Dirty Words in Health Care

The closest you can come to heresy in today’s health care policy debate is to suggest that managed care can help and that capitation is the best way to pay for it. No presidential candidate even whispers the terms. What a shame.

Massachusetts faces a $147 million shortfall this fiscal year in its subsidy for the universal insurance coverage that it courageously mandated two years ago. That raises a question: What system of payment will best support innovations that can make care less expensive and better at the same time? The easier solution — make care less expensive and worse at the same time — is neither necessary nor worthy of us.

The answer to the question is that health care should be managed in the same way, and for the same reasons, that school systems and air traffic are managed. Managed health care was a great idea when it first emerged, before the term got hijacked by insurance companies that claimed to manage care but in many cases only managed money.

We practiced medicine in one of the best managed-care systems in the nation: the former Harvard Community Health Plan. What made it great was the freedom of staff to think creatively about what patients really needed, and to reinvent care to meet those needs. Harvard Community Health Plan pioneered innovations that most U.S. health care still pines for: electronic medical records, patient reminders, creative roles for advanced practice nurses and physician assistants, quality measurement, and more.

The financing system that allowed all that to happen is today as dirty a word as managed care, namely ‘capitation.’ That means bundled, prospective payment to an organization for the care of a defined population. In the case of HCHP, that population was our patients, enrolled through their employment-based health insurance, Medicare, or Medicaid. Our job was not to produce transactions. It was to take care of people, and that is what we did.

apitation gave us the flexibility to use our budget with creativity limited only by our imaginations and habits.

The innovations that managed care and capitation made possible were good for almost everyone. For example, with extended hours of service, off-hours telephonic access, and outreach, HCHP’s population had a rate of emergency department visits less than half the statewide average. Thousands of people avoided needless hospital visits; they got more appropriate, less expensive, better coordinated care in office settings. Of course, our care systems were far from perfect, but our extensive investments in quality measurement enabled us to identify defects, and capitation gave us the resources to act swiftly and prudently to fix them.

Physicians worked on salary. We were supported to create proper clinical pathways for our patients. A strong professional ethic among our clinicians, reinforced by strong member presence on our board, and by extensive quality measurement, kept us from doing too little. ‘Managed care’ did not mean ‘restricted care’; it meant ‘care that makes sense.’ We can not recall a single instance of being told by management to withhold from a patient any care that we thought, based on evidence, could help.

When the term ‘managed care’ got hijacked, the public rapidly lost faith. That is because the restrictive, often unspoken, principle of ‘manage the money, not the care’ led to handcuffs on physicians’ decisions, aggravating and annoying both patients and clinicians, and sometimes even causing harm.

The backlash was violent, and it swept the good forms of managed care and capitation into disrepute.

Rage against managed care mounted as some CEOs reaped multi-million-dollar compensation from savings derived from limiting care. In the storm, successful models found too few champions.

So, America, we have a question. Would you like to think again about managed care and its financing mechanism, capitation?

Details matter — a strong focus on patient satisfaction, compensation and incentives, sound leadership, transparent and sophisticated measurement and information — but done right, managed care works. We lived it. Maybe, properly defined and designed, these may not be dirty words after all.

Dr. Joseph L. Dorsey is former medical director at Harvard Pilgrim Health Care. Dr. Donald M. Berwick is president and CEO of the Institute for Healthcare Improvement. This article first appeared in the Boston Globe.