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The coming medical apocalypse. (Beyond Managed Care).

THE TSUNAMI HAS BEEN used as an apt metaphor to describe the coming impact of changes in American health care. (1) Those of us in health care are walkers on a beach unaware of the danger and destruction that is bearing down upon us. One might well object that most of us are anything but "unaware" about changes in health care these days. but our knowledge is not the same as foresight. Do we really see what dangers lurk on the horizon?

Even the most knowledgeable person can be surprised when cataclysmic events occur suddenly and seemingly without warning. Journalist Hedrick Smith, a long time Moscow correspondent for The New York Times, admitted that he did not foresee the sudden collapse of the USSR, despite his many years of living in and reporting on that country. (2) If such a historical and cultural "tsunami" can catch even the most knowledgeable and astute observer by surprise, how comfortable can we be about our future?

Today's events in medicine suggest that a tsunami-like catastrophe could catch us unaware at any time. Our health care system may be teetering toward the brink of its own implosion; yet who among us is considering this possibility--let alone preparing for it? It is human nature to believe that things will eventually work out for the best; often this is so. But we need to consider the bleaker picture as well. This article will describe some reasons why an apocalypse of American medicine could occur and discuss some actions we might take to prepare for such an event.

Five trends that threaten medicine

Let us consider five readily identifiable trends that threaten American medicine. None of these trends is a secret; they will seem all too familiar. We live with these realities every day, but do we consider their long-term consequences? Any one of them ought to be enough for serious concern, but taken together their meaning may be much more ominous.

The five dangerous trends are:

1. The practice of providing medical care is becoming too complex from both a business and a legal perspective.

2. Less money is being spent on medical care without any corresponding reduction in services provided, creating long-term operating deficits.

3. Investor-owned, for-profit corporations are changing the focus of medicine by putting shareholder concerns ahead of patient care.

4. Employment-linked health care insurance creates a growing uninsured population. adding extra financial stress to our hospitals.

5. Providers are losing faith in their future and are becoming increasingly demoralized about practicing the healing arts.

Let us consider each one of the trends in more detail before thinking about their cumulative impact on our future.

1. Business and legal camplexity

The growth of complexity is insidious. Each day we adjust a little more to living with increasing complexity in doing the business of medicine. Keeping up with the science of medicine ought to be enough, but it Is not. Laws are passed that turn normal referral patterns and innocent billing errors into "crimes" punishable by fines and jail. HMOs and insurance companies develop new and ever more complex rules for the care of their "covered lives," making navigation of any particular health plan difficult even for knowledgeable patients and their doctors. We all grumble about how difficult the practice of medicine has become, but we strive to cope and carry on.

Any given doctor's office, clinic, or hospital will have at least a dozen separate contracts for providing health care services. Each contract has its own special requirements and restrictions. Billing requirements vary, the referral forms for each health plan are unique, and the panel of referral specialists is different for each plan and changes from day to day. Thus, layer upon layer of complexity is added to practicing medicine--this slows us down, needlessly increases overhead, and diverts us from attending to patient needs. We seem to never experience a day when these sources of complexity are reduced, streamlined, or eliminated. Worse, as soon as we learn to play the game. the rules change once again.

If business complexity were the only problem, things would be bad enough, but it gets worse. Practicing medicine is becoming a legally dangerous activity. We have all learned to live with the ever-present threat of a malpractice action, but who among us is ready to face the full fury of the government in a criminal case?

The Health Care Financing Administration tries to reassure us that it only wants to catch the "bad apples." but who believes this? HCFA's new emphasis on documented medical services (i.e.. E & M bullet points) and aggressive discovery of what the agency considers "fraud and abuse" now includes a request for deputizing private contractors to investigate individual doctors. Moreover, HCFA specifically wants these agents-for-hire to have blanket permission to issue search warrants, make arrests, and carry firearms. (3) How will it play in your office or clinic when the C-men arrive with guns and warrants to search your patient records for fraud and abuse? Why are we not reassured?

