Managed care battles physiciansÕ discontent

Managed care battles physicians discontent

Helen Taylor

Business Report Staff Writer
Without a doubt, the advent of managed care has significantly changed the way physicians˜ practice medicine.

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In the face of such change, some hail managed care as a viable way to promote health and control unnecessary costs, but how many are reluctant players in the managed-care game and believe the current system is not the answer to the country˜s health-care woes?
Dr. Steven Thorson says a vast majority of doctors oppose managed care, including himself. As a family physician who has practiced in Fort Collins since 1974, Thorson has watched the managed-care movement grow to dominate the Denver market and gradually gain a stronger foothold in Northern Colorado. He is disturbed by the result.
"Managed care is a bad thing for patients and a bad thing for doctors," Thorson said. "It creates an adversarial element in the relationship between doctor and patient and brings into question whether the doctor is working as an advocate for the patient or as an agent of an insurance plan."
In the past, Thorson explained, the patient got together with the doctor, the doctor diagnosed the problem and made recommendations to the patient, and the patient either accepted or rejected the doctor˜s advice.
Now, under managed care, the patient has to worry that the doctor˜s opinion is based on pecuniary gain — that the doctor who determines that a procedure isn˜t necessary does so to save himself money.
While Thorson believes that most doctors are ethical and have the patients˜ best interest at heart, the system created by managed care weighs heavily on physicians˜ behavior, he said.
"It becomes a bigger fly in the ointment if the (health-care) plan is capitated, because under that system, doing less makes more money," he said.
A capitated physician receives a fixed amount of money, generally about $12, per plan member per month, to care for each patient. If the cost of care for the patient exceeds that amount, it comes out of the doctor˜s profits.
"The incentive to spend less per patient concerns me, especially with regard to generic and brand-name drug prescriptions," Thorson said. "A brand-name drug might be more reliable and easier to take, but the insurance plan˜s drug formulary might include only the generic drug that may not work as well."
As an example, Thorson cited a popular brand-name medication used to combat high cholesterol and high triglycerides, two conditions that raise the risk of heart disease. The medication is very effective and has few side effects but costs about $3 a pill, he said. So, instead of the more expensive treatment, some health plans offer a cheaper substitute. Thorson said the dosage for the less-expensive treatment, Niacin, is 4,000 mg, or eight pills, and flushing, nausea, diarrhea and liver damage are possible side effects.
"My dilemma is, if it was my family member who needed the prescription, which would I prescribe?" he said.
In addition to creating conflicting incentives, managed care can also disrupt established patterns of medical care and ongoing relationships between patients and doctors, Thorson said. When employers change insurance companies, their employees may be forced to change doctors. The new doctor might be good, but he or she doesn˜t know the patient. Continuity is broken, and a new relationship must be built.
From the doctor˜s perspective, another drawback to managed care is what Thorson describes as "hassle-factors ad nauseum."
"Doctors and their staff spend hours per day filling out papers or on the phone waiting for approval for tests," he said. "For one of the major HMOs, I˜m typically on hold for 10 or 15 minutes each time I call."
The increased administrative load has created a need for more nonmedical staff, which translates to higher costs. And plans˜ refusal or slowness to pay claims frustrates physicians even more. Thorson said he sees increasing incidence of depression among his colleagues saddened that health care hasn˜t gotten better, just cheaper and more cumbersome.
"An enormous amount of human resources goes to figuring out what game the managed-care companies are playing now," Thorson said, adding that 10 years ago, the average support staff per practicing physician was 3.5 full-time equivalent employees per physician, and now the number is 4.5.
"I˜m supposed to be devoting my time and intellect to taking care of people. Now managed care has foisted these other responsibilities upon me," he said. "And all of this is happening within the milieu of reduced payment for physicians˜ services."
Some might say that less money for doctors is a good idea — that they make too much anyway — but in light of escalating malpractice insurance costs, when managed care takes a bite out of doctors˜ salaries, the consequences can be severe.
Dr. Ken Olds, a family doctor in Greeley, recently gave up the obstetrics portion of his practice in part because of skyrocketing malpractice-insurance costs. And he is by no means alone.
"Doctors are a lot more afraid of being sued for not giving appropriate care than of insurance companies that limit their ability to provide care," Olds said. "Motivation for physicians is to cover our butt and do whatever necessary to avoid a malpractice suit.
