Cost-conscious care - health maintenance organizations and health care

Reason, June, 1996 by David P. Jacobsen

In praise of HMOs

"Torture by HMO" is the title of a March 18 column by Bob Herbert in The New York Times. Herbert tells the story of a North Carolina family with a baby suffering from leukemia. Their health maintenance organization insisted that the child undergo treatment in another state, at great cost and inconvenience. Herbert condemns the HMO's "inflexible and thoroughly inhumane" policies, adding that "humanitarian concerns are not what corporate care is about. In the competition with profits, patients must always lose."

This portrait of HMOs as soulless money-making machines has become increasingly popular in recent years, as skyrocketing health care costs have driven a shift from fee-for-service medicine to managed care. Critics such as Harvard Medical School professor David Himmelstein contend that HMOs reward doctors for providing less care, trapping them in a conflict between their incomes and their patients' welfare, and impose "gag clauses" that forbid them to discuss this conflict with patients. "The bottom line is superseding the Hippocratic oath," write Jeff Cohen and Norman Solomon in their syndicated column. "Cost-cutting edicts from HMO managements put doctors in a box....Faced with directives to help maximize profits, many physicians are under constant pressure to shift their allegiance from patients to company stockholders."

From my perspective as both a physician and a patient in the same HMO, these charges do not ring true. I do not doubt that HMOs, like any other business, sometimes serve their customers poorly. But there is no reason to believe that managed care systematically undermines patient welfare because of the imperative to cut costs. To the contrary, I have found that efficiency is perfectly compatible with compassionate, effective health care. (Since this article was written, I have myself become a cancer patient. Thus far, my care has been unsurpassed. I have the option of being treated outside my HMO, but would not think of going anywhere else. I expect from my plan the same level of care as a patient that I have provided as a physician.)

My plan delivers care at several neighborhood health centers. Each member chooses a "home" center and a primary care physician at that center. Surgical, pediatric, obstetrical, and mental health services, as well as radiology, laboratory, pharmacy, and physical therapy, are all provided under one roof. While our "staff model" HMO does not offer as extensive a choice of physicians as many "network" HMOs, our arrangement does offer economies of scale and strict control of physician quality. Surveys consistently show that patients rate quality of care above greater choice of providers.

I am paid a straight salary and modest bonuses tied to both the plan's profitability and a patient satisfaction index. Frequent advisory audits help me and my patients sort out health care they need from health care they want. My goal is healthy, satisfied patients and a financially sound business. Every day, I put my professional reputation on the line. So does my HMO. Our challenge is to cut costs without cutting quality. Fortunately, there are many ways to do this.

Changing the venue of medical care from hospital to out-patient center, office, or home is the most important factor driving health care costs down and quality up. Hospitals are very expensive pieces of architecture. They are also complex places and therefore potentially hazardous to your health. Despite rigorous safeguards, medication and treatment errors can and do occur. As many as 15 percent of hospitalized patients go home with a hospital-acquired infection, often caused by antibiotic-resistant organisms. Furthermore, most patients do not wish to be in a hospital. In the last three years, my HMO has reduced hospital use by 25 percent.

Inguinal hernia repair is one of the most frequently performed operations. Just a few years ago, the cost of this operation included a preoperative night in the hospital, one to two hours in the operating room under general anesthesia, and up to five postoperative days in the hospital. The patient had to take four to six weeks off work, and the recurrence rate was 10 percent. In 1996, at my HMO, this operation requires 40 minutes of surgery in a free-standing, outpatient surgical center under local anesthesia using a $100 plastic-mesh plug. Patients have less discomfort, return to unrestricted work in one week, and enjoy a recurrence rate of less than 1 per 1,000. This approach to hernia repair has been technically feasible for several years but was usually employed sporadically, at the discretion of the surgeon or the patient. In the era of cost containment, it has rapidly become the standard in the profession, regardless of reimbursement mode.

Thanks to the innovation of laparoscopic surgery, 80 percent of my patients who need their gallbladder removed can undergo the operation as outpatients and return to work in a week. The original inspiration for this procedure was the development of miniature video cameras, and the early reports were dismissed as mere technical wizardry. But as it became clear that laparoscopic gallbladder removal was not only safe but much less expensive than conventional surgery, surgeons quickly adopted the procedure as the standard approach, and patients demanded it.