ABLEnews Extra

                   Off With Their Heads!

     Although the following article was posted by its
     author on ADA-LAW in November of last year, since
     the "cataclysmic change" of which Dr. Fink warns
     endangers even more patients today, we believe
     itr merits your personal study. While we disagree
     on such details as the author's benign assessment
     of the Kaiser system, we believe his analysis of
     the undertreatment dangers of capitation and
     managed care is fundamentally sound. Using
     Dr. Schwartz's timely phrase, we call this
     development "checkbook euthanasia."

     [The following file may be freq'd as CBE41102.*
     from 1:275/14; and other BBSs that carry the
     ABLEFiles Distribution Network (AFDN) and ftp'd
     from ftp.icdi.wvu.edu on the Internet. Please
     allow a few days for processing.]

            The Decapitation of Health Care
            by
            Robert A. Fink, M. D., F.A.C.S.

Americans are about to experience a cataclysmic change in the way that
they receive their health care. Forces, operative for more than a
decade (since 1984 in California), have been relentlessly progressing
which, if they are carried to their logical completion, will result in
the virtual total dismantling of the American health care system as we
have known it. Sadly, the public, the so-called "consumers" of health
care, are, in most instances, totally unaware of how the way that they
are treated for illness or injury is about to change.

Political issues such as the Clinton Health Care Plan (which surely
appears destined for either defeat or severe "watering down" by
Congress and the politicians), and Proposition 186, the "Single-Payer
Initiative" before the California voters this November (which is
projected as a "loser" as well), periodically awaken the interest of
the lay public. I have learned, both as an interested and politically
aware individual, and as a practicing physician, that most of the
general public has virtually no idea of what the politicians,
bureaucrats, and multimillion-dollar insurance companies have in store
for us in the near future. Occasionally, an article or two appears,
often in the "alternative media" (such as two excellent articles which
recently appeared in Children's Advocate, an independent publication
produced by the Action Alliance for Children) which discuss the
sweeping changes which are about to take place in health care. Often,
these articles, as correct as they are, become couched in the
complicated terminology of the healthcare industry and  political
organizations. The result is that the ordinary layperson cannot
decipher the "bottom line," a line which will reduce the much-vaunted
American health care system to a level of mediocrity and
compassionless regulation that will shock the average person
accustomed to the "glory days" of American medicine, formerly the envy
of the world.  An oft-repeated comment at some of the many meetings of
health care people which I have attended recently is the thought of
having a health care system "with the efficiency of the Post Office
and the compassion of the Internal Revenue Service!"

We have had, at least in California, examples of "prepaid health
care", for many years. This dates back to the revolutionary ideas of
the late Henry J. Kaiser, who established the original Kaiser health
care system at the Richmond, California, shipyards, this to care for
his workers during World War II.  This system of prepaid health care
has evolved into the present Kaiser Health Plan, a plan which has
become the largest such system in this country; and which, in my
opinion, is probably the best of such forms of health care delivery.
One can state that there is a "downside" to this type of prepaid
health care; but, in general, those people who obtain their care
through the Kaiser Plan are satisfied with the system; and besides,
one was not required to participate in such a system. One could opt
for health care under a more "traditional" fee-for-service system,
this with the aid of health insurance, paid for either by one's
employer, or by oneself.

I will not, in this article, even begin to detail the sweeping changes
in the health insurance industry since the advent of the "Blues"
system (Blue Cross and Blue Shield), or even the changes brought about
in the sixties by the rise of the Medicare and Medicaid systems.
Neither will I here address the geometric rise of health care costs of
the last several decades, partly due to the proliferation of new
technologies which, although they are expensive, are frequently
life-saving. If one considers the cost savings in the preservation of
productivity of individuals saved by this technology, one witnesses a
true miracle of science. Part of the escalation of costs is due to the
increasing proliferation of facilities designed to utilize these
technologies resulting from the trend, stimulated by Government, to
"decentralize" the delivery of health care and provide such in "our
own communities."

