Document 0gmM86MXXbeoYVj6nEO672MxR

Health Policy Advisory Center March EPRINT 1972 EPRINT HEALTH / PAC BULLETIN BULLETIN HO JO OF HEALTH CARE Health, Incorporated is the Howard John- son's of health care delivery. It is de- signed to franchise health care centers ' in Massachusetts. When Health, Inc. was unveiled in April, 1970, by Dr. Leonard W. Cronkhite (General Director of Boston Children's Hospital) and Governor Fran- cis Sargent, it was hailed as a model to be " carefully watched by national health plans as a possible solution of the prob- lems of health care delivery plaguing this country. " After two years it is time for a preliminary assessment of Health, Incor- porated's model for the American health care delivery system. Presenting Health's Howard Johnson's Dr. Cronkhite, in the New England Journal of Medicine (February, 1971) presented the principal features of Health, "nc.'s program: OE Primary care, defined as " continuous preventive curative medicine, health edu- cation and maintenance and dental care delivered to families, " would be offered through primary care centers serving 20- 30,000 people. Back - up services offering " acute in- bed hospital care, nursing - home and ex- tended care, rehabilitation, chronic care and home care, " would also come in Health, Inc.'s package. Initially these ser- vices would be arranged by contract with the particular institutions involved. Even- tually, all these modalities of care would be delived under " single ownership or management. " OE Prepayment mechanisms that en- courage controlled utilization and pre- ventive care would also be developed. In the beginning, however, care would be provided on a fee service - for - basis. The management vehicle for bringing about this model would be an independ- ent, non profit - corporation. From a man- agement perspective, Health, Inc. could be viewed as a holding company for a series of franchised primary care cen- ters. This Howard Johnson's of health would help obtain start - up funds for pri- mary care centers, provide a " pack- pre - aged " facility and offer technical assist- ance in financial, marketing, personnel and other management matters. As one of Health, Inc.'s founders stated, " The Howard Johnson concept of modular de- sign is employed in the clinic set - up. " In the future, when enrollment is sufficiently large, the corporation would establish cen- tralized purchasing and computer services for accounting and record keeping. Health, Inc. is designed to operate like a profit oriented - enterprise. As stated in its founding press release: Health, Inc.'s non profit - status should not " insulate the corporation from many of the business pressures which will assure the most effi- cient and economic operation. " Even Dr. Cronkhite admits: " We still have discus- sion about profit or non profit - status. There are advantages and disadvantages to each. I guess we went non profit - simply because it is what we are most familiar with. " But Health, Inc.'s non profit - status is no disguise for its business management / orientation which shines through every aspect of the model. Locally, primary care centers should serve populations between 20-30,000 because " our arithmetic model- ing has indicated that a population base of 20,000 is sufficiently small to make local management problems easy but not so small as to drive up the unit costs of ser- vice. " Statewide, Health, Inc. should have a total target population of 250,000 to 500, 000 " to realize certain economies of scale and to make useful measurements of cost effectiveness and utilization rates. " It is no exaggeration to say that Health, Inc. is more concerned about the " Inc. " than it is about " Health. " The " Why " of Health, Inc. Health, Inc. is the brain - child of Dr. Leonard W. Cronkhite, general director of the Harvard affiliated - Children's Hospital and Medical Center. He, as President of the Board, together with his administrative colleagues at Children's Hospital, make up one half - of Health, Inc.'s board; the other half is comprised of carefully se- lected " community leaders " from Boston's Black and Spanish speaking - commun- ities. Therefore, it is not surprising that the origins of Health, Inc. can be found at Children's Hospital. A 1969 evaluation by Children's Hos- pital's executive staff and trustees report- ed the primary function of the hospital to be research and teaching in complicated diseases of childhood. The hospital is the last resort for critically ill children. But these functions conflicted with the service demands of some 70,000 children who use the hospital's emergency room each year for non emergency - complaints. During the 12 year - period from 1957 to 1969, emer- gency visits at Children's Hospital in- creased from 4,500 to 70,000 per