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But four years after President Clinton's announcement, reform in health care has come not from the
government, but from the free market and the controversial forces of managed care.
Thank you for calling Health Net, this is Joanne, how may I help you?
Managed care as a concept is unassailable.
This medication is currently not a covered benefit under your plan.
Here's the reality guys, we've got X number of dollars.
But doctors and nurses say they've been pushed too far.
For two years we've been struggling to get him approval from his insurance company to
be paid for heart transplantation and they have come up with one objection after another.
In fact, when we talk about managed care, we are talking about managing money and rationing
the care.
It's a relatively simplistic equation.
If you want our business, you'll have to listen to us.
This field of medicine, which is the best the world has to offer, is now trying to be
bargain basement medicine.
It's a discount store.
I had to make a change and get out before something bad happened because it's not a
matter of if, it's a matter of when.
Ralph Holmes is a surgeon at the University of California Medical Center in San Diego.
He specializes in rare birth defects in children.
There are only about 150 cases of these reported in the world's literature.
So you're looking at something you don't see very often.
Often cases at the cutting edge of medicine, whose treatments are costly and sometimes
untested.
We need to come up with a plan how we're going to take care of this.
This little boy was born with tumors all over his body that threatened his life.
Which ones are they going to be treating later today?
Are they going to be working on some of these down here?
The largest of the tumors has been removed, but he is left with tiny black lesions that
could spread and interfere with his ability to walk.
His doctors wanted to treat the spots with lasers, but the boy belongs to NHMO.
They had a switch at my managed care.
They did determine that some of the spots that appear on his skin were cosmetic.
And it's part of the disease, it's not cosmetic.
Managed care doesn't want to look at what may be harmful to his health five or ten years
from now.
And if you can defer something and have somebody else take care of the cost, that's the business
mentality that prevails now.
San Diego, where UCSD is located, has been seen as a symbol of where health care in the
rest of the country could be headed.
It is one of the nation's most aggressive managed care markets, with a handful of HMOs,
most of them for profit, controlling health care for the majority of the county's population.
And for many of San Diego's doctors, this means that for the first time, they are being
told no.
No, you can't do this.
It's too expensive.
No, you can't use that medication because it's not on the formulary for this particular
HMO.
No, you can't put that device in because that costs too much, go with something that is
cheaper.
It has become a middle manager between the doctor and the patient.
And that's made life quite difficult.
Physicians are constantly defending their patients from having to have less and less
done for them.
I couldn't just leave him stranded, I had to find him.
Under pressure from this boy's family and his doctors, his laser treatments were approved,
but for one year only.
Managed care doesn't like to have people around like me because I'm a user of resources.
And they only want people that are conservers of resources.
There is this contentiousness between me and the people who hold the purse strings.
And I know that they don't like me.
Portland.
Portland is here.
Connecticut.
Good afternoon, gentlemen.
Every week, 15 cities across the country are linked by teleconference to the Colorado headquarters
of Foundation Health Systems, one of the nation's largest HMOs.
This happened with the prior pregnancy in 1995.
Do you know which hospital that happened, why didn't they pick this up?
Malik Hassan is the company's CEO and one of medicine's new power brokers.
We're seeing the decisions doctors are making all over the country, with a strict eye on
the bottom line.
We were actually called the doctor, tried to get the doctor to discharge the patient
and the doctor refused.
Is there any treatment which is required as a maintenance as a part of the diagnosis?
Let's face it, we have a limited amount of resources and we do not have the luxury of
frittering away those resources on wild goose chases, and the winner is the consumer.
And after one is through with hand drinking and whining, isn't that what free markets
are all about?
And if you change your attitude, we are unwilling to sit down and talk to you.
Wall Street Journal reporter George Anders profiled Hassan for his book on the HMO industry.
Hassan is brilliant, dead certain of his own virtue, bullying when he needs to be, charming
when he thinks that can be helpful, and unabashedly proud of how rich he is.
Hassan started out as a practicing physician and says in his heart he still is one.
If I'm traveling the plane and somebody in the next seat asks me what do you do, instinctively
my response is I'm a physician.
It never comes out I'm a CEO or chairman of a company because that's not my identification.
He made his first few million as a neurologist in private practice in Colorado.
He was one of the most dedicated, aggressive, hands on doctors driving from town to town
looking for more patients and bringing them in for diagnostic tests.
In fact the federal government at one time asked questions about why he was ordering
up so many tests.
But once he got into managed care he switched to the exact opposite extreme.
Today with over eight billion dollars in revenues, Hassan's company is one of the largest HMOs
in the nation and still growing.
This is the jewel in the company's empire, Healthnet.
It controls medical care for over two million patients in California alone.
