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Home > Resources > eNews > Oct 1999 Part2 |
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The Managed Care Insider eNews Volume One Number 4 October 1999 PART TWO of TWO Welcome to The Managed Care Insider eNews. You are receiving this because you have subscribed; the eNews is never sent unsolicited. Subscribe/unsubscribe information can be found at the end of this eNews. The Managed Care Insider eNews is published, copyrighted, and owned by the Scheur Management Group, Inc. (SMG), http://www.scheur.com and is distributed monthly, free to subscribers. If you wish to forward this edition, you may do so only if the edition is forwarded in its entirety. No reproduction of any part of this publication is permitted without the express permission of the publishers. ---------------------------------------------------------------- This edition of The Managed Care Insider eNews is another two-part publication. We present, in Part One, an optimistic and futuristic view of managed care in the new millennium. And while many of our readers may be tired of articles about the "millennium," the view from healthcare is both exciting and challenging, with changes occurring like tornadoes, leaving providers, payers and professionals scrambling. In Part Two, we present the first in a series of articles which takes both a nostalgic view of the changes affecting hospitals, as well as a futuristic view of what is to come. The series author is David Buchmueller, our newest addition to the SMG team. As always, if you have any comments or suggestions, we want to hear from you. Send your comments to insider@scheur.com. ---------------------------------------------------------------- HEALTH CARE IN THE PAST QUARTER CENTURY: CHANGES, CONSTANTS AND LESSONS LEARNED By David Buchmueller Recently, I accompanied my father on a tour of Marshalltown (IA) Medical and Surgical Center (MMSC), the hospital from which he retired as administrator 25 years ago. MMSC impressed me as a model of today's innovative and responsible community health care organization. As we toured the facilities, most being unrecognizable to my Dad due to new construction or major renovations, he frequently complimented our hosts on the improvements in scope and quality of service. Their gracious response was that they had merely built upon the solid foundation built by Dad and his team during his more than two decades at the helm. I appreciated, and believed, what they said. In the late sixties this community blazed a trail that others would not take for decades when they brought about the merger of a Protestant and a Catholic hospital. Since then there have been hundreds of hospital mergers or acquisitions; this was one of the first. I learned that much has changed at MMSC over 25 years, but certain important things had remained constant. This visit, along with recollections of my experience as a hospital/health system CEO since Dad's retirement, prompted me to reflect on the following questions: - How have hospitals and health care changed during the past quarter century? - Have there been any constants or unchanging paradigms during that time? - What lessons can we learn from this? I will offer my perspective on these questions within the context of several themes in this and subsequent issues. SIZE DOES MATTER: We've learned that size does matter. But bigger isn't always better. Individual hospitals and small systems have gained buying power, leverage and economies of scale through organizations like VHA and Premier; likewise, the aggregation of Catholic systems. In major markets like Chicago (Advocate), Dallas-Ft. Worth (Texas Health Resources), Boston (Partners) and New York (Mt. Sinai-NYU) these freestanding powerhouses have come together, submerging, at least to some degree, their prior prominent identities. On the other hand, some merged organizations in San Francisco, Philadelphia, Manchester, NH and Detroit have fallen on hard times or have been dissolved. I am among the minority who believe that Columbia's national branding campaign was not entirely wrong. But in some markets, like Chicago and Corpus Christi, their acquisitions caused some observers to say, "You can't put four KMarts together and produce a Bloomingdale's." Is there a constant theme? Clearly, essential ingredients include commitment to a common mission and vision, an objectively and thoroughly crafted business plan, and the courage and tenacity to execute. Or, as George Caldwell, then CEO of Lutheran General System, once told me, "It's not what you do, but who you do it with." That's OK. It's Reimbursable Some of our younger colleagues will not recall hearing that mantra of the 70's and early 80's, usually intoned by those who were advocating the acquisition of an expensive piece of equipment for which there might not have been a solid business case, but "which Medicare will reimburse care." For one radiologist colleague that phrase ranked right up there with "if your mother were the patient." That began to change in 1983 with Medicare's prospective payment system -- DRGs. But in the meantime, these perverse cost reimbursement incentives helped create excess capacity that is not easy to eliminate, even with painful budget reductions, mergers, downsizing, punitive governmental reimbursement policies, and the selective provider contracting and medical management practiced by the managed care organizations. In this instance, a new paradigm has evolved. While the declining cost of many technologies like CT scanners makes them more "affordable," executives and governing boards are making tough minded business decisions, looking at return on investment (ROI) models similar to those employed in the general business world. As resources become more constrained, precious capital must be conserved for new business ventures, market needs must be considered (and not just the needs of the providers), and objective business analysis used for deciding where to deploy the capital. I will discuss other ramifications of this change in reimbursement in addressing other themes in upcoming issues. CAPTAIN OF THE SHIP: That was the typical description of the doctor's role in the hospital, even in the early post-Darling v. Charleston (the Illinois case that established a hospital's responsibility for care, including medical care, within its walls) era. I still view the doctor as the most important player on a growing team comprised of players with increasingly diverse and finely honed skills. So, while there is some degree of constancy, there have also been changes in at least two different venues: CLINICAL: In the clinical setting there has been an evolution of the doctor's role and function, along with other professionals, which, from my perspective, has