year. Dr. Cronkhite felt that Children's emergency room, like those of many other hospitals throughout the country, was compelled to bear this burden because " fewer and fewer private practitioners are available to give primary health care. " Health, Inc. was created to serve these patients and take the non emergency - load off teaching hospitals like Children's. Five leading Bos- ton hospitals were asked by Dr. Cronkhite to support Health, Inc. by giving up the primary care business. According to Dr. Cronkhite, " This would mean a major al- teration in their emergency departments and in their general outpatient depart- ments. " " Asked why he set up an independent corporation, bypassing three medical schools and 13 teaching hospitals, Dr. Cronkhite explained, " Our perceptions in- dicated that academic physicians and teaching hospital administrators wanted to leave things the way they were. There- fore, we had to create another power base through which those professionals who wanted to change the system and who were interested in community medicine could have a real base of operations with- out being sabotaged by their academic or parochial seniors. " Politics, Politics Two political events spurred the growth of Health, Inc. First, in his campaign for re election -, Governor Francis Sargent adopted Health, Inc. as a state wide program. And second, Nixon's push for Health Maintenance Organizations (HMO's) as a major federal health re- form, cast Health, Inc. into national prom- inence and paved the way for federal funding. When his opponent forced Governor Sargent into adopting a health platform, he turned for advice to Dr. Cronkhite. Cronkhite was then chairman of the Gov- ernor's Medical Assistance Advisory Council and a member of the State Task Force on Health Facilities. Cronkhite was in the midst of establishing Health, Inc. and suggested that the Governor use it as his major health initiative. Sargent bought the idea, and on April 14, 1970 " revealed details of a plan for a health delivery sys- tem now being initiated in the Common- wealth. " The press release gives the mis- taken impression that Health, Inc. was a state developed - and state sponsored - pro- gram - a misconception that Health, Inc. has done very little to correct. Yet Health, Inc. remains completely independent of state government (except for its charter as a non profit - health care corporation) without any state grants for direct finan- cial support. In February, 1971, the Nixon Adminis- tration announced the Health Mainte- nance Organization (HMO) as its funda- mental program for restructuring the American health care delivery system. Published by the Health Policy Advisory Center, 17 Murray Street, New York, N. Y. 10007. Telephone 212 () 267- 8890. The Health - PAC BULLETIN is published monthly, except during the months of July and August when it is published bi monthly - . Yearly subscriptions: $ 5 students, $ 7 others. Second - class postage paid at New York, N. Y. Subscriptions changes - of - address, and other correspondence should be mailed to the above address. Staff: Constance Bloomfield, Des Callan, Oliver Fein, Marsha Handelman, Ronda Kotelchuck, Howard Levy, and Susan Reverby. Associates: Robb Burlage, Morgantown, West Virginia; Vicki Cooper, Chicago; Barbara Ehrenreich, John Ehrenheich, Long Island: Ruth Galanter, Los Angeles; Kenneth Kimerling, New York City. 1972, 2 Although it masquerades as a preventive health care program, the HMO is pri- marily a management concept designed to save costs (see BULLETIN, December, 1971). Cronkhite's Health, Inc. fits the HMO conception ideally. In fact, it is likely that Cronkhite, as a member of HEW's Committee on Health Care, had an important role in formulating the HMO idea. Health, Inc., as HMO, was eligible for federal financing, which it eventually obtained: $ 125,000 from HEW and 93,000 $ from OEO. While awaiting government funding, the corporate level of Health, Inc. was busy fund raising from private sources. The Kellogg Foundation gave 250,000 $ ; the Permanent Charity Fund, 49,000 $ ; the Hyams Fund, $ 20,000; and Regional Med- ical Programs, $ 20,000. Funds in hand, planning for the primary care level of Health, Inc. got underway during the sum- mer of 1970. Health, Inc. leased the old hematology laboratory on the grounds of Children's Hospital and spent $ 250,000 re- modeling it. On February 1, 1971, it opened as the Longwood Center - the first and still only primary care center of Health, Inc. Though it wanted to open several other centers during the past year, Health, Inc. has had its hands full with the Longwood Center. Dr. Cronkhite is still optimistic and claims that 17 community groups have re- quested Health, Inc's assistance in explor- ing primary care centers for their neigh- borhoods. These groups