WILL THE COST CUTTING IN HEALTH CARE KILL YOU? Maybe not. Quality is thriving in a few places, thanks to reform-minded doctors and employers -- and smart patients.
(FORTUNE Magazine) – THE SCREWS keep tightening on medical insurance, both private and government- run, and you are beginning to wonder whether this trend will be hazardous to your health. So far it isn't, judging by statistics that show gains against major diseases, but what of the future? Health plans are starting to cut premiums to win business, and Medical Care magazine already tells of two fast- paced health maintenance organizations in which 58% of the physicians were found to be suffering from "high emotional exhaustion." In Washington, where reform legislation has been cryogenicized, politicians keep wanting to raid Medicare -- which sends the elderly home from hospitals faster than it used to -- to pay for universal coverage. You might think that the medical system you count on -- in many respects still the world's best -- is in danger of crumbling. Yet the apostles of total quality management see a diametrically opposite possibility. Getting a grip on costs, they believe, can force a head-to-toe reexamination of how medical care is done, just as it has prompted rethinking in other industries. If the economizing takes the form of smarter processes rather than crude cost cutting, says Dr. Donald Berwick, president of Boston's Institute for Healthcare Improvement and a leader in medical TQM, we can have it both ways: "Costs can be 30% lower and the quality dramatically better." Medical quality is clearly at a crossroads. It could slip if health plans go the way of the cutthroat airlines, which compete almost exclusively on price. Alternatively, if it goes the way of the automakers which, in a perennial balancing act, strive both to chip away at costs and to make the product ever more appealing, it could scale new heights. Which of these scenarios unfolds depends in part on how much consumers like you care about quality. You'll be better equipped to fight for it if you know about the ways in which some doctors and hospitals are already learning to heal better without raising prices and, yes, sometimes practice less expensively, even without a windfall from technology. You can also be assertive about getting the services you need from your health plan. If its cost constraints block you, you can, if it permits, turn to outside doctors and hospitals, or, if you have the option, switch to another plan. In pursuing health care quality, you will, of course, be in quest of something difficult to define and measure. "It's not like testing a bumper 28,000 times," says Craig Anderson, an Ernst & Young partner and health care consultant who also serves as an examiner for the Baldrige quality awards. Curiously, withholding services -- which might seem as if medicine has surrendered to the bean counters -- can enhance quality if it spares you from needless risks of drugs or scalpel. "Sometimes," says Robert Waller, a physician who serves as CEO of Minnesota's Mayo Foundation, "the operation that has the fewest complications and leaves the patient the most satisfied is the one you didn't do." At Waller's famed Mayo Clinic, it just happens, the salaried M.D.s don't get richer by carving you up. AS COMPLEX as health care quality is, HMO "report cards," data on individual hospitals' death rates for heart surgery, and other information are starting to peel back the ignorance about who cures best. Dr. Paul Ellwood, a leading proponent of accountability in health care and president of Wyoming's Jackson Hole Group, an association of doctors, businessfolk, and other reformers, wants a lot more data made available on medical "outcomes." That way, he says, the comparison shopper could check out HMOs' track records on how well they keep members healthy and treat key illnesses. Without such information, Ellwood worries, "health plans will compete on price." If you're lucky, though, you live in an area like Seattle or Hanover, New Hampshire, where the new accountability is already nudging the $1-trillion-a- year medical system to deliver a better product. A tour of the principal frontiers of the quality movement shows the exciting possibilities:
-- REMODELING YOUR CARE. Hospitals, with their elaborate choreographies of treatment by nurse-doctor teams, are the most obvious candidates for the streamlining that comes with TQM. There's plenty of room for upgrading. Harvard's Dr. Lucian Leape, contributor to a new book, Human Error in Medicine, estimates that iatrogenic hospital deaths -- adverse events that are mostly preventable, such as post-surgical infections and bad drug reactions -- may total 100,000 a year nationwide. That's more than twice the number who die in automobile accidents. For the moment, you needn't fret that pennypinching is driving hospitals to trash quality. Chances are, you'll still be well cared for. But Medicare enrollees, whose program would be extended to everybody if the aficionados of a Canadian-style system had their way, have had reason to worry about a worsening of the