In California, organized medicine derailed AB 1955 in last year's legislature, which would have specified prison terms for a physician if an elderly patient under his or her care suffered from malnutrition or dehydration, was injured in any way, or did not receive proper care from another health care provider. (4) Who would willingly care for any nursing home patients with that sort of law on the books? One California physician was tried for murder recently because his patient died during transport to another hospital. The doctor was acquitted by a jury, but the costs of his defense and the case's notoriety have all but ruined him. (5) If situations that had been traditionally considered civil cases (i.e., malpractice) are now determined to be felonies, no one will be able to practice medicine in California. Unfortunately. we see an ominous trend at work here. These two examples will not be the last.

Why would anyone ever design such a cumbersome and legally onerous way of providing health care in the first place? If this level of complexity and liability had been thrust upon us suddenly, we all would refuse to cooperate, but because these changes are happening slowly, we accommodate ourselves to living in a new reality one step at a time. Much like our tax code, there is really no end in sight for this process. The answer to the problems of complexity? More complexity! At some point, health care will become too complex or legally constraining for any of us to successfully accomplish the daily tasks of practicing medicine. How soon will that day arrive?

2. A sea of red ink

Pundits point to the recent reduction of health care costs as a triumph of managed care and an indication that the 'fat' in the system can be safely cut away. Undoubtedly, some fat has been removed from health care, but how do we know when meat and bone start being cut instead? The only screams we are hearing at the moment are from health care providers-the patients' screams come later.

Even the Kaiser Permanente system is losing big money: $270 million in 1997 and $92 million for the first quarter of 1998. (6) When Kaiser (which never had a deficit before 1997) cannot stay in the black in today's medical marketplace, how are the rest of us to do any better? In smaller physician offices, contracts are being renegotiated to ratchet prices down below the breakeven point. A recent study by the California Medical Association shows that capitation rates for pediatrics pay only half of the costs of providing care to children. (7) And so medical costs are "controlled." Is anyone outside of medicine worried about the long-term impact of bottom line losses for medicine's institutions, both large and small? We are stuck in a lose/lose situation: "The floundering physician practice management industry is wreaking havoc on Wall Street, and hospital systems that purchased physician practices are bleeding red ink: (8) Only a few highly paid CEOs are reaping any benefit from all this chaos; for the rest of us, the new paradigm is failing.

Business entities (in medicine or any industry) can operate in the red for a certain period of time, but eventually they must return to profitability to make up for the losses. Health care is the same as any other business; the red ink can flow for only so long. The factors that create today's short-term losses in health care are set to accelerate over the next several years with little prospect for a change back to necessary profitability. For how many years can health care organizations of all sizes post deficits before a meltdown occurs?

Writing in Newsweek, Robert J. Samuelson notes: "(W)e Americans want contradictory things from the health care system; we want unlimited medical care without unlimited spending." (9) Our government has adopted a policy that we will reduce health care spending without any sort of corresponding reduction in benefits or services. There is no industry that can provide this for more than a very short time-medicine is no exception.

The coup de grace is the Balanced Budget Act. Congress and the Administration have congratulated themselves for balancing the federal budget out of Medicare cuts of $150 billion over the next five years. Will our leaders step up to take the credit as the impact of this action closes hospitals all over the country? They will not. If any single event could trigger a medical tsunami, the Balanced Budget Act is the one.

3. Wall Street and patient care

I had the unique experience of attending a general meeting of a medical group in which the doctors learned that they had just been sold. This medical group was owned by an HMO. (Corporate ownership of a medical practice is illegal in California, but there are many ways around that sticky legal problem. The HMO owned the medical group; no doubt about it.) What did the doctors hear that evening? Did they hear any concern about patient care? No. Patients were hardly mentioned at all. Was any reference made of the disruption to the physicians' lives? Not a bit. "Your contract indicates your legal situation," they were told. The singular concern cited again and again by the "suits" was shareholder equity. The stockowners of the corporation were not getting the return on their investment that they required. Everything else was of secondary importance to that fact.

