Feature Archive

The HMO Fiasco

A doctor speaks out.

WebMD Feature

June 19, 2000 -- A young woman sits in front of me with tears in her eyes, so grateful to have finally gotten an appointment in my office. She has end-stage liver disease and will need a liver transplant. She recently moved to our community so that she could live with her sister and find a good doctor close to a transplant center.

After two months in our system, she has seen three different doctors, but none would spend more than fifteen minutes with her. When she heard that I had a reputation for spending extra time with my patients, she asked the health maintenance organization (HMO) to transfer her care to my office. During 30 years of experience in my field, I have cared for many patients like her. I will make sure she survives to receive a liver transplant.

What's Wrong With This Patient?

What is it about this perfectly nice young woman that aroused so little compassion from her doctors? Nothing about her would make her an undesirable patient -- except that she is sick and will need a lot of attention. In the past, when doctors assumed responsibility for complex cases, they were reimbursed in a manner proportional to the amount of their time required. Now, under the so-called "capitated" payment systems used by most HMOs, they are paid a small fixed fee per year for each patient, no matter how many visits, operations, or hospitalizations are needed.

In my community, this fixed fee is so small that if a patient needs to be seen more than two or three times a year, the physician will actually be working for nothing because the fixed costs of seeing the patient (including secretarial time and paperwork) are not paid for by the HMO, but come right out of the physician's pocket. It is not an exaggeration to say that this payment system makes every sick patient a direct financial liability to his or her doctor.

Needless to say, the physicians who care for the greatest number of sick patients are penalized because they need to spend more time with each patient and can't see as many overall. It is the number of patients -- not the time spent with each -- that determines a doctor's income.

In most communities, the doctors who care for the sickest patients are highly regarded by their peers. They are the "doctors' doctors."

Far from being supported or encouraged by the HMOs, these doctors receive letters and lectures exhorting them to be more "efficient," meaning "spend less time with each patient and order fewer tests." The implication is that they just don't want to work as fast and hard as their more "efficient" colleagues.

Free Care for the Rich?

Doctors traditionally have been expected to provide free care for the poor. It is only now in the age of the HMO that they also have to provide free care to the rich, who assume, quite reasonably, that their doctors are well paid. It's true, the HMO insurance premiums aren't cheap. Someone is getting the money, but it's not going to the people who actually provide the care.

A friend, a sophisticated attorney with an income well into six figures, asked me to help him get into the practice of a very fine local internist who is not accepting any new patients. I asked my friend what insurance he had, and when he named a local HMO, I told him I could not help him. "Why?" he asked, "We paid a lot of money for this policy." I explained that my friend was already overwhelmed with HMO patients.

I suggested a deal. "Why don't you agree to provide all of the doctor's legal needs for a year for $200 if he will accept you as a patient?" "Why would I want to make a deal like that?" he asked, "I'm not an insurance company!" "Well, neither is he," I said.

"I can't believe it's really as bad as you say it is. Why did you guys sign such a contract? Why don't you just raise your fees?"

Why indeed? Those are very good questions. The fact is, we were never given an opportunity to negotiate. It was "take it or leave it." We signed such contracts so we could continue to receive referrals from the primary physicians in our community. We also thought that because the contracts applied to a minority of our patients, we could make up for the losses with other patients covered by conventional fee-for-service insurance plans. That worked until those other patients were forced by economic pressures to also join HMO plans.

So, are doctors in my community starving? Of course not, but many have left their practices. Even those medical offices with the most highly trained and qualified senior physicians are having difficulty recruiting new physicians to assist with their workload, because they cannot offer enough salary or benefits.

Efficiency Rewarded, Quality Punished

The failure and bankruptcy of medical groups and offices driven to failure by HMO contracts is becoming everyday news. Unlike other businesses, unfortunately, these failures do not involve just the marginal enterprises but frequently the most esteemed practices in the community. The reason is obvious. "Efficiency" is rewarded, while quality, compassionate medicine ends up being punished.