might do well to examine the problems at the Longwood. Center first. Promises, Promises (or full of Boston Beans) During its first year of operation, the Longwood Center failed in nearly every promise it made to both patients and staff. A recruitment brochure for patients made Health, Inc. - a holding company for a series of franchised primary care centers. the following promises to prospective enrollees: @ " One doctor - your doctor - in charge of health care for the entire family. " Within its first year, Health, Inc. had a nearly total turnover of doctors. One physician who recently left Health, Inc. re- ported that some of the patients he saw had four different doctors in a period of less than eight months. He suggested that in terms of continuity of care, patients might be better off at some Boston City Hospital clinics where patients have the same doctor for a least a year. OE " Open 24 hours a day. " The Boston Globe announced on January 31 1971, , that " The Longwood Center of Health, Inc. will open its doors, which are to remain open 24 hours a day, 7 days a week, at 9:00 A.M. tomorrow. " However, this has yet to happen. Hours during the first year were from 8:30 A.M. to 9:30 P.M. Monday through Friday and from 9:00 A.M. to 1:00 P.M. on Saturdays and Sundays. Plans for a 24 hour - answering service were only formulated after 9 months of operation. OE " Complete medical and surgical care. " All surgical patients, often even those requiring suturing of minor lacera- tions, were referred to the neighboring Peter Bent Brigham Hospital, Children's Hospital's adult counterpart. There pati- ents pay on a fee service - for - basis at the doctor's full fee. @ " Preventive care and health educa- tion. " Some preventive care was offered at the Longwood Center, but according to one of the doctors, " It was quite hap- hazard. " Physical check - ups were done, but routine preventive laboratory tests were left up to the individual doctor. Sickle cell screening was performed rou- tinely on all Black patients. But there was no counseling program for patient's dis- covered to have sickle cell trait. One of the few preventive care and health educa- tion programs - the nutrition education and counseling program - was discontinued 6 after). the first five months. (see box, Page @ " Everyone who joins Health, Inc. auto- matically becomes a member of the Con- sumer Council and has a voice in how 3 the family care unit is operated. " To date, there is no Consumer Council at the Long- wood Center. In fact, the public relations director of Health, Inc. has said there will be no Consumer Council at Longwood, be- cause the Center does not serve a coher- ent community. While the Center was originally designed to serve patients with- in a three to five mile radius, because of low enrollment, the region served had to be expanded. While the administration says there will be Consumer Councils in future centers, it is clear that their role will be circum- scribed. In an article written for hospital admiinstrators, Dr. Cronkhite describes their role: " to provide technical advice to consumers on how to organize them- selves to be an effective voice. " He con- tinues by saying, " The community will not hire and fire anyone, nor will it have operational or fiscal control. " In the same article, Dr. Cronkhite in- dicates his disdain for the community con- trol movement, which he labels " rampant consumerism, especially on the part of blacks, that has affiicted everyone from East Baltimore to Roxbury. " He suggests an alternative: " We [Health, Inc.] have taken the posture to maintain stalwartly that consumers can never be satisfied un- less providers are satisfied. " Cronkhite then lists the desires and needs of both consumers and provides and states that it is the clinic management's task to insure that both lists are fulfilled (see box, Page 4). OE " Health, Inc. gives you all these bene- fits at no more cost than you are paying now, for less! " In spite of promises of pre- payment, Health, Inc. still operates on a fee service - for - basis: $ 16 for an evalua- tion visit (over 20 minutes); 12 $ for a special visit 10-20 ( minutes); and $ 8 for a routine visit (less than 10 minutes); and extra for laboratory fees. However, at Children's Hospital Emergency Room (100 feet down the road from the Longwood We Aim To Please According to a report done by the Harvard Business School / School of Public Health, " Health, Inc. is opposed to giving non professional - community people operational control of a health delivery system. They [Health, Inc.] have observed in OEO and other government demonstration projects that in all too many instances'professional consumers'who have gotten a taste of power and want to gain more, force the programs to become embroiled in political