Document 8V4rvB5KD9mGdO1aOVp1LXMyK

HEALTH Health Policy Policy Advisory Center Volume 13, Number 1 PAC BULLETIN Public Public Public Public Hospitals Hospitals in Private Hands 2.11 Peer UB Review Health / PAC Bulletin November December / 1981 Board of Editors To the Editor: I just read the September / Octo- ber issue and found it interest- ing. Why did Arthur Levin wait till the end of his article to talk about " salt " restriction? The docs I respect (and I) try this first if circumstances permit, despite its difficulty; and I can't believe your NYC docs are that far be- hind the people I trained with in Indiana! David R. Cundiff, MD Preventive Medicine resident Johns Hopkins University Baltimore, MD Tony Bale Pamela Brier Robb Burlage Michael E. Clark Barbara Ehrenreich Louanne Kennedy David Kotelchuck Ronda Kotelchuck Arthur Levin Patricia Moccia Marilyn Norinsky Kate Pfordresher David Rosner Hal Strelnick Richard Younge Associates: Des Callan, Madge Cohen, Kathy Conway, Doug Dornan, Cindy Driver, Dan Feshbach, Marsha Hurst, Mark Kleiman, Thomas Leventhal, Alan Levine, Joanne Lukomnik, Peter Medoff, Robin Omata, Doreen Rap- paport, Susan Reverby, Len Rodberg, Alex Rosen, Ken Rosenberg, Gel Stevenson, Rick Surpin, Ann Umemoto. Editor: Jon Steinberg Health / PAC Staff: Carl Blumenthal, Debra De Palma, Dana Hughes, Peter Medoff, Steven Meister, Loretta Wavra. MANUSCRIPTS, COMMENTS, LETTERS TO THE EDITOR AND SUBSCRIPTION ORDERS should be addressed to To the Editor: We need more positive articles! How about something on Nicara- Health / PAC, 17 Murray St., New York, N.Y. 10007. Subscription rates are $ 15 for individuals, $ 30 for institu- tions. gua? Before the revolution the most ever spent there on public health was $ 26.4 million in 1979. Infant mortality was 123 per thousand live births. Most of the 1981 Health / PAC. The Health / PAC Bulletin is published bimonthly. Se- cond class postage paid at New York, N.Y. and at additional mailing offices. Articles in the Bulletin are indexed in the Health Planning and Administration data base of the National Library of Medicine. health care facilities were pri- vate, and beyond the means of the majority of the population. Since the Sandinistas took To the Editor: Your article " Voluntary Com- vel many miles to get it other- wise. power they have opened five hospitals and about 80 health stations, most of them in rural areas. This year the health budget is $ 46 million. Medical personnel will be increased to 4500 paramedics, 900 nurses, and 1300 doctors (including 200 Cubans). pulsions " on the growth and ef- fects of proprietary hospital chains contained many useful insights, but, I think, greatly understated the positive role of for profit - hospitals. We live in an era of slow eco- nomic growth; public funding of hospital construction is virtually To put it another way, these private institutions are making a profit because they are filling a real need for health care. With government financing at reason- able rates for services, the medi- cally indigent could also take advantage of these facilities. As a group which has often I realize it's hard to get infor- mation about socialist medicine non existent - . Small towns with (justifiably) criticized voluntary rapidly growing populations are hospitals as accountable to no (you won't find it in the New York Times or the New England Jour- nal of Medicine very often) but barely able to build sewers fast enough, and large capital out- lays for new hospitals are out of one, you ought to look more fav- orably on for profit - hospitals, which are accountable to a that is all the more reason why you should make the effort. the question. Private firms may not provide care for all, but they do provide broad population through the marketplace. A. Pitkin quality care, in the community, Stephanie Rogers, Ph.D. 20 New York for many who might have to tra- Boston, MA Notes & Comment S" ne of the brilliant insights of American public relations is that although a rose is a rose is a rose, if you call it a canteloupe in enough press re- leases, some people will begin to believe it is a canteloupe. This observation came to mind when Health / PAC received a news release from VE, The " Voluntary Effort to contain health care costs. " VE is a coalition in which the American Medical Association, the American Hospital Association, Blue Cross, Blue Shield, private insurers, and the Health Industry Manufacturers Association play the major role. There may be other interest groups which have contributed to and profited from the incredible escalation of health care costs over the past two decades, but it's hard to think of who they are. In its new mailing, VE announced that in ad- dition to the coalition's tireless efforts to find " a voluntary approach to resolving the nation's health care cost problem, " it will be working on " the demand side of the cost equation, e.g. in- creased population, more aged persons, ex- panded health care benefits, and new tech- nology. " After reading this, it seemed wise to put the press release down and take a deep breath be- fore venturing further. Visions of an imaginary VE strategy session were forcing their ominous way to mind. " Guys, " says a brilliant young cost analyst flown in from a prestigious university, " if we want to put medical costs into a descending mode, which is doable, we've got to spin off from the Reagan Stockman - construct and cut to the bone. " A chorus of rational huzzahs runs around the