Nothing else matters in the world of Wall Street. Indeed, by law, a corporation must put shareholder concerns ahead of everything else. Thus, these doctors became chattel in a giant game of Monopoly that used real dollars. They were, to say the least, upset and confused by what was happening to them. What they did not understand is that they are the wave of the future: "Under the equity model, the doctor in the trenches basically becomes a piece of human capital." (10)

The intrusion of Wall Street into health care has provided a short-term infusion of large amounts of cash for the acquisition of medical practices, hospitals, and other organizations. Indeed, medicine needs a significant infusion of money to upgrade its infrastructure, and Wall Street is just about the only source for that funding. But now the piper must be paid. As the margin gets squeezed out of health care, shareholder equity will be harder and harder to maintain. The consequences will be ugly, as the interests of investors increasingly conflict with medicine's traditional priority of patient care.

Many large publicly traded firms seem to be expert at mergers and expansion with little competency in their core business of providing medical services. Yet, at some point, expansion must yield to the daily task of doing the core business. We are yet to see any large publicly traded firm figure out how to care for patients inexpensively. The recent bankruptcy of FPA Medical Management, Inc. may be just the tip of the iceberg. We can expect to see a lot more financial pain and failures in the coming months and years." (11) Perhaps the marriage of medicine and Wall Street is doomed, but how much destruction to our profession can we endure as we try to make this relationship work?

4. The uninsured and employment linked health care coverage

Those who have no health insurance coverage at all stand as a somber reminder that our way of providing health care in the United States is very inequitable. The latest Census Bureau report shows 43.4 million uninsured people or 16 percent of our population, with an increase of 4.1 percent between 1996 and 1997. (12) Those without any safety net cannot be ignored forever as their numbers increase, but our country has successfully overlooked them so far. We must face the fact that there is no way to bring these uninsured citizens into our system as it currently exists. The connection of health care coverage to employment presents a major stumbling block to covering the uninsured. This linkage is so fundamental to our thinking that questioning its premise seems nearly un-American.

Moreover, the multiplicity of government health plans for certain selected sectors makes it difficult to address the entire population's health care needs as a single problem. Today, there is no constituency for such a far-reaching revolution. In fact, powerful special interest groups will oppose any unification of health care to cover all citizens, if this means their special programs might be folded into a single, general health plan for everyone. These stalwart groups represent important segments of our society--including the elderly, military veterans, and crippled children. Our leaders know that they flirt with political suicide to challenge any of them. The uninsured do not represent a similar powerful constituency. As such, the needs of those without health insurance will never be well addressed despite the best intentions of political leaders.

The medically disenfranchised will continue to avoid medical care until conditions are in crisis; financially they have no other choice. Then they will go to our emergency rooms because they have nowhere else to turn for help. Last minute medicine is often suboptimal and usually much more expensive. The uninsured add to the financial stresses on our medical infrastructure by increasing medical complexity and costs. In the past, hospitals dealt with these unfunded expenses by cost shifting, but they can no longer do this. As the ranks of the uninsured continue to grow, so will the operating losses of hospitals. We all pay a hidden price for this inequity.

5. Provider angst

Ask any clinician: it is getting harder and harder to enjoy practicing medicine. The problems noted previously and the subsequent loss of the joy of practice have turned medicine into just another job or worse. Many physicians are seeking escape by changing careers (including switching to administrative medicine). This problem affects other health care providers as well- pharmacists, nurses, physical therapists, and other health care professionals all share our pain, whether physicians notice it or not.

