The ethicist

I was waiting for Larry, our new ethicist, in the cafeteria. I'm a health care planner and COO for the Coalition for Health Care Reform. The Coalition started as the Governors' Committee for Health Care Reform after the 1991 National Governors' forum sponsored us.(1) But we were later joined by big business and started receiving federal funding, so now we are just the "Coalition."

Larry sat down. "Sorry I'm late, I had trouble with parking."

"Have a seat and we'll get started," I said. I started orienting him to the Coalition.

Soon, Larry began talking about the changes the health care system saw during the 1990s. "In a way, it's amazing what the States, industry, and the Feds have been able to do in 10 years. You're aware that my thesis was concerned with some of the trends we didn't see in the '90s."

"Yes, I know, but let me just finish up here, Larry."

The governors took the lead in health care reform in the early 1990s primarily because the states were going broke. California and New York spent 20 percent of their total budgets on health care; the national average was 16 percent.(2) Some of the early efforts at cost control, as outlined at the governors' 1991 national conference(1) failed miserably. These included rate setting agencies for providers and national certificate-of-need requirements.

Massachusetts tried to set physician rates and ended up losing a third of its physicians to other states. Those that remained overutilized, and it ended up with costs 150 percent of the national average.(3) We advised it that the certificate-of-need controls would work about as well as they did the first time they were tried in the seventies.

Other ideas the state had were okay. After a little refinement, we began our lobbying with medical and legislative groups and ended up with what we have today. My first week on the job, I told the governors that the current system had certain inherent flaws:

* Two-headed monsters disguised as hospitals, with administrators trying to control the cost behaviors of totally independent medical staffs.(4)

* The health care consumer not paying for his choices, like giving a stranger a credit card and turning him loose.

* Middle-man administrators skimming 20 percent of the health care dollar by churning and shuffling papers.(5)

* Malpractice as an adversarial, as opposed to an administrative, process adding costs directly by awards and indirectly by encouraging defensive medicine.(6)

* Joint venturing of physicians and hospitals returning 100 percent on investment each year.(7)

* Lack of standard treatment protocols and an estimated 20 percent of treatments ineffective or unnecessary.(8)

* Eighty percent of one's health care dollars being spent in the last six months of life.

Our advice was to correct these flaws in the system first and then to think about how to:

* Care for 36 million uninsured.

* Lower the highest infant mortality rate among developed nations.

* Reduce state spending of 20 percent for health care for the indigent.

* Care for the elderly. "You know I'm a physician, Larry?" "I'm sorry, I didn't know."

"So as COO I always had a faith in technology, especially pharmacology and bioengineering. And I knew that physicians and consumers would never accept anything but the best in health care. For instance, I never suspected at any time that a physician would have to tell a terminally ill cancer patient that all that was allowed for his treatment was palliation, or that a 65 year old man couldn't have dialysis because of the "rules." In all of our advice to the governors, we tried to have a basis in reality and in the psychology of the medical community, the consumer, and the politician."

"Hmm, What about the ethicist?"

"Couldn't get one budgeted till this year."

Larry and I decided to review the system as it is today.

Health Care in 2000

The nation spent 15 percent of the gross national product, one trillion dollars(8) on health care this year. Promoting access and controlling costs are still the missions of government and business.

There is no one system. Health care is still multipayer and multi-tiered. Fee for service, for practical purposes, does not exist. The major players in the system--government, business, physicians, hospitals, and insurance companies--each has its own agenda for "reform."

Government Programs

State governments still have control over the Medicaid program, which has been expanded to cover the uninsured and the underinsured. The TOBRA Act of 1993 mandated that all employers provide insurance to employees who work more than 20 hours per week and to their families, that states provide similar benefits to the uninsured and the underinsured, that states could institute rationing of their resources,(9) and that the first 60 days of nursing home care are entitlements under Medicare.(10)

The "Oregon Model" of universal, state-sponsored health insurance has been more or less adopted by all states except Arizona and Florida, where the referenda were defeated by a coalition of grey panthers and the ACLU. The state Medicaid program has been expanded to cover all medically indigent people.(11) Legislatures vote on and make law those conditions and procedures that will not be reimbursed when funds drop to certain levels.(9)

Patients who are certified, by three state-approved physicians, to be within six months of dying are given palliative treatment only, unless the patient or family objects, in which case they share half the costs.

