Here's to your health - Clinton Administration's healthcare policy

Changes in the wind

While President Clinton has the nation speculating about what form his healthcare proposal may finally take, those in New Mexico's healthcare industry know one thing for certain.

They need to prepare for change.

A universal access system based on some type of managed competition model is a highly probable outcome of the plan, aside from the other details that may emerge.

And no matter how watered down the reform package might get in the end, many feel their institutions will be doing more for less by the time reform takes hold.

Giving everyone access to health care while cutting costs will not be cheap. The healthcare system overhaul may move slowly and be phased in over several years, but chances are the industry will begin changing in the next 24 months.

Hospitals have been unable to do any real strategic planning with the exception of preparing for some basic healthcare reform ideas that are considered a sure thing.

Those concepts include a movement away from specialty care into primary care and preventative medicine. According to the National Center of Health Statistics, 12 percent of the nation's poor used a hospital emergency room for primary medical care.

A typical scenario that should change with reforms, whether they be through managed competition or single payer, is a hapless situation where a person falls ill, but can't afford either his insurance deductible or the 150-mile trip to find a doctor on his insurance plan.

In those instances, the sick may stall treatment until finally having to go to an emergency room where the cost for care doubles or triples after the staff administers test after test to find out what's wrong.

Maybe the hospital eats the cost, maybe the insurance company does, or maybe the patient does.

"Actually, I think it (reforms) can be done," says Tom Sloan, executive director of planning at University Hospital in Albuquerque. "But I think it'll take time, and to a degree it will be difficult because like anything else, there are special interests."

There is much money to be made in healthcare, and that system of profit-making will -- if Clinton gets what he wants -- change.

The system is geared toward taking care of sick people; some doctors say we should call it "sick-care" instead of healthcare.

Specialty care is where the money is; hospitals make money when a patient is hospitalized, and the payment mechanisms support specialty care.

With an emphasis on preventative medicine and primary care, where people may have regular access to physicians to stay well so they don't have to get well, there are unanswered questions as to how Americans will pay for it.

How the reforms will affect the quality of healthcare and research are other unanswered questions. And hospitals want to know where the incentives will be to encourage more primary care doctors.

Estimates to cover the 35 million to 37 million uninsured Americans have been anywhere from $50 billion to $90 billion or more.

Some of the financing ideas include a 7 percent to 9 percent employer payroll tax and a 3 percent employee payroll tax that could generate $34 billion or more annually.

Other ideas Clinton has considered include a tax on hospitals (provider tax) and more "sin" taxes on alcohol or tobacco.

The President's task force has suggested it may recommend a health alliance be created in each state to determine the payroll tax based on a state's health costs.

"The feedback I'm getting from New Mexicans will be very helpful when the Congress tries to transform the President's plan into a workable legislative package," says U.S. Sen. Jeff Bingaman, D-NM.

"It will be difficult to come up with a plan that satisfies everyone," says Bingaman, "but top concerns should be the plan's impact on small businesses and the fairness of access to affordable care among rural and urban states."

Bingaman has held several health care forums around the state, fielding questions from those in the industry and small employers who fear they will be forced into another burdensome bureaucracy and tax structure.

"I advise that every practice and every hospital be current on the present regulations and what's happening," says Annique M. Malm, president and founder of Healthcare Business Solutions Inc., an Albuquerque consulting firm.

Malm says hospitals need to be aware and educated on Medicaid and Medicare laws and regulations, especially since a single payer system has been talked about and could be modeled after Medicare or Medicaid.

The single payer system would be a combination of the single payer and managed competition models, where money could be collected to finance managed competition and provide medical services depending on an area's needs.

A lot fear a red tape nightmare and an evolution into Canadian-style health care.

"Run efficiently, keep overhead and costs down," Malm warns. "If you're ignorant right now about state and federal regulations, it's going to be a very tough transition."

The basic components of managed competition are organized medical groups, quality improvement measures and value comparisons of products (doctors and hospitals).

Managed competition encourages doctors and hospitals to compete on quality and cost through a centralized network. The idea is to use the government to restructure the system, not run it, and aims at creating private health plans that assure a complete benefit package that can't be canceled.