been accepted, even encouraged by most doctors because they genuinely care about doing the best for their patients. As pharmacists and nurses (and maybe even administrators) gain valuable and relevant expertise, most doctors have welcomed their growing and enabling role as team members. Clinical pathways have improved quality and reduced cost for cardiac emergencies, strokes, joint replacements and a whole host of other procedures and disease processes. What was once ridiculed as "cookbook medicine" is now seen by many doctors as useful, so long as it is not jammed down their throats. The same goes for hospital formularies. The technology of the nineties has also enhanced the doctor's role. It has enabled him/her to do more and to do it better. It has also enabled them to move to their offices many cases, from chemotherapy, to eye surgery to endoscopies, that previously required hospital support. Not good news for hospitals, particularly if there is already an atmosphere of rivalry and distrust. The growth of group practice, especially multi-specialty groups has made the doctor's life better. However, what about physician practice management companies (PPMCs)? While not all of them flamed out like MedPartners and FPA, they have, at best, been a mixed bag. NON-CLINICAL: The business of medicine has become a paper (or electronic) nightmare as doctors have felt compelled to contract with a dozen or more different payers, each with its own credentialing, billing and provider panel requirements. An internist recently told me that 15-20 years ago his practice spent about 40 percent of patient revenue on administrative support. Now overhead costs, largely due to meeting managed care and other payer requirements, consume more than 60 percent of billings. The decline in image and stature of "organized medicine" is evident and is disheartening to many physicians. Quite some time before the Sunbeam fiasco, the American Medical Association (AMA), like many county medical societies, had become less and less relevant in the lives of practicing physicians. The percentage of doctors belonging to the AMA has continued to drop. And now, what are we to make of this AMA unionization business? I think there is an important constant here - - and a lesson to be applied by us administrative types. Start by believing that the vast majority of doctors are dedicated professionals who want the best for their patients. They are data driven; have the facts and figures. They work hard and generally respect others who do. They believe, as I trust we do, that the truly important work is done at the bedside, in the OR or in the lab. And they want and deserve a voice in the decisions and processes, including the administrative ones, that affect them and their patients. So, as was true 25 years ago, a lesson learned and a high priority goal is that success can come through helping physicians succeed, both clinically and business-wise. In subsequent editions we will explore more of the "Constants and Changes" impacting healthcare. We hope that these observations are helpful in putting the last 25 years in perspective and in provoking a little debate. We welcome your opinions. Through such an exchange we hope to sharpen our collective understanding of events and trends, enabling us to condition our thinking and position our organizations for the changes that lie ahead. ---------------------------------------------------------------- What's New at SMG? Speaking Engagements: November 6, 1999 American Academy of Medical Administrators Convention Atlanta, Georgia TOPIC: "Another Health Care Mandate: Internet Technology" SPEAKER: Dr. Paul Reich, Chief Medical Officer If you are interested in contracting with one of the SMG associates for future speaking opportunities, contact Public Relations through nbelle@scheur.com ---------------------------------------------------------------- Sites and Sounds of the Internet: In keeping with the theme of this issue, "Changes and Constants" in Healthcare, we present the following web sites for your review. SMG takes no ownership of the following sites, nor does SMG endorse these sites which are presented solely as a resource for subscribers. More than 70 agencies in the United States Federal Government produce statistics reflecting the growth or decline of various industries, including healthcare. These are combined within FedStats: http://www.fedstats.gov/ World wide, healthcare is changing. To find out about global changes, visit the Health Economics Resource Centre at: http://www.york.ac.uk/res/herc/ A comprehensive web-site on public health, organized by country and includes 84 topics relevant to public health. The Virtual Library of Public Health at: http://www.ldb.org/vl/index.htm The Doctors' Guide to the Internet provides links and resources to disease information, tutorials on the Internet, and conferences at: http://www.pslgroup.com/DOCGUIDE.HTM Newsgroups: What they are; how to use them; and where to subscribe to them. If you are searching for a target e-mail discussion group related to healthcare, hospitals, managed care, and more, this is the place to go. Here you can create an alias e-mail address to protect your privacy while still participating in "group discussions" about your industry. http://www.deja.com/ ---------------------------------------------------------------- End of PART TWO of TWO, The Managed Care Insider eNews, Volume One, Number 4. Scheur Management Group (SMG) is one of the most experienced specialized healthcare operations management and business revitalization consulting firms in the country. Our expertise is in time-sensitive analyses, strategic business and market planning, operational re-engineering, and communications, as well as implementation of start-ups, expansions, and new products. The firm's clients cover the spectrum of insurers, managed care organizations, physician groups, integrated delivery systems, hospitals, employers, governmental entities, vendors, and other providers. Contributors to this edition are Barry Scheur and David Buchmueller. Editing and Research by Judith Jaffe. Production Coordinator is The Gracefield Group at http://www.gracefield.com/gg/index.html TO SUBSCRIBE: visit http://www.scheur.com/smghome.nsf/webcontent/ezine.html or send e-mail to insider@scheur.com with the word SUBSCRIBE in the subject and name, email, company, title, and country in the message. TO UNSUBSCRIBE: send email message to insider@scheur.com with the word UNSUBSCRIBE in the subject. Please take a minute to visit our eNews page at http://www.scheur.com/smghome.nsf/webcontent/ezine.html for archives, subscriber information and to RATE our ezine. Get up-to-the-minute health care news on-line at www.scheur.com |
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