The American health system: a contentious environment in the 21st century

Physician Executive, Jan, 1996 by Thomas P. Weil

The failure of antitrust agencies to restrain harmful consolidations will eventually become of greater concern to the public. As a result of the formation of networks and the shortcoming of the DOJ and the FTC in the health industry, the establishment of state health services commissions will gain increasing political support in the 21st Century. Perhaps the most fundamental issue surrounding the possible use of this public utility concept for the health industry is an assessment of whether an appropriate balance can be obtained between the rights of patients and providers and the need for governmental control. Why this is unlikely to be accomplished, relates to state health services commissions being able to merge their legislative, judicial, and executive powers. A commission is legislative in nature because it must write its own rules; it is judicial because it must decide cases for and against one health network versus another; and it is executive because it must enforce its own rules and regulations. Such a statutory authority has difficulty in not crossing and blurring the boundaries of its tripartite powers and duties.

All of the foregoing is made more difficult when one takes into account outside pressures from the state legislature that establishes a health services commission. Rulings and decisions can become tainted by political partisanship. Ex parte contracts--not only with elected and appointed officials, but also from the lobbying groups--are difficult to control in a free-enterprise society. We have learned that much from the way political action committees presently influence members of the U.S. Congress.

The tripartite relationships and political pressures are further complicated by the anticipated overlapping of state statutory authorities: the public health department concerned with broader community health issues; the insurance department approving HMO benefits and premiums; and the health services commission dealing with entry, scope of services, reimbursement rates, profit margins, and the exit of programs and facilities. Such divided authority will require coordination and integration among sometimes seriously conflicting policy goals, causing conflicts among providers and between providers and government agencies. A number of these matters will eventually be settled in state and federal courts.

An S & L-Type Debacle in the Health Field?

As huge cutbacks in Medicare, Medicaid, and other third-party payments are implemented and joint ventures and mergers among providers proliferate, the question arises whether further downsizing of the health industry could seriously jeopardize the financial statements of our nation's providers. Is there any likelihood of the savings and loan (S & L) debacle and the bail out ($200 to $250 billion) of the late 1980s being repeated in the health industry in the 21st Century?[14] Is the estimated $289 billion owed by the health industry in longterm indebtedness (mostly in tax-exempt bonds) now or in the foreseeable future at significant risk?