The stepwise rationing system is approved by the legislatures after recommendations from their health care rationing committees. These traditionally include ethicists, clergy, physicians, and consumer representatives.(12)

Women who qualify for the state-run medical plan must document that they are unable to conceive. Technological advances in birth control, such as subcutaneous slow release capsules, have made this enforceable. This was a trend first seen in Colorado.(13) They are also required to document vaccinations for their children.

There are 60 million people in this "safety net" plan. States have all contracted with HMOs, networked their own PPOs, or expanded their preexisting public hospitals and clinics to control delivery.

All states except California have instituted tort reform. All malpractice claims are handled administratively by the State Boards of Medical Equalization. Each hearing board is chaired by an administrative judge and paneled by physicians, attorneys, and consumer groups. The boards are responsible for hearing and adjusting claims and for disciplinary action against physicians. The national physician register, required by COBRA, has been effective in curtailing the "dangerous physician."(14)

Government's share of costs for elderly care has continued to decline as means testing has been gradually implemented. Regulations on "intermediate care facilities" have been eased, allowing the importing of foreign labor and the provision of more services in these facilities. But most care is delivered at home by family members or home health aides, and most cost is shared by families.(15)

Business

Business continues to be very proactive. In an effort to vertically integrate and control, Chrysler Corporation was the first to commit to a plan that established exclusive provider arrangements (EPAs) for its employees.(16)If employees stay within the plan, they share only 20 percent of the actual costs. Services outside the plan are still reimbursed at plan rates, so employees can pay as much as half the bill.(13)

Some companies established their own health maintenance organizations (HMOs). Physicians are salaried and work in a staff-model structure. Care is delivered under standard treatment protocols developed by the National Institutes of Health in the mid-1990's.(6) Ownership of the HMO and its earnings are shared with the union.

Employee assistance programs (EAP) have mandatory participation and compliance for certain product lines, such as smoking cessation, substance abuse identification and counseling, seat belt and other safety programs, and stress reduction counseling.(17)

Elimination of some administrative expenses saved 10 percent immediately.(5) EAP saved 15 percent after a few years, tort reform 3 percent, and use of standard treatment protocols 15 percent.(19)

Physicians

Physicians scrambled in the 1990s to compensate for their dwindling revenues. But they found that every turn was anticipated. Medicare eventually disallowed payment for services in facilities owned by the referring physician, including imaging centers, labs, and hospitals.

Most physicians practice in groups or are hospital-based.(18) Because fee-for-service reimbursement is virtually nonexistent, they are paid as salaried employees or are reimbursed by DRG or through capitated plans.

As ethical and standard of practice issues have arisen, many physicians have changed careers and gone into administration or consulting. A major entrepreneurial opportunity in the year 2000 is establishing IPAs that contract with business.

Most offices are networked with hospitals and payers by computer systems that reduce overhead costs. The systems are also used for outcomes management information distribution and for facilitation of the national treatment protocols that the payers are using as the standard for reimbursement. (19)

Hospitals

Inpatient revenues have steadily declined to 31 percent this year.(20) Shapers of this trend include the pharmacological "magic bullets" that have cured 80 percent of cancers and that have made ischemic heart disease treatable in the office. HMOs have continued their increasing use of home health services.(21)

Hospitals that have done well are those that have downsized, collaborated with business and government programs, and found specialty niches.(16) For example, hospitals in retirement areas have converted beds to skilled nursing facilities and integrated them with "life care" units. Many hospitals contract with Plaquebusters, Inc., a physician-owned group specializing in atherolytic therapy.

Surgery, long the major generator of revenues, has decreased as a contributor to the bottom line, giving way to pharmacological treatment and "mini-invasive" techniques.

Insurance Companies

Insurers are "packager-marketers." The federal medical claims office reimburses all providers according to either DRGs or standard cost protocols.(22)

One expanding industry is the "reinsurance company," which underwrites for the smaller or higher risk companies now that the initial insurer is required to insure without regard to certain preexisting diseases or child-bearing status.

Summary

It was time for me to get back to the office and make some phone calls. I could see Larry was bothered by something.

I continued, "Government and business as the major payers have been the major reshapers of our health care system. After business was required to insure all employees, it asked for and got many of the reforms that have allowed more control over costs."