Every day thousands of calls from doctors and patients pour into these offices to be
fielded by Healthnet's customer service representatives.
This medication is currently not a covered benefit under your plan.
You know what doctor you want to change to?
Doing good things in you.
This is our operations manual, this is basically our Bible.
This has all the information about everything that we need here at Healthnet.
Work under durable medical equipment.
These are the limitations.
Infertility services would be covered at 50 percent, chemotherapy would be covered with
no co-payment.
The same way that Sears can go to a clothing manufacturer and say you know we'll buy ten
million sweaters but we want a good price, a health maintenance organization can go to
a hospital and say we're potentially 15 or 20 percent of all your admissions, we want
a good price.
Chest and foot orthotics incorporated into a cast brace or strapping of the foot.
They don't have coverage for it.
Hearing aids are not a covered benefit.
It became a relatively simplistic equation.
If you want our business you'll have to listen to us.
And at some point practically every institution decided that they needed that business.
And whether they liked to listen at that time or not, they had to listen.
There were few places less prepared to listen than UCSD Medical Center in San Diego.
The city's teaching hospital and the Tiffany of its medical care.
It's here that elite doctors train the next generation of physicians and pioneer advanced
medical treatments.
For years these doctors were privileged enough to ignore the pressures of cost, free to concentrate
solely on their patients.
The operation we're doing today is a lady from Tennessee with quite an unusual condition.
She's got clots very deep in the lung.
Dr. Stuart Jameson is by far the highest paid surgeon at UCSD with a salary of $500,000
a year.
That's because he brings the hospital a great deal of business.
He's a world pioneer in heart and lung transplants.
If the circulation to your brain stops for more than three minutes, then you won't recover.
And we stop the circulation for over 20 minutes at a time.
The only way we can do that is to cool these people down so much that we put them in suspended
animation.
Scott, you want to help us?
Most heart surgeons have at least a 25% mortality for this operation.
Our success rate is over 95%.
I mean, my personal experience of this operation is way more than every other surgeon in history
in the world.
But despite the doctor's skill, operations like this one, which costs about $80,000,
are becoming harder and harder to do at UCSD.
An HMO doesn't recognize that one doctor has a special skill over another doctor.
There's no allowance made by the HMO for the fact that this person is getting operated
on by the professor with a national reputation versus this patient is being operated on by
Dr. Smith, who may be just out of his training.
It makes no difference to them.
So we have to directly compete.
This contract would bring with it a lot of the straightforward routine cases that everybody
else is doing.
Dr. Jameson may be the best in the world at what he does, but these days he has to peddle
his wares.
Just how low do you think we can bid on this?
The small number of HMOs that have a lock on the San Diego market are looking for the
doctors who offer their services at the lowest price.
A large part of my day is spent negotiating with the hospital, with my other colleagues,
just how low can we go?
We can come in at maybe a 60 percent discount of what we normally charge just because of
the volume of work that would be involved.
Every week, the chairs of UCSD's nine divisions of surgery meet.
Whatever else is on the agenda, invariably their talk turns to the crisis their hospital
is facing.
We try to cut things to the bone, as all of you have.
We've cut out, really, a lot of the testing that we used to do.
I think that it's going to be a tough time.
We've cut all of the fat out of our operating budget, as you know.
For the first time, these doctors say, the thing they do best, caring for the sickest,
is putting their financial survival in jeopardy.
It's a real irony, isn't it?
We didn't train to take care of well people.
One thing that I have found particularly disturbing is that the residents now focus on the path
payment status of the patient.
Here we are talking about these things.
I never expected to worry about which insurance companies are taking care of the patient,
but that's what's happening with managed care.
We are having to educate our residents, but we don't have a...
Did I think about money back 12 years, 15 years ago?
No, I didn't.
I just thought about the patients, health and what would best serve them, and the health
insurance industry I thought was one of our allies.
So it seemed like it was a golden age of health care, not just in San Diego, but in the world.
I practiced in that golden age, and at least from my perspective, it wasn't a golden age,
it was a mixed age.
There were some good things and some bad things.
One of the bad things was that there was hardly any accountability of what the physician did.
It was an open expense account.
Managers spent, and insurance companies passed on the cost to their customers, government,
big business, and ordinary consumers.
The result, unnecessary surgeries, too many diagnostic tests, and by the 1980s, health
care costs that were spiraling out of control.
Before managed care, the business community and the United States government had surrendered
to doctors and hospitals the key to their treasuries.
And they told these doctors and hospitals, do whatever you think is right for the patient.
Hospitals, we said, whatever your costs, we'll reimburse you with a little tip on top.
The more doctors did for you, the richer they got.
The more hospitals did for you, the longer you stayed, the richer they got.
