There is a quiet but very active “revolution” going on in American medical delivery systems that is rapidly approaching the delineation of a national policy. Intimately connected with this revolution are issues of reimbursement and payment, competition, advertising, cost effective diagnosis and therapeutic procedures, for-profit corporations delivering health care, and prospective pricing systems, including discounting. Since many of these developments will impinge upon the practice of psychoanalysis, a traditionally solo practitioner-patient contractual arrangement, and on the education of physicians and other health care deliverers, it is important that our members become familiar with this new “capitalized medicine” which, though different from, still has many similarities to socialized medicine, about which we heard so much in the past.
Statistics indicate that there has been a significant drop in real income for physicians in the past five years. In our own discipline, we hear of the marked diminution of psychoanalytic patients or of those who can afford to pay the fees for this treatment. We are getting fewer candidate applications; there are fewer medical students going into psychiatry; and many of our psychoanalytic clinics have also reported a marked fall in their number of patients. Clearly, we are faced with concerns that cannot be ignored by our Association. Changing policies and realities require a reexamination of our organization's priorities, goals, and objectives.
The public press, newspapers and magazines, as well as the professional news reports, contain ever-increasing information about government, industrial, and insurance concerns over health care and its costs. At meetings of the Council of Medical Specialty Societies, which I recently attended, the themes were similarly related, i.e., the rapid rise of for-profit medical corporations, the increasing impact of market forces on the $360-billion health care industry, the intense competition created by a glut of physicians and hospital beds, and the forthcoming battle for revenues and patients.
A recent article in Business Week (July 25, 1983, p. 44) states: “Competition will accelerate in September, when administrators who run the nations's approximately 6,000 hospitals learn how much they will get from the government in fiscal 1984 for caring for medicare patients.” The payment schedule may be quite low. Furthermore, a new era in American medicine may be introduced with the setting of prospective reimbursement schedules and amounts for treating specific medical conditions. This may be based on the diagnosis-related groups (DRG's) classification of illness into 467 categories. Then hospital reimbursement will be determined by the average cost in nine regions of the country.
Some hospitals will suffer, but a few may benefit. Although the law relates to hospital costs and for the time being does not directly involve psychiatry, the time will soon be here when office-based practitioners in all health care fields will be affected by the new regulations. Cost effectiveness will have to be balanced with optimal diagnostic and therapeutic interventions. The marketplace may be the ultimate determinant of the price charged and received for patient care. The already existing medicare regulations are the beginning and there may eventually be DRG pricing for all care.
This is part of a growing tendency to describe an illness and its treatment in fiscal terms before therapy, with the provider considered a service person. In addition, skyrocketing hospital and medical costs are forcing a re-evaluation of many assumptions and operating premises. Competition among providers of care stimulated by comparative shopping and discounting already exists. Hospitals, HMO's, medical schools, nursing homes, clinics, group practices, as well as individual practitioners will be affected. Business Week indicates that a radically restructured U.S. hospital system is emerging. This restructuring will involve all of us—clinicians, educators, researchers, and administrators. Some experts at the Council of Medical Specialty Societies believe that the era of the solo office-based practitioner is over.
Business Week notes changes in the following specific areas:
Hospitals paid on the basis of diagnosed illness will accelerate diversification of health care alternatives, i.e., clinics, home programs, cheaper ways of getting assistance.
Chains already run one-third of the hospitals in this country. Investor-owned systems account for this proliferation. By 1990, 90% of the nation's hospitals will have new national or regional affiliations. We know that many solo practitioners are incorporated, but this solo corporate situation may also be altered. Harvard Medical School recently considered seriously, but then voted against, the acquisition of McLean Hospital by the Hospital Corporation of America. This corporation, however, is the largest private operator of hospitals in the United States. Founded in 1968, it now manages over 350 general hospitals and 24 psychiatric hospitals and has recently entered into an agreement with Vanderbilt Medical School to build and operate a psychiatric center for children and adolescents.
Insitutions will have to reorganize and restaff as they prepare for a new
cost-sensitive environment. This involves establishing or strengthening already existing marketing, advertising, and planning departments. Planning will focus on short-term, intermediate, and long-range contingencies. In other words, business procedures and approaches will become necessary for educational institutions and specialty organizations in order to successfully compete, survive, and expand. Pressures for change have been building up over the past decade. In the past I have attempted to alert our Association to some of these. Now I wish to bring to your attention additional issues which face us. The withdrawal of insurance coverage for psychoanalysis is one indication of what has emerged. The prospective payment plan with its DRG cost caps, the preferred provider organizations, the increasing competition interprofessionally, interspecialty, and intraprofessionally at all levels also becomes an increasing reality. Many will be hurt economically and professionally unless changes can be made now.
