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Read Making a Killing

home / healthcare / in the media

Fort Lauderdale Sun Sentinel
Feb 27, 2000

by Nancy McVicar

In Need Of A Cure

Health Care System Is Ailing
When Beth Guendjoian got the news she had breast cancer, her gynecologist told her she needed to find a surgeon.

Using her HMO booklet, she contacted all the surgeons listed in Palm Beach County. Not one still had a contract with her HMO. Guendjoian, 40, of Boca Raton, sat down on her kitchen floor and cried.

When Eric Levine got a half-inch cut on his forehead, the Coral Springs 5-year-old's emergency room bill came to nearly $ 700. The cut didn't require stitches.

Glenevier Dubulis, 62, plagued by headaches and dizzy spells, treated herself with herbs and vitamins because she has no health insurance. When the Margate woman finally sought an expert opinion, she learned that she had a brain tumor and needed surgery. One doctor and hospital told her they wanted $ 10,000 up front to remove it. She didn't have the money.

The United States has arguably the most technically advanced medicine available on the planet -- if you can get it and if you can afford to pay for it.

"We have the best health care in the world but not the best health care system," said Dr. Nancy Dickey, past president of the American Medical Association. "Our system is a mess. Patients are unhappy, doctors are frustrated over loss of autonomy and there are 44 million uninsured who are really unhappy because they're not in the system at all."
 
Dickey said the time to fix the system is now.

"You have to get to a certain pain level before people are ready to make tough choices," Dickey said. "From my travels around the country (last) year I would guess we're very near that point."

As the Florida Legislature opens its session next month and the 2000 presidential campaign picks up steam, health care is a key issue once again.

In a survey released last month by the Kaiser Family Foundation and the Harvard School of Public Health, voters cited education and health care as the two issues most important to them. Dominating the scene

Six years ago, the Clinton health care plan, which would have forced employers to pay most of the cost of covering their workers, failed to win support in Congress. Ever since, managed care has come to dominate.

About 81.3 million Americans are enrolled in HMOs, or health maintenance organizations, up from 33.3 million in 1990, according to InterStudy, a market research organization for the HMO industry.

An estimated 89 million more are enrolled in PPOs, or preferred provider organizations. PPOs cost more but allow patients more flexibility.

HMOs, which require doctors to get permission before providing expensive care or diagnostic tests, have been embraced by the nation's large employers as a way to control health costs.

The strategy worked, for a while. For most of the '90s, health care inflation was squelched. The inflation rate dropped back into the low single digits, much like the rest of the economy.

But then, in 1998 and 1999, costs started heading up again, increasing about 5 percent in 1998 and an estimated 6.5 percent to 10 percent last year. Unsure about care

In the meantime, managed care has not won the hearts and minds of the American public. In a national survey released in late October, only 46 percent of Americans were very confident their treatment would be based on their health care needs rather than on the cost of the care. The survey was done for the Employee Benefit Research Institute.

A Newsweek/Discovery Health Channel poll released in November found that 61 percent of Americans agree with the statement, "I'm frustrated and angry about the state of the health care system in this country."

And there are other indicators that managed care has not been a panacea.

Only one-third of the people who had been ill in the year before the survey said they were completely happy or very happy about the care they received under their HMO, according to a Consumers Union survey of 19,000 HMO patients released in August.

A majority of doctors, 72 percent, say the quality of care is worse under managed care, according to a Kaiser Family Foundation/Harvard University survey released in July. Doctors are joining unions and forming networks to have more clout in negotiating with managed care. Some have stopped taking HMO patients.

Hospitals say they are being squeezed by slow and low payments from HMOs and cuts to Medicare. Many have had to cut staff, including Mercy Hospital and Mount Sinai in Miami and St. Mary's and Good Samaritan medical centers in Palm Beach County.

Nurses say they often are so short-staffed that patient care in hospitals is being compromised. The same Kaiser/Harvard survey showed nearly 70 percent of nurses worry about inadequate staffing levels. They, too, are joining unions.

Karen Ignagni, president of the American Association of Health Plans, said much of the backlash against managed care has been generated by the very health care providers whose bad past practices -- such as ordering too many tests and performing unnecessary surgeries -- brought about the need for change in the first place.

Ignagni said industry studies show most managed care patients like the system. "Satisfaction has been high," she said.

Dr. Richard Vance, corporate vice president for population health improvement at Humana, said managed care remains the future of health care because it controls costs and takes an active approach to managing disease.