That was the status quo.
In a health care system rewarded for doing more, UCSD was a typical offender.
As recently as five years ago, it built a lavish new facility which catered to its wealthier
patients.
It was called Thornton, but some people called it Four Seasons by the Bay.
It was built when there were already too many hospitals in the city, and it has sat largely
empty, an invitation for people like Malik Hassan looking to make their business by ringing
waste out of San Diego's hospitals.
I think if you will go and talk to the leaders in these institutions, if they are being candid
with you, after the hand-wringing and how terrible it is, I think they will acknowledge
that they are acting much more efficiently and better than what they were doing before.
Maybe it was some pain which brought that on, but it did make them better.
As in my book, efficiency ultimately decides how good or how bad you are.
That's the artistic, not that you are a legend in your own mind.
A.R.
Moussa, UCSD's Chief of Surgery, agrees.
We have a responsibility which in the past the profession had neglected some.
I know I wasn't aware of cost until the last few years, but I am making a big effort to
know about cost to be cost effective.
We all do, and we are training our residents to do so.
But I think we've gone too far to the other extreme.
In fact, when we talk about managed care, we are talking about managing money and rationing
the care.
That's basically what we are doing.
The jobs are not wired together, but there are some rubber bands.
Many doctors at UCSD say that in the HMO's race to cut costs, they have crossed a crucial
line.
Did it hurt after some of the last operations?
Which one hurt the most?
My ear.
Yeah, that really hurt a lot.
Ralph Holmes is UCSD's Chief of Plastic Surgery.
Born with malformed ears himself, Holmes does over 90% of the reconstructive surgery in San
Diego for children with birth defects of the ear.
When she sleeps, she'll hear, she'll know when you call.
But when this boy needed a new ear, Dr. Holmes was not asked to perform the surgery.
The boy's HMO sent him to one of the doctors in their plan, someone with far less experience
in doing this kind of operation.
This was the result.
I saw the ear and I was shocked because the person informed me it would be the last surgery.
And I remember my son's reaction, it looked like he was going to pass out.
And my dad saw the ear and he just, many people couldn't believe that they said it's finished.
It looked better before when he had no ear.
After letters and protests from the boy's family, the HMO agreed to refer him to a specialist
outside the plan, who redid the operation.
It's a matter of sculpture.
You have to sculpt the cartilage.
I find to make things even worse, that what Manage Care is now doing is they're asking
their plastic surgeons to recommend that these children have rubber ears made.
In other words, to drill a little hole into the bone, stick a little metal post in there
to which you could clip these rubber ears.
And the true tragedy is that once that is done, you've so scarred up that ear that they
can never, when they're older and want a real ear made out of their own tissue, they can
never have that done.
Now I'm having great difficulty climbing stairs, lifting anything.
Dave Saunders is 55 years old and wants a new heart.
It's been some time since we've been trying to get approval for your transplant and I
think we're both concerned that you might be deteriorating in that time.
For two years we've been struggling to get him approval from his insurance company to
be paid for heart transplantation and they have come up with one objection after another.
It's very frustrating.
Two and a half years since I was told I needed a heart and now my latest insurance company
says no, we're not sure he's sick enough.
We won't let you down on this issue.
You do need a heart transplant and actually it's the only thing that will save you.
It's never a question of how can we help you.
It's a question of how can we slow things up?
How can we delay it a little bit?
What other objections can we have?
Hi, I'm Dr. Holmes.
Are you in the office for authorizations?
I've heard rumors that it doesn't do any good for me to call up on a patient's behalf
because all they'll do is they'll take that file and put it at the bottom of the file
because this is a way of kind of wearing me down.
She's not absolutely convinced that this thing is benign and I can't give her 100% assurance
that it's benign either.
They have these people that are like medical assistants.
They want people that will just look at the book, look up something and then deny it.
I'm waiting for a physician please.
He has a rigid abdomen and he has an ulcer history.
I don't really know what's going on.
For doctors everywhere, a big part of the business they do nowadays is on the phone,
talking, waiting, and getting permission from HMOs.
I don't have a referral for anything that's been recent.
For HMOs, these conversations are also an important part of business.
From his Colorado headquarters, Malik Hassan personally monitors calls as they come into
his company's offices around the country.
The price of that little tube of stuff is $29.50.
You don't know what the net price will be to me?
I don't know.
It depends.
If it's a generic, it'll be $7.00.
If it's a name brand.
The smoother they run, he believes, the better his company will be.
This is one of the ways where I have direct access to what is happening so that I am comfortable.
The response time slowed down significantly from 30 seconds up to 20 to 30 minutes.
And one minute, as you realize, is unacceptable.