table. " Wait, " says a very ethical drug manufacturer who has just introduced a new remedy for most of the side effects of two other drugs his company sells, " We can't restrain technological inno- vations just when the Administration is green lighting us to let the buyer beware. That would be stabbing the deregulation program in the back. " " And don't forget, " warns a representative from a major health insurance firm, " we can't discourage free enterprise by restraining our profits just when the government is about to say we should assume the whole coverage burden. " " No question, " says the young academic, " I'm front positioning - the other two factors, in-. creased population and more aged persons. Over the long term we hope to zero out the surplus by raising entry - level costs for babies and deaccessioning non productive - old people through an accelerated depreciation schedule. But we also have a short term downstream op- tion. Our computer studies show that if you de- couple the lower 20 percent of the population from the health care system you can raise per patient capital input and profits 30 percent and still effect significant reductions in the GNP health care component. Not only that, people who do get care will pay market rates so we can be sure service costs will find their true value. " " Terrific, " " That's knocking it to the knee - jerk liberals, " and other expressions of value - free cost benefit - analysis fill the room. " An investment incentive for us and raised outlays freed up to buy the Pentagon more arms, " cries an ecstatic prosthesis manufacturer. " " Right, " says the young analyst, " I've already audience - readied a message President Reagan can offer those who will sacrifice their todays for our better tomorrows:'Get the government off your back and you can lie on your stomach at home. ' After fighting off this fantasy, returning to the VE press release seemed a relief. Sure enough, all it promised was " a comprehensive utilization restraint program (spearheaded by the American Medical Association) " and " special attention to Medicare Utilization patterns led (by the Blue Cross and Blue Shield Associations). " That's completely different. Maybe. -Jon Steinberg aaa eae Vital Signs Inspection statistics: Total inspections down 21% Complaint inspections down 32% Follow - up inspections down 72% Total inspections down 45% Construction inspections down 13% Excuses Up In response to an earlier AFL- CIO study, Federal OSHA Di- rector Thorne Auchter claimed that the decline in numbers of inspections and citations was the result of a reduced inspection staff conducting fewer inspec- tions. (Washington Post, Dec. 26, 1981) In the current study, the AFL- CIO replies that, " OSHA does have fewer inspections (the number of safety and health inspectors is down to approximately 900-1000). However, in addi- tion to declines in numbers of inspections and _ citations, there have been significant decreases in the proportion of inspections resulting in citations as well as the pro- portion of total citations which are serious, willful and repeat. Total numbers may show a decline due to a re- duced inspection staff, but proportion of inspections resulting in citations and the nature of those citations should not be affected. " The union federation parti- cularly noted the steep decline in enforcement in recent months as changes in national OSHA enforcement policy begin to have increasing impact at the local level, among OSHA area directors and inspectors. For ex- ample, comparing enforcement activity for October, 1981 with that for October, 1980: Complaint inspections down 49% Follow - up inspections down 81% Citations and Penalties: Percent of initial inspections with citations down 11% Number of serious citations Number of serious cita- down 33%. tions issued down 40% Number of willful citations Number of willful citations down 75% issued down 94% Number of repeat citations issued down 60% Number of repeat citations down 48% Percent of citations which are Number of complaints fil- ed down 40% serious, willful and repeat down 18% Complaint backlog up 208% Penalties down 48% -David Kotelchuck Other indicators: David Kotelchuck is a member of the Health / PAC Editorial Board. Number of complaints filed down 26% Complaint backlog up 105% Average amount of time spent on health cases down 30% Enforcement Down Enforcement of the Federal Average number of employ- > ees covered by inspections down 16% OSHA law continues to decline -David -David Kotelchuck precipitously, according to a re- cent study by the Department of Occupational Safety and Health, AFL CIO -. Unleashing Free Enterprise " For practically all com- pliance indicators evaluated, the latest analysis shows con- tinuing declines in OSHA en- forcement activity under the Reagan Administration, with November, 1981 being the worst month yet for enforcement since the Reagan Administration took office, " according to George H.R. Taylor, Department Direc- tor. Comparing figures during the first year of the Reagan Adminis- tration (November February - , 1981) with those during the last year of the Carter Adminis- tration (October January - , 1980), the study found: After laying off hundreds of inspectors and allowing its budget to be savaged, the Occu- pational Safety and Health Ad- ministration leadership found itself facing a severe occupa- tional hazard: overwork. With the current number of inspectors, admitted OSHA's deputy assistant secretary, " it