SAM L. ERVIN : Chief executive officer, SCAN Health Plan
Sam Ervin is chief executive of SCAN Health Plan, a Long Beach-based, nonprofit company mandated into existence by Congress. Called a Social Health Maintenance Organization, SCAN Health Plan--still in the demonstration phase--offers free hospital, outpatient and in-home health benefits to the elderly in Orange and Los Angeles counties using Medicare funds. The Social HMO model, Ervin says, could be a forerunner to a national health system. He talked recently with staff writer James M. Gomez.
What is the essential difference between an HMO and a Social HMO?
The Social HMOs have all the benefits of a traditional HMO, but they offer ancillary services that HMOs don’t. We provide in-home nursing, personal care and adult day care, for instance. We can do this because we hold down costs. SHMOs cover all the gaps.
How did the concept of a Social HMO come about?
Brandeis University developed the concept of the SHMO in 1985. The idea was to put acute care, comprehensive long-term care, prevention and social services together into one managed system, under one organized administration.
They convinced the Health Care Finance Administration in Washington to demonstrate the concept in four places in the country.
Has the political debate over universal catastrophic health care had an effect on the project?
Yes, it has. The original concept was that the federal government would allow the four sites to demonstrate the model and evaluate it for 3 1/2 years, and tell us if it is going to work. If it does, they will add it on to everybody’s Medicare benefits. Congress has now extended it twice and is in the process of extending it again. The Catastrophic Care Bill was passed and then repealed because there was such an outcry about the financing mechanism. That hurt. Now, anybody talking about long-term care in Congress just said, “Forget it. I will not deal with it.” So they have kept the project going because they knew it had value, but they weren’t ready to make public policy out of it.
Are those extensions more a matter of politics or concerns over the project’s viability?
It’s a viable system and Congress has not been ready to enact nationwide legislation that would build upon our experience. They haven’t been ready for a variety of reasons. Catastrophic Care set back any discussion in Congress on long-term care legislation.
But it is clear that the SHMO works. You can use the HMO concept as a basis and you add on to that. It’s more than an HMO. We are everything that an HMO is, plus we offer more benefits.
How does a Social HMO cut costs?
This really only works in a managed system of care. You have to manage it, you have to watch what your hospital utilization is. If it gets out of whack, you have to try to get it back in line. That’s where prevention comes into the picture. So you try to catch problems before they become serious, acute problems. You want to give what is needed to keep people healthy. If you can accomplish that and keep good physicians who understand and good case managers then you are holding down the cost and giving an incredible range of benefits. Could this system work effectively in a national health care system?
Well, yes. But there’s a ways to go before we are really ready to make that happen. I think what is more likely is that, incrementally, it could cover more and more of the population. One of the reasons it hasn’t been legislated yet into a much larger system is that there are drawbacks. There are rural areas where it would be extremely expensive to provide all these benefits. So there are issues that have to be hammered out at the federal level before it can really apply to all the population.
What are the roadblocks for putting universal Social HMOs in urban areas?
I really don’t think anything keeps it from being possible in urban areas, except the awareness of what it has to offer, the value of it. People are not as aware of SHMOs as they ought to be. The Congress is not as aware of us because they get caught in the press of big health care reform bills for the whole population. And here is a solution to a part of the problem that is sort of staring us in the face. But getting our message out is still like an uphill battle.
Do you think managed health care should be instituted on a state-by-state basis than a on a national scale?
That’s a difficult question to answer. I think that the states and the federal government need to work more closely together. But behind that question is the question, is managed health care the way to go? I believe it is. I think it’s the only choice we have. But a lot of people in this country are being dragged kicking and screaming to managed care systems.
What, if any, are the objections to a Social HMO plan?
Actually it’s never our benefits. You can’t beat the price. There’s no premium, the co-payments are minimal and it has more benefits than anybody else. So they look at that and they say, “This is fabulous.” Then one of the next questions usually is, “Do I have to change doctors?” They may then say, “No, I’m going to pay more and stick with my existing doctor.”
Do employers and unions also have objections to a Social HMO-type health care system?
A lot of them don’t want to bite the bullet. A lot of corporations are pushing back and saying, “Our people really want indemnities and things like that.” But managed care is the only thing that has a good shot at really containing the cost. We are committed to making sure that quality is there . . . We want to make sure you get the medical care you need.
On why health care costs are soaring. . .
“Physicians make more money if they bring people back for more visits, procedures and tests. It doesn’t matter if they treat illnesses after they happen; they make more money that way.”
On the benefits of managed care. . .
“In a managed care system, you’re managing to get the most cost-effective use of the dollar. In a managed system, you want to prevent illnesses. “
On the limitations of Medicare benefits. . .
“Medicare doesn’t cover nearly as much as most people think it does. People think it covers long-term care. It doesn’t.”
On the government’s role in the health care crisis. . .
“The federal government needs to set the tone where you have competition and choice among managed care players, but where managed care can also thrive and do well.”
