Pediatric Annals

EDITORIAL 

A Pediatrician's View: The Time for Political Advocacy for Children Is Now

William A Altemeier, III, MD

Abstract

If you are happy with current medical systems and politics, or if you are satisfied with what most of us are doing to some degree - complaining about what managed care is doing to children - don't read this issue. If you are interested in doing something while we are waiting for the storm to pass, read on. But, first, will it work to just ventilate our dissatisfactions to each other and give mutual support? To do this, we need to know who to complain about or blame. Upon what is managed care based, and why are we faced with such difficult times? The following are my views.

When my career started in the mid* 1960s, . the world was our plum. We could choose to train in any branch of medicine or subspecialty, open an office almost anywhere, and be reasonably successful. There was a shortage of physicians at that time. Then Medicare and Medicaid were introduced in the mid' 1960s, and these accelerated the rapid growth in third-party payment for medical care. This growth is at the foundation of our current problems. At Vanderbilt, Jerry Hickson compared third-party reimbursement to having someone else's credit card; as our costs went up, we billed them to third parties and were paid more. Medicine flourished. The number of physicians increased, as did the proportion who subspecialized, especially in procedure-oriented fields. Hospitals changed from public institutions where patients were on wards, to more luxurious environments with gardens, marble, and art. Single-patient rooms, better cuisine, birthing rooms, and other amenities improved as bed numbers increased. These were good for patients, especially since insurance paid most of the bill, but they were expensive.

Others tapped into third-party money indirectly; the US pharmaceutical industry is the strongest in the world because it was profitable to invest in research and development. Unique, more effective medications were eagerly sought by physicians and patients, and paid for by Blue Cross and Medicare. Other high-tech companies joined the bandwagon. If you developed new ways to see inside the body or monitor what was happening there, profits were available. Even the attorneys found ways to join. Malpractice became more lucrative because of this dollar flow: working backwards, litigation caused dollars to reach attorneys and plaintiffs. These dollars came from malpractice insurance companies. The insurance companies charged higher malpractice rates, and physicians added this to patient bills on their way to third-party payers.

Insurance companies tried to cut costs by hiring utilization review teams. We countered with opposing teams of billing accountants to maintain income, and again the costs flowed through patient bills to thirdparty payers. Medicine was a growth industry, but it became very expensive, expanding 3% per year (compounded) faster than overall inflation between 1967 and 19871 to reach almost 14% of the gross domestic product currently. The American public, government, and industry demanded a stop to medical inflation, and the stage was set for an explosive growth of managed care over the past 5 years.

Health maintenance organizations (HMOs) achieve cost control by making primary care physicians "gatekeepers" and using capitation and other incentives2 to reduce procedures, drug costs, subspecialty referrals, and most of all, hospitalizations. The number of subspecialty physicians and hospital beds needed in managed care is considerably less than it is in a fee-for-service world, so the supply of physicians and beds now exceeds demand. This is at the foundation of what is happening to us now. To keep patients, we have been forced to ban together into HMOs and bid against each other. Wherever there is a surplus over demand, prices fall, and this…

If you are happy with current medical systems and politics, or if you are satisfied with what most of us are doing to some degree - complaining about what managed care is doing to children - don't read this issue. If you are interested in doing something while we are waiting for the storm to pass, read on. But, first, will it work to just ventilate our dissatisfactions to each other and give mutual support? To do this, we need to know who to complain about or blame. Upon what is managed care based, and why are we faced with such difficult times? The following are my views.

When my career started in the mid* 1960s, . the world was our plum. We could choose to train in any branch of medicine or subspecialty, open an office almost anywhere, and be reasonably successful. There was a shortage of physicians at that time. Then Medicare and Medicaid were introduced in the mid' 1960s, and these accelerated the rapid growth in third-party payment for medical care. This growth is at the foundation of our current problems. At Vanderbilt, Jerry Hickson compared third-party reimbursement to having someone else's credit card; as our costs went up, we billed them to third parties and were paid more. Medicine flourished. The number of physicians increased, as did the proportion who subspecialized, especially in procedure-oriented fields. Hospitals changed from public institutions where patients were on wards, to more luxurious environments with gardens, marble, and art. Single-patient rooms, better cuisine, birthing rooms, and other amenities improved as bed numbers increased. These were good for patients, especially since insurance paid most of the bill, but they were expensive.

Others tapped into third-party money indirectly; the US pharmaceutical industry is the strongest in the world because it was profitable to invest in research and development. Unique, more effective medications were eagerly sought by physicians and patients, and paid for by Blue Cross and Medicare. Other high-tech companies joined the bandwagon. If you developed new ways to see inside the body or monitor what was happening there, profits were available. Even the attorneys found ways to join. Malpractice became more lucrative because of this dollar flow: working backwards, litigation caused dollars to reach attorneys and plaintiffs. These dollars came from malpractice insurance companies. The insurance companies charged higher malpractice rates, and physicians added this to patient bills on their way to third-party payers.