We could face a day in the near future when health care providers across the board decide that what they are doing for a living is not worth it anymore. This is not just a matter of dollars; at the moment incomes are still good as compared to most other jobs. But this angst is much more a matter of losing joy and fulfillment in one's profession. As we all feel pushed to do more and more with less and less, there comes a breaking point. For as many as one third of physicians, that breaking point (i.e., "burnout") is already here. (13) Our system could not absorb the loss of a large percentage of all doctors and other health care professionals. yet we fail to consider that such a loss might suddenly happen. The impact of a massive defection of health professionals would snowball throughout the entire medical industry.

A more invisible and widespread problem involves the many physicians who stay in practice but give up on the emotional, spiritual, and joyful aspects of the healing arts. All of us are in medicine to make a living, but for an increasingly large number of practicing physicians, making a lot of money is the only reason to work. We see this when ophthalmologists choose to give up treating eye disease by limiting their practices to cash-basis refractive surgery. We see this when a primary care doctor "treats" 90 or more patients every day using assembly line tactics and cookie cutter medicine. When doctors refuse to treat patients after hours or be on call to the local emergency room, the sacred bond we have with our patients weakens just a little bit more. How long before there is nothing special left in the doctor-patient relationship?

No particular specialty or mode of practice is immune from this spiritual loss in favor of materialism. All sorts of doctors are afflicted; the problem is ubiquitous. In one very real sense, these demoralized physicians have given up on healing as a calling. The rest of us are diminished by their emptiness and retreat. Worse, we are all in danger of being pulled down psychologically with them into cynicism and demoralization. This spiritual loss is perhaps the biggest threat to medicine of any problem we face.

Is our future all gloom and doom?

We should not assume that the widespread failure of our health care system would be entirely bad. If, or when, the business structure of medicine fails, the act of failing could fulfill an important function. Such an apocalypse may well be our only road to necessary reform of the health care system, since all the major players and forces are currently deadlocked. If a sudden upheaval occurs, the unprepared will fare the worst. We still have some time to get ready for a possible collapse of medicine, and even if a medical apocalypse never comes, those who have prepared for it could be in the best position to survive whatever changes do happen in the next few years.

One might argue that any one or two of these negative trends is not enough to topple the U.S. system of public and private health care, but taken together they paint a disturbing picture. More tinkering with the system will not fix these problems. And yet, more marginal tinkering is all that anyone proposes to make things better. In California, a stalemate in the legislature prevented nearly all HMO legislation, significant or otherwise, from passing in 1998. (14) Those few bills that did pass were mostly vetoed by Governor Wilson, even though they enacted recommendations from the Governor's Commission on HMO Reform. (15) California may be the birthplace of managed care, but so far the Golden State is not the incubator for any workable solutions to the challenges facing health care.

Discussing the possible collapse of medicine is a sad and bitter exercise. Sad because many innocent people will be hurt if medicine fails. Bitter because such an apocalypse did not have to happen. In 1993-94 our country seemed to have the right combination of political will and public interest to make a peaceful change to the health care system. That opportunity was squandered. Now we are left with the ultimate result of that political failure, and the odds of a health care crisis grow greater every day.

Crisis and opportunity

The Chinese pictogram for "crisis" is a combination of two characters: one meaning "danger" and the other meaning "opportunity." Perhaps there is still time for the medical profession to pluck opportunity out of the danger. To do this, we have to be prepared for the crisis. To be prepared, we have to admit to ourselves that such a crisis is not only possible but probable.

No one can say that a medical meltdown will come to pass. Predicting future trends is an iffy business at best. And yet, these five negative trends continue relentlessly. Likely, the reader can add other serious trends to the ones listed in this article. Wise individuals and organizations try to augur the future as best they can and prepare for possible problems based on what they see. Pretending that our health care system can continue on its current track indefinitely with just a little fine-tuning here and there is unwise planning.

Our first step, then, is acceptance of the possibility or probability of a medical apocalypse in the near future. Each of us should ask: What will I do (or what will my organization do) if such a medical meltdown does occur? What steps should I (we) be taking right now to lessen the blow? How can we protect ourselves when we see a tsunami appear on the horizon?