People sitting there, one minute is an eternity.
How did they miss that point?
I'm just getting tired of this.
In Hassan's eyes, the system doesn't breed mistakes.
People do.
Whatever shortcomings are of the managed care, those are the shortcomings of the managers
and the shortcomings of the plan.
It's not the shortcomings of the concept.
Managed care as a concept is unassailable.
And that is, you manage the care in the most efficient manner, bringing the best quality
and the lowest cost.
I don't think there's anybody who can disagree with that concept.
And the same exact thing happens.
Down on the ground, these doctors say, the concept doesn't seem to be working.
There are also cases in which people do need an operation and they're not referred.
Boy, they're referred late.
I mean, I think that the problem we see is that the patient comes later.
They are referred late to save money.
It pays the hospital, obviously, to get the patients out quickly.
The people who are most affected and don't understand it yet are the patients.
This field of medicine, which is the best the world has to offer, is now trying to be
bargain basement medicine.
It's a discount store.
People are focused exactly on cost and quantity.
Radiation therapy for cancer that ordinarily would be...
The language that is used is very telling.
We no longer talk about patients.
We talk about covered lives.
We no longer talk about doctors.
We talk about providers.
Okay, so it's a totally, totally different system in which we all got trained.
And I think the public is not very aware of what is happening.
But the public is rapidly finding out how far-reaching the impact of HMOs has become.
Perhaps the biggest change is how quickly people are sent home when they go to the hospital.
Patients are being discharged more acutely ill.
Patients are having surgeries done in outpatient facilities that used to require an overnight
stay in the hospital, mastectomies.
Women who underwent mastectomies just a few years ago had several days in the hospital.
And oftentimes that is just a one-day hospital stay now.
Mary Lou Connolly runs UCSD's home care program, which contracts with HMOs to provide visiting
nurses for people who need care outside of the hospital.
And the expectation is that there will be sophisticated care provided, either by an
agency or a family member, in the home in order to affect that early discharge.
But that's not always the case.
Doris Deutsch had severe ulcerations on her legs, which required complicated daily care.
Her HMO would only authorize four home visits by a nurse.
The rest of her care was left to her husband, Art.
I had to undress the wound and I had to de-breed it, removing scab tissues, which is painful.
If you care for somebody, it hurts you, and when you do it for two years, it starts to
take its toll.
Now, you know, it's a different story if you see somebody in bed and somebody else is doing
it to her.
It hurts you, but it doesn't hurt you as much because you're not doing it.
I become emotional.
As a nurse, I know that I would not want the responsibility that we expect some family
members to take about providing care to their loved ones.
And that's scary, too.
If I think that I couldn't handle it as a healthcare professional, then what business
do I have expecting other people who have no knowledge of healthcare to, in fact, do
what I wouldn't want to do?
The Deutsches are not an isolated case.
Around the country, state legislatures have begun passing laws requiring HMOs to pay for
longer stays in the hospital.
Can you imagine how this goddamn government has to pass a law so a woman that has a mastectomy
can stay in the hospital one more day?
Ridiculous.
When a woman has a cesarean, she can't stay in for two days, only one day?
Come on.
My wife had a hip operation.
They forced her out of the hospital for three days, and to this day, she can't walk properly.
They have everything like this, and the average person can't do a damn thing.
With patients going home faster, hospitals are increasingly filled with only the very
sick, a situation which puts more and more pressure on hospital staff.
I'd have to say the morale is poor right now, really poor.
We just don't have enough help.
We're asked to do the impossible a lot of times, and there are no reserves to draw on.
People are just strapped to the limit.
But if I left here and went anywhere else, I'm not sure that the grass would be greener.
I see the same thing happening everywhere.
As managed care sweeps the country, this is what you're going to see now.
If it hasn't hit the East Coast yet, it's coming.
It has already come.
Here on the quiet North Shore of Massachusetts, most of the HMOs are still not for profit.
But they have to compete with for-profit HMOs like Foundation Health, and as a result, hospitals
here are under just as much pressure to cut costs.
Is that the final offer from Tufts that was put forth?
Bob Fanning is the CEO of Beverly Hospital.
There's no way of moving that forward.
When we negotiate with many of the managed care plans, we have what I would term little
to no leverage.
They simply can say, look, if you don't like the terms of our contract, we can take our
contract and simply give it to one of your competing neighbors.
But all of Beverly's neighbors are having trouble managing on the reduced income HMOs
provide them.
Once there was a hospital for almost every town in this area, but today, half of them
are gone.
This office building used to be a hospital.
So did this rehab center and this supermarket.
Faced with these pressures, Fanning and his vice president, Bob Schaffner, have had to
take a tough stand to keep their hospital alive.