would take us 50 years to cover every establishment. " To lighten the burden, many previously proposed OSHA regulations have either been eliminated or " indefinitely postponed. " But an overwhelming work- load remains and the Reagan Administration appointees, ever mindful of the needs of their employees, not to say Corporate America, have found a solution. Some call it deregulation. We like to think of it as a wholesome faith in the basic goodheart- edness and responsibility of American free enterprise. Under the proposed plan, OSHA inspections of many com- panies would be eliminated in exchange for voluntary compli- ance with health and safety rules. To ensure they follow through, most participating companies would establish man- agement - worker committees to handle health complaints. Companies with current health and safety plans would not be required to create com- mittees. They are to show their good will by reporting regularly to their employees. Enforcement has been left a little vague. Trade unionists have express- ed doubts that after neglecting their workers'health whenever it was financially beneficial throughout the history of capital- ism, companies will suddenly reform. " It is doubtful, " com- mented George Taylor of the CIO AFL -, " that management would allow a committee to make any decision on health and safe- ty that could cost them money.'" We hope Mr. Taylor and his ilk are unduly cynical and pes- simistic. We've been reading the corporate ads in " opinion- maker " magazines, Saturday Review, Harpers, the New Republic, and so forth, and we know these corporations, at least their their public public relations relations depart- depart- ments, realize how despicable it is to sacrifice the health of humans, plants, and animals just to make a little extra cash. There is, however, some reason for uneasiness. Cor- porate executives may be a bit confused about what is expected of them since at least one Fed- eral agency appears to be telling them that almost anything goes as long as it's profitable. According to the February 18 New York Times, the Securities and Exchange Commission re- cently overruled its enforcement staff and decided not to prose- cute Citicorp, owner of the country's second largest bank, for conducting illegal actions to avoid taxes in other countries. John M. Fedders, a corporate lawyer who just became head of the SEC's enforcement division, joined other top officials in con- tending that because Citicorp had never represented to stock- holders or investors that its senior officials possessed " honesty and integrity, " it had no legal duty to disclose its trans- gressions. Furthermore, Mr. Fedders noted, Citicorp's con- duct " does not appear to have resulted in material economic harm to the corporation. " Of course, if workers sued be- cause their health was con- sciously endangered on the job, it could result in " material eco- nomic harm to the corporation. " To close this loophole and allow free enterprise free rein, the right to sue employers must be limited. This is exactly the intent of a new piece of legislation writ- ten by the legal department of Johns Mansville - Corporation and sponsored by Rep. Millicent Fenwick (NJ R -) and Sen. Gary Hart (Colorado D -) . It will pre- vent asbestos victims or their widows from suing asbestos companies for compensation. The burden would be shifted to the taxpayer. As readers of the Health / PAC Bulletin are aware (see Vol. 11, No. 5) there are very good grounds for such suits now, since Johns Mansville - in particular concealed information on hazards from its employees for many years. Let Poland be Poland could be just a beginning. The Reagan Administration appears to be giving new meanings to freedom every day: let the buyer beware, let the worker be sick; and let them all eat catsup. -Peter Medoff (Peter Medoff is a member of the Health / PAC staff.) 5 better Da The socialist government of President Allende in Chile was providing free milk and other food for the poor. This reduced the number of premature babies and lowered infant mor- tality rates. But we weren't selling our incubators. On the contrary, our multi milli-o dno ll-a r invest- ments were threatened. We helped take care of Allende. Taking care of people is one of our best ideas. And with the unique air compressors we've come up with for incubators, premature babies can get the pure air, free of all toxic sub- stances, they need to survive. Or at least preemies whose parents are rich enough to af- ford our incubators. And they'll grow up to buy bread and insurance from us, rent our cars, and use our tele- phones. Dollar for dollar, good nutri- tion saves many more babies than high technology. But what pioneering medical centers want to buy is innovative com- pressors. And we like to help people. That's why we aided Hitler and Nixon. Some of the ideas we like to boast about most are the ones that help very little people. Babies are small and helpless. A bit like most Third World countries. When you see our name, we hope you'll think about how we help some babies. Oiudre abs etshta ti dfeoaosl apreeo ptlhee people. WITT c o / the Health / PAC Bulletin, 17 Murray St., New York, N.Y. 10007 Expanding Contracting Private Management of Public Hospitals in California by William Shonick, Ph.D. Throughout American history we have never stopped debating which publicly mandated functions are better performed directly by a public agency and which should be contracted out to private