Although insurance companies are complaining about many of the reform ideas, the health maintenance organizations (HMOS) could stand to benefit from this model, and doctors would likely be members of more than one plan with patients having more choices than they do now.

"We're really going to see a national plan and some state plans that will rely on the managed competition model," says Larry Bridge, regional vice president for FHP of New Mexico. "I see an environment similar to what we're in, but more intense because of the competition."

Many HMO and PPO executives feel employer mandates will come out of the reform over a long period.

"Business people I talk to these days are feeling tense about healthcare reform," says Michael Mayer, executive director of Qual-Med Inc. "Everyone thought we'd know more about the specifics of the plan by now. It's hell not knowing."

Managed competition already exists in Albuquerque to some degree, with the more than 1,500 doctors and nine hospitals catering to a market that is penetrated nearly 75 percent by managed care plans.

The competition has forced prices down, and Mayer says that managed care has been proven to satisfy physicians, patients and employers in terms of quality of service, care and cost.

According to the Health Care Leadership Council, a Washington, D.C., based group representing various industry players, the average cost of a hospital admission in Albuquerque is 17 percent lower than the national average, with the average cost of providing benefits to Albuquerque's employees $600 less per employee than the national average.

Las Cruces has benefited from the competition with all four health systems available to the city now, and these systems are expanding into other areas of the state.

But hospitals in more rural settings are concerned with how a managed competition plan will work for them. It may work in Albuquerque, but New Mexico is a large, mostly rural state with limited resources.

"The concept of networking and individual regions falling into groups, and when you start talking about managed competition, it's difficult to have managed competition when there isn't any competition," says Dr. Orson Treloar, vice president of medical affairs at Eastern New Mexico Medical Center in Roswell.

"We're 200 miles from any place," says Treloar. "That means that if they come up with guidelines that you have to have managed competition, it's going to be difficult for all regional areas to meet those demands.

"I think that's what his (Clinton's) proposal will be," says Treloar. "We're a rural community here in Roswell, and we're a small regional referral center, and managed competition will be a very difficult process to initiate in rural areas such as ours."

Eastern New Mexico Medical Center, like many rural hospitals, is locked into receiving subsidies because of the large indigent population and low commercial base.

How does a hospital in Roswell or Socorro recruit physicians when those professionals can double their money by taking a job in some other city or state?

Government intervention is likely to address this issue, and incentives are needed to attract doctors, say experts.

"That's going to be more and more difficult," Treloar says. "We're doing some planning with our physicians to get into a more cooperative status.

"We're trying to remain economically viable, and if hospitals and doctors can bargain as a unit, it can be much more effective.

"My personal philosophy is I think nothing we do with healthcare is going to improve the situation until we as a nation realize we have to ration healthcare.

"You can't spend 50 percent of the Medicaid dollar in the last six months of life trying to keep people alive indefinitely," says Treloar. "You can't spend that amount trying to keep kids born very prematurely alive. Someplace we have to decide what our priorities are for who gets treatment and who doesn't. That's the only way we will ever begin to change health care."

Home healthcare programs and hospices are considered one alternative to reducing costs.

Partly in response to the rural dilemma, a concept that has been talked about is the state 'flex' plan, which would give states various options to respond to individual needs based on federal guidelines.

Some hospital administrators don't think the state should be involved at all because the state's resources are limited enough, but many insurance carriers, HMOs and employers would like to see some state involvement.

Allowing state flexibility may also be politically expedient for President Clinton when Congress tackles the proposal.

State flexibility may allow a state to form a single payer system, while another state may choose managed competition. It's difficult, though, to plan or lobby for anything when no concrete plan is on the table.

University Hospital's position is unique, in that as far as Albuquerque's competitiveness, the hospital is not as well equipped.

Clinton is considering taking money now earmarked for hospitals that service large numbers of low income patients under Medicare and Medicaid to finance care for the uninsured.

"We're in the process of trying to do some strategic planning on what might happen in health care, but until we see what is actually coming down, we're not sure what to do," Sloan says.

E. David Grenham is a Belen newsman and freelance writer.

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