Insurance companies tried to cut costs by hiring utilization review teams. We countered with opposing teams of billing accountants to maintain income, and again the costs flowed through patient bills to thirdparty payers. Medicine was a growth industry, but it became very expensive, expanding 3% per year (compounded) faster than overall inflation between 1967 and 19871 to reach almost 14% of the gross domestic product currently. The American public, government, and industry demanded a stop to medical inflation, and the stage was set for an explosive growth of managed care over the past 5 years.

Health maintenance organizations (HMOs) achieve cost control by making primary care physicians "gatekeepers" and using capitation and other incentives2 to reduce procedures, drug costs, subspecialty referrals, and most of all, hospitalizations. The number of subspecialty physicians and hospital beds needed in managed care is considerably less than it is in a fee-for-service world, so the supply of physicians and beds now exceeds demand. This is at the foundation of what is happening to us now. To keep patients, we have been forced to ban together into HMOs and bid against each other. Wherever there is a surplus over demand, prices fall, and this is happening for these bids. Enter giant for-profit corporations. The insurance companies and hospital corporations recognized the opportunity for greater profits. Because of the excess supply of physicians and beds, they can negotiate physician and hospital costs down (aster than the per patient per month HMO insurance bids are felling. The difference between what the insurance companies get and what they pay for care, minus administrative costs, is corporate profit. So medical care is pinched by both felling insurance bids and because a smaller percentage of the dropping figure is going to medical care.

So who is to blame for what has happened to medicine in America? Is it the corporations? Actually, they are doing just what they are designed for - making profits. The economic strength of the United States is largely built on corporate law that rewards entrepreneurial risk taking and innovation with corporate profit. Most of our retirement income is dependent on corporate profit. Really, we are all to blame - physicians, hospitals, malpractice attorneys, corporate medicine, government, and patients. We all worked together to set the stage for what is happening.

So can we ride out the storm by complaining to each other and wallowing in self-pity? It's hard when we are all (collectively) to blame in some way. This era will end - it is too hot to last. These are raw times in medicine, almost like a gold rush, and the chaos, felling per patient per month insurance rates, and rising corporate profits will eventually interfere with quality of care.3 When middle America recognizes this, it will demand evolution or change again. But this may take 5 or 10 years. Meanwhile, we have to adapt while the excesses unwind from the system. Incidentally, one way to look into the future is to watch the stock prices for corporate medical companies. When the above opportunity for profit became evident, they rose rapidly as these companies grew. The price of any stock reflects a collective consensus of future profits by investors. There will always be ups and downs in the market, but when investors begin to perceive that the era of large corporate profits is over, stock prices for these companies will fell. Meanwhile, we have to survive.

As an interim step, there is much to say for political advocacy. Governments can pass laws that protect children during this revolution in medical care, and we as pediatricians are in the best position to guide our lawmakers and act as catalysts for this. Why us? We have credibility. We chose pediatrics because we were more interested in children than money. Being near the bottom of the physician income scale is to our advantage when we act as advocates. We will need this advantage to go up against corporate lobbyists on the other side.

This issue is a guidebook for success in child advocacy. Dr Berkelhamer 's introduction is motivating. Dr Bergman's *The Practice of Political Medicine" is a "how-to" handbook for basics and summarizes past successes. Dr Holm and Paul Shaheen show how a statewide coalition was developed and what this accomplished. Ms Dolins reminds us that we already have an advocacy group in place: the American Academy of Pediatrics (AAP) should be supported and used, and the state branches of the AAP can be effective advocates. Much of the important lawmaking for children's medical care seems to be shifting to state governments, so much of the action will be there. Dr Shelov has an excellent practical discussion about working and living with the media. The next time you have an opportunity to advocate on the media, take a chance and do it. But review Dr Shelov's article first. There is some loss of control when you enter this world, but we owe this to our patients. Dr Hein reviews federal structure and explains why and how to advocate for children with the federal government.

What are the best subjects for political advocacy? Think about the big picture of how managed care can and will impact children negatively:

* Uninsured children may be forced out of medical care.

* Children with chronic diseases and other expensive disabilities are at increased risk.

* High corporate profits due to low "medical loss ratios" reduce funding for pediatric care.

* Managed care organizations may attempt to substitute subspecialists trained in adult medicine or surgery for pediatric subspecialists. Parents may not realize this or may not know that children and adults have different cardiac diseases, cancers, etc.

* Look at your own practice and see where children are being left out.

So pass the time until the storm ends by fighting and adapting, and include child advocacy as a tool. Having a plan and getting started will make a difference in your morale. Counter opinions are welcome.

REFERENCES

1. Fuchs V. The health sector's share of the groes national product. Science. 1 990:247: 534538.

2. Hillman AL, Píuly MV, Kerstein JJ. How do financial incentives affect physicians' clinical decisions and the financial Performance of health maintenance organizations? N Eng) Med. 1989;321:86-92.

3. Kassirer JE Managed care and the morality of the marketplace. N Engl J Med. 1995;333:50-52.

10.3928/0090-4481-19950801-04

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