US Managed Care: teaching Limeys how to suck eggs

1. US Managed Care: teaching Limeys how to suck eggs By Alan Maynard

2. Outline • What is managed care? • Why copy US failures? • Overview :let’s do it our way!

3. Managed care ‘… a system that, in varying degrees, integrates the financing and delivery of medical care through contracts with selected physicians and hospitals that provide comprehensive health care services to enrolled members for a predetermined monthly premium. All forms of managed care represent attempts to control costs by modifying the behaviour of doctors, although they do so in different ways.’ Iglehart 1994

4. Organisational forms of health delivery in the USA Organisational form Definition Indemnity plan with Complete freedom of choice to fee for service patients. Insurer reimburses physicians on a FFS basis Managed indemnity Free choice and FFS but insurer plan exercises some degree of utilis- ation control to manage costs

5. Organisational forms of health delivery (continued) Organisational form Definition Preferred provider Insurer channels patients to ‘preferred’ organisation physicians who are usually paid discounted FFS. The insurer, not the physician, usually accepts financial risk for performance Independent practice Insurer channels patients to physicians association usually solo or in small groups who have agreed to some financial risk for performance. Payment may be either capitation or FFS with financial incentives based on performance

6. Organisational forms of health delivery (continued) Organisational form Definition Network independent Similar to IPA but consists of a network practice organisation of larger group practices. Payment is usually capitation to each group, which then pays the physicians Staff/group model The classic, prepaid, large multispecialty health maintenance group practice. Patients are covered only organisation for care delivered by the HMO. Physicians are usually salaried and work for the plan (staff model) or a group practice that has an exclusive contract with the plan

7. Managed care in the UK • Contracts that specify activity and case mix (I.e. how much and what?), measures of failure (e.g record cards and weekends), and measures of success :health related quality of life measures (e.g. www.sf36.org and www.euroqol.org ) • Management of doctors I.e. controlling the their behaviour. Agreeing with them and policing:what they produce?, how much?, how (which evidence based technology?) and to whom (peasants or bourgeoisie?)

8. US managed care failed so why copy it? • Common problems • Medical practice variations • Failure to deliver appropriate care: Rand Corporation study: The First National report Card on Quality of Health Care in America in May, 2004: “overall , adults received about half of recommended care” • medical errors.medication errors kill twice as many Americans each year as 9/11 • the failure to measure outcomes

9. Practice variations survive unmanaged over decades • US Medicare per capita spending in 2000 was $10,550 per enrolee in Manhattan and $4823 in Portland, Oregon. Differences are due to volume effects rather than illness differences, socio-economic status or price of services. • “Residents in high spending regions received 60% more care but did not have lower mortality rates, better functional status or higher satisfaction” Fisher et al (2003). Potential savings of 30% if high spenders reduce expenditure and provide the safe practices of conservative treatment regions? Fisher in NEJM, October, 2003

10. Why do variations survive? • “the amount and cost of hospital treatment in a community have more to do with the number of physicians there, their medical specialties and the procedures they prefer than the health of residents” Wennberg and Gittelsohn(1973 in the journal Science) • Does “supply creates its own demand”? Time to micro manage clinical activity to produce what local populations need rather than what amuses doctors to provide! Managed care failed to do this, like the NHS!

11. Measuring outcomes 1 • “If a surgeon has made a deep incision in the body of a man with a lancet of bronze and saves the man’s life, or has opened an abscess in the eye of a man and has saved his eye, he shall take 10 shekels of silver. If the surgeon has made a deep incision in the body of a man with his lancet of bronze and so destroys the man’s eye, they shall cut off his forehand” Laws of Hammurabi, Babylon, BC 1792

12. Measuring outcomes 2 • Florence Nightingale : is the patient • Dead? • Relived? • Unrelieved? • Why do we not measure success in health care? The use of health related quality of life measures www.sf36.org and www.euroqol.org e.g the case of BUPA

13. Overview • Why are we interested in US “solutions”. We have failed to manage doctors to remedy the four problems of variations , appropriate care, errors and outcome measurement, just like the Americans • Adopting their failures, with its nice marketing techniques,may fail whilst some NHS reforms may assist change e.g. a well managed GP contract

14. Managing contracts • Why are PCTs such feeble purchasers? • Do you need the purchaser-provider divide to be an efficient contractor: US managed care integrated finance and provision. • No contact is ever complete, and all will be subject to gaming. The respective roles of trust and money. Confucius said “without trust we cannot stand”

15. Managing doctors • Either they must transparently manage themselves with good information systems, or they will have to be managed externally. The need for validated activity, mortality and success (HRQoL) data. • Why is there no such management? As the US sociologist Paul Starr remarked 20 years ago “ the dream of reason did not take power into account”!

16. Caution…. • Will diversity on the supply side, improve or undermine the NHS? • Private providers once involved in the NHS have a vested interest in legislation and its favouring them e.g is the model the decline and fall of NHS dental care? • No health care system has been able to regulate the private insurers or providers in health care to ensure they serve both efficiency and equity goals

17. Summary • Health care reform is social experimentation, and may damage patients just as much as bad drugs and poor patient care • Government continually redisorganises the NHS with untested and usually unevaluated policies e.g patient choice, national tariffs, Foundation Trusts and untested US policies • Be sceptical and demand evidence , not religious incantations!

18. Conclusion:clever people mess up more! • Petr Skrabanek and James McCormick wrote: • “ the more intelligent the authorities, the more idiotic will be some of their claims. This paradox was explained by Francis Bacon (the philosopher, not the painter) who said when such a man sets out in the wrong direction, his superior skill and swiftness will lead him proportionately further astray” • (Facts and Fallacies in Medicine, Tarragon Press, Glasgow, 1992)