The new anatomy of health care - includes related articles and glossary of medical terms - Panel Discussion

Chief Executive, The, Jan, 1996 by J.P. Donlon, Barbara Benson

We have a long way to go in developing these data. Historically, developing them has been inhibited by privacy issues. But until we develop more results-oriented data, users will have a hard time making intelligent choices.

Tabak: You're right: Don't misconstrue control as scrutiny. As scrutiny diminishes, costs will escalate.

Jack Rosen (Continental Health Affiliates): We're missing the most important ingredient: How to control Medicare and Medicaid costs. Whatever progress we're making will be overpowered by how the government handles these biggest cost sectors.

J.P. Donlon (CE): I'm going to challenge you on that. We didn't get a government health plan, and look what's happened: The market has adjusted and is undergoing consolidation.

Rosen: I'm not suggesting we continue the discussion about a national healthcare plan. But we need to tackle the Medicare and Medicaid dollars. The Republicans want to move them into managed care. The Democrats want to maintain the status quo. It's essential that we manage these huge components.

Weston: You can't tackle all components at the same time with the same solution. Medicare and Medicaid deal with people who are not in the work force, representing about 40 percent of the total number of insured lives. That will require one type of solution, because it's mandated by the government. For the other 60 percent spread out over 3 million employers and the self-insured, no single solution will work for all of them.

Rosen: I'm not so sure. Right now, there's a gold rush in New York State for who is going to sell Medicaid a managed-care program. Since the margins are narrowing on the private side of managed care, providers see a pot of gold in Medicare and Medicaid.

Go: Yes, the commercial HMO field is becoming so crowded, and there are relatively few - if any - virgin markets left. So equity-based, publicly financed HMOs are looking for growth as a way to sustain their P/E ratios. Medicare and Medicaid are new places to do that.

Joseph T. Lynaugh (NYLCare): Managed care promises to cut costs, but it will not be a painless transition. First, any cost-cutting will mean laying off some healthcare employees. Second, we are heading into an unprecedented time in this country in which there will be unemployed physicians. That presents an interesting ethical question: What kind of world is it where men and women who control life and death are unemployed? Third, how will this affect academic health centers, such as medical schools and research hospitals? Much of the cost containment will come from their hides, and they are not prepared. I'm all for managed care, but it comes at a price.

William E. Mayer (CE/University of Maryland School of Business): How will managed care move from a promise to something closer to reality?

Go: First, more of the risk will be shifted to the providers. This process has started. Second, professionals must be appropriately incentivized to do the right things and develop new ways of managing the care of patients or members.