Remember what happened in the late 80’s and early 90’s? When every day, we heard about a new fiasco with managed care treatment of its insured (customers, patients)? Well, it’s coming back, with a vengeance, I fear.
Insurance companies are buying up physician practices and hospitals. As that happens, it will mean the physicians you choose are really employees of the insurance company, following their practices- in other words, managed care- in spite of your paying for and employing a more expensive premium insurance (choosing the docs and treatment you want from among the approved physicians).
Insurance companies are not stupid. They know that doctors drive most health-care costs (as do the patients, who respond to all that advertising in the media). Docs order the tests, choose stents over drugs, order multiple imaging tests (MRI, for example)- both to insure they can’t be blamed for bad decisions and because they receive higher revenue for more tests or procedures. (Again, as I have often stated, our health system should not be based upon fee-for-service.)
Therefore, the insurers want to control the physicians. That would mean they also control the patients (who are controlled by the docs). But, the hidden reason for these acquisitions is that the health care laws prefer accountable-care organizations (ACO). ACO’s are groups of doctors and hospitals that provide integrated care to regional populations. That’s why the insurance companies are buying these docs and clinics. Now, they will head the ACO. (At least one provider, United Healthcare, has admitted as much in public.)
Let’s first look at one market- Western Pennsylvania- as an example of what is happening across the US. The two behemoths in the area are the University of Pittsburgh Medical Center (UPMC) (56% of the local market in Allegheny County) and Highmark Insurance, the largest health insurer in Western Pennsylvania.
Highmark just bought West Penn Allegheny Health (second largest hospital chain in the area, with 6 hospitals). This will be the “in-network” choice for the insurance company. Highmark is pressuring UPMC to lower its prices- dramatically– or be considered “out of network”, which means that insured don’t just pay a co-payment, but 20% of the fees involved (typical out-of-network reimbursement).
West Penn Allegheny Health agreed to be acquired because it has been losing money for the past five years- a LOT of money. Probably $ 475 million. It has some $ 800 million in debt. And, that may be due, in part, to it’s charging lower rates compared to UPMC.
This is not just two entities vying for a monopoly (yet), since UPMC accepts Aetna, United Healthcare, Coventry, Cigna, and HealthAmerica (i.e., in-network). And, Highmark says it won’t outlaw UPMC, but it will bundle certain items to render UPMC’s offerings financially out of reach for its insured.
United Healthcare is following a similar path, in other markets. The $100 billion compnay not only offers health insurance, but it is a provider of technology to hospitals and other insurers, distributes drugs, manages clinical trials and offers continuing medical education, among many other offerings. Now, it seems to be starting a network of clinics (a minimum of 500 physicians) around the country.
It’s OptumHealth unit is busy acquiring physician practices in California, Arizona, Nevada, Texas, Florida, and Minnesota, among other places. These acquisitions have been done via a “less than transparent” process. In at least one case, OptumHealth claimed to be a “privately held LLC based in Minneapolis” for its offering of health care clinics at various WalMarts.
Physicians are buying into the process because OptumHealth offers them technology (health care information systems, among other items), management (physicians and lawyers are among the worst managed small enterprises in the US), and other data necessary to operate in the 21st Century.
Highmark and United Healthcare are not the only providers that are seeking to control providers. WellPoint bought CareMore Health Group (26 clinics offering care for seniors). Humana bought Concentra (urgent/occupational-care clinic chain).
This is happening because the health care insurers are banking that Congress will not move forward with funding the new regulations passed last year. So, there will be no oversight to insure that the accountable care organizations will provide the results contemplated- and not be subverted to meet the desires of a for-profit insurance conglomerate.
GOVERNMENT IS NOT THE PROBLEM. BAD GOVERNMENT IS!
The Khan Academy has an 8 minute video (blackboard, not people) that expounds on the dangers of this practice.
Our health care system is a mess — and they are gobbling up each other in pursuit of financial domination no matter what the cost/results for those who need their help.
Do you think more accountability/regulations are the answer? This seems to be one area where the industry doesn’t self-regulate well…
Michelle- thanks for your comments and questions.
I personally have a problem with an insurance company owning hospitals and clinics- unless it is a non-profit. And, even then I have problems. (More below on that.)
