A few words of warning for managed-care executives: Success, popularity and prosperity can come back to bite you in the behind.
It's been a banner year for managed care, especially for investor-owned HMOs. Enrollments are swelling, stock prices are skyrocketing, and there's plenty of cash available for expansion. Meanwhile, employers continue to praise managed care for stabilizing medical costs, while Medicare and Medicaid programs are betting that HMOs can turn around their sickly financial conditions.
But three recent stories illustrate the potential pitfalls of success. If there's a lesson to be learned or a common thread in the trio of tales, it's that today's easy victories don't ensure tomorrow's triumphs.
Take the case of the greedy managed-care plans that have tarnished the reputation of the insurance industry with their stupid rules on inpatient care for new mothers.
Sure, it takes discipline and tough rules to successfully manage a managed-care plan. But it also takes common sense. Nobody is exercising much brain power by continuing to cut down on the length of time a new mother can spend recuperating after childbirth. The standard seems to be a hospital discharge after 24 hours for an uncomplicated birth and after 72 hours for a Caesarean section. At one Kaiser Permanente facility in Los Angeles, an internal memo directed staff to encourage women who have normal vaginal deliveries to go home after eight hours (July 17, p. 28). Give the actuaries more power and they may cover only home birthing.
The insurers forgot, however, that moms are an active and vocal lot. After frequent complaints about early discharges, the politicians have jumped on the "drive-through delivery" bandwagon. Maryland and New Jersey already have passed laws mandating that insurers cover at least two days of care (four days for Caesarean sections) for new mothers and their babies. Similar bills are being weighed in California, New York and Pennsylvania, and in the U.S. Senate.
HMOs claim such mandates disrupt their ability to conduct business and that the home environment is healthier for the mother and the child. Such thinking is fraught with danger. When you mess with motherhood, you're messin' with trouble. In many cases, the new mom is too exhausted to return home, especially if she has other children to care for.
But the real danger for managed care is more government interference in setting guaranteed benefits and minimum standards. Drive-through deliveries have given politicians a perfect opportunity to worm their way into increased managed-care regulation.
It's the financial success of managed-care companies that riles the critics. While hospitals and physicians are expected to conform to new rules and lower rates, the fat and sassy insurers always seem to want more concessions from providers. In California, Blue Cross wants to "partner" with hospitals by redoing contracts and instituting a ranking system that gives preferred status to low-cost hospitals.
Providers are being asked to disclose sensitive pricing information to Blue Cross, which could control more than 30% of the state's private insurance market once a merger of Blue Cross' WellPoint Health Networks subsidiary and Health Systems International is completed.
In Cleveland, meanwhile, Blue Cross and Blue Shield of Ohio is asking hospitals for flat bids on specific procedures. That could pave the way for selective contracting and centers of excellence for enrollees in the Super Blues' managed-care plans.
While there's nothing wrong with aggressive negotiating, managed-care plans mostly pay lip service to the idea of partnering with providers. Many, in fact, seem more interested in exploiting their power over hospitals. Price drives the decisions, with quality and service playing only minor roles.
Managed-care companies would be better off with meaningful collaborative efforts that offer providers incentives and rewards for treating enrollees. Quality of care and service improvements should be just as important as price to managed-care plans. They certainly are for patients.
Successful HMOs get that way for a reason. Promoting preventive care and shrewd contracting with providers is part of it. But selective recruiting of enrollees and limiting services also can improve what HMOs inhumanely call the medical-loss ratio.
HMOs have done an excellent job of recruiting, marketing, negotiating and arranging medical services for a relatively healthy base of patients.
Where they fall short is dealing with episodic, emergency-type care for enrollees. Prior authorization and limiting treatment is not always possible in an emergency, yet HMOs remain steeped in bureaucratic oversight.
Furthermore, Editor Jerome P. Kassirer, in a recent issue of the New England Journal of Medicine, worried that providers will be tempted to conform to the restrictions of managed care, thus "deceiving themselves that what they are doing is best for the patient."
Efficiency, proper utilization of resources and wellness are at the center of managed care. Those managed-care plans that emphasize patient care and service will eventually overcome competitors preoccupied with the dreaded medical-loss ratio.
As Roberta Clarke-an associate professor of healthcare management at Boston University and this year's winner of the American Marketing Association's Philip Kotler Award for Excellence-pointed out recently: Within this explosive market, few managed-care organizations are sufficiently concerned with disenrollment figures.
Even if 20% of enrollees leave in a given year, there are always more to fill the void. It won't be that way forever.