Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Medical Advocate Favors Health-Care Financing Reforms by: Harry Schwartz, PhD May 1983

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George Ross Fisher III M.D.

Not many practicing fee-for-service physicians are invited to address the White House staff on the economics of medicine. But two years ago George Ross Fisher, MD, of Philadelphia, Pa., received a White House invitation to speak about the burning medical issue of the day cost containment.

Now considered to be a prominent spokesman for the Physician viewpoint on this topic, Dr. Fisher started on the road to the White House podium when he wrote a book called The Hospital that ate Chicago which was published in 1980. In May 1981 Dr. Fisher’s book got a rave review in The Wall Street Journal’s sister publication, Barron’s a review that caught some White House staff members’ eyes and earned him his invitation.

When the various business coalitions on health held their first national meeting in Chicago last year, Dr. Fisher was the featured luncheon speaker. Before and since then he has outlined his ideas for many influential audiences around the country. For physicians, a key aspect of Dr. Fisher’s thinking is his belief that substantial economics and efficiencies can be made in the nation’s health care system without abandoning the many huge advantages and efficiencies of fee-for-service medical practice. Since he is both informed and articulate, his writings and speeches make a deservedly positive impression.

A member of Pennsylvania delegates to American Medical Association (AMA) House of Delegates for the past five years, Dr. Fisher is also the only AMA delegate in the country to have won an independent position as spokesman for ideas congenial to many, probably most, of the nation’s practicing physicians. Curiously, the AMA seems to have little idea of Dr. Fisher’s eminence and importance in the national debate.

Born in Erie, Pa., in 1925, the slim,erect and vigorous endocrinologist, who is a graduate of Yale and Columbia University's College of Physicians and Surgeons, is self-taught in medical economics, largely as a result of years of service on the economics committee of the Central City Branch of the Philadelphia Medical Society. He is married to another physician, Dr. Mary Stuart Fisher, who is a radiologist at Temple University Medical School. Among their four children is daughter Margaret, who will receive her MD degree next month along with her husband Jonathan Rosenthal.

Dr. Fisher originally wrote The Hospital that Ate Chicago in mid-1979 with the expectation that Sen. Edward Kennedy would be the Democratic candidate for president in 1980 and that national health insurance would be that year’s prime issue. His purpose in writing the book was to demonstrate the enormous cost and numerous inefficiencies inherent in the nation’s partisan approach to national health insurance plus Medicaid and Medicare have already imposed costs and inefficiencies that would be multiplied if the Kennedy nostrum became law.

At the cost of oversimplification, two weakness of the present system of financing medical care in this country is central to Dr. Fisher’s analysis. One is the prevalence of employer-paid private health insurance. This makes many people indifferent to the cost of their health care, especially if it is delivered in a hospital where care is most generously financed.

There is little or no patient resistance to ever more expensive care, practically if delivered in a hospital where insurance will pick up the entire bill.

The second central weakness, Dr. Fisher believes, is that because most hospitals are nonprofit institution they do not have the incentives for taut, economics operations like those profit-making institutions. Instead, they dissipate their surpluses either in above-market salaries for their paid personnel or in ceaseless efforts to grow bigger and more complicated. Where profits are not an index of efficiency and competence, Dr. Fisher remarks, mindless growth tends to replace that index.

From these and related premises, Dr. Fisher tends to favor reforms in health insurance which will give patients incentives to ponder costs among their health-care alternatives. Thus he is an advocate of taxing private health-care insurance benefits beyond some minimum level. The best insurance, he believes, is catastrophic insurance, i.e., health-care-insurance with a large deductible, since most people are healthy and can afford the relatively small bills for medical care the average person racks up in an average year.

He also believes that the charitable functions of nonprofit hospital ought to be separated from their normal operations; he is an advocate of nonprofit hospital turning their hospital and other heal-care activities into for-profit subsidiaries which would be run on a businesslike basis to deliver health care of a high quality as efficiently and index pensively as possible. He notes with satisfaction that since he articulated this notion, some hospital pioneers have begun doing precisely what he recommended.

