Most people have heard the saying "Perception is not always reality". This simple statement certainly applies to managed health-care. In fact, managed health care coverage may be the most reviled service that millions of Americans are actually choosing to purchase each year. There is a widespread impression that HMOs have been forced upon an unwilling populace. However, most employers who provide health insurance benefits offer their employees non-HMO plans as well. In California, 80% of employers provide more than one choice of health plan for their employees. Even with the availability of alternatives, enrollment in HMOs has increased each year over the past decade. This is because people naturally choose health care plans that provide them with the greatest benefits for the least amount of out-of-pocket expense.

Many physicians and hospitals wistfully recall the old days of fee-for-service medicine of the 1970's and early 1980's. The only constraint that existed under the old system was the ability of the patient to pay the fee that was charged. The patient was placed in the position of having to make choices about his or her own health with little to no information about the value of the services received. Furthermore, medicine was a "cottage industry" that was not going through the quality revolution that so many other American industries were facing at the time. As health care employment benefits became more commonplace, employers faced health benefit costs that were rising at an alarming rate. During the 1980's, health care expenditures accounted for up to 19% of the American gross domestic product. Employers faced a simple choice: abandon the practice of offering health care coverage, or control the rate of medical cost inflation. The federal government, one of the largest purchasers of health care through the Medicare program, faced similar issues.

During the late 1980's and 1990's, medical cost inflation was reduced dramatically to the 5 to 6 percent range annually. Early cost savings were achieved by reduction of unnecessary medical care that often did more harm than good, and by bringing the costs more in line with the value of the services provided. The Health Care Financing Administration developed a nationwide health care fee schedule based upon the relative values of the services provided. Controlling health care costs helped American business fuel the recent economic boom.

Nevertheless, there are two sides to every story. Everyone has heard about HMO "horror stories" in the news media - needed medical care denied by an insurance company with disastrous results. Physicians in general feel that business and medicine make for a poor marriage, and rightfully put the welfare of their patients above financial concerns. As a result, physicians have been pressed hard by insurance companies to take lower rates for their services. Over the past few years, many physician groups and hospitals have become insolvent because insurance companies shifted the financial risks of heath care to providers in the form of "capitation". Capitation is a prospective payment for all medical services for a defined population of patients over a given period of time. If the cost of providing care to that group of people is less than the capitation payment, the providers retain the balance. However, if the cost of care for that group exceeds the payment, the provider absorbs the loss. Most primary care physicians and many specialists in California are "capitated" in some manner. Until very recently, physicians found themselves in same position as Don Quixote, charging at windmills as they tried to individually deal with insurance companies. These problems have received national attention, and have prompted the California legislature to pass, and the Governor to sign, 18 new laws regulating managed care in the State.

Now, physicians have grouped together in the form of Independent Practice Associations (IPAs), of which Santé Community Physicians is an excellent example. Primarily, Santé represents its 1200 physicians in negotiating with health insurance companies, and simplifies the practice of filing insurance claims for its member physicians. However, Santé does much more for its physicians and their patients. Santé provides our physicians with critical information on the quality, effectiveness, and efficiency of their practices. Santé provides our physicians with a "one-stop-shop" for becoming a provider for our various managed care contracts and a member of the medical staff of Community Medical Centers. Santé provides an ongoing continuing medical education program for primary care physicians, evidence-based guidelines for the care of common medical problems, and a range of services designed to support the operation of our physician's offices. Santé also provides Wellness classes for patients, customer service for patients who are having problems with their insurance companies, and case management for patients who have chronic illnesses. In short, Santé exists to serve the physicians and their patients.

We are working hard every day to assure that our physicians are fairly reimbursed for what they do, and that their patients receive the right medical care, delivered at the right place, at the right time.

Daniel L. Bluestone, MD, MBA
Medical Director
Santé Community Physicians