Medical Practice   4/95

by Del Meyer, MD

Physicians have traditionally completed their training and then entered practice by joining another physician, a group of physicians, or by hanging out their own shingle. Physicians were respected on the basis of their diagnostic acumen. They kept their patients by developing their bedside manner, sense of humor, and empathy. Specialists, in turn, would win over the confidence of primary physicians with these same traits. Successfully saving their patients' lives in complex situations would indirectly lead to a respected referral practice. Practice and referral patterns developed which lasted decades. Physicians regularly read their journals, attended their meetings, and took courses to improve skills and increase their knowledge. The profession was respected. The brightest and best of our country sought to enter this noble profession. All seemed right with the world of medical practice.

We seldom worried about getting paid. Our charges were modest. Services were sometimes rendered for free. Professional courtesy to physicians and their families was the mode of the day. Even the pathologist and radiologist did all of our personal lab and x-rays free.

The laboratories owned by the pathologists were sold to commercial laboratories and their last professional courtesy disappeared this past year.

Clinical professional courtesy has also vastly changed. As practices were being bought up by hospitals and others, maximum charging became the mode of the day. Increases were implemented every three months until the highest reimbursement was found. Yearly gyn exams went from professional courtesy to $65 to $125 to $168 in just four years.

Insurance companies couldn't control these huge increases even with massive premium increases. They contracted with managed care companies for a commission (the WSJ estimates this at 20% projecting an increase up to 50% by the year 2020) with a promise that they would reduce reimbursement to considerably more than their commission. Charges submitted became irrelevant. Allowed charges became the payment rate and were sometimes only 40 cents on the prevailing dollar rate.

Doctors tried their best to become more efficient, and reduced hospital stays. The total charges still went up. The surgeons developed a laparoscopic technique which enabled them to take out a gall bladder, or ovary, or appendix and send the patient home the same or next day trusting that a one day hospital charge would be one-fifth of a five day hospital charge. However, hospital charges for the one day stay exceeded the previous five day stay. Similar efforts were made to reduced the average hospital stay for a variety of medical conditions also but the total hospital cost for a brief stay continued to increase over the previous lengthy stay.

Doctors began to reverse their defensive medicine practice and started doing fewer procedures and ordering fewer tests. The total costs continued to increase and the doctors were still blamed for the escalation of medical costs. After all, we still ordered the tests and the procedures. But we never were given a price list or a fee schedule of the drugs, tests, or procedures we ordered.

Every fiscal intermediary from the Feds (Medicare), State (MediCal), insurance companies, managed care organizations, began reducing doctors' reimbursement even further, or holding increases to less than inflation with little change in total costs.

Administrators' portion of the health care dollar now exceeds the physicians' portions. Some are making 10 to 100 times what some doctors make with the justification that they are the ones controlling health care costs. They are, in fact, just stemming the rise somewhat by reducing the level of care and taking the credit for what doctors in large part did.

The U.S. president and his wife tried to implement a national health plan to control costs since they convinced a lot of people that doctors didn't... but the public and congress became wary.

The State of California tried to eliminate all insurance carriers by becoming the carrier themselves. The residents of California awakened to the fact that the history of government medicine is bad for patients, doctors, hospitals, and taxpayers... as well as for research, pharmaceutical and technology companies.

By this time doctors began feeling helpless and hopeless. But what could they do? Some thought that they should outdo the system by starting a managed care company themselves. If doctors are perceived as the cause of the failure to control costs, wouldn't this clear them of the blame for failing? But if doctors knew how to further decrease costs, why wouldn't they do it as professionals on their own patients rather than through a managed care organization denying authorizations and claims of other physicians' patients?

The patient lost all economic incentives. In fact, many patients felt that they had no responsibility for their own health if it were not paid by insurance. Both the patient and the doctor forgot that insurance was instituted to provide security in paying for catastrophes. Insurance does not cover a worn out hot water heater in our home or the diagnosis of a noise in the engine of our car. Neither can it cover the diagnosis of anemia, thyroid dysfunction, or most service calls to our offices.

Health maintenance organizations (HMOs), such as Kaiser Permanente, did a superior job of competing with insurance and providing routine basic care and increasing levels of acute care. Insurance companies developed Preferred Provider Organizations (PPOs) to compete with HMOs without bringing the medical community under one roof. Community wide HMOs were then developed to compete with PPOs and in house HMOs.

If we thought patients were confused, physicians are now also becoming confused. But we have to admit that the above has controlled the business cost of health care. It did stem the tide of the health care costs of the products we buy. General Motors estimated that the price of each of their cars included $800 for the workers health care costs.

Can we bring order out of chaos? Perhaps we should try to define what each of these do best. HMOs and health insurance may not be entirely competitive but complementary with overlap. But is that definable?

Should HMOs cover 100% of basic health care with a fix co-payment up to a certain amount of hospital care? How can they cover a $120,000 bone marrow transplant in a cancer patient with a minuscule chance of improvement? Should PPOs cover everything above a basic office visit up to some limit of hospital charges? Should catastrophic health insurance then cover above a certain number of days of hospitalization up to the usual liability we carry on our car or our practice? Like an umbrella liability policy?

Physicians may be unable to bring order out of the HMO, PPO, insurance morass. However, restoration of a stable doctor/patient relationship is a primary and worthwhile goal. It occurs when our patients pay a fee for the service they see us provide. When someone else pays for our services, the fiduciary role is not present; therefore, a stable doctor/patient relationship is not present. It has been supplanted by a doctor/insurance and an employer/patient contract. The doctor/patient relationship will become a business arrangement which can be changed simply by a certified letter. Medical practice will then just become the business of medicine.