(Originally printed in 1994 in GAFP Journal, the official publication for the Georgia Academy of Family Physicians)
The winds of change are blowing across the health care landscape. Propelling this change are worrisome vital signs in health care. This $900 billion industry, representing 15 percent of the GNP, has been growing at more than twice the rate of inflation. Approximately 15 percent of the population (more than 37 million Americans) are uninsured. Many Americans experience inadequate coverage as they move between jobs, and many groups experience discriminatory underwriting procedures, moreover, we do not have regulator controls over medical malpractice claims. Hospital and specialty capacity soars while we experience a shortage of primary care physicians.
Fundamentally, the problem lies within the third party payor system and the lack of consumer and provider accountability it has spawned. Consumers need to have financial incentive and information in order to differentiate health plans and providers on the basis of cost, quality and personal value. Health providers, including the family physician "gatekeeper," have insufficient cost and health outcome information, and insufficient financial incentive to better "manage care" in order to ensure Americans receive the highest quality, most appropriate care for their diagnosis or medical condition.
Everyone seems to agree the nation's health care goals are to improve health outcomes, while containing costs and guaranteeing universal access.
One element of the solution over the past decade has been realized through managed care organizations (MCOs), including health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Over 40 million Americans (over 16 percent of the population) are enrolled today in MCOs. In the Southeast, about 8.,7 percent of the population are MCO enrollees. Compound annual MCO growth has grown past 15 percent over the last decade -- growth at the expense of traditional indemnity insurance companies.
What has sparked this growth? MCOs offer employers consistently lower insurance premiums which, for the employee, translates into little or no out-of-pocket costs compared to indemnity insurance. How do MCOs offer the lower cost? First, MCOs exchange their ability to provide large patient volume for discounted fee-for-service or capitation reimbursement contracts with health providers. Second, they deploy utilization management programs including certain contracting, administrative, and clinical practice business requirements. Third, the MCO typically requires enrollees to choose a primary care physician "gatekeeper" to coordinate downstream hospital, specialist, and ancillary care.
How does managed care, as we know it today, impact family practice? first, to be included in the network, you mu7st sign annual service contracts requiring price discounts from usual and customary rates, or insurance risk sharing (capitation reimbursement). Consequently, you work harder for less and are faced with more patient utilization risk, possibly without the health information or appropriate incentive to manage the hospital, specialist, and ancillary utilization.
Second as your MCO patient's "gatekeeper," you will be required to provide pre-certification authorization and case management services for hospital, specialist, and ancillary utilization, as well as address myriad claims payment issues. Thus, you and your staff spend more unreimbursed time dealing with administrative issues arising out of the MCO contract.
Finally, the most advanced MCOs will ask you to follow their clinical protocols and practice guidelines for treating your patient's needs, and they will ask that you direct downstream referrals to intra-network providers. The result is diminishing clinical and referral autonomy.
Despite these business requirements, the diagnosis for family practice within the new managed care environment is excellent. As a primary care physician, you are the focal point in leveraging the highest quality, most cost-effective and medically-appropriate care for your patient. Your patient relationship is today, and will always be, the foundation of the health-care system.
There is a way you can "manage care" for your patient with the rights cost and quality information, incentive, and clinical autonomy. There is a way to improve your patient's health status, satisfaction and security.
As you look toward the future and contemplate the best way to control your practice destiny, carefully weight the cost and benefits of your strategic alternatives: stand-alone, group practice stand-alone, full-time hospital affiliation, full-time MCO affiliation, or group practice and partnership with a primary care clinic management company.
Due to the business requirements, we believe this can be best achieved in an independent, managed-care oriented primary care group practice with the right clinic management partner. The best strategic partner can provide you with total clinical and referral autonomy; greater clinical time; managed care contracting expertise and relationships; administrative support services to remove the hassle factor; income security; clinical decision-support information and contractual financial incentives to provide the most appropriate care; on-line patient tracking systems for effective down-stream case management; innovative, interactive health education technology; market position strategies; an immediate capital for clinical development and growth.
Jimmy Rose is a Project Manager for First Physician Care. Walter Barry is the Director of Business Development for First Physician Care, Marietta, GA.
Copyright (c) 1994 First Physician Care, Inc.