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The Two Faces of Managed Care

Managed care - two faced? Actually, it has many faces.  By which I mean there are several variations in what the many entities within the healthcare system mean by the term "managed care." All the variations are based, more or less, on the "pure" ideas we have just considered, but none conceive of, promote, or apply managed care in its purest form. "Pure" managed care does not exist in the wild.

Fortunately, the most prominent variations in managed care fall into just two major schools of thought, which, as it turns out, happen to be those same schools we've already had the pleasure of meeting - the Wonkonians and the Gekkonians. 

Wonkonian managed care

As you will recall, the Wonkonians believe that the problems in our healthcare system can be traced to human weaknesses (most specifically, greed on the part of physicians, patients, and corporations).  Thus, fixing these problems depends on setting public policy and promulgating governmental regulations. One can readily see how a theoretical construct like managed care might appeal to one holding to such an outlook, since managed care offers to remove some of the choices humans have to make in delivering healthcare (choices which are easily colored by greed), and to replace them with externally-generated processes and procedures. Philosophically, it's a good fit.  

Because Wonkonians genuinely like and believe in the ideas behind managed care, the people who conceived of and developed those ideas - the academics, healthcare experts, government commissions, economists and editorialists -- tend to gravitate to the Wonkonian camp.  Thus fortified, Wonkonians espousing the ideals of managed care tend to sound like very much like purists.  They are proselytizers, who truly believe in applying continuous quality improvement, critical pathways, information management, and other efficiencies of industrial management to healthcare. Because of their obvious sincerity, and because many of their ideas have considerable merit, it is easy for right-minded folks to fall in with this crowd.

What differentiates the Wonkonians from true managed care "purists" is in what they mean by the word "managed."  In classic managed care, "manage" merely refers to the application of management principles such as standardization. To Wonkonians, manage means "regulate."  Managed care is, to a large extent, simply a convenient tool for advancing their basic belief in policies and regulations to control human behavior.  Invariably the specific recommendations put forth by Wonkonians have much more to do with establishing a centralized regulatory structure for healthcare than they do with classic managed care principles.  To them, an envisioned system of strict regulations has become synonymous with managed care.

Gekkonian managed care

The Gekkonians, on the other hand, find that the healthcare system is broken because it hasn't been treated like the business it is.  Allow free-market forces (i.e., to force the point, greed) to reign, and the problems will take care of themselves.

Accordingly, Gekkonians come at managed care from an entirely different direction.  Historically, they have little claim to the managed care peerage. In fact, Gekkonians spent decades decrying managed care as socialist heresy.  Freedom and competition is their battle cry, and managed care smacks too much of social engineering.

Since the 1980s, however, the Gekkonians have co-opted the term "managed care" to their own ends, and in so doing have utterly changed its meaning.  Their tie-in to managed care is quite tenuous; indeed, it is almost brazen.  Since managed care techniques derive from industrial management principles, they hold, managed care is actually a child of the open marketplace.  Thus, Gekkonians seem to be saying, what managed care is really all about is applying the principles of free enterprise to the business of healthcare.

Managed care to Gekkonians is dog-eat-dog, compete until you die, for-profit healthcare.  Any actual relationship between Gekkonian managed care and classic managed care is purely incidental.  (Sometimes standard managed care techniques can be useful, but only if they give you a competitive advantage).

Both faces of managed care, then, have co-opted the terminology of managed care in order to advance their own goals. Managed care is a means of establishing a stronger system of regulation on one hand, and a means of seeking profit on the other.  Both schools of thought are prominent today, and both are actively and loudly advancing their respective points of view.  A lot of the turmoil we have seen over the past decades, in fact, can be explained by the competition and interplay between these two schools of thought as they each try to advance their visions for American healthcare.  

But for more than a decade, ever since the failure of the Clintons' audacious (or brave, depending on whether you hold with the Wonkonians or the Gekkonians) attempt to reformulate American healthcare, it has been the Gekkonians - armed with their chief weapon, the Gekkonian HMO - who have held center stage.  Accordingly, it is the typical Gekkonian HMO, the despised beast with which most Americans are familiar, that we will now explore.

The rise of the Gekkonians

The Clintons' reform plan, misguided as it was, was proposed in response to a true crisis in healthcare financing. And while the collapse of the Clintons' reform plan in 1994 caused a sudden deflation of expectations, the severe fiscal crisis remained. In fact, awareness of that crisis had been significantly heightened by the Clintons' campaign to reform healthcare, and nobody (except, of course, some of the doctors) entertained the delusion that we could simply go back to business as usual.

But as it turned out, a new group of saviors awaited. And here is what they said: "Citizens!  We all - employers, patients, physicians, hospitals, manufacturers and insurers - have just dodged a bullet.  Thanks to us, the frightening socialist reforms of the Clintons have been soundly defeated. But where does this leave us? We stand now between Scylla and Charybdis, between the specter of nationalized healthcare on one hand, and the continued profligacy of traditional fee-for-service medicine on the other.  And we cannot countenance either. But here," the Gekkonians continued, "is a third way.  A painless way, based on the sound principles of managed care, open markets and free enterprise.  Let healthcare become a business like any other business, and the market forces will find ways not only to cut costs but also to improve quality, etc., etc., and with no government intervention."  

The offer, in other words, was to turn healthcare over to the business professionals, and let them harness the efficiencies of the marketplace to solve our problems.  Because we're Americans and we know the benefits of capitalism, and because the other choices we faced looked even worse, we all said: go for it.  

The result, over the next few years, was perhaps the most rapid transformation our healthcare system has ever seen.  While most of those changes were real, palpable and material, perhaps the biggest transformation of all was a philosophical one.

For all their faults, the Wonkonians have always held to the age-old and endearing notion that the basic underlying purpose of healthcare is to maximize the public good.  Indeed, they believe, this fact is what gives government the ultimate authority to regulate healthcare. Only the government can guarantee that the special interests will act in a manner appropriate to public benefit.  (The flaw in this argument, for those of us who are suspicious of Wonkonians, is that regulatory bureaucracies often wind up behaving as the biggest, nastiest special interest of all.)

What the Gekkonians gave us in the 1990s was a brand new first premise.  The primary purpose of healthcare, they said, is not to increase public benefit.  How could it be, when healthcare is merely a business like any other business?  What we should be striving for is to build a well-run business. Since well-run businesses are beneficial to the community, in the end we can expect plenty of benefits to go around. But the fact remains that healthcare is a business. And the primary purpose of business is to make money.

To see the effects these Gekkonian-style HMOs are having on doctors, patients, and on American culture, in the following vignette we'll trace the evolution of an imaginary, but typical, modern-day HMO called "For the Patient" (FTP).