odds since 1983. That's when the federal Health Care Financing Administration (HCFA), which runs Medicare, instituted a schedule of flat payments to hospitals for handling 492 categories of disease, ranging from respiratory failure to hips needing replacement. Some feared that hospitals, no longer able to gain by hanging on to Medicare patients as they did under the old, open-ended payment system, would send them home quicker and sicker. They're leaving more quickly, all right, but apparently not sicker -- at least not yet. The Rand Corp., sampling the records of patients with five major illnesses, found that after the new payment caps were imposed, a favorable trend previously under way -- fewer people dying in the 30 days following discharge -- continued. But could the situation have worsened after the late Eighties, when the Rand data leave off? The experts doubt it. "To the best of my knowledge," says Gail Wilensky, who ran HCFA in the Bush Administration, "there is no indication that people are getting lower quality of care." The real question is how fast hospitals are improving. Who hasn't heard about capricious nurses and blundering orderlies, let alone rude doctors? Hospitals haven't traveled far enough down the TQM highway to impress Stephen Shortell, professor of health services management at Northwestern's Kellogg school. Shortell has surveyed the level of activity at some 3,300 institutions and, with the exception of "a couple of handfuls," concludes that a move to quality is "relatively embryonic." Boston reformer Berwick bewails the lack of "benign piracy" of benchmarked best practices that is remaking other parts of the economy. Says Berwick: "Go into the average hospital and ask, 'What three things have you learned elsewhere that you are testing this week?' and you get blank stares."
STILL, government data on outcomes has galvanized some of the pacesetters. HCFA began publishing hospital-by-hospital mortality rates from selected illnesses in the late Eighties. While the feds have halted such disclosures on the grounds that they accomplish little, several state governments will send you surgical mortality rates and other data if you ask. New York and Pennsylvania throw in individual heart surgeons' batting averages. The mere existence of HCFA numbers sent a team of doctors and nurses at New Hampshire's Dartmouth-Hitchcock Medical Center to the drawing board to map a TQM-style "critical path" for the steps in heart bypass surgery. "It has certainly reduced chaos in this hospital," says chief cardiothoracic surgeon William Nugent. The percentage of that hospital's patients who die from the operation has fallen by more than 50% just since 1992, to 2.7%, and the proportion of those fit to be discharged within five days has increased from 20% to 40%. Many local business groups buying health insurance have formed coalitions to make sure that quality isn't suffering amid all the economizing. Generally, hospitals have furnished mortality and other outcomes data to member companies' benefits managers only on condition that they not share it with employees. But if you live in Cleveland, all you need do is walk into a local Rite Aid drugstore and pay $6 for a 32-page pamphlet called Cleveland Health Quality Choice: Summary Report. Disseminated by a partnership of business and medical groups, it's a simplified version of the performance data that the partnership obtains from 29 regional hospitals. The user-friendly pamphlet evaluates each hospital's quality in a number of areas, such as intensive care and obstetrics. Quality is rated by three grades: better than, equal to, or worse than what's expected, based on the hospital's mix of patients. "Business has to share this information with employees," says Patrick Casey, executive director of the Health Action Council of Northeast Ohio, one of the business groups in the partnership. "If an employer says, 'We're going to send you to six hospitals,' they'll say, 'Yeah, that's because they're the cheapest.' This data shows that they may also be of the highest quality." You can't readily get this kind of information in Cincinnati. But four leading employers -- Procter & Gamble, Kroger, Cincinnati Bell, and General Electric's jet engine unit -- have goaded hospitals to pare costs while improving outcomes. The city's Jewish Hospital, with help from the Iameter consulting firm of San Mateo, California, has sharply lowered its charges for heart bypass surgery and angioplasty over the past three years. They're down from $31,000 to $22,000 and from $10,300 to $6,900, respectively, excluding surgeons' and doctors' fees. The percentage who die from these procedures, meanwhile, has been heading south too -- by 32% for bypass surgery and 10% for angioplasty. Many hospitals have caught the quality fever without corporate prodding. Seattle's Virginia Mason Medical Center, an integrated multispecialty group practice with its own hospital, has taken a fresh look at eight procedures. Patients getting arthroscopic ligament repairs on injured knees, for example, typically used to stay around for two days of