Providers putting out the "Risk Wanted" shingle may get more than they bargained for.
In addition to the financial risk of providing medical services to a defined population in return for a fixed monthly stipend, hospitals and physicians may encounter another hazard. Converting from a provider of healthcare to a manager of healthcare resources thrusts hospitals and physicians into a position of making medical decisions based on cost-effectiveness.
It's the kind of stuff that makes for Time magazine cover stories. If you haven't read Time's Jan. 22 "special investigation" on "What Your Doctor Can't Tell You," I advise you to do so. This in-depth look at managed care and one woman's fight to survive is a scary testimonial to the new order of healthcare. Expect this article to be cited for months to come by politicians, consumer advocates, patients and physicians who have resisted managed care.
The lesson for providers is simple: Decades of goodwill and image building can evaporate if the hospital and health system begin rationing care. And make no mistake about it, managed care is in the business of rationing. Even if tough decisions are based on medical ethics, scientific evaluation and sound cost-benefit analysis, a groundswell of protest is inevitable once you say no. Furthermore, the fireworks intensify if a clinical decision is picked up by the media or becomes the focus of a juicy lawsuit filed by a desperate patient. A dying mother makes for a much more sympathetic character than a faceless insurance company or an impersonal medical facility.
That's not to say healthcare administrators should retreat from facing risk. But at a time when the American Hospital Association and many top hospital chieftains are chirping about the need to build healthier communities, it's only prudent to examine the risk of risk assumption.
On paper, direct contracting, hospital-based HMOs and provider-sponsored networks seem like economic salvation to organizations choking on per diems and heavily discounted rates. By cutting out middlemen, it logically follows that the cost of care should decrease and give more breathing room to physicians and patients burdened by zealous managed-care insurers. Providers also believe that capitation can give them more control over their own economic destinies.
But the middlemen in today's healthcare environment are there for a reason. They not only pool and allocate money, but also assume the burden of managing that money. And in this exchequer role, there seem to be few limits on intrusion into the provider-patient relationship.
Health system executives have told us that managed care has erected barriers between patients and treatments, while institutionalizing such unsavory practices as unwarranted claim denials and drive-through baby deliveries.
Organizations that assume risk also may encounter onerous solvency and licensing regulations to protect consumers against the cyclical nature of underwriting. Risk, after all, is risky. But rewards and riches are within reach for those that can successfully manage the nuances of managed care. All you have to do is just say no.
In the case of PSNs, the stakes are high and enticing. For providers, it amounts to control and the flow of dollars for millions of Medicare beneficiaries. However, once the government transfers risk and the politicians are freed from the phobia of rationing care to seniors, watch for a shift to more consumer protectionism.
Charles Jacobs of InterQual believes the goal is achieving an equilibrium between overutilization and underutilization of medical resources.
"Providers now serve two masters: patients and managed-care organizations," said Jacobs, who founded the Marlborough, Mass.-based medical research and consulting firm in 1976. "This incentive is minimized when objective guidelines supersede subjective, individual desires."
Loading the deck against managed care in the form of legislation (longer stays for mothers or any-willing-provider laws) isn't the answer, he said. Nor is placing the provider at risk through capitation or exclusion threats.
"The circumstances are not known to the consumer," Jacobs said. "The patient may indeed have no idea these implicit pressures influence a physician's decision to provide or withhold one or another form of care."
And that's just what the latest media barrage is all about. In addition to the Time cover story, a number of other influential media outlets have let loose on capitation. For example, USA Today weighed in with a Jan. 22 front-page profile on assembly-line medicine and a lawyer's daily battle to get "treatment for patients within a system he believes is increasingly ethically corrupt."
The theory, of course, is that when providers are paid in advance, they will stress preventive care and emphasize wellness. And when treatment is required, companies such as Milliman & Robertson are there to set the limits. Seattle-based Milliman & Robertson writes standards and offers consulting services to those assuming risk. Milliman & Robertson's strict standards are steeped in statistics and focus on cutting hospital bills. The New York Times last year crowned this influential company as the "supreme court of medical insurance."
Many hospital administrators now can say "the devil made me do it" when a patient is discharged earlier than expected or treatment is denied. But that argument won't hold as much weight as hospitals and health systems become more involved in risk assumption.
Jacobs recommends a "robust, case-by-case utilization procedure based on clinically sensible guidelines to cut costs fairly and safely." Focusing on each patient's condition and the physician's care plan may not maximize profits for risk-assuming providers. However, it can soften the impact of crashing into the knotty world of capitation.
Healthcare may be a business, but it's the humanistic aspects of the business that drew many hospital managers into the field. While searching for the middle ground, don't let the dollars and cents overpower your sense of responsibility to the patient.