The answers to these questions can influence decisions about growth and purchasing plans, debt structuring, organizational reengineering, and much more. There is no one answer that fits everyone s situation. Strategic planning tends to be an optimistic exercise. That is reasonable, but we also need to run parallel strategic plans based on pessimistic projections. At least then decision-makers can consider a dangerous and pessimistic future along with an optimistic one.

We can be sure that people will continue to need medical care and that some sort of new health care system will be put into place if the current system fails. If health care collapses suddenly. the pressure will be on for a quick fix. Whatever decisions are made in that moment will determine the direction of American medicine for years to come. Medicine as a profession should be preparing to offer an acceptable and detailed substitute for the health care system in the event of its massive failure. Such a plan must be balanced and equitable to all players and must not be one that merely favors physicians. If physicians wish to be more than passive participants in the creation of whatever comes next, we'd better get ready now. We will not enjoy the luxury of time for thoughtful and detailed debate once the health system fails.


There is no joy in writing about all these problems. One can only hope that these predictions of a medical apocalypse will not come to pass. Passively wishing these dangerous trends away will not be enough. If we are to have a better future for medicine, all of us in the profession must start working now to make that future a reality. Those who do not wish to see the current health care system fail must redouble their efforts to derail these trends and other similar problems. Far better that we should be ready for a disaster that never comes than to be surprised by a medical tsunami that we did not anticipate. The task is daunting, but what choice do we have?


(1.) Cocowitch, V.A. and Fickenscher, KM. The Turnaround Imperative: A Guide for Survival in a Turbulent Health Care Environment, Tampa, Florida: ACPE, 1995.

(2.) Smith, Hedrick; in discussion of current Russian politics, C-SPAN. June 13, 1998.

(3.) Foubistor, V. and Klein, S. Latest fraud plan: private contractors, more authority, American Medical News, 41, 37 (Octobcr 5. 1998) pp. 8.

(4.) California Medical Association, Capitol Pulse. July 15, 1998.

(5.) Bland, Aura. Murder they said... California Physician, clan, (15)7 (July 1998) pp. 18-22.

(6.) Kaiser's Troubles Continue, Posts $92 Million Loss, California Medicine, (9)5 (July 1998). pp. 13.

(7.) California Medical Association. CMA survey shows pediatric cap rates don't cover physician's costs, CMA Alert, August 20, 1998.

(8.) Tschida, Molly. Up for grabs. Modern Physician, (2)9 (Sept. 1998) pp. 3.

(9.) Samuelson. Robert, 1. Having Ii All. Newsweek, September 28. 1998. pp. 71.

(10.) Reinhardt. Uwe. quoted in Carlson, Robert; The PPMC Debate, The Physician Executive. (24)4 (July/Aug. 1998), pp. 14.

(11.) Cook. Bob. Stormy weather. Modern Physician, (2)9 (September 1998) pp. 2.

(12.) Gardner, Jonathon. Uninsureds' number is up, Modern Healthcare, (28)40 (October 5. 1998) pp. 8.

(13.) Olden. Megan. Physician Burnout--Stemming the Epidemic Among Us. California Physician. (14)9 (September 1997) pp. 26-31.

(14.) Walters, Dan. Politics block HMO overhaul. The Sacramento Bee, Sept. 4, 1998. pp. A3.

(15.) California Medical Association, CMA Alert, October 1, 1998.

Earl R. Washburn, MD, FAAP, is an Administrative Physician at ElDorado Pediatric Medical Group, Inc., in Placerville, California. He can be reached by calling 530/626-1144, via fax at 530/626-3335, or via email at
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Author:Washburn, Earl R.
Publication:Physician Executive
Geographic Code:1U9CA
Date:Jan 1, 1999
Previous Article:The next stage of managed care. (Beyond Managed Care).
Next Article:Physician-centered management guidelines. (Beyond Managed Care).

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