physical therapy to alleviate pain. Now, thanks to altered practice patterns and a different anesthetic, 97% go home within hours, relatively pain-free. At a hospital in Provo, Utah, operated by the Intermountain Health Care chain, a quality team has drastically reduced the number of newborns kept in intensive care for up to ten days because they are suspected of having sepsis. The disease can be deadly, and doctors previously erred on the side of overtreating. Says neonatologist Stephen Minton: "We found tremendous variation," one of the villains that TQM strives to vanquish. "Every doctor had a different workup, and it differed from baby to baby for the same doctor." Last year not a single baby in a test group needed to go into the intensive-care unit. Downtime, another TQM target, is no laughing matter if you are a heart attack victim waiting and wondering in an emergency room. Amazingly, even though heart attacks remain the country's No. 1 killer, "half the hospitals don't have a treatment protocol," says Dr. Frederic Jones, executive vice president for medical affairs at South Carolina's Anderson Area Medical Center. In 1989 an Anderson task force developed a treatment flow chart extending from when the patient first experiences chest pains at home to when he or she leaves the hospital, alive or dead. Fewer victims now die, 13% instead of more than 20% previously. That's because Anderson's protocol has shrunk the average "door to needle" time -- the name given by health professionals to the interval between a patient's arrival at the hospital and the administration of clot-busting drugs -- from 162 minutes to 43 minutes. Anderson's mortality rate remains somewhat above the country's for reasons beyond its control; its mostly rural patients take four hours to get to the hospital, twice the national average. At the Paul Dudley White coronary care center in Baltimore's St. Agnes Hospital, patients show up sooner, and door- to-needle time is a bit faster than Anderson's. Mortality is 6% to 8%, says Dr. Raymond Bahr, the center's medical director. But it could be driven down to just 1%, he notes, if drugs could be administered within the "golden first hour" when chest pain symptoms first appear and before the heart is extensively damaged.
-- MAKING YOUR DOCTOR LISTEN. Even when raised to new heights by TQM, most of American medicine remains short term and physician-focused. Doctors repair the part of your machinery that's busted, usually not expecting to hear from you unless the trouble returns. You'd fare better, a growing body of medical opinion says, if the system headed off trouble before it occurred or, if you are treated, stayed in touch with you to follow the long-term effects. Doctors should track not only your progress in traditional clinical terms, says this school, but also changes in your own perceptions of your health, using the information to continually improve the way they treat patients. It will take extensive on-line computerization of patient records before this kind of "outcomes management" is possible on a large scale. But some doctors and hospitals are already expanding the time dimension. Not content with sending more patients home alive from heart bypass surgery, Dartmouth- Hitchcock Medical Center has begun surveying them six months later. The aim is to see not only how they are doing from a physician's standpoint but how they view their own health. The survey instrument is the short, easy-to- understand "health status questionnaire," also known as SF-36, developed over the past 20 years by researchers at UCLA, Rand Corp., and Boston's New England Medical Center. Typical question: "Does your health limit you in climbing several flights of stairs?" Says heart surgeon Nugent: "We're trying to get people the way they want to be, not just pain-free." Patient-focused information is already beginning to change health care for the better. On the theory that quality is enhanced if needless surgery is avoided, the Oregon Spine Center, part of the Sisters of Providence hospital system in Portland, stresses physical therapy over the knife for low back pain. It has found that many patients with herniated disks, who elsewhere would be advised to have a $15,000 operation, do just as well at the center with $1,000 worth of physical therapy. As might be expected, those whom the center selects for surgery score worse on SF-36 when they arrive for treatment than those deemed not to need it. But a follow-up questionnaire three months later shows that things turn out just as well for the latter group. Don Bukstein, a pediatric allergist at the Dean Medical Center in Madison, Wisconsin, looks for gains from outcomes management in treating asthma. On arrival for appointments, his patients or their parents fill out an SF-36-like questionnaire supplemented with asthma-specific items. The answers are immediately scanned electronically so that Bukstein can see them on a computer screen while he is examining the patient. Bukstein believes this will lead to fewer asthma patients' having to monitor their breathing at home with a peak flow meter.
