HMOs Healthcare of the Beast HMOs: The Health Care of the Beast Many people are concerned about rising health care costs. In reaction to this, some individuals and companies are gravitating toward the assumed lower prices of Health Maintenance Organization (HMO) health plans. HMOs spend billions of dollars each year advertising their low cost services. While these savings look good on paper, there are many pages of small print. The explanation after the asterisk indicates that not only do the HMOs lack lower costs, but they also short-change the patient in quality care.
Much of the money spent on premiums goes directly into the pockets of stockholders and less is then available for patient care. In addition, the main clinical decisions are made not by doctors, but by a board of directors more interested in the bottom line than in little Jennie’s cough. When the facts are considered, HMOs should not be permitted to assume the role of the primary medical care-givers. Traditional insurance companies and HMOs have comparable premium rates. HMOs are too profit oriented and, because of this, their patient care lacks in quality.
One way that HMOs cut their costs is to spend less on direct care. As opposed to fee-for-service (FFS) companies, patients relying on their HMO spend 17 percent less time in the hospital regardless of the degree of their illness. This said, patients in Medicare HMOs also spend about 17 percent less time than they would in a traditional setting. It is surprising that, in spite of this fact, Medicare patient risk contracts actually cost Medicare 6 percent more than they would have if done in a fee-for-service setting. (Rice, 79-80) The lack of savings is not limited to Medicare recipients.
Spending on health care in California, which has one of the highest concentrations of HMOs of any state in America, is about 19 percent higher than the national average. There has only been one year since HMOs became so prevalent, 1994, in which employers nationwide saw a drop in their health insurance costs — and it was an almost imperceptible 1 percent. These companies’ earnings continue to skyrocket, and the HMO executives are always on the lookout for ways to increase profits by reducing care to their members. It is troubling that while cost remains nearly the same, the deficiency in quality service continues to increase. Most of the money generated by FFS insurance goes directly to patient care and physicians’ salaries. In recent years, the idea of physician owned clinics has gained new ground in the industry.
A group of doctors band together to create their own private corporation. These businesses, being privately owned, have the luxury of not having to deal with the fiscal demands of stockholders and other investors. Thus, the doctors have the ability to use the generated funds to care for their patients. Yet with volume purchasing of gauze, needles, and other medicating implements, they are able to compete favorably with the HMOs. Part of the monies generated by HMOs is used to pay stockholder dividends; the demands of the investors must be met.
In 1994 salaries and stock awards to the heads of the seven largest HMOs averaged $7 million each. Shareholder-owned companies saw earnings increase by as much as 20 percent each quarter (“News”). Because of this, the corporation rather than the physician becomes the patient care decision maker. In other words, the medical decision making process is subject to approval by a board of directors. In some cases these individuals go to great lengths to save money. For instance, some HMO doctors are forced to sign a “gag order,” which forbids them to advise their patients about expensive medical care which their HMO does not want to pay for. Doctors may actually be penalized by their HMOs because, in violation of a gag order, they discussed with their patients the option for a procedure the HMO did not want to pay for. Equally maddening is that HMOs sometimes give their doctors financial bonuses for not ordering tests or referring their patients to specialists. Some HMOs pay doctors according to a “withhold” system, in which some of the money the doctors are owed is held back and paid only at the end of the year, and only if the doctors have not ordered too many tests or referred too many patients to specialists (“Did You Know”).
HMOs are not the only answers to cost control. Most physicians practicing in the United States consider their profession to be very much a form of art (Kleinke). The definition of art infers that within its sphere there are many variations and preferences. After all, one should not ask Picasso to carve like Michelangelo. Physicians too differ in their methods of treating patients.
However when needless tests and procedures are done the treatment will cost more. This is waste. Many suggest that cutting waste will lead to a cut in quality. This is not necessarily true. Consider the following: an otherwise healthy forty-year-old male comes to a clinic complaining of a sore throat.
This is a good nonspecific symptom, so naturally some tests are done. Some blood is drawn, a culture taken, and an electrocardiogram performed. An EKG in this case is not medically necessary, but many physicians still do not hesitate to order one. By eliminating useless procedures, lower cost can be maintained. To determine which procedures are useless, scientists would need to perform ongoing studies of patients that fall under their investigative categories. For instance, every year about 80,00 Americans get a carotid endarterectomy, a kind of Roto-Rooter job on the clogged neck arteries.
Typically costing $9,000, counting the bill for the hospital stay, the operation is designed to prevent strokes. Another triumph of modern medicine? Or an overly risky, overdone alternative to cheaper drug therapy? Incredibly, no one knows for sure, and no one is tracking the patients on a systematic basis to find out (Marmor 90). Eliminating waste from the health care system is imperative. However it is not good to make “expensive” synonymous with “medically unnecessary.” In this struggle to contain cost, four areas of waste have been identified: ineffective or harmful, of uncertain effectiveness, ethically troubling, and allocationally ineffective (Marmor 89). No one disagrees that harmful c …