In 1984, two bills were passed in the California Legislature which, at
the time, went almost unnoticed by the general public.  These two
bills, in simplest terms, removed from California Law, a restriction
which had existed, both de facto and de jure, since the last century.
Prior to 1984, the practice of medicine had been restricted to those
professionals who possessed a license, issued by an examining Board
only after the applicant had demonstrated his or her competence by way
of a review of credentials and an examination.  The laws passed in
1984 repealed this restriction, and essentially said that hospitals,
insurance companies, and others, not licensed on the basis of
professional competence, could engage in the regulation and provision
of medical care, the making of medical judgments, the establishment of
guidelines for care, and the selection of "approved" drugs and
technology.  A few of us saw how this change could radically affect
the care of patients. It is interesting to note that this was also the
time when "physicians" became known as "providers" and "patients"
became known as "consumers" of health care. Yet none of us realized
how cataclysmic these changes would be only a decade after the
enabling legislation was passed.

The impetus for the writing of this article was engendered by what I
heard at a recent medical staff meeting at one of the local hospitals
at which I practice.  The subject of this meeting was "Understanding
and Evaluating Capitation", and the guest speaker was an physician
who, although he had practiced primary care medicine in the past
(internal medicine), his present position was that of a senior
actuarial executive for a nationally-known firm specializing in
developing prepaid health care coverage on a "capitated" basis.  What
I heard at that seminar both angered and saddened me. Since the age of
six, I had wanted to be a physician, and had spent almost two decades
in rigorous study and training in order to achieve this goal. I have
been a physician for the past twenty-eight years, and have practiced
specialty medicine in the San Francisco Bay Area. At the age of 56, I
am probably at the "peak" of my professional abilities and experience;
and yet, I envision a time very soon where I shall consider retirement
rather than participate in what appears to me to represent a
perversion of the tradition of excellence that has been the bulwark of
American medicine.

Capitation, what does that mean?  The word is based on the Latin word
Caput, meaning "head."  Capitation, in a medical/economic sense, means
practice of medicine by head count, or, as the insurance actuaries
say, "per life per month". Please read life as "person".  A health
care system based on capitation is an economic scheme; most of these
programs pay but lip-service to quality of care, and are purely
systems of cost control. A group of actuaries, after looking at the
"at risk population" (the persons covered by the insurance plan),
decides what it will cost, "per life per month", to pay for the health
care required by these individuals. After deducting a percentage (the
figure given at the above seminar was 20%) for "administrative costs"
which include the often highly inflated salaries and benefits of the
senior management personnel, the Plan develops a "capitated rate of
reimbursement" to the "providers" participating in the plan.  Thus, a
primary care physician, a family practitioner or internist, with a
panel of 1000 patients, would be paid a figure, for example, $4.50
"per life per month". The physician would be paid each and every
month, whether or not those patients needed medical care.  Thus, the
primary care physician would receive $4,500 per month on a regular
basis whether or not he or she saw any patients, or whether all 1,000
of the patients required major medical care during that month.  The
beauty of this system is that it would be to the physician's advantage
to supply the least amount of health care that he or she could get by
with. The more care he or she delivered (because it costs money to
supply health care), the less the physician would "clear" in the form
of earnings.  I recall, many years ago, hearing the Chief Executive
Officer of an early (and successful) capitated health plan attribute
the fiscal success of his organization to the "secret" of having
"learned how to supply the minimal amount of medical care that the
public would stomach".  Thus, this system of capitation reverses the
old trend where a physician was allegedly encouraged to supply care
because the more care he or she supplied, the higher the income. Now,
under capitation, a physician is encouraged to withhold or postpone
care if guidelines of "medical necessity" (another new "buzzword") are
equivocal.  In the old days, if there was a question as to whether a
patient should be seen and cared for, the benefit of the doubt went in
favor of the care; now it is the reverse.  Now, if a physician
practicing under "managed care" guidelines supplies care to a patient,
and the "managed care entity" (often represented by an Administrator
with little or no contemporary medical experience) decides that the
care provided was "not medically necessary," the physician is not
paid. Under the capitation schemes, if the physician supplies "too
much care", he/she will soon find that the overhead of supplying the
care will result in a net loss to the practice.  It is also likely
that the physician's contract with the capitated plan will not be
renewed because he/she is "inefficient" or, in the newspeak of
"managed competition", is a "cost outlier."  I could continue on and
on as regards the implications of capitation on the relationships
between physicians and their patients; but space does not permit such
in this article.

