Section 5 - Portrait of a modern HMO 

     The meaning of the Gekkonian era

While acknowledging that the demise we’ve just predicted for the Gekkonians may be a bit premature, let’s examine their accomplishments over the past few years. 

On the positive side, the Gekkonians have focused the attention of everyone within the health care system squarely on the issue of costs.  Today, in any health care organization, no purchase of any sizeable item is made without first carefully considering how badly the item is needed, calculating the full cost of ownership, and defining clearly who will pay for the expanded services made possible by the new item.  This is a fairly radical departure from just a few years ago, when hospitals often purchased high-cost equipment of marginal value just to keep up with the rivals across town. 

Similarly, the fiscal pressures brought to bear on health care providers by the Gekkonians have resulted in many new efficiencies. This is because, when hospitals and doctors are squeezed financially, not all the cutbacks they make are in useful or worthwhile services.  A lot of wasteful endeavors are cut too. In fact (despite perceptions to the contrary), when providers are forced to cut back, they usually try preferentially to eliminate the inefficiencies.

Further, it’s not just the for-profits that are growing bigger in order to take advantage of the economies of scale – the non-profits are learning the fine art of merger and/or cooperation as well.  The general prospect of having to compete in the marketplace with the profit-mongers has made the remaining non-profit HMOs (which still account for approximately one-third of all HMOs) much more fiscally fit.  (The imperative for non-profits to behave like for-profits extends beyond merely having to compete with them for enrollees.  These days, non-profits must raise most of their funds not through community charity, but through the bond market.  And pleasing the bond market is very much akin to pleasing shareholders.)

So the Gekkonians have driven our health care system to become leaner, meaner, and more in fighting trim than we’ve ever seen it before.  We eventually would have made the same strides without the Gekkonians, of course, but it probably would have taken much longer.

On the negative side, Gekkonians have greatly expanded our capacity for covertly rationing health care.

It has been argued by several commentators that, despite the perfidies of modern managed care, egregious examples of rationing (i.e., providers blatantly withholding obviously needed health care) are still relatively rare.  I generally agree with this observation, but disagree with its implication.  Just because rationing is still practiced mainly on the margins, where it’s difficult to recognize, doesn’t mean that it isn’t significant. Besides, the economic pressures for rationing, as we have seen, are just beginning to build. The problem with the Gekkonian way of life is not so much that it already has caused egregious rationing to become rampant, but that it has caused us to abandon the principles that would prevent such egregious rationing.

I'm talking, of course, about the primacy of the individual.  Under the Gekkonian paradigm our resistance to violating this first principle has been significantly reduced.  This fact is best illustrated by looking at what we have already allowed to happen to the doctor-patient relationship.

Destroying that relationship was a requirement for Gekko; it was his number one priority. His basic operating rule, in fact, was that if you control the patients, you control the doctors; and his 18 month plan was designed to accomplish just that. The moment Gekko controlled the flow of patients, he himself replaced those patients as the doctors’ chief customer.  The doctors instantaneously became obligated to Gekko, just as Gekko was obligated to his shareholders.  And all the “gag clause” did at that point was to rub the doctors noses in the new reality.  Gag clause or no gag clause, Gekko owned them.

The patients themselves have not been entirely innocent victims of the carnage.  They had a choice to make, too, and they made it.  As health care expert David Mechanic has said,

“Enrollment in an HMO is really an agreement between the enrollee and the plan to accept a situation of “constructive rationing”. . . .For a lower premium, more comprehensive benefits, or both, the consumer implicitly agrees to accept the plan’s judgment as to what services are necessary.” Mechanic D. Trust and informed consent to rationing. The Milbank Quarterly. 1994;72:217.

Patients may not realize at a conscious level that they’ve made this implicit agreement, but we can be sure that the health care economists, academics, and HMO directors all realize it. And accordingly, patients and their health have become fair game.

So what’s happened here?  What’s happened is that both patients and doctors have allowed themselves to be shunted aside. The individual doctor and individual patient, together, no longer comprise the basic nuclear unit of health care.  Doctors and patients have been separated from one another; separated and marginalized, reduced to ciphers.  They have become mere commodities in the vast health care marketplace. 

And when a commodities trader is dealing in pork bellies, she’s only concerned about buying, selling and thus maximizing her profit on large quantities of pork bellies.  Concern for the careful handling of the individual pig never crosses her mind.

The change in focus from the individual to the group is more than just tacit.  While most professional codes of ethics and legal doctrine still hold the physician’s primary responsibility to be a fiduciary one to his or her patient, many health care experts and even ethicists are now explicitly proposing that this ideal be changed.  For instance, a 1998 article in the Annals of Internal Medicine had this to say about the physician’s traditional fiduciary role:

“It is untenable for the medical profession to continue asserting an idealistic ethic that is contradicted so openly in clinical practice. . . . We propose that devotion to the best medical interests of each individual patient be replaced with an ethic of devotion to the best medical interests of the group for which the physician is personally responsible.” Hall MA, Berenson RA. Ethical practice in managed care. Annals of Internal Medicine. 1998;128:395.

So, it would appear, sticking to ethical principles is supposed to be easy.  If it becomes difficult, you’ve got to get yourself some new principles.

When (if) the Gekkonians withdraw from the field, they will leave both us and our health care system very different from the way they found it.  They will leave us more cost-aware, more efficient, and less wasteful.

Next: Section 6 - The Clintonians strike back

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