Approved advertising will further intensify competition. Already hospitals are using various systems to identify all costs, and their administrators require constant and detailed records from all clinicians. Record librarians, using computer technology, can identify money-losing services and some of these will be weeded out. Hospitals and also reimbursing agencies will monitor medical personnel. How one practices, outcomes of therapeutic interventions, costs for care will be considered in assessing a physician, his or her professional profile, and whether to continue on with his or her contract or employment status.
New reimbursement patterns that emphasize cost effective treatment by reducing the cost of care and “paying for diagnosis” rather than treatment are already here.
Trained administrators and careful records will be crucial for effective organizational functioning at all levels. Organizations will have to change in the light of these developments.
Events have moved very rapidly. The new legislation was passed by the Congress and became law in only four months! In Business Week (p. 47), Dr. W. C. Mohlenbrock emphasizes the importance of keeping medical records that indicate costs. He further states, “If you can give physicians a method of measuring the severity of illness, they will have a tool for self-monitoring. If a hospital has that tool, it can determine which physicians are cost-effective and which are not.” If they are not, the implication is clear of what comes next. All of these developments may be offensive to us, but they cannot be ignored by us. Our institutes, our societies, our associations will be affected by these developments in medicine. We may learn to apply management, planning, advertising, and marketing techniques that are used successfully in the business world. We are there already, particularly for those colleagues who have for-profit corporations or participate in Keogh plans. I am suggesting that our organizations also be involved in marketing, advertising, planning, and competition
We are involved with scientific, clinical, professional, educational, and ethical issues. We should also consider issues of recruitment, advertising, merchandising, and socioeconomic-governmental influences.
issues. In this way we can preserve some of our independence and our viability.
As an association we are involved with scientific, clinical, professional, educational, and ethical issues. Although it may be onerous to some, we should also consider issues of recruitment, advertising, merchandising, and socioeconomic-governmental influences. We should establish means of communicating the latest trends and actions to our members, our societies, our institutes, and our students. The rising average age of Americans, the greater wish for treatment and knowledge of preventative measures, the increased communication to all citizens in the press, television, and radio, guarantee the continued demand for high level, efficient, and cost-manageable care. We can, we should, be willing to talk about such issues. They are realities that need attention now.
Competition at all levels will be emphasized even more than has been the case so far. For instance, Preferred Provider Organizations (PPO's) competing with each other for HMO contracts are already realities. This involves discounting and “selling” the services of the provider group.
The “doctor business” has always been competitive. This begins with premed courses in college and now extends throughout one's professional career. Medicine has been a small business, derived from the European guild system. It is now becoming big business. By controlling access with systems of licensure and credentializing, as well as internally enforced codes of standards and ethics, competition within the profession has been controlled. However, cost and economic challenges involving government, industry, and insurance carriers are changing this situation and the changes are and will be profound and long-lasting.
A new and profound change requires a re-examination of existing policies, procedures, and participations. Some in the profession may deny these assertions and become outraged that physicians can be viewed as anything but autonomous professionals, accountable only to the profession itself and regulated only by the patient-physician relationship contract and by the specifics of medical licensure. This may no longer be the situation. Membership requirements in professional societies as a means of controlling the behavior of the profession's membership may be eroding away, especially as the cost of such memberships increase and if there are no tangible returns to the members.
Medical service previously was structured around the solo/partnership practice of medicine in the mode of a cottage industry. But competition with larger health care organizations in a capital market of limited resources makes this a questionable mode for the future.
Health care consumers will change their source of this care as costs for such care increase. The individual provider may find a reduced demand for his or her services. This decreased demand for services will reflect itself in less income, more “available time” that is unfilled, and a general sense of threat and dissatisfaction. The “seller's market” will become a “buyer's market.” This, of course, has already and will in the future affect psychoanalysis, psychoanalysts, psychoanalytic institutions and organizations, and the number of younger individuals who may choose not to become psychoanalysts or even physicians.
Because this rapidly changing situation will and has affected our student population, our patient availability, our membership participation, and the future of our Association, we should begin planning for change now. If we do not, it may be too late when we finally decide to do something. By then we may have become an endangered species.