I think that any ACO (accountable care organization) requires a board of directors- the size dependent upon the population served. There is no perfect way to choose the directors- but there should be never less than 6- 2 medical professionals (physicians, nurses), 2 managerial (preferably chosen from local universities, who are disallowed from consulting in this arena), and 2 constituents (insureds or community leaders with MEDICAL knowledge, not politicians). I also believe that standards (and now I have to be political)- the ones against which the Republicans have been railing- need to be enforced- 90% of revenue expended on care. I also would love to see fee-for-service abolished and treating the whole patient, with outcomes-based payments to be employed. But, unfortunately, my magic wand has run out of batteries…
[Non-profits: Way too many non-profits are “artificially” endowed. They are really entities that pay their officers very high salaries and don’t pay dividends. Over the course of my career, I have run into these kinds of profitable non-profits in the regulatory arena (setting themselves up as standards authorities and raking in the fees), in the political/public policy arena, and in the healthcare domain in particular. This is NOT what is conjectured when we normally think of a non-profit.]
Roy
Thank you for posting this, Roy! I especially like the last sentence, that the problem is not government but bad government. Sadly, there are far too many people who seem to want to get into government while saying that they hate it, and when they get there, they spend their whole time trying to prove how bad government is by their ineptitude. This is a perfect example of why we need elected officials who actually care about doing a good job for the people who elected them. I’ve seen things with some of these insurance companies myself (a couple months ago was the first time ever that a claim for United actually went through on the first try) and I hate to imagine what will happen if they get monopoly control over our health care system like they are trying to do in Western PA.
Steve:
Your first two sentences cover a mouthful.
When I was on the debate team (oh, so, so, SO many years ago), we used to discuss the concept of a straw man. Now, we have our politicians defining the straw man and becoming the straw man that they wish to demonify! Then, they declaim- “See, I told you so!”. Like that proves something other than we can all manipulate the system to our heart’s content.
I am not saying everything always works out. As I have written about the dialysis systems, we all had high hopes for the system, its payment processes, and patient care. Now, some 40 years later, we have a regulatory/payment system that spends about as much administering the system as is used to provide the care. We have not addressed the basic issue (prevention and cure) and had a fee-for-service system that determined every angle to obtain more funds. We’ll see what happens with this system (as, perhaps, the harbinger of the new health care system) as it becomes outcomes based, with incentives for better care.
Thanks for dropping in!
Roy
Roy,
This is really scary for the potential for abuse and manipulation as you point out. I really appreciate your balanced view of this issue. Healthcare (and it’s reform) has become a cacophony of sound bytes hurled back and forth, and the sad thing is that there are real issues and concerns on both sides and real people suffering in the middle.
Appreciate the research you’ve done. This post educated me a little more than I was before about this vital issue.
Glad you got something out of it, Steve.
You are right- this is such a politicized issue that it is hard to discern facts. My issue here is that when an insurance company takes over a hospital and/or a physician practice, who stands up for the rights of the patient? And, there is a potential for abuse when the insurer decides what rates it is willing to accept (claiming reasonable and customary- and they own the unit they decide to term “customary”….)
Thanks for dropping in.
Roy
I heard the word ‘insurance’ and I just shut down! While I appreciate the information your provide here Roy, it still irks me how messed up our health care is in this country. I just got another increase with our Blue Cross Health Insurance. It was over 38% increase! What the … do they think my income has increased that much?
Sorry – but this is a sore subject and not one I enjoy at all. I only hope that some how health care will be changed and hopefully sooner rather than later.
Yes, Lynn- you live in California. The land where the insurance companies have the same right as the Feds do- the right to print money!
And, it should bother you more that they segregate their insureds left and right so that no one ever can figure out WHY there’s an increase. I have a client with 25 employees (which they classify as a small insurer and pool them with the onesy, twosy guys, claiming they can’t predict the risk) with the same employees for the past five years. You can’t do the risk on that??? Now, they are going to buy your physician’s practices. So, if you thought you were not in an HMO type plan (hence the 38% increase), the net effect is the same. They set the policy, you pay the premium, and it’s the same as an HMO at premium price.
Roy
If only we could fire governments. We expect them to fix the problems, complain when they fix it to suit certain levels, fail to look at the problem and continue to treat the symptoms. I am glad that I still live in a country where health care is not yet controlled by insurance companies
Most of this is related to state governments (here in the US). And, therein lies the problem- compounded. If we think lobbyists are a real problem for the eds- the states have let (invited?) lobbyists to come in and write potential laws that are then passed.
Thanks for the comments and the comparisons!
Roy
Well, thats a bit of an eye opener!
There are private and public hospitals in Australia, as far as I know the private ones are run by private industry not including insurance companies.
There has been a move in the past 5 years here for the takeover of private GP practices from big conglomerates. Whilst there was a big hoo haa about it, private medical practice is a hard slog, particularly in Australian rural and remote areas and many have sold out.
Private docs tend to exist in nations where there is no national health program. There are private docs in other places- but they cater to special needs.
Thanks for the comment- and the visit, Maureen!
Roy