power plays. " Health, Inc. and a group of community leaders made a list of consumer desires in health care and professional desires. They found the items were not mutually exclusive. They hope to build the satisfaction of the consumer's de- sires into the reward system for the medical staff. It is the clinic management's task to insure that the desires and needs of both parties are supportive of one another and that they are fulfilled. " The following list has been prepared by Health, Inc.: Consumer List A setting in which one receives care with privacy and dignity * Professional List An opportunity to lead an orderly life (can't do it in private practice) A career ladder Availability of care 24 hours a day A physician that one can relate to Successful medical care Hospital privileges so that he can remain a part of the profession and be able to refer patients. If a medical school is available, at least an honorary affiliation is de- sired so he can obtain professional status and keep up with changes in medicine A reasonable salary, with time and fringe benefits so that he can spend it The truth is that Health, Inc. has not succeeded and cannot fulfill either the consumer's needs or the professional's desires. 4 Center) the rates are only $ 14 for the first visit, and free for routine follow- up care. The Harvard Community Health Plan, a prepaid group practice program located several blocks from the Longwood Center, offers as many visits as needed for a prepaid sum of $ 20 a month for an in- dividual, including hospitalization insur- ance. Health, Inc. is supposed to transform itself from a service fee - for - operation to a prepaid program; but considering the poor record on its other promises, that may be a long time coming. Less explicit promises were made to the staff of the Longwood Center. Health, Inc. was a new program, supported by signifi- cant progressive forces within the health and political establishment. The staff ex- pected the opportunity to carve out new roles. David Weiner, a close collaborator with Dr. Cronkhite on Health, Inc. stated that the " health care team was one of the major operating concepts for Health, Inc. " The team would consist of a doctor, nurse, nurse's aide and clerk typist working together on an equal basis and having fre- quent meetings to iron out differences. Nurses were promised on job - the - training in order to become nurse practitioners. These promises were also broken. The nurses were most articulate in their com- plaints: "... nurses have been forced to do clerical work, leaving them with less time for patients. There is no nursing director and so called - service in - education for nurses has been relegated to lunch- hour patient conferences. Working condi- tions for nurses have deteriorated... The nurses and most employees have not been given a contract. Nurses are required to work two half - and - a - more hours per week than originally stated - with no increase in pay; they do not receive evening differ- ential pay. The fringe benefits originally promised have not been approved by the corporation. Although nurses were hired with the understanding that they would contribute to the planning of the facility, they have not been consulted. " Consequences, Consequences or (, Who Burnt the Beans?) Discontent built up within Longwood Center during the first few months. The corporate level of Health, Inc. felt that the Center's administrator did not have " con- trol of his staff " and failed to meet enroll- ment and income projections. He was fired in June, 1971. The nurses, however, continued to push for their demands for in service - education, fringe benefits, etc., and to point out the hypocrisy of Health, Inc.'s recruitment brochure. All four nurses were finally fired, plus several secretaries. Several of the fired workers were joined by 30 to 40 members of Bos- ton's Medical Committee for Human Rights in picketing and leafleting the Center. At the end of the first year of operation, the Longwood Center experienced almost 100 percent turnover in staff. Eight staff were fired, the rest resigned: including four secretaries, three nurses, one nurse coordinator, one administator, two social workers, two nutritionists, and six full or part time doctors, including the medical director. But if Health, Inc. had trouble keeping staff, it had even more difficulty attracting patients. After one year, the Longwood Center had only seen 6,000-7,000 patients, most of whom did not regard the Center as their primary source of care. A major- Health, Inc. has not allowed its patients any voice in policy making and is operated as a business... Balancing its books has been far more important than the delivery of health care. -Report on Health, Inc. Boston MCHR ity of these were Medicaid patients, since they were