"This is the only area in a pretty chaotic health care system that is bringing all the related parties together into something that is making a substantial difference for patients," Vance said. Costs going up

But costs are increasing again as hospitals and other providers, who say they have been losing money, balk at the low reimbursement rates HMOs have negotiated with them over the years.

"Hospitals are telling us they need more," said Dr. James W. Moffat, vice president of medical operations for AvMed, a Florida HMO.

Many HMOs are in financial trouble as well -- posting $ 1.25 billion in net losses nationwide in 1998 -- and are raising premiums and cutting services or, in some cases, selling out.

Several large managed care companies across the country have gone bankrupt, leaving state officials and consumers scrambling to find coverage.

The last profitable year for Florida's HMOs was 1996, when they made a collective $ 45.3 million. A majority of managed care companies in Florida, 21 of 35, lost money in 1998. Losses totaled $ 55 million. At the end of second quarter 1999, 23 of 35 had losses totaling $ 34 million.

This month, SunStar, an HMO serving more than 88,000 Floridians, was declared insolvent and taken over by the state. And state officials have fined 18 companies $ 334,000 in recent months for late payments..

Many of the nation's largest insurance companies have sold off their health insurance businesses as it becomes harder to make a profit. Prudential sold its health insurance component to Aetna/U.S. Healthcare in 1998, after recording 1997 losses of $ 63 million in Florida alone.

Health care corporations, once the darlings of Wall Street, have fallen out of favor. Lenders also are backing off.

Eighty-five percent of lending institutions surveyed last month by the Phoenix Lending Survey in Philadelphia said they would not lend to a health care concern, with managed care companies topping the list. More than half of the 95 lenders around the country participating in the survey named health care as the least attractive industry among a list of 16 to which they lend money.

Whether the industry can recover is left open to question, said E. Talbott Briddell, president of Phoenix Management Services. 'Code Blue'

"There's clearly a 'Code Blue' being signaled in the health care industry," Briddell said. "The question is, is anybody listening?"

Jamie Court, who heads Consumers for Quality Care, a national health care consumer group based in Santa Monica, Calif., has similar concerns.

"It seems to me there will inevitably be a financial collapse of these managed care companies," Court said. Confidence is lacking now on Wall Street and a lot of money is leaving the system. I'm afraid there could be an S&L-type failure looming on the horizon and the public is totally unaware."

Managed care is also under assault from some of the same lawyers who took on the tobacco industry and won.

One suit, invoking federal racketeering statutes, accuses Aetna/U.S. Healthcare of engaging in a nationwide fraudulent scheme by promising quality health care, then denying needed care to boost corporate profits. Aetna, the nation's largest health care company, denies the allegations.

Such lawsuits are an ominous sign for the industry, said John Erb, vice president and employee benefit consultant at Arthur J. Gallagher & Co. in Boca Raton.

"The intent here is to unravel managed care and essentially take away the ability of managed care to manage care, and that's the only way a lot of people can get coverage now," Erb said. "The impact is going to be to raise costs and, if they're successful, the cost will go up significantly."

Bills in the Florida Legislature and in Congress would give patients the right to sue their HMO for damages if their health suffers because of an HMO decision. HMOs have largely been exempted from such suits by the federal legislation that created them in the early 1970s.

The House passed the so-called "patients' bill of rights" in October. A conference committee is scheduled to begin hearings within two weeks to iron out differences between that bill and one passed by the Senate earlier last year. The Senate version does not allow patients to sue.

Ignagni and others say allowing such lawsuits would drive up the cost of care and push more people into the ranks of the uninsured.

Nearly 3 million of Florida's 15 million residents have no health insurance and despite a booming national economy, more than 44 million of the 274 million Americans lack health coverage, up from 35 million 10 years ago.

Dr. Mohammad N. Akhter, executive director of the American Public Health Association, said studies show people without insurance are being denied care and the situation is likely to worsen if solutions aren't found.

The four most prominent presidential candidates have issued proposals they say would help reduce the numbers of uninsured, but Akhter said none of them goes far enough.
 
"Everybody's dissatisfied with the current system," Akhter said.

"We need to find a solution that provides universal coverage. Otherwise we would be just putting a Band-Aid on this big problem, which is what we have been doing. Now it's catching up with us."

Nancy McVicar can be reached at nmcvicar@sun-sentinel.com or 954-356-4593.

GRAPHIC: PHOTO, Staff photo/Taimy Alvarez; (color) UNINSURED: Glenevier Dubulis, 62, of Margate, suffered from headaches and dizzy spells but had no health insurance. Months went by before she was diagnosed with a brain tumor and had surgery to remove part of it. "What happens if I get sick again?" she worries.




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