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Friday, October 05, 2007

Good Intentions Are Not Enough

Bob Ebert was Dean of the Harvard Medical School during the 1960’s and 70’s. A key initiative of his administration was the creation of Harvard Community Health Plan (HCHP). Patterned after the renowned and long-established Kaiser Permanente health plan in California, HCHP was a part of the Health Maintenance Organization (HMO) movement – the health care reform of its day.

I think that Dean Ebert is no longer with us, but if he was, he would be shaking his head over what has happened to HCHP.

HCHP was created as a “staff model HMO,” meaning that it employed its own physicians. It was thought that paying the HMO a fixed amount per enrolled patient per month (called a “capitation”) would give it an incentive to keep the patient well; i.e., maintain health, so as to avoid the cost of treating preventable illnesses. It soon became apparent, however, that while the investment in prevention had to be made now, by the time the prevented illness would have occurred, the economic benefit likely would be realized by another insurance company, to which the patient would have transferred in the meantime because of relocation or other reason.

It was also thought that replacing fee-for-service with capitation would reduce cost by eliminating the incentive to order unneeded services. That actually worked, but the savings were more than offset by an unexpected consequence of the staff model, which was that when physicians changed from private, fee-for-service to salaries, they expected to make nearly as much money without working nearly as hard. Or, as I used to say, they started going to their sons’ Little League baseball games.

The HCHP CEO who tried to solve that lost his job and shortly thereafter, HCHP physicians were spun off into a private group, called Harvard Vanguard.

While all this was going on, the idea of managed care emerged, suggesting that savings could be achieved by managing care more effectively. But managing care is something that neither HMO’s nor their physicians ever learned how to do.

When Harvard Vanguard was created, it took the HCHP patients with it, which made it look as though the HMO/managed care concept was still intact. But now, some years later, HCHP (now Harvard Pilgrim Health Care or HPHC) has decided that it also wants to insure patients who prefer to receive their care from physicians outside of Harvard Vanguard

Last Sunday, September 30, 2007, HPHC ran a full two-page ad in The Boston Globe with the statement “It doesn’t tell you where to go. You tell it where you want to go.” In other words, you pick your own physician and HPHC will pay fee-for-service.

So much for health maintenance. So much for capitation. So much for managed care.

When it comes to reforming health care, it seems that good intentions are not enough.

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