-- GETTING THE BEST FROM HMOs. Like it or not, health insurance policies that allow you an unlimited volume of virtually free services are being priced out of the market. These days, if your employer offers traditional fee-for-service insurance with free choice of providers, it's probably subject to "utilization review." Just as likely, your company has switched either to a preferred- provider organization (PPO) that hits you in the pocketbook if you go outside a list of doctors and hospitals, or to an HMO, the most tightly managed health care organization of all. With membership that has leaped fivefold to about 50 million since the early Eighties, HMOs inspire some of the greatest hopes for quality improvement. Says CEO George Halvorson of Health Partners, a Minnesota HMO: "An organized system should be able to deliver superior care. We should win hands down." But whereas HMOs have an edge when it comes to the premiums they charge, there's not enough data on medical performance to clinch Halvorson's argument. To many, HMOs merely represent cut-rate medicine. Your fears on this score may be greatest if you are enrolled in an HMO with a "capitation" system for paying doctors. It's most commonly used by HMOs whose primary physicians also see patients from outside the plan. These doctors get a flat amount per month for each HMO patient who chooses them, regardless of what they need by way of treatment or services. To the suspicious, of course, this sounds all too much like an invitation to skimp. But in essence, this is no different from keeping Mayo Clinic physicians on salary. Capitation is designed to eliminate the incentive for overtreatment and to lessen the need for medical micro-management from headquarters.
MORE OFTEN than not, researchers who have probed the medical performance of the HMO system have come up with reassuring findings. One of the most favorable is a recent report in the New England Journal of Medicine. Looking at the records of all 97,000 adult Californians under 65 who were hospitalized in the state for appendicitis from 1984 to 1989, a team of investigators found HMOs to be doing a superior job. Only 25.8% of HMO members suffered from ruptured appendixes -- which raise the risk of death -- compared with 29.3% for fee-for-service patients in the Golden State and an even higher percent for those on Medicaid and the uninsured. On the negative side, two studies in three unidentified cities have shown evidence that HMOs do a poorer job detecting and treating mental illness. Their enrollees with depression were less likely to be diagnosed by primary physicians as having it, or to improve when they were treated by HMO psychiatrists. Many negative reports about HMOs tend to be anecdotal or about bureaucratic hassles. Consider the California woman whose HMO, until it backed down, wanted to cut to eight hours the 24-hour nursing assistance she had been accustomed to for a child on a special breathing tube, which would have forced her to quit her job. And, of course, sometimes things go seriously, and tragically, wrong and the HMO is lambasted. Yet when calamities happen in a fee-for- service plan, such as a death from an unnecessary operation, people tend to blame an individual doctor or hospital rather than the traditional insurance system. In fact, overwhelming member-satisfaction rates at some HMOs -- 94% in surveys by Pennsylvania's U.S. Healthcare -- show that they must be doing something right. Watchful lest its capitation payment system cause primary- care physicians to rush people through, U.S. Healthcare periodically checks appointment schedules to see if doctors are exceeding its standard of no more than four to five patients an hour. If the books show a higher number, reports Dr. Neil Schlackman, a medical director, "we'll say, 'You're scheduling six an hour. If you want to be in our system, you've got to comply with our standard.' "
BY PICKING and choosing their doctors, HMOs say, they can also keep out quacks. Tufts Associated Health Plans, a fast-growing HMO near Boston, excludes physicians who have had a malpractice judgment against them in the past four years -- the kind of information a consumer could not easily get on his own -- and recredentials all its doctors every two years. Random calls by Fortune to a dozen Tufts members turn up considerable praise for its physicians and no tales of bungling. Steven Wasserman, a financial analyst and a Tufts enrollee, calls the plan "wonderful." His only grouse: a long wait a couple of years ago to get his son to a pediatric neurologist. Several other members cavil about the written referral needed to see a specialist. None have found it necessary to go through the HMO's grievance procedure, and Dr. Harris Berman, Tufts's CEO, points out, "at HMOs, unlike fee-for-service, people at least have a place to complain." In their promotional material, many HMOs boast of their tie-ups with renowned medical "centers of excellence" for big-ticket illnesses. You can't be sure how much your HMO actually uses them, and you have every right to