The future of medical practice.

For most of this century, the delivery of medical care in the United States was largely controlled by an autonomous medical profession. It would be no exaggeration to say that the medical care delivery system consisted mainly of professional services directly provided or supervised by physicians, plus the use of facilities, services, and medical resources ordered or recommended by physicians. Although physicians collected only 18 to 20 percent of the health care dollar, they directed the expenditure of most of the rest through their employment of hospital and ambulatory services, diagnostic testing, prescription drugs, and the like. Their professional recommendations were rarely challenged, and, after the advent of Medicare and Medicaid, when nearly 80 percent of the population had some form of third-party indemnity insurance, most bills were paid without question--provided only that they were "customary and reasonable." But this system was inherently inflationary and could not remain viable in the long run. It had to be brought under fiscal control. Physicians, preoccupied with clinical practice, could not--or would not do this. As a result, some other agency had to take over at least part of the sovereign power that had been exercised until then by the medical profession. Government tried, but the defeat in 1994 of the Clinton Administration's proposal to control costs through government-regulated "managed competition" left the initiative in the hands of the private sector. Employers had been turning to prepaid managed care plans for several years before then. The political demise of health care reform simply accelerated the process, and attracted more plans into the insurance market. More than 50 million persons are now in HMOs, most of them in IPAs, with at least an equal number covered by other less structured forms of managed care. Enrollment in IPAs is growing rapidly, and it is predicted that, by the end of this decade, the great majority of privately insured people will be in some type of plan. The current Republican proposals for the restructuring of Medicare and Medicaid call for still further expansion of HMOs. The expectation is that competition in the managed care market will slow the escalation of costs, as they seem to have done for the moment in the private sector. However, the long-range effect of competition on medical costs, not just for employers but for the whole country, remains to be seen.

Starting up a new managed care plan requires risk capital, business management and marketing experience, medical actuarial expertise, and contacts with physicians in the community being served. Many traditional medical insurance companies easily met these requirements and made a relatively quick transition to managed care. But most of the new plans are recently formed investor-owned companies attracted to the profit-making potential of a huge new market. To realize profits, any managed care plan must restrain medical expenditures, and to do this it must control the behavior of the physicians with whom it contracts. The methods used for this purpose include employment of primary care "gatekeepers" who are paid on a capitated basis, sparing use of consultants, restriction of hospital days, substitution of nurses and paramedical personnel for physicians, and review of utilization.

What all this means is that the hegemony of physicians is now being undermined by the economic imperatives of the business managers in the new medical plans. Control of medical expenditures by a medical plan inevitably means control of the professional behavior of the physicians who are employed by, or have contracts with, the plan. Physicians working for a plan must temper their clinical decisions, and sometimes even curtail their availability to patients, in accordance with policies of the plan. Doing otherwise risks being "deselected" by the plan and losing an important source of patients. Furthermore, payment of primary care physicians by the "capitation" method--the usual practice among IPA plans--is, in effect, strong corporate restraint on recommendations of tests and consultations by the physician.

Even more troubling to many physicians than this limitation of autonomy is the intrusion of the plan into the relation between doctor and patient. Doctors have traditionally been regarded as a fiduciary or agent for the patient. They are supposed to act primarily in the patient's best interests, with economic considerations in a secondary position. Under managed care, however, physicians are forced to serve two masters--the patient and the plan. It is almost as if a business manager were in the examining room with the doctor and the patient, monitoring the physician's use of medical resources. The plan also steps between doctor and patient in another sense, i.e. by defining the circumstances under which patients and doctors can get together. Physicians are increasingly dependent on managed care plans for access to patient populations, just as patients must follow the plan's rules to gain nonemergency access to its doctors.

The old indemnity insurance system not only allowed physicians and patients to associate freely and reimbursed physicians for whatever services they provided, but also opened the entire medical care delivery system to patients--as long as they were insured. With the advent of managed care, many employers now choose one or, at most, a few plans for their employees, who must accept one of those plans if they want to exercise their health insurance benefits. As they search for ways to reduce their health care costs, employers have become increasingly involved in the selection of plans and the monitoring of their "performance" (however the latter may be measured). In this sense, employers rather than individual subscribers have become the main customers of the managed care plans, and it is toward employers that the competitive plans direct most of their sales and marketing efforts. As a consequence of this system, longstanding relations between patients and their doctors are often interrupted and, because employers often change their choice of plans, the continuity of new relations is often disrupted. Here again, we see how the medical profession, once the keystone of the health care system, is being moved to a more marginal position and is becoming dependent on the managed care industry.

Of course, all of this corporate intrusion into the medical care system is being done in the name of cost control and quality protection. But it seems to me tragic that physicians have, by default, ceded their responsibility for achieving these objectives to investor-owned businesses (i.e., managed care plans). They have also allowed the plans to determine how they will provide care to patients. Neither physicians nor patients can have much reason to take comfort in this transition. What, then, can be expected for the practice of medicine in the future? Much will depend on how the social and political climate evolves over the next few years, and on how well the managed care industry as presently configured manages to satisfy public expectations for cost control, expanded access, and quality improvement in the health care system.

I believe that managed care in one sense is here to stay for the foreseeable future. Networks of physicians, working together to provide comprehensive care on a prepaid basis appear to offer the best chance of solving most of the major problems in our medical delivery system. But I do not believe the present, commercialized market approach makes sense for either consumers or providers of medical care. Managed care as it exists now is in essence the "corporate practice of medicine." It consists of corporations hiring or contracting with physicians to practice medicine for the ultimate financial benefit of the investor-owners of the corporation. Physicians cannot meet their full professional obligations to patients under such circumstances, any more than lawyers could adequately represent their clients, interests if they were employed by an investor-owned corporation. The latter is illegal in most states; so too should be the same kind of arrangement with respect to physicians.

I expect that growing public and professional discomfort with corporatized managed care will eventually bring changes in public policy that will encourage the replacement of for-profit investor-owned managed care plans by not-for-profit community-based plans that are owned by voluntary hospitals, charitable organizations, or consumers (i.e., cooperatives). Medical care in these groups will be the responsibility of physicians, who will be accountable to the owners for living within a fixed budget. Group- and staff-model HMOs are likely to gain in popularity as a way of organizing and managing the physicians in these plans. Professional values are best protected when physicians manage other physicians. To this end, we will need to do more to encourage the development of medical administrative career pathways for physicians. I also expect to see a large and growing number of plans turn to full salaries as the prime method of compensation, because salaries make it easier for physicians in multispecialty groups to work together efficiently and harmoniously.

To conclude, I do not believe that a return to the "good old days" of fee-for-service, autonomous private practice is possible. Managed care of some kind will clearly dominate the future of health care, but the unresolved crucial question concerns the ownership of the managed care plans. An investor-owned managed care industry now holds sway, but it is not compatible with the professional practice of medicine or with the needs of sick patients, so I do not expect it to last very long. In the long run, physicians must be in charge of medical care, but they must live within budgets and be accountable to payers and to their patients. The only solution that makes sense to me is one based on multiple local physician networks, organized on a not-for-profit basis. In short, I predict that staff and groupmodel HMOs, with salaried physicians, will be the mainstay of the medical care delivery system within a few decades.

Arnold S. Relman, MD, is Professor Emeritus, Medicine and Social Medicine, Harvard Medical School, and Editor-in-Chief Emeritus, New England Journal of Medicine.