Why Did the Cost of healthcare Become So Inflated? #2

When the government Medicare managers noted that the cost of healthcare was rising far above the levels they had originally projected (as pointed out in the previous article) they again erred in their diagnosis by blaming physicians, not the free access model they had invented: Thus they set about to curb those rises by bringing Health Maintenance Organizations-HMOs into play. The Nixon administration had looked at the Kaiser-Permanente model and noted efficiency, favorable patient outcomes and cost savings. What they failed to perceive however, was the fact that the administrators were following the sage advice of their physicians; a bottom up approach, rather than a top down method where a lot of administrators who knew nothing about the practice of medicine were calling the shots; the model currently followed by all HMOs today.
As a result the present, Nixonian, multilayer of bureaucratic control provided by insurance companies began to tell us doctors how and when to treat our patients and to selectively assign physicians to their panel of providers who kept the rules established by the HMO and who willingly acquiesced to their reduced reimbursements. Those organizations began to practice medicine by telling physicians when and if they could admit patients and when they should be discharged. They were allegedly doing that to lower the cost of healthcare while at the same time they were paying their CEOs huge salaries. I.e. the CEO of United Healthcare was drawing an annual salary of $250 million while continually reducing physician reimbursement and curtailing patient access to proper care. It is little wonder that 25% of every dollar paid to an HMO by a private citizen or his/her employer for health coverage goes into paying the HMOs exorbitant administrative costs.

If the CEO is paid such an excessive salary, it stands to reason that the middle managers must also be grossly over indulged financially. The bureaucratic layers beneath those middle managers are also running up the cost of managed care. Those strata include one for secretarial staff hired who handle the tons of paper work generated by the HMO and returned by physicians, one tier to hold the call screeners who receive physician’s calls asking permission to treat their patients and another level that includes nurses who screen calls for permission to perform diagnostic studies or admit one of the HMOs clients to a hospital if the first layer of non-professionals (clerical workers) cannot handle the physician’s appeal. Finally there is that layer of nurses who visit physicians offices, checking patient files for what they deem as errors in judgment, ordering what in the nurses’ minds are unnecessary diagnostics, noting patient outcomes and criticizing physicians who have failed to initial lab and X-ray reports, even if the file clearly shows that the abnormalities in those reports were addressed in further studies or treatments regardless of the lack of initialing.

Ever since the inception of HMOs, the premiums for healthcare have risen insidiously and predictably, while the reimbursement to physicians, ancillary lab and X-ray facilities and hospitals has steadily declined. It is no secret that the difference between what is paid to those treating the populace and those who manage those who perform the treatments, is a remarkable improvement in the bottom line of the HMOs. Eliminate the HMOs and the cost of medical care will drop like a rock in a vacuum.