ask. Prudential figures it actually comes out ahead by sending many of its managed- care patients to such centers. Thanks to contracts to perform organ transplants under its Institutes of Quality program, Prudential has been able to secure better outcomes -- one-year survival rates that are four to 12 percentage points higher than the national average for transplants -- at prices about one-fifth lower. One contented Prudential enrollee is Mike Kelley, 51, a private detective and ex-smoker in Orlando. He is back looking for missing persons thanks to a double lung transplant he received at St. Louis's Barnes Hospital in April 1993. Some prestigious centers are counting on their superior track record and competitive costs to keep HMO customers coming. Referrals from Minneapolis HMOs to Mayo Clinic's Rochester, Minnesota, complex 70 miles away are holding up well. HMO patients are also on the rise at Manhattan's Memorial Sloan- Kettering Cancer Center. "We can do it better for somewhat less," says Dr. Paul Marks, Sloan-Kettering's disarmingly candid CEO. Taking no chances, Marks has set the daunting goal of cutting costs 25% over the next several years without compromising quality. The center also hopes to market a capitated oncology program, the first of its kind, under which it would do everything cancer-related for a health plan's membership -- from screening to detect illness to performing surgery on advanced cases -- at a flat monthly rate. So how well are HMOs performing right now? Given their built-in incentives to apply the ounce of prevention, HMOs have high credibility when they claim they're trying to keep you well. They're starting to hit home runs. At Scripps Clinic in La Jolla, California, a multispecialty practice whose patients include 75,000 from various HMOs, an astounding 95% of the female HMO members over 50 get annual mammograms. The national average is perhaps no more than 75%. "We bug the physician and don't go away until action is taken," says Dr. Linda Lyons, Scripps's vice president for resource management. Result: "For women who have been in our plan for five years, we have not had a single case of stage 3 or 4 breast cancer." When breast cancers are detected at earlier stages, survival rates are very high.
But are HMO members in good hands when they get sick? If plans don't do what's necessary, Lyons recently told the publication Quality Letter, "the patients will cost you more in the end." But might not some shortsighted HMOs, like some businesses, be tempted to improve their bottom line by deferring maintenance, in this case on you? Accreditation procedures and report cards try to allay some of these worries. In recent years, many major corporations have insisted that HMOs be accredited by the private, Washington-based National Committee for Quality Assurance (NCQA), whose teams look for such things as prompt access to care and quality improvement programs. According to a list available to the public, only 30% of the plans ruled upon thus far by NCQA have won full three-year accreditation. Six percent have been denied the stamp of approval. NCQA is also in the report card business. In fall of 1993 it unveiled a document, conceived five years ago by a panel of HMO and corporate representatives, that bears the lumbering name Health Plan Employer Data and Information Set, known by the acronym Hedis (pronounced "heed us"). For quality-minded corporations comparing health plans to cover their workers, Hedis lays out the specs for 60 standardized measures of performance, from member satisfaction to financial solvency. Early next year the NCQA will publish report cards for 21 HMOs, based on a short version of Hedis. DON'T LOOK to report cards, however, for data showing how well your HMO treats diseases. The clinical information Hedis calls for mainly lists preventive efforts, such as the percentage of women in an HMO getting Pap smears or of diabetics receiving eye examinations. That's a disappointment to Jackson Hole's Paul Ellwood, who has battled for the inclusion of more outcomes data now. But Margaret O'Kane, NCQA's president, insists that broad inclusion of outcomes data is "at least five years away." Some HMOs simply can't furnish the information now, O'Kane argues, and a fair way of comparing outcomes hasn't been worked out. Another faction, which includes Dr. Robert Brook of Rand Corp., says the best way to ensure that HMOs don't compete solely on price is to track whether they perform selected procedures when the situation warrants. The controversy hasn't stopped Kaiser Permanente's big Northern California region, with 2.4 million members, from forging ahead with a report card that's the talk of the managed-care industry. Kaiser has compared some key outcomes against state or national averages. Dr. Francis Crosson, associate executive director of the Permanente medical group that serves Kaiser members in the region covered by the report card, says they can all read it at its health centers. To employers, he says, the document shows "we deliver high-quality care, and here's the evidence