"Juries will forgive you for being stupid, not for being greedy," he added. "That˜s why, according to the AMA, 15 percent of the tests we order are given to cover ourselves against potential lawsuits, not because they˜re needed."
To put things in perspective, Olds related the following statistics: When he started his practice in 1973, he charged $7 for an office visit and his malpractice insurance cost him $500 a year. Today, he charges $51 for an office visit and his malpractice insurance runs $13,000 a year. That˜s an increase of 600 percent for his charges and an increase of 2,500 percent for his insurance.
Thorson agreed that managed care˜s ratcheting down of costs creates a greater degree of liability exposure.
"If you˜re asked to use cheaper means of care, you˜re more likely to make your patient angry with you," he said.
In response to such damning testimony, Dr. Michael Paddack, regional medical director for PacifiCare of Colorado Inc., notes that if physicians see their relationships with patients as adversarial, then the insurance companies aren˜t doing their job.
He agrees that it is a problem anytime there˜s an incentive for physicians to shortchange on care but points out that insurance companies have mechanisms in place to ensure that physicians don˜t underuse the system, or overuse it, for that matter.
"I can˜t argue with the fact that there˜s a problem, but under the old system, physicians could milk it to death," he said.
As medical director for a large insurance company and as a practicing physician, Paddack sees both sides of the coin and empathizes with doctors˜ frustration at the vast quantities of paperwork.
"They˜re right. I see patients too, and it˜s a real pain to have to check a plan˜s formulary before writing a prescription, but show me an industry that has less paperwork than it had five years ago," he said.
As for problems with restrictive drug formularies, Paddack says pharmacy costs are the fastest-growing costs managed-care companies face, and use of generic drugs is one way to control those costs.
"There˜s always a new drug coming out that˜s better than what came out last year. The question is, do we switch right away or stick with the one we have," he said. "Our pharmacy decisions are made by physicians, and while we insist that physicians try the drug on our formulary first, if it doesn˜t work we˜ll move up to a more expensive drug."
Paddack acknowledges that some physicians have become nothing short of morose in the face of managed care, but suggests that the reason might not be the new system per se.
"Just in the last 15 years, we˜ve seen tremendous change in the industry, and those who don˜t do well with change have more problems than others," he said.
"Some won˜t want to work with managed care, period. There are some physicians who are more independent, less collegial, and perhaps they need a different niche where managed care isn˜t prevalent. But when it all comes together, when they˜re really immersed in it, it works."
Olds believes that managed care has made health-care providers take a harder look at how they can do their jobs more cost efficiently, but says the problem of high costs for health care won˜t be solved until individuals take more responsibility for the cost of their care and the costs of liability insurance and malpractice awards are curbed.
Olds likes the idea of medical savings accounts — tax-free savings accounts built up specifically for payment of medical expenses — and suggests that physician service organizations may play a bigger role as managed-care companies lose favor. Groups of physicians partnering with hospitals will offer their own health-care product to self-insured employers and bypass managed-care companies altogether.
Thorson believes that managed care will eventually collapse under its own weight because it demands so much in terms of human resources.
"There will come a point when consumers will realize how wasteful and hassleful the system is and decide it˜s not in their best interest," he said. "Then society will have to ask what other options do we have? Perhaps doing everything for everyone is impossible. On the other hand, we˜re a benevolent society, so how do we make such difficult decisions and put criteria on what we will and will not do?"
Indemnity insurance with a larger deductible tied to a medical savings account might be the way to go, he said, on the premise that medical savings accounts give patients more control over their health-care dollars, and insurance that kicks in at a certain level serves as a safety net.
"It would be equatable to home owners˜ insurance," Thorson said, "insurance used to cover disasters, not to paint the house or mow the yard."
Paddack agrees that things will change, but said that a return to indemnity insurance isn˜t the answer, nor are medical savings accounts.
"We can˜t get people to save for retirement, so who˜s going to put money in an MSA?" he said. "Managed care is here to stay but not in its present form. We˜re working to streamline the process and delegate more to the physicians, and what we˜ll probably see is insurance companies doing sales and service and physicians˜ organizations taking on more responsibility.
"Physicians are key," he added, "because they are more trusted than insurance companies and hospitals. However, whatever product develops will be a managed-care product."