Health Care Reform:

The HMO Fiasco

Free Care for the Rich? continued...

A friend, a sophisticated attorney with an income well into six figures, asked me to help him get into the practice of a very fine local internist who is not accepting any new patients. I asked my friend what insurance he had, and when he named a local HMO, I told him I could not help him. "Why?" he asked, "We paid a lot of money for this policy." I explained that my friend was already overwhelmed with HMO patients.

I suggested a deal. "Why don't you agree to provide all of the doctor's legal needs for a year for $200 if he will accept you as a patient?" "Why would I want to make a deal like that?" he asked, "I'm not an insurance company!" "Well, neither is he," I said.

"I can't believe it's really as bad as you say it is. Why did you guys sign such a contract? Why don't you just raise your fees?"

Why indeed? Those are very good questions. The fact is, we were never given an opportunity to negotiate. It was "take it or leave it." We signed such contracts so we could continue to receive referrals from the primary physicians in our community. We also thought that because the contracts applied to a minority of our patients, we could make up for the losses with other patients covered by conventional fee-for-service insurance plans. That worked until those other patients were forced by economic pressures to also join HMO plans.

So, are doctors in my community starving? Of course not, but many have left their practices. Even those medical offices with the most highly trained and qualified senior physicians are having difficulty recruiting new physicians to assist with their workload, because they cannot offer enough salary or benefits.

Efficiency Rewarded, Quality Punished

The failure and bankruptcy of medical groups and offices driven to failure by HMO contracts is becoming everyday news. Unlike other businesses, unfortunately, these failures do not involve just the marginal enterprises but frequently the most esteemed practices in the community. The reason is obvious. "Efficiency" is rewarded, while quality, compassionate medicine ends up being punished.

Like many of my colleagues, I did not go into medicine for the money. Yet now I find the payment system and its perverse incentives are driving me away. If I could be convinced that the present dysfunctional system, as bad as it is, were the only way to achieve "universal health care," I would consider it a worthwhile sacrifice. Unfortunately, the exact opposite is occurring: While more patients are driven into HMOs, many others find themselves without any health coverage whatsoever.

I accept that the HMO concept was a possible solution to the skyrocketing cost of health care. Kaiser-Permanente, a not-for-profit institution, was a good model. It was a big mistake, however, to assume that market-driven, investor-owned, for-profit HMOs could be trusted to provide a fair balance between profits for the stockholders and health care for the public.