Making a Killing
HMOs and the Threat to Your Health

Contents | 1 | 2 | 3 | 4 | 5 | 6 | Apdx 1 | Apdx 2 | Apdx 3 | Notes

Making a Killing

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A retired New York City surgeon, often described by his peers as a doctor's doctor for his skill, dedication and fealty to placing patients first, wrote me recently with a list of principles that he believed necessary for a universal health care system. These principles included being economically available and geographically accessible to everyone, with a free choice of physician and the preservation of the one-to-one patient/physician relationship. Physicians would be on a fixed salary, adequate and commensurate to the locale and expertise of the individual physician. Hospitals would be stratified, as to the complexity of procedures (primary, secondary, tertiary), compensated on a service experience for a particular year, and subjected to regional quality control. Along with standards to ensure accountability and fiscal sustainability, he insisted that the system must be administered on a non-profit basis.

Profits-before-patients is easily translated into corporate-dominated medicine. Greed and focus on stocks, stock options and quarterly earnings rapidly degrade everything they touch. Professionalism of physicians and nurses is undermined by the juggernaut of commercialism uber alles. The critical relations of care and compassion between server and patient are replaced by categorical protocols imposed by corporate bureaucrats commanded by monetized minds at the top of the corporate hierarchy. The exercise of judgment, discretion and mercy at the server/patient level is relentlessly eroded by the forces of Mammon—the giant HMOs, their masterminding corporate law firms and their political allies who safeguard their immunities and privileges in the face of growing public and professional outrage.

This was not the way it was supposed to turn out in the minds of the pioneers of prepaid medicine. Commencing with Dr. Michael Shadid's mobilization of poor farmers around Elk City, Okahoma, in the 1920s1 to form the first cooperatively owned hospital in America and then into the Puget Sound and Kaiser Permanente health care plans, the ideal was quality health care with attention to preventative services within an affordable system of prepayment. Organized medicine, led by the American Medical Association (AMA) and its fee-for-service medicine, fought these plans and successfully opposed Harry Truman's universal health care proposal to Congress in the early '50s.

In the '60s, Medicare and Medicaid took the steam out of the reform movements among the elderly and poor, while preserving much of what the AMA wanted to keep. In the '70s, the federal government began encouraging the formation of Health Maintenance Organizations (HMOs) whose non-profit status and prevention orientation were believed to be well suited to curbing the excesses of the fee-for-service system with its incentives to sell too much to patients. As costs annually far exceeded the general inflation rate and health care absorbed ever greater percentages of the GNP, the alternative of "managed care" emerged as a way to control costs. A dominant format also emerged—the giant, for-profit HMOs and their entrepreneurial billionaire bosses securing large clusters of customers and seeking more and more mergers. A series of perverse economic incentives were insinuated from top to bottom so as to seriously compromise the independent clinical judgments of physicians and other health professionals and often turn the pocketbook allegiance of the health care servers against the interests of their patients, as with gag rules, bonuses for not referring and the like. The HMO and its deepening swamp of commercialism over service, of profiteering over professionalism, of denial or rationing of care where such care is critically needed, of depersonalization of intensely personal kinds of relationships, are all occurring and spreading without sufficient disclosure, accountability and structural responsibility before the damage to life and health is done.

The organized flow of corporate power moves in all directions. From the contractual agreements with physician networks and hospitals to the drive to limit the judicial rights of patient-victims to the Niagara of campaign contributions to politicians at the state and federal level to the rush of manipulative television propaganda campaigns, the power of the HMOs and their alliances continues to grow. Impervious to disclosures and scandals, even when widely reported as with egregious medical malpractice or the Columbia/HCA scandals or the routine billings fraud and abuse, more than the facts need to be part of the public debate and activity. Palliatives won't do. The injustices and misallocation of patient, taxpayer and employer dollars invites structural changes and the elevation of patients, public health and the safety of the environment, workplace and marketplace to positions of supremacy in law, organization and public expectations.

The underfunded Canadian universal health care system is probably the best in the world, despite attempts by companies and corporate ideologues in North America to undermine and weaken it. For around 10% of the GNP, Canada provides health care for everyone from cradle to nursing home. Its administrative expenses are about eleven cents out of each dollar compared with double that in the United States, which this year may spend 14% of its GDP on health care, with millions of men, women and children without coverage.

The foregoing is by way of welcoming Jamie Court and Frank Smith and their wide scope and detailed treatment of the contemporary HMO situation. They searched and researched evidence, from inside the industry, the public records, the court judgments, and the documentation of personal tragedies flowing from HMO priorities, and found patterns, not just episodes or examples. It is the system—that breeds the greed, fraud and frenzy—which swoops the savings from rationing and curtailment of needed care upward along the managerial ladders where the rewards grow larger and larger until they mock the very adjective "obscene." Venerable institutions and traditions in need of improvement are instead shut down and destroyed before the onrushing corporate Moloch.

This book moves from a description of corporations making medical decisions, the ensuing harm, the predictable frauds, the shunting aside of community servers, toward both institutional reforms and suggestions for self-help by patients and their families. The authors know well that while information is the currency of democracy, it will take a stronger democracy to achieve the desired changes. This means a critical mass of citizens who are aroused and determined to forge a health care system as if patients and health care mattered. As the only Western nation without universal health care for its citizens, the United States is long overdue. This highly motivating book tells a gripping story of excessive power without restraint that comes down hard on powerless and defenseless people. Who speaks for them and those who follow them? It could be you, the readers.

Ralph Nader
Washington, D.C.
July 1999

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