solicited by letter from those using the emergency rooms of the two neighboring hospitals, Children's and Peter Bent Brigham. Health, Inc. was forced to explore other sources of patients. The Division of Youth Services of the Massachusetts Department of Correction has agreed to bring inmates to the Longwood Center for the same fee charged regular patients. A prepayment plan was arranged with the Division of Child Guardianship, under which Health, Inc. received 40 $ per month from the state for each foster child enrolled. Plans are to serve 1500 children. Thus it appears that a large proportion of its present patients had little to say about their choice of Longwood Center. Other more organized groups of pa- tients rejected Health, Inc. outright. When 5 28 Flavors - No Food Health. Incorporated guaranteed its enrollees " preventive care and health education. " In an unexpected windfall, this guarantee took on some reality. The Nutrition Department of Harvard School of Public Health, after being turned down at the Columbia Point and Bunker Hill Health Centers, offered its services to Health, Inc. Dr. Cronkhite (founder of Health, Inc.) was enthusiastic, but he insisted that Health, Inc. had no funds to support a nutrition program. So the Nutrition Department raised 59,000 $ from the Public Health Service to train a nutrition aide and provide community services. However, it became obvious, from the moment that the Longwood Center opened its doors, that Health, Inc. placed a low priority on the nutrition pro- gram. The nutrition aide training - in - and her instructor were assigned to the smallest examining room in the building. Demonstrations and classes for patient groups were impossible in the space provided. There wasn't even a bulletin board. The nutritionists were prepared to provide a variety of services, ranging from individual counseling on diets for hypertensive and diabetic patients, to group sessions on shopping and family budgets. But the real problem was that very few patients were referred for counseling and others did not keep their appoint- ments. In the first five months at Health, Inc. the fulltime nutrition aide training - in - saw a total of 96 patients (less than 1 per day). Faced with the lack of cooperation and concern at Health, Inc. and especially exasperated by the meager patient load, the Nutrition Department withdrew its services five months after the program started. The Nutrition Department, how- ever suggested that Health, Inc. retain the nutrition aide; and a doctor at the Longwood Center offered to pay half her salary, if Health, Inc. would pay the other half. Health, Inc. refused to put up the money. Nutritional health education became a thing of the past at the Longwood Center. is was rumored that Health, Inc. might move into their neighborhood, the Martha Eliot Health Center in Jamaica Plain and the South End Health Center swiftly and successfully moved to block Cronkhite. Both Health Centers felt threatened by Cronkhite's adamant stance against com- munity control. Another blow to Health, Inc.'s expansionary vision was dealt by a Spanish speaking community in Spring- field, Massachusetts. The community vetoed Health, Inc. in spite of a $ 93,000 OEO grant that it had obtained for a primary care center there. Bad Hamburgers ' The Longwood Center has failed by its own standards. It has not attracted pa- tients; it seems to have repelled staff; and it has not made money. When asked how quality patient care could be maintained at Longwood, George Lunn, Children's Hospital Personnel Director and a Health, Inc. Board member, said: " If McDonald's sold bad hamburgers it wouldn't last very long. " By this criterion the Longwood Cen- ter should close down. Of course, the problems of poor man- agement, worker discontent, etc. could be chalked up to the difficulties of the start- up year and undoubtedly, this played a role. But the Longwood Center failed for 6 more basic reasons. It couldn't satisfy the needs and desires of both providers and consumers and still make money. As the Center's administrator stated: " We were very much under pressure to have the doctors meet the projections, which were directly tied into dollars. The commitment was never really to effective care, but rather that'x'number of dollars could be generated by seeing x'' number of pa- tients. It was never realistic to expect that we would do both things: generate dollars and do effective care... " With budgetary considerations foremost, the needs of pa- tients and health workers suffered. For example, at the Longwood Center, pa- tients were scheduled in rigid time slots according to the amount charged per visit. If a doctor doing a routine check - up took longer than the allotted time, he had to reschedule the patient for a second visit- an