We're being asked to do more work, and we're being paid less.
We try to find other sources of revenue, but that's very difficult to do.
So our trick is to maintain quality of care on the one side and try to do it within the
resources that we have, that we're being paid, the revenues.
It's not an easy job.
With sicker and sicker patients in the hospital, every decision to cut costs is high stakes.
And nowhere are the decisions more difficult to make than when it comes to nursing staff.
On a scale of one to ten, with one being no pain and ten being the worst pain you've ever
had.
In hospitals like Beverly, the patient floors are almost exclusively the nurses' domain.
Doctors are in and out, but it is the nurses who man the floors 24 hours a day, and who
are often the first and last line of defense for patients.
And nurses are also one of the hospital's costliest expenses.
And so Beverly, like many hospitals around the country, has cut back.
We had a time when we had all registered nurse staffing.
And then when you stop and look at what registered nurses were doing, they were being forced
to do a lot of non-nursing activities.
We try to relieve the professional nurse of non-nursing issues and pass those off to other
kinds of workers.
The main idea is to lay as still as possible, okay?
What they did was hire less trained workers, dressed in red, called clinical associates.
At a much lower cost to Beverly, they are changing bedpans and dressings, taking EKGs,
and drawing blood.
This allows Beverly to use its nurses in a more supervisory role, giving them a heavier
workload.
It has not been a popular policy with the nursing staff.
I find that I'm being taken away from my patients more and more.
We're still trying to do the best we can for our patients in terms of providing care under
these conditions, under these cost-cutting conditions.
You know, we're asked to do more and more with less and less, basically.
Anybody have ICU numbers?
Two potential admits to monitored beds.
Beverly's new policy turns meetings like this into a tug-of-war for precious resources.
Which floors are going to have enough nurses to take care of the work today?
And which floors are going to run short?
J3 is down a half a person.
All right, so now we've got a problem.
I have to think we need to plan that we're not going to get that person.
So now let's figure out what we're going to do with what we've got.
To meet its financial targets, the hospital uses a mathematical formula called a matrix
to calculate the minimum number of nurses necessary for the patients on the floors that
day.
We have been able to redesign and re-engineer new ways of delivering our services and products
absolutely parallel to what was done in the automobile industry and now done in thousands
of industries around the country.
Do you have 40 beds?
You do?
You have two females, a male and a private?
Trying to wipe out duplication, trying to make things more streamlined, more efficient,
taking steps out of the process, manufacturing or patient care that are redundant or don't
do anything to add to the final product.
I call for 4.75 RNs and two.
You're calling for 4.75 and we don't have 4.75 to give you.
We only have four to give you.
Stacey Kelleher has been a nurse at Beverly for four years.
If I was coming on for the next shift to know that I'm already down a nurse, I mean,.75
of a person, can't get.75 of a person, it's a nurse, it would upset me because I would
know that people higher up that aren't going to be busting their butts working on my floor
have chosen to run me short.
3B?
303B?
Is our discharge correct?
Yes.
It's hard for her to swallow.
I just walked around and counted on it physically.
On Beverly's floors, the staff struggles to keep up with the demands of the new system.
To help manage the workload, the hospital has also given a larger role to its housekeeping
staff.
Now, in addition to cleaning, they also give patients their meals and transport them to
and from their rooms and to and from surgery.
You eat as much as you can.
Tanya Iagalo is a manicurist.
Now, she also works at Beverly as a service associate, earning six dollars and 73 cents
an hour.
What's the toughest thing about your job?
The toughest would be, you know, just learning more of the medical.
I wasn't trained fully on medical because that's not what the position needs, but I'm
learning as I go along.
Even if my feet can handle it, I'll do it.
So it would be more if you're doing transport, you've got to understand about the oxygen.
You have to understand where it goes, what to do with the tank, you know, make sure you
shut it off so it doesn't expel itself and then if someone needs it in an emergency,
you go.
Do you think it's going to f**k up soon?
His IV is leaking a little bit.
Everything has to be sterilized and if there's oxygen, the tubing's on the wall, you know,
technically it's not my job to take it out, sterilize it and put it back.
But if I'm there, I want to do it and get it done because it makes everything run smoother.
And if I'm not 100% sure, I ask.
I don't think the public understands what's happening.
I don't think they realize that many of their nurses have been replaced by the unlicensed
assistive personnel.
I don't think they realize that they're not getting the training that a nurse would or
even that an unlicensed assistive personnel should get.
I really don't think that people know.
I think they need to know.
One of the biggest indicators that something is going on medically with someone is vital
signs and we are no longer responsible for vital signs.
That's the clinical associate's responsibility and a lot of times they don't recognize a
change, an important change or a change that signals that there's something going on.
