Have a Marketing Degree? 'You Should Live and Be Well': Managed Care 101 in 2010 (Part VII)

If the marketing degree does not qualify one to manipulate the health care offering (that is, the benefit package) to the point that people cannot get the care they need , then what about those MD's with MBA's who are running mega health plans? jgk

From Gilbert R (an academic group's health care executive)

Oh, you mean: the Bill McGuire, MD's who ran United? The Norm Payson, MD's who ran Oxford? The Jack Rowe, MD's who ran Aetna? They should only live and be well.

The issue is not MBAs but the basic responsibilities of all business, profit or not-for-profit to take care of the intuition's needs, with no responsibility for the community. Hence hospitals, many run by physicians are no better at dealing with community needs than those run by MBAs. Another way of looking at this conflict of purpose is the expansion of services not needed in a community, accomplished at the expense of community clinics. As the hospital MD-CEO said, 'there is no mission without margin.'

Perhaps there should be a community health index or report card that recognizes, rates and rewards the hospital's direct and indirect impact on the health of the community it serves. (Or does this sound too much like population-based capitation?) jgk

And if insurance adds nothing (and in no way is this to excuse excesses in to administrative costs), then why do they exist? Surely the for-profit ones never should have been able to capture market share from their non-for-profit competition, were it not for the failings of the latter and the former's superior marketing and advertising.

On October 11, 2008 at 3:04 PM, Fredrick H. (MD, PhD, JD) wrote:

You are absolutely right - MDs who become administrators are no better or more compassionate than MBAs. There is some kind of self-aggrandizing institutional imperative that can overtake ANY organization. Many (most?) "non-profit" organizations turn into personal fiefdoms of the leaders. The members of the College of Cardinals and the Central Committee of the Communist Party live(d) like Princes. What excuse is there for the head of the Red Cross to be paid $1 Million/year? (And this was back in the day when it was Elizabeth Dole. It's probably higher now.)

However, one advantage of a non-profit is that it's easier to enforce policies of openness, if government has the will to do so. Increased oversight is mandatory.

You say that the reason that for-profit HMOs superseded non-profits "was not better marketing and advertising." I'm afraid I'd need more than your say so to believe that.

From Gilbert R

If business is as mercantile/greedy as you describe, they you must believe that their decisions are solely financial. And if solely financial, then for-profit HMOs had to offer more in benefits or lower rates than not-for-profits for these companies to replace their health plans with those of unknown entities.

Having built one of those evil entities, that is exactly what happened. We offered more benefits and lower prices than existed in the market, even against BC/BS plans with 50+ years of not-for-profit positioning. The business decision to change was based on price and benefits, and for more than a token difference of 5-10%. Moreover, had BC/BS been interested in the cost of their product and did something about it, the HMOs would never have had a market opportunity.

Not-for-profits are no different in their conduct than any business; survival of the business is what their leadership is paid to do, and they are rewarded accordingly. It is the very rare exception when the CEO of a hospital that isn't fulfilling the core mission is prescient enough to radically change the organization or propose its closure and replace it with services more needed in their community. Rare as they are, how much are those CEOs worth?

The typical CEO largely controls their Boards and the information these bodies receive is tailored to support the CEO's position. Few board members invest the time into learning the business or challenging the CEO, unless the organization is in trouble. If the mission is to run a successful hospital, and that is how the CEO is rewarded, then that is what actions will be taken; good for healthcare,--who cares? Good for the community--who cares? Protect incompetent MDs because they are large admitters, add services that produce profits, and reduce those that the community needs that are losers—that's what they do best.

I find it interesting every year to watch the annual N.Y. State budget debates on hospital funding. Hospitals - you cut the money quality will go down and our ERs will have to close/be reduced/long waits, nothing said about the duplicative cardiac programs under utilized in the same community, or that cosmetic surgery program that is expanding.

If you want health, pay for health; if you want medical services, pay for those. You get what you pay for.

Is there an analogy with the Auto industry's big mucky-mucks? In terms of health care, will Single Payer solve these problems of confused priorities and personal profits before patients?