inconvenience to both the doctor and the patient. The fiscal problems of Health, Inc. could be blamed on its inability to develop a pre- payment scheme and a single manage- ment vehicle. Prepayment would guaran- tee Health, Inc. a monthly income from subscribers. A single management vehicle Luniting primary care, acute hospital and nursing home facilities under one man- agement would permit Health, Inc. to save money. For instance, instead of ex- pensive hospitalization for diagnostic work, tests could be done more cheaply in the primary care center; and patients no longer needing acute hospital care could be transferred earlier to nursing homes. It is true that these " management fixes " were not applied to the Longwood Center during its urst year of operation. But even if these cost saving - measures had been used, Health, Inc. would still be in trouble. There are many other costs which better management cannot control: the cost of high priced - medical technology and drugs (supplied by profit making - companies), as well as the costs of handsomely paid administrators and doctors. These uncon- trollable costs continue to rise at rates three times the consumer price index. Eve under the bet prepayment scheme higher costs mean higher premiums. In addition, Health, Inc. drew a majority of its patients from Medicaid. As medical costs soar, state governments, faced with angry taxpayers, seek ways to cut back expenses. Rather than control the " profits " of the medical industrial - complex, the gov- ernment takes whole groups of people off Medicaid. In Massachusetts, all general relief recipients (those not on federal pro- grams) were recently cut off Medicaid. These patients will no longer be able to use the Longwood Center. Health, Inc. diagnosed the illness of the American health system to be a lack of planning, coordination and management and prescribed a large dose of spanking- new corporate management techniques. It assumed that with some technological and managerial tinkering and streamlin- ing, the system, as it is now, can be made to work. It found itself treating the symp- toms while the disease ran rampant. It is not surprising that Dr. Cronkhite should prescribe more and better manage- ment for the ailing health system. For Dr. Cronkhite has built his career on finding management solutions to medical institu- tional problems. When he was appointed General Director of Children's Hospital in 1962, the President of the Board character- ized the appointment as " the first major step in the reorganization of Children's Hospital Medical Center along lines con- sistent with modern management prac- tices. " In building Health, Inc., Dr. Cronk- hite turned for advice to five large busi- ness concerns: " companies whose talents we needed and who were competitive non - _ an electronics firm, because it is the largest single employer in the state; a gro- cery store chain, because it has much ex- pertise in running multiple operating units from a single corporate headquarters; a large international corporation with good managerial skills; a local investment Health, Inc.'s advisors: An electronics firm - the largest employer in the state; a grocery store chain; a large inter- national corporation; a local investment counselor; and a life insurance company. counseling organization and a life insur- ance company. " Unfortunately Dr. Cronkhite is hardly alone in his estimate of the American health system and its cure. In much the same way as the organized medicine of the AMA once insisted on " freedom of choice " as the ideological underpinning of the American health system, the repre- sentatives of the liberal " corporate " or- , ganized medicine of today rest on good management as doctrine. Those " young turks " who talk about restructuring the American health system are recruited by the Cronkhites of today to place their energies into designing computer systems, better reimbursement formulas, and single management vehicles which allow the present system to remain fundamentally unchanged. If nothing else, the saga of Health, Inc. demonstrates the limits of this kind of managerial reform. -Oliver Fein Research by Boston Chapter, Medical Committee for Human Rights. Copies of complete report available from: Boston MCHR, P.O. Box 382, Prudential Station, Boston, Mass 02199 7 THE AMERICAN HEALTH EMPIRE: POWER, PROFITS, AND POLITICS A REPORT FROM THE HEALTH POLICY ADVISORY CENTER cAenn taenrasl yMseidsi cptaooi wde rM eodfi ctahNieadt i Aoonmafel rHNieaactlatihno Inhnaseular alintcneh tshyes theema lI-nts huwr ahsnocye s. pt2re79om fp pia.t nsd pdroocfuimtesn tfsr otmhe ibta naknrdu patncdy wohfo rleocseenst lroesceesn.t Irte fiodremn tpirfoigersa mgsr ofwrionmg National PAPERBACK $ 2.00. Mail orders to: Health / PAC 17 Murray Street New York, N. Y. 10007