"That bothers me a little," Larry interjected. "It's the same with the state governments. Once they were mandated to provide for all medically indigent people, they asked for and were given the right to ration and make people go on birth control, among other things. It bothers the ethicist that the payers have ended up with all the power here, and the consumer and the provider just sort of dance to their tune."

"Well, Larry, if the system needs more compassion, ethics, medical control, or whatever, you'll just have to do it in the next 10 years."

References

1. House Subcommittee on Healthcare. C-Span broadcast, April 22, 1991.

2. Averill, R., and others. "Present and Future: Predictions for the Healthcare Industry." Healthcare Financial Management 40(3):50-4, March 1986.

3. "Massachusetts' Care Costs Update." Medical World News 31(3):62-3, March 1990.

4. Mickinney, M., and others. "Paths and Pacemakers: Innovation Diffusion Networks in Multihospital Systems and Alliances." Health Care Management Review 16(1):17-23, Winter 1991.

5. PBS, 1991.

6. Zall, M. "American Healthcare Is Worth the Price Tag." Private Practice 9(1):12A-B, Jan. 1991.

7. Idaho Statesman, Sept. 1, 1990.

8. Pollner, F. "'92 Budget Shatters Fragile Pact." Medical World News 31(3):18-9, March 1990.

9. Larkin, H. "CEOs Split over Oregon Medicaid Reform." Hospitals 64(2):75, Jan. 20, 1990.

10. Patlak, M. "Older Adults Examine Healthcare Options." FDA Consumer 25(1):14-7, Jan.-Feb. 1991.

11. Dentzer, S. "Scandalous Health Care." U.S. News and World Report 108(10):24-28,30, March 12, 1990.

12. New York Times, May 2, 1991.

13. Kuttner, R. "Health Care: Why Corporate America Is Paralyzed." Business Week 3208:14, April 8, 1991.

14. Hackney, V. "The National Practitioner Databank: A Step toward More Effective Peer Review." Journal of Health and Hospital Law 24(7):201-9, July 1991.

15. Supple, T. "The Labor Shortage." American Demographics 8(9):33-5, Sept. 1986.

16. Coile, R. The New Medicine. Rockville, Md.: Aspen Publishing, 1990.

17. "EAPs Are Effective--Three Year Study Finds." Medical Benefits 5(9):15-6, Sept. 1986.

18. McKahan, D. "The Healing Environment of the Future." Healthcare Forum Journal 33(3):36-9, May-June 1990.

19. Pollner, F. "Flexible Practice Guidelines Urged." Medical World News 31(3):20-1, March 1990.

20. Burda, D. "Why Hospitals Close." Modern Healthcare 19(12):24-8,32-5, March 24, 1989.

Further Reading

The following additional sources of information on approaches to organizational ethics were obtained through a computerized search of databases. For further information on citations, contact Gwen Zins, Director of Information Services, at College headquarters, 813/287-2000.

Drane, J. "Medical Ethics in the 1990s. Emphasis on Death-and-Dying Issues Will Continue but Social Concerns Will Command Increased Attention." Health Progress 72(7):29-37, Sept. 1991.

La Puma, J., and Priest, E. "Medical Staff Privileges for Ethics Consultants: An Institutional Model." QRB 18(1):17-20, Jan. 1992.

Momeyer, R. "Philosophers and the Public Policy Process: Inside, Outside, or Nowhere at All?" Journal of Medical Philosophy 15(4):391-409, Aug. 1990.

Randall, T. "An Ethicist's Perspective on Health Care Reform. JAMA 268(17):2352, Nov.4, 1992.

Rosenbaum, R. "To Hell with the Ethicists. I'm a Real Physician." Medical Economics 68(21):80-2,85-8,90-2 passim, Nov. 4, 1991.

Veatch, R. "Professional Ethics vs. Cost Containment: The Inevitable Clash." Internist 32(6):9-11,15, June 1991.

White, B., and others. "An Account of the Usefulness of a Pilot Clinical Ethics Program at a Community Hospital." QRB 19(1):17-24, Jan, 1993.

James L. Jones, MD, is Secretary, American Emergency Physicians, West Covina, Calif. This article was originally prepared as "Healthcare in the Year 2000" for the University of La Verne Health Care management Masters program.

COPYRIGHT 1993 American College of Physician Executives
COPYRIGHT 2004 Gale Group