In response to the changes at the hospital, Beverly's nurses have begun to organize a
union.
At this point we're having trouble with the mid-range, the eight to ten year experienced
registered nurse.
But the administration defends its staffing decisions.
I think clearly the philosophy here is that nursing care is terribly important and we
have to make sure that we keep our eye on that target.
What we do is we challenge those people that have been in our field for a long period of
time who have been used to dealing with things for 20 years, the status quo.
I think when you begin to challenge the status quo, I think you begin to get resistance.
People have a great deal of difficulty identifying and explaining what quality of care really
is.
And I think it's just too easy for most of us or many of us to say quality of care is
being sacrificed.
I think that's become a catch-all excuse for not going through necessary change.
I feel like some bean counter someplace is deciding that you nurses make far too much
money.
We can train these people off the street to do what you used to do and there's going to
be a big savings.
Has your daughter been in to see you today?
Nobody's been in.
Do you remember me?
My name is Sue.
I took care of you the other night.
I need help.
You need help.
What's the matter, honey?
I'm scared enough to be alone.
I know you are.
I feel like I can't be everywhere at once and what if something goes wrong?
If something goes wrong, I'm sunk.
Some nights, if they're all breathing when I leave at the end of my shift, I think, whew,
thank God.
And then I come home and I lay awake all night thinking, what didn't I do, what did I forget
to do, what did I do wrong, did I do something wrong, did I forget to give a med?
And it happens to me night after night after night.
And how do you feel right now?
Joanne Lashie, who trained as an intensive care nurse, says she also has worried that
something will go wrong.
If you're sick enough to be in intensive care, especially nowadays, you're a moment-to-moment,
hour-to-hour kind of person, you know, and things change that quickly.
Therefore the logic of planning only for the moment leaves a lot of room for bad things
to happen, because if you plan on, at this moment we have six patients, therefore you
get three nurses, and even one of those patients changes in their level of illness, you've
upset the balance.
There's a line you cross there when things are no longer serious and intense and in control
and being dealt with, they become serious and intense and out of control and not well
coped with.
It is a response that I hear all too often, I'm scared.
I hear nurses who have said to me that I'm more my age and say, I can't change.
And this is very frustrating to me, I cannot change.
They all want to go back, as I do sometimes, to the good old days, but those things aren't
going to happen.
But for Joanne, the changes at Beverly became too much to bear.
Try to make a change and get out before something bad happens.
Because it's not a matter of if, it's a matter of when.
We've all been this close, and I don't want to be any closer than that.
Joanne didn't leave nursing, she went to work at Cable, a small emergency center in the
nearby town of Ipswich.
Here, where the pace is slow and the face is familiar, Joanne can do the kind of nursing
she likes, the kind that used to be practiced all over these towns.
It's you, another nurse and a doctor, we're available, we're very available.
There's no bureaucracy when you walk in the door, there's just us to take care of people.
I think it is a throwback in some ways to what health care was like before, because
you can establish a little bit of a relationship with a person.
When you say you were lightheaded, did you feel the room, was the room spinning?
You get to hold their hand, you get to do the medical stuff, but you also get to do
the personal stuff, which is gratifying, I mean that's what it's about, that's what
makes medicine different from fixing cars.
But Cable's future is in danger.
Northeast Health Systems, Beverly Hospital's parent company, owns Cable and has been talking
of closing it down for over two years.
It served its time, it served its need in the days of technology that are available,
the paramedic system that's available, the cost savings or cost constraints that both
the community and the hospital are under, the time has come to phase that down and hopefully
replace it with more access to primary care physicians.
Here's the reality guys, we've got X number of dollars, we've got this many patients.
What can we do differently to still care for our patients in this environment?
And that's what's happening here.
And I think people who sort of hide behind some excuse, we're sacrificing quality of
care, they're not picking up the mantle and doing what they need to do to see that that
doesn't happen.
And to bury your head in the sand ain't going to change public policy.
Since the early 80s, the number of nursing personnel has been cut by 27% in the state
of Massachusetts, 25% in New York and 20% in California and across the country, nurses
have protested.
14 months out of nursing school, I am ordered to care and supervise 40 patients on my own.
I do not have the skills and nobody has the time to teach me.
I am afraid to care for these patients.
The movement against managed care has picked up steam.
In December of 1997, a group of Massachusetts doctors and nurses restaged the Boston Tea
Party, tossing symbols of for-profit medicine into Boston Harbor.
They said they resented the interference of for-profit HMOs in important and private medical
decisions.
That night, they held a town meeting in Boston's historic Faneuil Hall.
Harvard cardiologist Dr. Bernard Lown.