to support it." Until the day arrives when you can make apples-to-apples comparisons of HMO performance, how can you know that your plan is any good? Satisfaction surveys are the best proxy for now. A few years ago, says editor William Boyles of Health Market Survey, an HMO newsletter in Washington, managed-care plans' surveys of their members were "totally slanted." Now, thanks to the involvement of NCQA, they have higher believability. In the San Francisco and Washington, D.C., areas, you can also refer to independent surveys in the Consumer Checkbook. The magazine will soon also publish a book based on a nationwide poll of what federal employees think about the plans available to them. If you're lucky, your employer will conduct its own soundings and pass the findings along to the troops. In a standardized survey of 24,300 employees of Xerox, GTE, and Digital Equipment, the Health Institute at Boston's New England Medical Center found that, except in New York, HMOs were more popular than the fee-for-service plans these companies offered. In questions narrowly relating to the quality of medical care, the traditional plans ranked somewhat higher. But the overall ratings "flipflopped," says Harris Allen, who ran the survey, because the lower cost and minimal paperwork of HMOs outweighed the purely medical factors. In an effort to steer employees toward plans with superior performance, including member satisfaction in the three-company survey, GTE will cut their premium contributions next year. American Express, which has also surveyed its workers, will lop up to 20% off the employee contribution for plans that satisfy. If your employer pays little attention to the quality issue, you may need to nag the HMO. If assertiveness proves unavailing, you can turn to the HMO's grievance procedure. Pennsylvanians have an added safeguard that other states would do well to provide. If turned down by an HMO's grievance mechanism, they can write to -- or simply telephone -- an appeals office at the Department of Health in Harrisburg run by Stephen Male, who has been overseeing HMOs since the Seventies. Most grievances never reach Male's shop. "We're a deterrent," he says. "The HMO knows the consumer can come to us." In just the three years since the state grievance procedure was set up, Male has noticed a virtual disappearance of clear-cut denials of medically necessary services. Says Male: "The cases that come to us now are more ambiguous, where there is room for honest disagreement about what should be done." In every dispute the HMO has followed the Department of Health's recommendation. Not long ago, HealthAmerica denied a lung transplant to Ron Paich of Aliquippa but gave in when the state backed his appeal. If all else fails or you simply get fed up with an HMO, switch to another plan if you can. The fresh air of competition can force all health plans, traditional as well as managed care, to deliver quality if consumers are free to take their business elsewhere. Disappointingly, a recent survey by the Henry J. Kaiser Family Foundation and KPMG Peat Marwick found that the great majority of very small employers, and even 27% of those with more than 1,000 workers, offer but one health plan. If you work for such an employer and have any influence, beg, cajole, and pester your bosses to allow a wider selection. One of the good features in President Clinton's ill-fated health blueprint was a requirement that all workers, including those already covered, have an escape hatch. Who wants to be taken for granted by the sole supplier of services when the quality of care -- and perhaps your life -- is at stake?
BOX: HOW YOU CAN FIND QUALITY CARE
-- Learn about the best medical techniques. -- Where the information is public, check a hospital's track record. -- When picking an HMO, be guided by member satisfaction surveys. -- Be assertive with HMOs and file grievances if dissatisfied. -- If you don't like your health plan, switch. If you can't, nag your boss.
CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: How one HMO rates its quality Health care reformers dream of the day when consumers can compare how all HMOs treat illness. Leaping beyond the report cards already being developed, Kaiser Permanente's Northern California region HMO has issued a report card that compares its performance -- including what it regards as too many gall bladder operations -- with state and national averages. The figures excerpted here are mostly for 1991 and 1992.
CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: NEW ENGLAND MEDICAL CENTER CAPTION: How employees rate health plans % of three companies' workers satisfied with. . . In a survey of 24,300 employees of Xerox, GTE, and Digital Equipment, the New England Medical Center found fee-for-service plans were seen to offer the best care. But because of other advantages, including cost savings, group practice HMOs that run their own health centers scored highest overall. Independent Practice Association (IPA) doctors see other patients. Point-of-service plans let you go outside your HMO.