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Vol. 3. No. 2
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March/April 2001 |
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Insider Vision
The Price of Glory - The Cost of Change: An Owner's Reflection on the Media and Managed Care
by Barry Scheur, President
The last thirteen months as an acquirer of distressed health plans has taught me a lot about perception, reality, sensationalism, politics, communications and, perhaps most importantly, the impact of the media on all of these areas. When VHPG took over ownership of the two health plans in Louisiana and Alabama, they had collective debt obligations of $49 million and short-term losses through the end of 2000 of $20 million more. That's a lot of red ink to erase when, simultaneously, you have taken a pledge to communicate with integrity, to change bureaucratic and unrealistic medical policies that inhibit the practice autonomy of physicians, and to raise the bar for what managed care should stand for in the marketplace.
Commitment, regardless of price, is the cornerstone of my personal philosophy about organizations as well as life. The reason for creating The OATH as a brand identity for our health plans was to find some way of translating this philosophy into our identity in the most recognizable form -- that being our name. The decision to promote our organization through advertising that decried the unfortunately all-too-prevalent practices in our industry of deception, passivity, and lack of accountability has created what I might call politely a lack of popularity among our competitor colleagues in our marketplaces. That's perfectly okay with me. I don't provide our competitors with coverage and I certainly won't subscribe to their plans!
What is of greater concern, however, is the way in which some of the tough decisions that must be made in order to maintain The OATH's principles and to act on them in the future have been picked up and interpreted by the media in an effort to continue its war with managed care.
No better illustration of this misinterpretation of philosophy exists than in the recent media focus on our reducing the size of our primary care Medicare network. Our two combined plans currently serve around 40,000 Medicare+Choice beneficiaries in $0 premium products. Since our acquisition, the losses attributable to providing care to our Medicare members have exceeded $10 million. There isn't enough premium provided to health plans in the HCFA program to cover the true cost of care to these beneficiaries. Many of the major health plans have drastically curtailed services to this population, have eliminated coverage altogether, or have sold off their blocks of Medicare members -- all in the name of profitability. |
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Yes, I need profitability in our health plans too, but not to the extent that we compromise the very ideals of why The OATH came into existence in the first place. I was advised by the sellers of Health Partners of Alabama to get out of the Medicare business right away, at the very time they slapped a 22 percent hospital rate increase on us as a condition of acquiring the plan. Many other people have told me that I have no choice but to eliminate the Medicare product line until HCFA and the administration come to their senses with a realistic managed Medicare policy.
Well, we have chosen not to run as have many others, but to figure out the best way of dealing with the problem to protect the integrity of our continued provision of benefits to the vast majority of this population.
Recently, in Alabama, we faced the difficult choice of eliminating some 50 physicians who provided primary care to about ten percent of our Medicare enrollees. For the most part, these physicians had few Medicare OATH patients, and our difficult decision was to focus on working with those physicians who were caring for the majority of our patients and helping them to provide quality and effective care through sharing information and data about their practice patterns and treatment alternatives.
Eliminating physicians from a network is not pleasant. It creates antagonism among plan members and often throughout the community. People must find new doctors if they want to stay within the health plan, or change to another managed Medicare program (if one is still available) or to fee-for-service Medicare with lower benefits and higher costs. When we sent letters to these physicians announcing the changes, the media immediately pounced upon The OATH, accusing us of "breaking our promise," whatever they interpreted that promise to be.
On my part, that promise is to continue to participate and to expand our role in the managed care Medicare program, to seek out new enrollees, and to offer them a cost-effective alternative to traditional fee-for-service Medicare. It is possible, although I hope not likely, that in 2001, we will still lose up to $10 million by continuing to serve this population in our two plans, given our hospital contracts and our commitment to remain in business for the 90 percent of our population that remains unaffected by these physician changes. Those losses are not academic; they make more challenging the very survival of the health plans and our future growth, not to mention my own personal financial commitments.
But that is the price for accepting the responsibility for being accountable and for making changes. You can't put people first as the basic core of your philosophy and then throw out the health care coverage for 35,000 to 40,000 people. But to do nothing in the face of an avalanche is also foolish. As a health plan owner whose next acquisition may have us managing the largest single percentage of
Medicare+Choice enrollment in a private health plan (well over one percent of national Medicare beneficiaries), I can only hope that my competitors will act as responsibly and that the media critics will try to understand the full story. The words of songwriter Phil Ochs in his 1960s tribute to Woody Guthrie, "Bound for Glory," still stir me with the passion and energy of my commitment to our endeavors and our members: "Oh why sing the songs and forget about the aim? He wrote them for a reason, why not sing them for the same. And now he's bound for a glory all his own, And now he is bound for glory!"
I don't know what the price of glory or understanding is. I can only live up to the pledge I made based on our philosophy. We will do what is right to meet challenge, to ensure change, and not simply predicated on an immediate short-term financial gain. Perhaps not entirely the best profit-based strategy, but a strategy of conscience nevertheless.
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