The Ethics of Modern Managed Care

The Ethics of Modern The Ethics of Modern Managed CareManaged Care

The Physician-BusinessmanThe Physician-Businessman

Brian A. WellsBrian A. Wells

IntroductionIntroduction

Managed Care has increasingly Managed Care has increasingly forced the physician to consider forced the physician to consider the cost of treatmentthe cost of treatment

This presents a conflict in the This presents a conflict in the physician-patient relationshipphysician-patient relationship

Is it ethical for a physician to play Is it ethical for a physician to play the role of a businessman in the role of a businessman in dealings with a patient?dealings with a patient?

The Hippocratic OathThe Hippocratic Oath

Upon graduation, many medical Upon graduation, many medical students take a modern version of students take a modern version of the oath written by Louis Lasagna in the oath written by Louis Lasagna in 1964.1964.

At the heart of the Hippocratic Oath, At the heart of the Hippocratic Oath, both classical and modern, is the both classical and modern, is the vow to avoid doing harm and to help vow to avoid doing harm and to help when appropriate and necessary.when appropriate and necessary.

SituationSituation

Consider the following situation:Consider the following situation:– Dr. X is a family practitioner with a large Dr. X is a family practitioner with a large

practice. Dr. X’s practice has recently been practice. Dr. X’s practice has recently been experiencing financial hardship ever since experiencing financial hardship ever since XYZ HMO changed its reimbursement XYZ HMO changed its reimbursement policy from discounted FFS to capitation. policy from discounted FFS to capitation. Dr. X’s patient utilization has always been Dr. X’s patient utilization has always been high and it is now having an even greater high and it is now having an even greater effect on his practice. Dr. X is worried that effect on his practice. Dr. X is worried that by continuing to see his patients from XYZ by continuing to see his patients from XYZ HMO, it will eventually cause his income to HMO, it will eventually cause his income to plummet and his practice to suffer.plummet and his practice to suffer.

Dr. Solomon’s Dr. Solomon’s DilemmaDilemma Martin Solomon is a physician at Beth Martin Solomon is a physician at Beth

Israel DeaconessIsrael Deaconess Sold his practice to CareGroup HMO in Sold his practice to CareGroup HMO in

1998.1998. Solomon began to manage Solomon began to manage

the financial risk of many of the financial risk of many of their patients, effectively taking their patients, effectively taking on the role previously held on the role previously held by HMOs.by HMOs.

Dr. Solomon’s Dr. Solomon’s DilemmaDilemma ““Pods” of 11 doctors each were formed Pods” of 11 doctors each were formed

to manage riskto manage risk Majority of the discussion was not about Majority of the discussion was not about

the actual care of the patient – instead the actual care of the patient – instead it was about the cost of the careit was about the cost of the care

““Report Cards” were distributed at Report Cards” were distributed at these meetings to show how each these meetings to show how each physician was doing compared to the physician was doing compared to the other members of the “Pod”other members of the “Pod”

Dr. Solomon’s Dr. Solomon’s DilemmaDilemma ““I think it's important for doctors I think it's important for doctors

to know the value of the services to know the value of the services they're providing. That means they're providing. That means they have to know both the they have to know both the quality of the care and the cost of quality of the care and the cost of the care.” - James Reinertsen, the care.” - James Reinertsen, MD, CEO of CareGroup in 1998MD, CEO of CareGroup in 1998

Dr. Solomon’s Dr. Solomon’s DilemmaDilemma ““The very best way for a doctor to The very best way for a doctor to

be paid is on a salary where be paid is on a salary where whether the doctor makes whether the doctor makes decisions to do something for the decisions to do something for the patient…or not to do something is patient…or not to do something is totally irrelevant to the doctor’s totally irrelevant to the doctor’s income.” - James Reinertsen, MD, income.” - James Reinertsen, MD, CEO of CareGroup in 1998CEO of CareGroup in 1998

Is this Ethical?Is this Ethical?

It creates the need for a balancing act It creates the need for a balancing act – the more control a physician has – the more control a physician has over the treatment of a patient, the over the treatment of a patient, the more that physician tends to bear the more that physician tends to bear the burden of risk.burden of risk.

It interferes with the autonomy of the It interferes with the autonomy of the physician.physician.


