In his article Care: The Next Generation, Michael Sachs has used some evidence from a few marketplaces to create a trend. This trend, however, is not supported by hard evidence but rather by anecdotal evidence. The Sachs Group does great research, and I use that research all the time, but this time Sachs' trying to be a futurist misses its mark. The reason is fairly simple. With penetration below 30 percent, we as yet do not have managed care in this country. When we speak of managed care, however, we have never defined it. Some will claim you are receiving managed care if you are in an HMO or PPOdepending on who is doing the research. Yet, as one travels from west to east, it becomes readily apparent that what is called managed care by some managed care companies is in essence volume discounting. They use little if any managed care techniques to effect care. In short, they are indemnity insurance companies in disguise. Sachs' two models, the Economic and Care Delivery Models, are in my mind the initial stages of managed financing. Having been an executive both of major teaching hospitals and an HMO, and having consulted as well as having been a trustee of an academic medical center, I do not believe that our hospital industry's attempting to position itself as integrated delivery systems will present a viable answer to creating managed care for a population. This is like relying on the fox to guard the chicken coop. Hospitals and their subsidiaries have always tried, and will always continue to try, to maximize their revenues. They even started their own insurance product now known as Blue Cross to make sure they got paid when the pure fee-for-service system did not support those who walked through their door. Today, after having been for more than 15 years on the fixed payment system known as diagnosis-related groups, few hospitals and their physicians (both owned and privileged) know the actual cost of treatment, much less how to price on the margin. Try to find an epidemiologist within an integrated delivery systemor even an actuary or underwriter! Have not the past fiascoes-such as creating holding companies that own hospital companies, forming integrated delivery systems that do not integrate, creating physician hospital organizations that cannot agree, and buying physician practices that have been able to erode the bottom line-taught us that the brick and mortar of the healthcare industry is not where our employers and government wish to bet their future? Managed care today is hastily built on the smoking ruins of the fee-for-service industry. I have not stumbled across so much as one expose or scorecard report that truthfully characterizes the fee-for-service system as an insatiable user of resources that, for too long, has greedily ingested more of our gross domestic product than has any other healthcare system in any other civilized nation. Nor do we often enough hear how a feefor-service reimbursement scheme has created a healthcare system that, through ever-increasing premiums, has caused an oversupply of medically trained personnel. Choice at any cost! was the battle cry of the professionals who were only too happy to receive the fees. Unfortunately for these professionals, who today are grabbing the short end of the managed care stick, the benefits of choice were not passed along to the employers and governments who were footing the bill. …
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