Changes needed for managed care to survive, panelists say




Updated 2:00 PM March 31, 2003
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Changes needed for managed care to survive, panelists say

By Kevin Bergquist

An aging population and growing numbers of uninsured people are major stressors on the managed health care industry, and solutions must be identified if managed care is to survive, according to a panel convened on the topic by the U-M Health System.

Managed care had its heyday in the 1990s, when there was a 15 percent reduction in inpatient hospitals days and a 57 percent increase in outpatient visits accompanied by a slow rate of price increases, Zelda Geyer-Sylvia, executive director of M-CARE and former vice president and CEO at Community Health Plan, said at the March 21 panel.

She said it led to better outcomes, reasonable member satisfaction and lower costs. But the managed care industry began to suffer under the weight of hassles in the referral process, price pressures that created a consolidation of health care providers, and an image of profiteering among those involved in the industry.

In addition, insurance premiums have begun to outdistance inflation, and Geyer-Sylvia predicted health insurance premiums will double in five years at the current rate of inflation.

"But the world as we know it is not going to continue; there will be changes," Geyer-Zelda said. "It has to change to preventative care and care coordination and finding a home for those whose care has been episodic and fragmented."

Geyer-Sylvia predicted increased cost sharing by employees in 2003 and an increase in consumer-driven plans that connect consumers more directly to the cost of care. She said those involved in managed care need to restore people's trust and increase disease management and advanced care management for chronically ill patients with multiple diseases.

"The patient absolutely has to be involved in managed care and the HMOs (health maintenance organizations)," she said. "Cost-sharing needs to be there, but not prevent people from getting the care they need. Patients need to be partners with their plan and their physicians."

David Butz, co-director of the U-M Center for Healthcare Economics and a professor in the Business School and the Gerald R. Ford School of Public Policy, said people contend that managed care uses physicians that don't do good work, that physicians provide an over-valued product, and that managed care companies and physicians are locked in battle.

Butz said the managed care industry needs to become less adversarial and more collaborative and must drop cost control as the industry's mission. He also said providers and physicians need to recognize the tremendous value Americans place on health, and that they should confront behavioral issues and stress preventative care.

Butz addressed an audience question about paying physicians for better outcomes: "I don't agree with paying them for better outcomes, but rather in getting patients to those hospitals and providers that provide better outcomes. We need to invest in systems of care."

Geyer-Sylvia and Butz were the keynote speakers at the event in the Ford Auditorium, "Can Managed Care Survive Today's Challenges," sponsored by the FORUM on Health Policy and the Department of Internal Medicine.

"I think the more fundamental question is, will all of health care survive?" said Janet Olszewski, director of Michigan Department of Community Health. Prior to her appointment, Olszewski was vice president of government programs and regulation at M-CARE. "We really need to address all of [health care], not just managed care."

Olszewski said the number of uninsured residents in Michigan is everyone's problem. She said 20 percent of Detroit residents have no health care coverage. Of those, 80 percent are working or in working families. She said most Michigan residents are willing to pay for health care, but not at the exclusion of everything else.

"We need to get back to basics, redesign the delivery method and address the issue of the uninsured," said Olszewski, who added that the health care workforce also must be addressed.

Jan Whitehouse, regional director of health care initiatives for Southeast Michigan at General Motors (GM), said the company spends approximately $1,200 on health care for every vehicle it produces. She said GM spends about $4.5 billion on health care annually and has a health plan enrollee in almost every major ZIP code in the United States.

"The health care benefits landscape continues to present significant challenges to employers," said Whitehouse, citing an increased pressure on the bottom line and the consolidation of vendors and providers. "We have enrollees in 127 different HMOs and process 30 million transactions. This is a very serious issue for us."

Peter Jacobson, a professor of health management and policy who teaches law and public health in the School of Public Health, discussed lawsuits in which people claim they were not treated or their treatments were delayed due to their managed care plans. In these cases, he said, the courts typically have deferred to the managed care industry to adopt cost-containment initiatives.

Changes needed for managed care to survive, panelists say

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