It may be difficult for physicians to remain It may be difficult for physicians to remain objective about treatment decisions if a objective about treatment decisions if a monetary reward or penalty is associated with monetary reward or penalty is associated with a particular course of action. a particular course of action.

"Bed side rationing." In situations requiring "Bed side rationing." In situations requiring them to balance the interests of a particular them to balance the interests of a particular patient with those of other patients, physicians patient with those of other patients, physicians are prevented from carrying out their are prevented from carrying out their fundamental obligation of individual patient fundamental obligation of individual patient advocacy.advocacy.

Source: 1997 Report from AMA Council on Ethical and Judicial AffairsSource: 1997 Report from AMA Council on Ethical and Judicial Affairs


If the patient thinks that the doctor is If the patient thinks that the doctor is making treatment decisions based on making treatment decisions based on his or her own financial interest, the his or her own financial interest, the relationship of trust between patient relationship of trust between patient and doctor is eroded. and doctor is eroded.

Doctors may become resentful of Doctors may become resentful of patients who require the most care and patients who require the most care and resources. resources.

Source: 1997 Report from AMA Council on Ethical and Judicial AffairsSource: 1997 Report from AMA Council on Ethical and Judicial Affairs


Should the physician have to Should the physician have to worry about the cost of worry about the cost of treatment?treatment?

Should the physician be allowed Should the physician be allowed to act in the best interests of the to act in the best interests of the patient regardless of cost?patient regardless of cost?

Is it just a sign of our times that Is it just a sign of our times that this is the case or is indicative of this is the case or is indicative of a greater problem?a greater problem?

Statistics and TrendsStatistics and Trends

In the United States, it is estimated that 60 In the United States, it is estimated that 60 percent of doctors are at some financial risk percent of doctors are at some financial risk for the cost of care of their patientsfor the cost of care of their patients

Half the primary care doctors in the US are Half the primary care doctors in the US are at some financial risk for the care they give.at some financial risk for the care they give.

The top five states for doctors involved in The top five states for doctors involved in risk-based contracts are: California, Arizona, risk-based contracts are: California, Arizona, Minnesota, Florida and Massachusetts.Minnesota, Florida and Massachusetts.

Source: Peter Bowland – Source: Peter Bowland – The Capitation SourcebookThe Capitation Sourcebook


In California, the state where risk-In California, the state where risk-based, capitated contracts have the based, capitated contracts have the longest history, doctors receive monthly longest history, doctors receive monthly fees ranging between $35-$50 for each fees ranging between $35-$50 for each patient they see who is covered by a patient they see who is covered by a commercial plan. They must manage commercial plan. They must manage the total care of that patient for that the total care of that patient for that amount. If a patient needs extensive amount. If a patient needs extensive care, that patient becomes a money-care, that patient becomes a money-loser for the physician's practice.loser for the physician's practice.



According to PriceWaterhouseCoopers, According to PriceWaterhouseCoopers, 10 percent of the medical groups in 10 percent of the medical groups in California are operating under Chapter California are operating under Chapter 11 protection, while one-third of the 11 protection, while one-third of the medical groups are at or near medical groups are at or near bankruptcy. The cause: Doctors are not bankruptcy. The cause: Doctors are not able to cover the operating costs of able to cover the operating costs of their practices based on the their practices based on the reimbursement rates of these risk reimbursement rates of these risk arrangements.arrangements.



The number of patients doctors have in The number of patients doctors have in capitated, risk-bearing contracts varies capitated, risk-bearing contracts varies from practice to practice. However, when from practice to practice. However, when as little as 25 percent of a doctor's patient as little as 25 percent of a doctor's patient pool is capitated, that provider will pool is capitated, that provider will generally treat all patients as capitated, generally treat all patients as capitated, meaning he or she will become cost-meaning he or she will become cost-conscious indiscriminate of the fact that conscious indiscriminate of the fact that many are covered by traditional indemnity many are covered by traditional indemnity health plans.health plans.


ConclusionConclusion

This is a widespread problem.This is a widespread problem. It has no clear-cut, easy solution.It has no clear-cut, easy solution. There is a difference in the way There is a difference in the way

things should be and the way things things should be and the way things are.are.

Physicians should consider the cost Physicians should consider the cost of the care but should strive to of the care but should strive to maximize the care that patients maximize the care that patients receives at that cost level.receives at that cost level.

Education

The Ethics of Modern Managed Care