Medicine is a calling and its core is a moral enterprise grounded in a covenant of trust
between health professionals and patients.
By contrast, market medicine is organized like any other business.
Its aim is to generate profit.
In order to survive, the well-intentioned must hew to competitive pressures of the market
or get out of business.
But for all their concerns, efforts by doctors to take control of the system themselves have
not often succeeded.
This New Jersey health plan was founded by a group of doctors and hospitals.
They placed a 5% cap on profits, touting the plan as an alternative to the big HMOs, more
committed to good care than to generating dollars.
But the plan ran into serious financial trouble and had to turn for help to Malik Hassan,
who bailed the company out in exchange for a controlling interest.
With this addition, Hassan's plan will become the third biggest HMO in the Northeast.
Today Hassan is visiting his new acquisition.
Well, we've been waiting for your arrival with great anticipation.
In the first 10 months, this plan has lost about $74 million and we have gone into the
details going forward.
They know Hassan is the only one who can get their company out of trouble and they are
anxious to please.
We've initiated a new pre-authorization process that you've been kind enough to lend your
expertise to.
I don't think you were given a choice.
The founders of the plan had wanted to keep out public shareholders, who might demand
higher profit margins.
But with Hassan on board, the hand of Wall Street will be felt.
The for-profit CEO has to worry daily about what these young people on Wall Street think
about what he or she is doing and how that reflects on the stock prices, which can do
bad things for him if they tumble.
The quarter that you'll be reporting should be essentially on target with street estimates,
which is nice to hear.
Wall Street analysts monitor the performance of Hassan's company and Hassan pays close
attention to their opinions.
Do you have any concern about our company?
I think Foundation, from a stock standpoint, is very attractive.
We have a buy rating on the stock, as you know.
The for-profits set themselves up to these targets and once they're there, they feel
almost morally obligated to deliver that to Wall Street.
To go to Wall Street and say, I promised you 15% is only 10, that's a very painful walk.
What do you think is the right size?
Are we the right size or do we still need to get bigger?
I think ever greater scale, if it's properly managed, will be important to sustaining growth
and earnings.
A lot of the decisions in Hassan's HMOs are made by medical directors who are essentially
MDs who will take a desk job.
And one of the very clever things that Hassan has done is to have an awful lot of their
pay tied to stock options, so they begin to think like Wall Street.
Their thinking is not just what's right for the patient, what's right for the community,
but how do we get the value of the stock up.
And I've interviewed former medical directors who say they took a pay cut to come and work
inside one of Dr. Hassan's HMOs, but they ended up making $3 million and $4 million
on the stock options.
When you've got that kind of pay incentive, pretty soon everyone within the health plan
is beginning to think what's the way Wall Street would want to do it.
Hi.
How you doing?
I'm fine.
Good work.
Hassan sees a world of medical efficiency, where higher quality and happy shareholders
go hand in hand.
The interests of the shareholders and the interests of the members are the same, and
that is that you have an organization which is efficient, an organization who knows what
they are doing.
As soon as we hear from them, we can put it in the works.
Thank you for holding.
This is Julie.
How may I help you?
It's in the shareholders' interest in the long term that we should have a reputation
of taking good care of our customer.
Hi.
Hi.
But in recent months, Wall Street's pressure on for-profit HMOs like Foundation has begun
to mount.
Yes, we have dental, we have vision, we have chiropractic care.
We do offer a PPO network with our plan.
Tell me what's covered, or what isn't covered, or what I can get at.
In the early 90s, most HMOs were delivering as much as a 20 percent profit per year to
their shareholders, but as the obvious fat is cut from health care, that number has begun
to slip.
Sir, have you got in your packet for met in the U.S. health care?
You can stick that on your refrigerator.
Most for-profits only saw a 5 percent return last year.
Many people predict that premiums will go up.
Others wonder, will more cost-cutting be necessary?
Well, actually, now the fun starts, because you are absolutely right.
The easy fat is gone, but it can be maybe more efficient, and the American ingenuity
and innovation then comes into play, because then you start thinking about productivity.
Then you start thinking about how to do things better.
One solution that HMOs are turning to, called capitation, passes the tough medical decisions
on to doctors and hospitals, giving them a lump sum of money per patient per month.
What they save, they keep.
What they spend, they lose.
Now it's the hospitals themselves saying no to their doctors.
Dr. Holmes, you are the other division that is grossly in the red.
And I am having complaints from the other divisions that are supporting you.
What's your answer to this?
How are you addressing it?
Well, we're making a number of very substantial changes, and the largest one is that we're
realizing that our mission, which is to take care of the complex reconstructive problems
of birth defects, breast cancer reconstruction, burn reconstruction, can't be the primary
focus of our mission if we're going to survive as a division, because we lose money on every
one of them.
