by Robert E Toomey, LLD

In 1993 I wrote in "Modern Healthcare" magazine that it was time for the hospital and its medical staff to consider divorce. I still feel that way only more strongly.

Multi-hospital systems, regional alliances, consortiums and with increasing frequency, managed care systems have all but canceled out the need and desirability for community hospital medical staffs as we have known them in the past.

In place of the medical staff, a new and independent structure should be established as a Regional Medical Care Corporation (RMCC), composed of all physicians in a region. Vertically integrated systems as the university staff and Kaiser/Permanente may wish to remain separate which would help prevent FTC problems. The corporation could be for-profit or not-for-profit.

The corporation could be composed of solo-practitioners and group practices, whether multispecialty, single specialty, or subspecialty. Or it could develop linkages of physicians by specialties. The corporation would be accountable for the actions and care rendered by its members. It would perform duties and provide services for its members. These could include legal, business, and negotiating services with hospitals. The hospital contracts would spell out what the hospital will do and will not do for each physician and what the corporation will do and will not do for the hospital.

Managed care is a euphemism for controlling costs and controlling the use of diagnostic and therapeutic services, equipment and facilities being used by physician members of the Regional Medical Care Corporation. Only the physician has the skills to manage this arena, and must move into this new and exciting role as leaders of managed care.

Medical schools and residency programs have not prepared today's physician for the total requirements to run managed care. Effective managed care is impossible without a total rethinking of the training process. It must include not only policy, but also medical ethics, medical literature, statistics, management theory, computer technology, and leadership training. There must also be a practicum part with application to alternate pathways in dealing with a disease process to developing clinical pathways in which to practice.

Post graduate seminars and courses are totally inadequate to achieve these goals. It would require a half day once or twice a month on a continuing basis to do this retraining adequately. The above could best be done in a college format in concert with the Regional Medical Care Corporation. There would be two primary tracks in this program, namely one for primary care physicians and one for specialty physicians with additional executive training for those seeking major leadership and management roles. Leaders should remain in personal contact with patient care to retain hands on familiarity with changing practice demands.

Managed care is also the name given to all medical care efforts by any person or organization with a financial stake affecting what happens to a person who is ill and seeks care.

When an organization entity, such as a hospital, assumes responsibility for care it becomes the agency which will attempt to exercise the controls which affect the cost of care. However, it may not be effective in controlling costs since it has an even greater incentive to cover its large overhead.

It is a recognized fact that when one doctor was individually responsible for all decisions regarding services and care rendered, that his incentives seemed to be to maximize all services of care. This incentive was extremely costly even if the doctor had no direct financial benefits from the laboratory, diagnostic, or hospital facility that was used. The Regional Medical Care Corporation will be the essential element in leading physicians from their concern with one patient at a time to a responsibility for the care of hundreds and thousands of enrollees in one or another managed care program.

Efforts to control costs and reverse incentives, require the institutionalization of the management of care providing a satisfactory level at lesser and controlled costs. Organizational entities which have stakes in controlling costs are the insurer, the payer, and the patient.

One mechanism to attack the problems of cost, access, utilization and quality of care was the Physician Hospital Organization (PHO). This entity is comprised of one or more hospitals and a cadre of doctors who have agreed to establish the joint venture with each element owning an agreed upon share of the venture. For this to be successful, there must be a cessation of any hostility or competition. Power must be shared. Physicians must learn management skills.

An increasingly prevalent organization is the Health Maintenance Organization (HMO). This entity is created and may be owned by hospitals, insurance companies, doctors, interested citizens, or by businesses and industry. The rate structures for the HMOs are so low that consults are restricted and very few sophisticated or invasive procedures can be allowed.

As the HMOs are increasing in prevalence, the number of Preferred Provider Organizations (PPOs) are decreasing. At the present time they are almost equal nationally. The PPO is a paper organization of doctors without hierarchy or form. Each doctor agrees with a proposal made by the payer to accept a predetermine fee for service or a discount from the usual fee for the medical care rendered.

When an individual physician was the sole patient advocate, the cost of care became out of reach. With open consultations, such as in a PPO, with several consultants ordering sophisticated testing, there are no effective cost containment except the discount for service. The PPO could possibly survive with several significant modifications. This would probably still place the rate structure greater than the cost of an HMO, but individuals could opt to pay a higher fee above that which the employer paid for extra services.

By making some basic changes, the PPOs could once again become the dominant funding for health care. For a PPO to survive, the price must be such as to beat the competition. Gatekeepers are feasible as part of the PPO. Overhead for the PPO can be much less than for any other managed care organizational entity.

The proposed Regional Medical Care Corporation could also evolved into the managed care organization (MCO) for the HMOs and the PPOs directing the whole constellation of health care resources which embrace health education, prevention, immunization, nutrition, information systems, and any related protocol designed to enhance the quality of life, reduction of severe trauma, and inpatient care.

In conclusion, as each individual becomes part of a managed care plan, managed care will muddle through all its variations from PHOs, to HMOs, IPAs and a goodly number of other efforts by patients, physicians, hospitals, carriers, and the payers. In one or two decades we will find our systems with physician leaders and our patients served by well organized elements of care.