‘Managed Care’ Bandwagon Sounds Sour to Physicians : Medicine: New system replaces traditional health delivery. Now hospital employees provide all care to big groups of patients for a flat fee. Profits depend on limiting procedures and cutting costs.
James T. Shaeffer, an orthopedic surgeon here for 18 years, figures that the patients he has sent to St. John’s Regional Health Center have paid millions of dollars of medical fees to the 736-bed nonprofit hospital operated by the Catholic Sisters of Mercy.
So Shaeffer was surprised last fall when hospital officials called him in and disclosed that St. John’s would try to buy out his practice and the practices of dozens of local physicians. Once St. John’s had established a tightly controlled network of clinics and doctors, it would sell its own “managed care” health plan to businesses, organizations and insurance companies. Doctors who did not go to work for St. John’s network would face an uncertain future.
The decision, made without consultation with most of Springfield’s independent physicians, left Shaeffer feeling “about as valued as the housekeeping staff,” he said. Now he and more than 200 other physicians have until Aug. 1 to decide whether to sell the hospital their practices, including medical records, patient lists and office assets.
Like it or not, Springfield’s medical community is being shoved aboard the fastest-moving bandwagon in the U.S. health care industry. Known as “managed care,” it replaces the traditional health delivery system, in which insurance companies paid providers for every procedure or diagnosis. In managed care, networks of hospitals and doctors, who often are hospital employees, provide all care to big groups of patients for a flat fee. Profits depend on limiting procedures and cutting costs as much as possible.
The shift to managed care, which is occurring even without health reform in Washington, has stirred similar turmoil in hundreds of medical communities around the country and led to calls by the American Medical Assn. for legislation to protect the doctors’ independence. In some regions, such as Minnesota and Southern California, managed care has affected drastically what doctors are paid and how they practice medicine.
St. John’s is offering signing bonuses and other fringe benefits and has promised not to “interfere with the exercise of independent medical judgment by physician(s).” But doctors who accept employment but quit later would face penalties of $1,000 a day if they practiced medicine within 25 miles of Springfield within two years after leaving St. John’s, according to documents obtained from sources other than Shaeffer.
Some doctors fear that if most local residents are enrolled in the health plans of St. John’s and its main rival, Cox Health Systems, there would not be enough patients left for independent physicians to treat. “Nobody knows whether they can survive outside the system,” said a doctor who asked not to be named. “The hospitals are saying, ‘Here’s your option. It’s up to you. And you’re not getting a second chance.’ ”
Spurred by health reform proposals and fear of competition from well-heeled insurance companies and HMOs (health maintenance organizations), St. John’s and Cox have been moving aggressively to dominate this changing health care landscape.
“The danger isn’t socialized medicine, it’s commercialized medicine,” said Sylvan Lee Weinberg, past president of the American College of Cardiology. “Managed care is totally controlling everything, the flow of patients and access to doctors. It’s an absolute scandal.”
Hospital officials in Springfield say their goal is efficiency and cost control, and many applaud their move. Even if Springfield ends up with only two big hospital-based networks, “It will be like having two Ford dealers: You’ll go to the one with the best deal,” said Gordon Kinney, who runs Med-Pay Inc., a local insurance firm representing 40,000 employees and dependents.
But critics question whether the two networks will leave much room for competing health plans and HMOs. They also wonder whether hospitals, with a vested interest in filling beds and using their expensive medical technology, are the best institutions to contain costs.
“An oligopoly is not going to bring the level of competition that will ensure the continuous search for lower costs and higher quality,” said J. Neal Ethridge, past chairman of the Ozarks Area Business Group on Health, a coalition of small businesses covering 36,400 employees and dependents that has tried unsuccessfully to bargain with the hospitals in the past.
The conversion of St. John’s and Cox to managed care still surprises many in Missouri. For years, both resisted the penetration of the Springfield health care market by HMOs and refused to bargain with local business groups over prices.
St. John’s, which is part of a chain of hospitals operated by the St. Louis-based Sisters of Mercy Health System, and Cox, named after the late Springfield businessman Lester E. Cox, were major beneficiaries of traditional “fee-for-service” medicine.
Doctors could order all the tests and services at the hospitals they wanted, and insurance companies would pay.
Springfield’s “Medical Mile,” running along both sides of National Avenue between Sunshine Street and Republic Road, is a kind of monument to the fee-for-service era. While the southwest Missouri economy sputtered with the rest of the country in recent years, and Zenith Corp. pulled up stakes in Springfield at a cost of 2,500 jobs in 1993, nonprofit Cox and St. John’s piled up big cash surpluses and invested tens of millions of dollars in buildings and state-of-the-art medical technology.