Some time late in 1994, or perhaps in early 1995, a large number of
Californians, with health insurance provided for by their employers,
are going to receive a rude shock.  Just recently, one of the large
pre-paid HMO entities, Qual-Med of California, entered into a merger
with HealthNet, another large health insurance carrier.  Qual-Med is
the product of yet another earlier "buyout" of an organization called
HEALS, an Health Maintenance Organization founded by a group of
physicians in Berkeley, California more than a decade ago in an
attempt to provide high-quality prepaid care to a large segment of the
local population. HEALS, an "HMO/IPA" organization was designed both
to preserve patients' rights to choose physicians of their choice, and
to afford good h ealth insurance with minimal "out of pocket" outlay.
Physicians who agreed to participate in the HEALS/Qual-Med
organization saw patients in their own offices, subjected their
non-emergency treatment plans to a panel of their peers for review,
and agreed to accept a "discounted" fee for their services. This was
in return for a larger patient-base and a system which allowed for
reimbursement without having to bill and collect from patients.  While
there were some problems with some of the mechanics of this system, it
generally worked well, and, up until recently, both patients and
physicians were reasonably happy with the system.  In effect, the
HEALS/Qual-Med system was a great deal like Kaiser, but had the added
advantage of allowing, for the most part, free selection of both
physician and the hospital.  I (although this was considered radical
and smacking of socialized medicine by some at the time) was one of
the initial members of the HEALS panel of physicians and continued on
in this capacity when Qual-Med, a Colorado corporation, purchased
HEALS several years ago.

Now, with the acquisition of Qual-Med by HealthNet, Qual-Med is about
to convert to a capitated plan. Both primary care physicians and
specialists will be forced to affiliate with several large medical
groups, previously contracted with HealthNet on a capitated basis to
accept a "flat rate" reimbursement based on "per life per month"
schedules. If physicians do not wish to accept a "capitated" system,
they will no longer be able to care for patients enrolled under the
plan.  Patients of mine who I have seen for many years, often for
serious and chronic illnesses, will suddenly find that they will
either have to pay for continued care out of their own pockets, or
they will have to select a new physician who is a member of the
capitated medical group affiliated with their "new" insurance.  Each
"layer" of this construction; the parent carrier, the "contracted
medical group", the individual physicians' offices; will have their
respective administrative costs, this further diluting the funds
available for the actual care of patients.  Since many, if not most,
of these patients will have their insurance provided for by their
employers, they will have no choice. Even if they wished to obtain
private individual insurance in order to retain their freedom of
choice of physician and/or hospital, their pre-existing chronic
condition would result in a refusal of any new insurance carrier to
accept them due to "risk factors."