Since writing his book, Dr. Fisher has developed two other ideas for which he has been seeking support.

One idea, which he got the AMA House of Delegates to support last year, is called health-related IRA penalty exclusions. It asks Congress to amend the individual retirement account(IRA) laws to permit a waiver of the present 10 percent penalty for withdrawal of funds prior to owner reaching age 59 ½. Such a waiver, Dr. Fisher argues, should be permitted under two health-related conditions. One would be in the case of illness required expensive treatment when an invasion of the IRA savings would be permitted to meet limited and defined health expenditures causing economic hardship. The second would permit diversion of investment income from an IRA to escape penalty if it issued to pay health insurance premiums.

Enactment of a law permitting this change in the Ira would mean that the IRA would assist not only in making up for inadequacies of Social Security pensions but also help make up for looming inadequacies of Medicare. The Medicare trust funds are rapidly approaching the bankruptcy that would have affected Social Security of it were not for the radical change and tax increases of recent years.

Dr. Fisher’s second brainstorm is what he calls assigned risk pools for health insurance. Dr. Fisher put the need for this change in these words when he addressed the AMA Council on Medical Services last January: “An uncomfortably large number of Americans presently feel unable to obtain health insurance, either because they have unsuccessfully tried to obtain it, or because they feel they would not know where to if they had to… It cannot be doubted that it would lessen future pressures for nationalized insurance if the public knew that anyone who wished to buy health insurance would not have been refused even though not everyone took advantage of the opportunity.”

In Dr. Fisher’s opinion, this risk scheme would assign applicants to all health insurance firms in a state in specified rotation, so that all insurers would share in the burden. He worries about the assigned risk fee getting so low that people would voluntarily abandon their existing health insurance to go on the assigned risk plan, and for that purpose, he would require that the standard premium of the insurance company. He would also favor making the assigned risk assurance a plain with a deductible of serial thousand dollars linked to a clause making preexisting illness non-coverable for some defined period.

Though Dr. Fisher is a staunch advocate of fee-for-service medicine and does not hide his distaste for such schemes as mandatory fee assignment for physicians, e does not accept the conventional conservative position on all medical issues. He was a strong advocate of the professional standards review organizations (PSROs) because he felt they helped remove the one economic advantage health maintenance organization (HMOs) had over fee-for-service medicine.

That typical HMO advantage he points out is that an HMO hospitalizes its members far less often than does a comparable group of fee-for-service doctors. Dr. Fisher argues that the Philadelphia PSRO helped Blue Cross in that city reduce hospital days per thousand members from 1,085 to 760 in less than a decade. Persistence of such PSRO pressure for eight more years would lower Philadelphia Blue Cross members’ hospitalization to the 550-days-a-year level of Kaiser-Permanente in California, he says.

This summary of Dr. Fisher’s views cannot give a full idea of the subtlety, sophistication, and wit of his writing and thinking. In “the Hospital that Ate Chicago,” Dr. Fisher included a series of fantasy chapters which use fictional scenes to suggest what actually happens in the relations among the various groups impinging on hospitals and hospitals’ decisions.

Dr. Fisher has also gained expertise in the arcane but very important area of the higher mythology known as hospital accounting, particularly as that mythology tends to encourage the building of bigger and more expensive hospitals whether or not they are needed. And Dr. Fisher explains how the momentous misjudgment of the founders of Blue Cross/BlueShield in having both organizations be nonprofit groups made it possible for government officials to expropriate both Organizations from the hospital and physician organizations whose initial investments and scarf ices created first Blue Cross and Blue Shield.

Dr. Fisher has managed t develop is a high level of understanding and exposition of medical economics while continuing a demanding practice as a board-certified internist and endocrinologist on the teaching staff of the medical school of both the University of Pennsylvania and homes Jefferson University. There may be other remarks physicians in the United States, but they must be few a far between.

 

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