Philadelphia Reflections

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New topic 2019-05-24 20:49:32 description

Monitoring the Actions of the Business Coalitions for Health: by Harry Schwarts, PhD

Chicago, Il. Those much discussed and, in some medical circles, much-feared Business Coalitions for Health Action may be a more constructive force on the health scene than doctor pessimists have feared.

No one could have attended the first national meeting of the coalitions, sponsored by the U.S. Coalition for Health Actions at the first of June, without understanding the strength of the commitment of the coalition representatives to more economical resource use in healthcare. But this was no "hate-the-doctor" meeting nor was there any irrational or demagogic posturing such as has come so frequently from some politicians in Washington.

On the contrary, both speakers and participants agreed the United States has a superb health-care system offering patients the best available care. There is a desire to make the system operate more economically by widening the choices of both doctors and patients. But the coalition members seemed much too sophisticated to believe there was any single magic answer such as dragooning all doctors into health maintenance organizations (HMO's) or making them hired hands of the federal government.

Moreover, the stress was on slowing down the rate of future health-care cost increases. It was recognized health-care costs will increase because the country's population is aging and because future medical progress will make it possible for doctors to do more to help their patients than ever before.

Perhaps the most intriguing insight offered to the more than 100 participants came from Stephen Caulfield, of the Government Research Corporation. He suggested that later in the 1980's the greatest of health-care price increases might come from the high cost of the capital.

"There is a desire to make the system operate more economically by widening the choices of both doctors and patients."

Many of the nation's community hospitals, built 20 to 40 years ago, are becoming more decrepit and, in many cases, need rebuilding or complete replacement. Just to replace the community hospitals, with no increase in beds, he estimated, would cost $190 billion, most of which will have to be borrowed. And at the likely rates of interest visible ahead, that interest load may well prove the most inflationary force on health-care.

For physicians pinched by increasing competition and the resulting patient shortage, a possible new rival to HMO's was described in detail by Gary Brukardt, of Denver's Mountain Medical Affiliates, a preferred provider organization (PPO), organizations that may conceivably become as much a part of medical jargon as HMO's.

A PPO is a device for doctors to compete by cutting prices or giving discounts, for third-party payers. Burkhardt's pioneering PPO was organized by Denver's Presbyterian Saint Luke's Medical Center after the hospital began losing more and more of its patients to suburban hospitals and HMO's.

The hospital decided to meet the challenges by organizing itself and its specialist physicians who cared to join into a price-cutting source of tertiary care later expanded to primary care. Mountain Medical Affiliates was organized by the hospital as a complementary physicians organization, now embracing 320 doctors representing 28 specialties.

In effect, the hospital and the PPO offer third-party payers a discounting deal. The arrangement apparently appears mainly to Denver companies that self-insure for medical costs. If their employees go to the hospital, the hospital's bill to the employer is discounted by some undisclosed percentage. If the employees go to one of the 320 participating specialists, their employer is billed at a rate which is between 5 and 20 percent below the prevailing "usual and customary" rates.

For the participating physician, the arrangement has two big advantages. First, it is a source of additional patients, as well as a means of holding on to odd patients. Brukardt estimated that 45 percent of the PPO's patients are new. Second, the companies involved pay promptly, normally within seven to 10 business days on receipt of the physician's bill.

The Hospital itself has expanded its system to include a total of six hospitals including institutions in Estes Park and Vail, Colo., as well as Colby, Kan., two emergency facilities, and eight primary-care centers staffed by employed physicians. Brunkardt emphasized participating PPO physicians control their destiny, decide themselves what the relative values of different procedures shall be and are by no means completely dependent on the PPO. Some physicians g=fet 20 percent of their patients from the PPO, while others get only a few each weeks.

The luncheon speaker was George Ross Fisher, MD, a Philadelphia endocrinologist author of "The Hospital That Ate Chicago" and a veteran member of the American Medical Association's House of Delegates. Dr. Fisher emphasized two points: the need to make patients more conscious of the cost of medical care by introducing more deductibles and percentage payment arrangements into health insurance schemes; and the need to run hospitals in a more businesslike fashion.

To foster the latter objective, he suggests every non-profit hospital set up a subsidiary for -profit organization that would actually operate the hospital. All profits made by the organization running the hospital could be used by the owner, the non-profit corporation, for encouraging teaching and research and to pay for patients who cannot pay for their own care.

There are now 48 full-fledged coalitions for health care operating in the United States, a Peter Ozge, director of the U.S. Chamber of Commerce Clearinghouse on Business Health Coalitions, told the meeting participants. The 48 coalitions enroll 1,870 members 75 percent are employers, 18.5 percent are health-care providers, and the rest is labor, government, and miscellaneous groups.

Most of the coalitions are relatively small, local organizations and only 20 percent of them have more than 50 members, while 9 percent have under 25 members. Most of the coalitions are operated by volunteers or personnel assigned by member companies, but 21 coalitions have only workers employed by those organizations themselves.

About one-third of the coalitions consist exclusively of employers, while only none of the 48 have to labor organizations as members. The interest of the provider organizations in the coalition movement was indicated by the presence of numerous representatives of provider groups such as the Indiana Medical Association, Kaiser-Permanente and the Hospital Corporation of America.

The stress was on slowing down the rate of future health-care cost increases.

The business community's effort to exert pressure for restraint on medical costs is not monolithic. Entirely separate from the coalition movement is the Health Task Force of the Business Roundtable. The Roundtable consists of the chief executive officers of some 200 of the largest corporations of the country, and the latter has encouraged its members to belong to the Washington Business Group on Health, an articulate representative for business views on health issues before Congress.

But apparently relations among the different business groups are cordial. Lindon Saline, Ph.D., a General Electric executive assigned to the Business Roundtable "Health Initiative," spoke to the group. He emphasized the Roundtable is encouraging its member corporations to participate in local coalitions in all of the communities where the member coalitions have significant plants and offices. Willis Goldbeck, the chief executive of the Washington Business Group on Health, acted as moderator at one of the meeting's afternoon discussion sections.

A representative of the Department of Health and Human Services (HHS), medical economist Bruce Steinwald, Ph.D., said the Reagan administration is still interested in the competition strategy but has the regulation strategy in reserve if needed. HHS, Dr. Steinwald said, is collecting a wide variety of information on medical costs and on how costs are affected by different modes of healthcare delivery and by business efforts to restrain costs.

Gerald Gleeson, of the Philadelphia coalition, and government data collection efforts. These efforts aim to make basic data sets available that will permit equivalent comparisons between medical care given and medical costs incurred for similar conditions in different communities and different parts of the county.

However, few stressed that the collections of fully comparable and uniform data for all parts of the country will permit government and other third-party payers to press for greater uniformity throughout the country. It is known, for example, that the length of stay in a California hospital is relatively short while relatively long in the Northeast. With the passage of time, availability of better data may create the basis for pressure to make the length of stay in a hospital and other cost elements more uniform across the country.

Gleeson, other speakers, and various coalition members and staff personnel attending the meeting expressed concern that the Reagan administration may try to put more of a load on the coalitions that they are capable of bearing. "We cannot be the nation's health planners, utilization reviewers and 'what have you' as some in Washington would like us to be." one veteran coalition official said.

Nevertheless, the coalitions hope to expand their activities and help get all providers both doctors and hospitals to adopt more economical modes of health-care delivery. Doctors and their organizations are apparently welcome to cooperate as are hospitals and their organizations. But nobody at this Chicago meeting doubted there would be conflicts as well as cooperation in the months ahead.

Originally published: Monday, January 28, 2019; most-recently modified: Friday, May 24, 2019