.’s termination had nothing to do with his skills as a practitioner. Nor did he believe that he was being fired for economic reasons: Though he found the monthly reports on his bottom line barely comprehensible, Dr. B. understood them well enough to know that he had been practicing well within the financial constraints the company specified. “So why?” he wondered, reading the letter again and again, as if he could force it to reveal all. What had he done wrong?
It seems incredible that almost overnight someone as independent as Dr.B. could go from entrepreneur to employee who could be laid off on a corporate whim. But his story resembles that of more and more doctors because of the rapid success of managed care. IN the U.S., enrollment in the most popular form of managed care, HMOs, was 9.1 million in 1980. Thirteen years later, it had reached 45 million. The New York Times reported that as of 1994, 65 percent of the people insured through employers with two hundred or more employees were on managed-care plans. The change has been so broad and so swift that doctors who choose to avoid HMO participation may soon find themselves out of work.
In essence, the growth of managed care represents the shift of medicine from a cottage industry to one that is run like a giant corporation; the entrepreneurial aspect that is at the heart of the medical profession is vanishing. Certainly the high cost of medical care—attributable, in part, to the greed of some doctors—is responsible for this change. As large corporations began to provide greater and greater medical benefits as incentives to keep people on the job, doctors noticed that no matter what the cost, employers paid up. The money was in doing more: more office visits, more surgery, more tests. The late seventies also saw increased competition for patients: A doctor glut resulting from the expansion of medical schools in the sixties and seventies heralded the age of specialization. Patients didn’t just choose an orthopedist anymore, but an orthopedist who specialized in sports medicine.
All along, insurance companies, supported by bountiful employer premiums, provided generous reimbursements not just for serious illnesses but for less-dire procedures like breast reductions. Also, as the business of malpractice lawsuits grew, doctors ordered still more tests to protect themselves, thereby driving up the cost of care even more. “Someone came in with a headache, you did an MRI,” says George Rosenburg, a family practitioner in Houston.
During this time the stereotype of the rich arrogant doctor came of age, and it wasn’t far off the mark. Salaries continued to rise (by 1979 a cardiac surgeon’s average gross income could surpass $500,000 a year). Just as health care had become an entitlement with the creation of Medicare and Medicaid, enormous wealth had become the doctor’s right. Unchecked, costs continued to soar. By the mid-seventies medical care had become 8 percent of the gross national product and showed no signs of diminishing. In the eighties, as medical care was closing in on 10 percent of the GNP, employers slammed on the brakes.
Once corporate America began to balk at its medical bill, the pendulum of power swung swiftly and radically. With public sympathy for medical professionals almost nonexistent, private insurance companies moved in with ease, taking their cues from the Reagan administration, which had set caps on Medicare reimbursements. Even as costs continued to rise—the greediest docs found ways to subvert the government caps—private health care was turned inside out: The days of doing more and more for patients were over; now the money was in doing less. The way to control costs, the theory went, was to control doctors—by limiting their fees and their access to patients. Under managed care, insurance companies could withhold the bonus from doctors who performed too many tests, made too many referrals to specialists, or prescribed too many hospital stays. A doctor who didn’t tow the line could be dropped from the plan. That was no idle threat: As more employers rushed to managed care, the number of patients available to doctors who weren’t on such plans shrank. For doctors, the message was clear: Get with managed care or managed care will get you.
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