Capitation is even becoming a threat to the poor, the unemployed, and
the elderly.  Federal Medicare has recently set up pilot projects with
capitated entities ("Senior Security", "Secure Horizons", and others)
which have contracted with Medicare to assume liability for the care
of Medicare-covered individuals. Prospective patients are enticed into
these plans with promises of "no deductibles", "no co-insurance" (the
partial payments required under standard Medicare); yet these same
patients do not realize that, by contracting with these other
entities, they are giving up their freedom of choice of physician and
hospital, and are binding themselves to future care by physicians who
are contracting members of the medical groups affiliated with the
outside insurance companies. Such entities' contracts with
participating physicians are almost always on a capitated basis, and
the "utilization review" controls are often relentless.  Imagine an
elderly individual who has just required a major operation and who
finds that the "guidelines" dictate a hospital stay of 48 hours or
less. Under a capitated plan, you will be forced to go home
(interesting if you are elderly and live alone), or, perhaps, be sent
to a Nursing Home to recuperate, when a few extra days in an acute
hospital setting may be the most effective way to get you back to good
health and independence.

The recent article in Children's Advocate also pointed out that, later
this year, or in early 1995 at the latest, the state Medicaid program
(called Medi-Cal in California) is also going to join the ranks of
"managed care" and "capitation".  Thus, the already deeply-discounted
reimbursements in the Medi-Cal system will be reduced even further,
and yet another layer of bureaucratic management will be inserted
between patient and physician.  In the case of the Medi-Cal system,
there are already too few physicians who are willing to accept the low
reimbursements. Physicians are currently reimbursed in the range of
30% of what would be considered a "reasonable" fee.  A further erosion
of the reimbursement rate, along with yet another level of paperwork
requirements, will most likely result in even fewe r physicians being
willing to accept Medi-Cal patients. This will result in a further
reduction of accessibility of care for the poor and disabled.

As one who has been involved in the practice of medicine for most of
my adult life, I have no illusions as to the "perfection" of the old
fee-for-service, indemnity-based, insurance system.  There are many
problems with the old system, and the cause of these problems cannot
be blamed on any one of the many sectors in the health care
environment. There are instances of avarice and insensitivity,
prejudice, ignorance, and other negative factors operating in the
world of American health care; but, at root, our system of caring for
the sick and injured has been the best of many in the world.  The time
has come for true reform in the delivery of health care, so that all
Americans will have an "equal playing field" in the matter of health.
I believe that, indeed, in our rich and advanced country, health care
for all is a right.  There are ways to provide this right to all
without denying the equally moral right of health care professionals
to receive fair recompense for their work. At the same time, it is
repugnant to most good people to have a few highly-paid administrative
types profiting from the bureaucracy which is dismantling American
medicine in a way which would shock and sadden the great pioneers in
medical science. During the last hundred years, the advances in health
care have raised our quality of life to a level which our ancestors
could not have imagined.

Proposals such as Proposition 186 on the November ballot in California
(which I support) are a beginning in our attempts to extend the
benefits of modern medicine on a universal basis.  I also believe that
the proposed Clinton Health Care Plan falls short of the mark. I do
not support it mainly because it encourages the very type of health
care which I have written about. I feel that some form of universal
health care coverage, and probably with a "single-payer"
infrastructure, is an idea whose time has come. This will put a stop
to the ill-advised, unfair, and morally reprehensible schemes of
capitation now being foisted upon an unsuspecting public in the name
of "managed care", "managed competition", or managed anything.  Do
patients really want an administrator to "manage" their medical
treatment?  Capitation, carried to its logical conclusion, will lead
to the "Decapitation" of health care in this country. It is essential
that the general public become informed on this vital subject and act
to pressure their elected representatives for change before the heart
of American medicine shares the fate of the "decapitated" head and
leads us into a world of medical mediocrity and business-driven health
care.

            The End.
=================================================================

Robert A. Fink, M. D., F.A.C.S.   Phone: 510-849-2555
Neurological Surgery              FAX:  510-849-2557
2500 Milvia Street  Suite 222
Berkeley, California 94704-2636 
USA 

E-Mail:  rafink@ix.netcom.com
CompuServe:  72303,3442
America Online:  BobFink          "Ex Tristitia Virtus"
********************************************************

ABLEnews Editor's Note: For an analysis entitled "Managed
                        Care: Dangers for Persons With
                        Disabilities," see CBE9204.*.

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