Managed care has been good medicine;

we don’t need micromanaged care

WILLIAM H. GRUBER

and DAVID S. ROSENTHAL*

The recent budget accord calls for a reduction in federal payment for Medicare and Medicaid by more than $100 billion The government is mandating a reduction in payments for medical services even as it launches legislation and regulations that will increase the cost of health care and divert the, attention of’ physicians, hospital, and managed-care administrators from their efforts to improve quality and productivity in the delivery of health care.

Here’s the catch: Although there are imperfections in delivery, government actions may have a higher cost than benefit. This is not to say that some problems can’t be corrected by the government. For example, the Child Health Insurance and Lower Deficit Act would provide health insurance for 10 million uninsured children by levying a 67-percent federal tax or cigarettes. This would improve the health care of children while lowering the health costs of smoking.

In the mounting criticism of health care, how can we focus on constructive government actions while rejecting microregulation of health care that is likely to have a high cost-to-benefit ratio?

Managed care and the consolidation of hospitals have been the target of many complaints about health care delivery. The causal force in the health care revolution was the three decades of health cost inflation that raised spending from 6 to 14 percent of GDP. Efforts to curb this did not begin with managed care but with the federal government’s initial efforts to control costs and reduce variability in payments with diagnostic-related groups in 1983.

Efforts to reduce cost occur in both managed care and fee-for-service medicine. But higher quality care and more-effective cost control are more likely to be achieved in an integrated health system with managed-care incentives to provide appropriate care rather fees for service, which create incentives based on the amount of care provided. Managed-care plans have the information systems and the resources to measure the quality of care and develop practices to assure that higher standards of care e achieved than were available under the old paradigm of individual physician fees.

That is why the backlash of proposed legislation and regulation against integrated health systems and managed care should be evaluated in the larger context of societal and health care problems created by the old paradigm of fee-for-service medicine. Prior to managed care there was virtually no way to track quality in such settings as clinics and physician offices.

Despite some media coverage to the contrary, history will likely prove that there is no conflict between higher quality and lower Cost inflation. More-effective screening and preventive care in the health system as a result of managed care will be an important factor in how higher quality achieves lower cost. Overall, the control of runaway inflation in health costs achieved in the last few years has occurred at a time of remarkable improvement in programs to measure and improve the quality of health care in managed-care practices.

What about the wave of government proposals to regulate health care that have been fueled by vivid stories of patients hurt by managed care? A much stronger case could be made with equally vivid stories about the problems created by the high cost inflation and low quality control in fee-for-service medicine. The serious problems of the old system and the high potential benefits from the integrated health system with managed care and effective scale of operations with consolidation among hospitals should he paramount in the minds of politicians who advocate the micromanagement of the delivery of health care.

Integrated health care systems an managed-care organizations in the Boston area are working effectively to improve quality of care even as we control cost inflation. For example, at Harvard University Health Services, the health service for students and an HMO for faculty and staff, we are investing in improved care with guidelines, medical delivery teams, and information systems that are strengthening the continuity of care.

The primary goal of a higher investment in information technology is to create high-quality clinical systems, such as the electronic patient medical record. Replacing the frequently illegible and inaccessible medical records of fee-for-service medicine with a computer-based medical record is now part of the trend toward the integrated health system and managed care.

So how do we support needed reform in health care and reject any high cost to benefit proposals? First, we must be wary of any proposed micromanagement regulation. Second, we must continue the rapid rate of progress in higher quality and lower cost. Third, we must address the serious gaps of access. If we achieve these goals, we will have high quality and affordable health care.

*William H. Gruber is chief information officer at Harvard Risk Management Foundation. Dr. David S. Rosenthal is director of Harvard University Health Services and a professor of medicine at Harvard Medical School.

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