You're so big.
You're so huge.
You're so big.
You're so huge.
Dr. Holmes has been told he has to make a radical readjustment of his priorities.
The only way his program can survive is he has to do a larger portion of cosmetic surgery,
because this is cash payment.
I came to you to talk about my arms.
They're a little larger than I like.
Okay, so you're thinking of liposuction?
Is that what you're interested in?
Faced with the closure of his department, Holmes has shifted his emphasis to lucrative
cosmetic surgeries, like liposections.
Have you heard about ultrasonic liposuction?
And facelifts.
I guess around the eyes, from this part over here, and I guess any other recommendations
that you have.
Yeah.
All right.
Well, let me have a look up here.
Liposuction?
Okay, sure.
I have to show you the sites right here that I'm not happy about, and how long will this
procedure take?
The procedure itself takes about an hour.
You don't have a whole lot of fat.
I think there are a number of advantages that we offer.
People come in and they feel so much better about themselves because they look good.
People sometimes believe that if you go to the university, some intern is going to be
doing your surgery, and that's definitely not the case.
I, and I alone, would be doing all of your surgery.
Otherwise, I wouldn't do anything.
There may be a time later on when...
We've converted it into a business, and as soon as you become a business, the major,
major issue is always profit.
The number of surgeons, which amaze me enormously, who are going to go and try and get an MBA
is amazing because they see this is where the money and where the action is.
Their mission of taking care of patients, educating other doctors, and doing research
has been eroded enormously.
I find that I'm most warned in the evening.
You have to see so many patients per day.
You have to operate on so many patients.
This is all tallied and monitored under the managed care arrangements.
And so the idea of spending time with a child before surgery, trying to make them trust
you so that you can take them into the frightening environment of an operating room, doesn't
exist in the minds of those who are looking after efficiency.
It's becoming a assembly line.
It's a dramatic change.
Few would deny that what has happened in San Diego has reordered a system that was badly
in need of fixing.
But the question for those around the country who are watching is what we may be losing
in the process.
And it's downhill.
I'm 82.
I feel like I wish they'd go away and let me be now, if you know what I mean.
I think medicine is practiced one patient at a time, even if we have 260 million people
in the country.
It all comes down to what's happening in that exam room when I go in and I ask the doctor
to take care of me.
It's getting so when they start and grab my arm and haul me around like I'm 90.
The most important thing that HMOs can't count is trust.
There's no space on an Excel spreadsheet that says trust.
But if you fundamentally trust your doctor and your hospital, your chances of a good
recovery are better.
And the concern on both sides of the divide becomes can I, as a patient, trust my doctor
and hospital?
Or as a physician, as a hospital, do I feel I'm in an environment where I will get rewarded
for doing the right thing?
I couldn't feel that I was delivering care the way it should be given.
And that's not the kind of person I want to be.
I need to feel that I did the best that I could do.
I don't want to feel that way anymore.
Some doctors and nurses have chosen to leave rather than accept this process of being worn
down by managed care and their reduction of resources.
And sometimes you wonder whether you should just stick it out and wait till things get
better or whether you should join them and find some way to recapture some time to do
other things that we should be doing in life.
Find out more about this report at Frontline's website.
Read reports on the pros and cons of HMOs, from the viewpoint of doctors, a profile of
Malik Hassan and his HMO, one of the largest, fastest growing in the nation, some advice
on how to choose an HMO or evaluate the one you have, and much more at Frontline online
at www.pbs.org.
Next time on Frontline, marijuana.
Two and a half billion dollars a year is spent to combat it.
One in six federal prisoners is serving time because of it.
When he's facing a life sentence, well, who did he kill?
Are we fighting the wrong battle in the war on drugs?
I think we ought to start basing mandatory sentences on the conduct of the people engaged.
Are they using violence?
Are they using kids?
Watch Busted, America's War on Marijuana, next time on Frontline.
For video cassette information about tonight's program, please call this toll-free number
1-800-328-PBS-1.
Now your letters.
This time about our program examining class divisions among black Americans.
Here are some excerpts.
It is not as if we do not want to associate ourselves with our disenfranchised counterparts.
The truth of the matter is that in many situations we are shunned and made to feel as though
we are sell-outs.
We are constantly bombarded with statements such as, you don't act black, you don't talk
like a black person, you aren't really one of us.
What this segment of society fails to grasp is the reality that the majority of white
America still views us as black, regardless of our accomplishments.
I think a lot of the interviewees got the analysis right, but their age-old problem
is that they only know how to talk to each other and not to the people that are the subject
of their internal debate.
Let us know what you thought about tonight's program by fax, by email, or write to this
address.