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Copyright © 2000 The Seattle Times Company
Editorials & Opinion : Wednesday, May 31, 2000
Rolling snake eyes with health care
by Kathleen O'Connor
Special to The Times
Not being a gambler, I nevertheless joined friends at a casino. I took $10. After five minutes and five lost dollars, I quit blackjack to try craps.
I thought craps was a simple roll of dice. Roll a 7 or 11 and you got money. But no, craps is laden with rules - use one hand; keep your hands inside the table; double your money if you place chips in a certain box, and so on. I stopped listening, shook my head and laughed about so many rules over a simple toss of two cubes.
I lost $10, but physician groups are losing more, much, much more in the benefit-management crapshoot. One clinic has lost $16 million in the past two years. It is not alone.
Rules of the game
United Physician Service, Kitsap Physician Service, Medalia and Cascade Healthcare Alliance are in receivership or out of business. But it's not just them. Over 70 percent of such medical groups in California verge on insolvency. Even the national managed-care flagship, ranked No. 1 in the nation, Harvard Pilgrim Health in Boston, is in receivership.
Why? These groups accepted financial risk for patient care in the new managed-care marketplace. But too many options exist with no information systems or other infrastructure to support the complexity, much less manage it efficiently.
What this means is the plans and the medical groups and hospitals that contract with them do not know for sure if the patient is really eligible for services, if the patient was referred to the right doctor or the right hospital. Even though care is provided, the doctors may not know until months later what they will get paid - or whether they will get paid.
Take my former assistant. She went to her primary-care doctor, who referred her to a specialist. He sent her to the hospital for surgery. Six months later, "Karen" got a bill for $6,000. The letter said she went to the wrong hospital. Her primary-care doctor sent her to a doctor who was not in the approved network. He sent her to the hospital he is affiliated with. That hospital was not in the approved network. Karen got the bill. Happens every day.
Deciphering health-care benefits is a crapshoot. Each insurer has many different plans, with different rules on co-payments, deductibles, premiums, physician and hospital networks and payment options. I spent three hours one Sunday with a very savvy friend who works in health care, trying to figure out her annual costs if she used the POS (point of service) vs. the HMO option vs. the PPO (preferred provider organization) option. Neither of us could decipher these choices. And, if this was a problem for us, imagine a physician's office.
Take The Everett Clinic, one of the most highly regarded group practices in the state. It contracts with Regence, Group Health, Premera, First Choice and Aetna, and others. Each of these plans has many different products, each with a different list of approved doctors and hospitals. Then, they have options within options - HMO, fee for service product, PPO, POS and Medicare HMOs - all with their own separate rules and payment structures.
The Everett Clinic employs 75 people full time just to analyze these rules and regulations.
"We used to have 15 plans we worked with, but are now down to 7 or 8 because of mergers, but these plans have as many benefit options as Carter's has pills," says Richard Cooper, CEO of the Everett Clinic, and 20-year industry veteran.
"We have 175 physicians. We used to have 3.5 employees per doctor to help support the practice. We now have 5.5. Nearly a quarter of them spend their time deciphering eligibility, referrals, authorizations and various billing and insurance-related issues. The IRS has 14,000 pages of tax regulations. Medicare alone has 146,000."
Plague of plans
Managed care is a crapshoot with manufactured rules decipherable only by those who design them.
Physician groups are bleeding financially from arcane and microscopic differences. By deluding ourselves that choice is good, we have created a work force that does nothing but decipher rules that change every year with every contract.
Health plans say employers and patients want choice; that they compete in the marketplace based on the benefits, coverage and cost-sharing options they offer. But more choice means more complexity. More complexity means more costs.
If I cannot figure out a friend's options, or if the Everett Clinic has to hire 75 people just to decipher who is covered for what, then things are out of control. We have already lost Medalia, United Physicians and Cascade - say what you want about management mistakes. We are drowning in complexity that serves no beneficial health-care or financial purpose.
It would be cheaper and better if we all had fewer and clearer choices. Let plans compete on the quality of care and customer service instead of benefit design. Then we, as patients, could understand our choices and use the system wisely. And our doctors and hospitals would have half a chance of understanding the rules and staying solvent.
Until then, it's a crapshoot. And we are all losing.
Kathleen O'Connor is a health-care industry analyst, consultant and writer based in Seattle. She has over 20 years experience in various sectors of the health-care industry.
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