by Thomas J. Grogan, MD
Thomas J. Grogan, MD, is a practicing orthopaedic surgeon in Santa Monica, Calif. and CEO of Innovative Medical Consulting and Management, Inc.
The evolution of managed care systems has engendered changes in all aspects of the delivery of health care. The changes in the interactions between patients and health care professionals have been significant and well-publicized throughout the country. Simultaneously, the business side of medicine has experienced far more dramatic, but less well-publicized changes.
Managed care was developed in response to health care costs which were correctly perceived to be spiraling out of control. In actuality, since the 1960s, the cost of health care per insured life has routinely consumed a larger and larger portion of the Gross National Product (GNP). In the mid-1960s, health care spending in the United States accounted for $1 out of every $17 of GNP. By 1995, that proportion was $1 out of $7, with the total cost of health care in 1996 expected to top $1 trillion. In response, the employers and employees who bore the costs of the skyrocketing premiums began to push for mechanisms to control the runaway medical inflation, and managed care systems began to develop.
Originally, many companies sought to control costs through aggressive management of the administrative side of health care services. This emphasis on administrative control, however, did not always achieve the desired results. The patient and health care professional relationships were to be regulated by the administrative functions of a medical gatekeeper. The gatekeeper was to assess all patients and triage onto specialists only those patients who needed advanced care. Financial and/or corporate incentives were implemented to assist the gatekeepers in their decisions.
Unfortunately, these incentives often resulted in a hesitancy to seek advanced care from specialists in the early stages of health care problems which frequently led to negative patient outcomes. In addition, this poor decision-making often did, and still does, lead to costly, expensive care that might have been unnecessary if care was instituted in a more timely manner.
The evolution of cost containment in managed care can be viewed from two distinct perspectives. The first viewpoint looks only at the medical management of disease states. The goal is to provide effective, cost-efficient care that can be characterized by value. Value, in this setting, is measured by the resources consumed to obtain a specific medical outcome. The second viewpoint focuses on the process management component, also known as the business side of medicine. Cost containment efforts are directed towards such diverse areas as contracting, utilization review and other factors of pure, technical cost management.
Successful reduction in costs was most noticeable in the expenditures for facility costs. Specifically, the facility costs incurred through hospitalization comprised approximately two-thirds of the total cost of health care. Systems were therefore designed to improve decision-making processes resulting in a more appropriate utilization of these costly resources. The original primary care gatekeeper system was able to, in many instances, achieve this goal.
The most successful example can be found in the effect of managed care upon bed-day utilization. The industry benchmark is termed as the number of bed days per thousand members per year that is required to manage a population of patients. For commercial populations (patients under age 65) in unmanaged systems, the number of bed days was approximately 450, compared to 140 in well-managed systems. This example of efficient and effective management of inpatient bed days demonstrates a reduction in the rate of medical inflation through a decrease in facility costs. This is an example of appropriate management that is directed towards an area that consumes a large portion of total health care dollars.
Managed care systems initially designated primary care physicians (PCPs) as the gatekeepers. The PCPs were believed to be best able to manage the overall care of the patient and control the decision-making processes surrounding disease management. Indeed, most managed care systems were either owned by PCPs or specifically designed to economically reward well-managed systems by giving the PCPs bonuses and/or incentives based on the cost savings.
As the number of patients converting to managed care systems rapidly increased, these savings were initially quite easy to achieve since most HMOs were very selective in the populations they enrolled. The HMOs tended to avoid patients with chronic illnesses and focused on enrolling large companies with relatively young employee populations. As these populations become more stable and begin to age, the cost savings produced by efficient administrative management become less significant while the cost savings that incorporate value in patient care management assume a greater role. Thus, the ideal gatekeeper will be able to successfully balance the needs of these two facets of health care delivery.
One illustration of a positive evolution in the role of the gatekeeper would be in musculoskeletal care. Orthopaedics is responsible for 12 percent of the health care dollar with 2 percent going towards professional services and 10 percent accounting for facility and nonprofessional fees, implant, and/or supply costs. In the past surgeons were paid according to the number and the complexity of procedures performed. Recently, disease management scenarios that emphasize outcome-based compensation for disease processes are increasingly moving the surgeon towards practicing cost-effective medicine instead of surgeon-productive medicine. For example, the two disease processes of hip fractures and arthritis care comprise 52 percent of the orthopaedic care of senior populations and thus are responsible for significant health care costs.
As mentioned previously, medical cost savings are significantly influenced by appropriate decision-making; proper management of these patients by specifically-trained professionals can lead to substantial savings in the senior population. Therefore, it is obvious that orthopaedists, who are trained to make musculoskeletal management decisions, are in the best position to be the gatekeeper of choice for musculoskeletal care.
In summary, the role of all professionals in the overall delivery of health care is and should be evolving towards the management of those disease processes best suited to their training and experience. PCPs are in the position to manage health, but they need to delegate disease management to those best able to manage specific disease processes. Specialty gatekeepers can and should be seen as disease state managers and not as competitors in the management of patient health. The interaction between PCPs and specialists can thus evolve to be complementary and mutually beneficial instead of competitive and antagonistic. All health care professionals, whether PCP or specialist, must adapt and evolve or face the very real prospect of becoming a medical dinosaur.