entrepreneurs. Current practice ranges across the spectrum. Firefighting is almost entirely the province of local govern- ment. Military aircraft are manufactured pri- vately with government financing. In between are various combinations of partial public came synonymous with poor care. And yet the policy continued. Professional services as well as board- ing, nursing and even burials - were " let out " to the lowest bidder on a flat rate basis. In Kern County, California, for in- stance, in 1877 a contract to " furnish medical and surgical attendance and all medicines and surgical supplies to all pa- tients who might be hospitalized " was operation and partial contracting out. Sometimes these hybrids will exist in the same agency. Many local health departments, for ex- ample, perform functions such as restaurant inspection directly and contract out programs such as mental health services. awarded to a physician bidding $ 116 per month. Experience soon furnished abundant evidence of the shocking defects inherent in such a system. There was no guarantee that the patients received the care needed. One of the sharpest controversies over con- tracting publicly mandated services has been in The physicians who waged the necessary battle and those who captured the contract provision of medical services to those unable to pay for it privately. As far back as the late 1800's critics denounced localities that contracted out care of poor populations to the lowest bidder with little or no attention to their capability or performance. These exposures were so devas- tating that the very term " contracting out " be- were not necessarily the most respected and competent professional men. At the end of the contract year, the unscrupulous doctor, doing as little as possible for the sick, could record a handsome profit, while the conscientious discovered a deficit. Inevitably many physicians became convinced that a fair deal could never be expected from a governmental William Shonick is Professor of Public Health at the University of California, Los Angeles. This article is based on research conducted by Ruth Roemer, J.D., who is Adjunct Professor of Public Health at UCLA, SPH, and William Shonick, supported by a grant from the California Policy Seminar 1979 # 81. Partial support of Ruth Roemer's participation was provided by the University of California, Los Angeles, Health Services Research Center (Charles E. Lewis, agency. These facts alone, one may be inclined to assume, should have induced public agencies once and for all to discard the practice of " renting the sick out. " Yet, such is not the case. In some parts of the country the method is still in use, and here and there it has even remained on the statute books. books. This commentary was written by a noted M.D., Director). The Center was supported by public medical care authority in 1945. grant number HS 02015 from the National Among the solutions used to help remedy the Center for Health Services Research, U.S. conditions he described was the establishment Department of Health and Human Services. of public hospitals dedicated to caring for sick 7 poor people. These institutions began to in- crease in many regions in the 1900's. In Cali- fornia, the movement to establish county owned and operated institutions accelerated in the 1920s; by 1950, 50 of the state's 58 counties had at least one, and only the eight that were sparse- ly populated had none. Public hospitals serving low income patients were never luxurious, but in the 1930's and 40's many were medically respected and widely used by low income persons, including the working poor. This was particularly true in the major ur- ban centers. Among the best known were those in New York City, Cook County (Chicago), Philadelphia, Boston, Baltimore, and Los Angeles County. Even the poor would be able to abandon inferior public institutions and enter the " mainstream. " " Contracting out the management or owner- ship of these hospitals wasn't an issue then. Almost all private hospitals were sponsored by non profit - entitles. Often they provided a con- siderable amount of free care but even the wealthiest couldn't hope to shoulder the burden of public hospitals. There was no government health insurance and little private. For profit - (proprietary) hospitals were relatively scarce, and certainly had no interest in subsidizing care for those who couldn't pay their bills. Private consulting and management firms eager to run hospitals had yet to appear. The Postwar Era After World War II new forces quickly trans- formed this environment. Private health insur- ance grew explosively, especially hospital coverage. This increased demand for private hospital care, and passage of the Hill Burton - Hospital Construction Act in 1946 provided the funds for new beds. Rapid expansion of the Na- tional Institutes of Health extra mural - research grant programs stimulated a spectacular in- crease in medical research and high technology medicine. New facilities and equipment quickly became obsolete. Hospitals had to scramble for capital to purchase the " latest developments. " A Public hospitals found it increasingly more difficult to compete. Their equipment was often older, their staffing thinner. Private physicians in the neighborhood followed their privately in- sured patients to the suburbs. The inner - city tax base declined, reducing available funds. As the working population drained away, the propor- tion of non paying - patients increased.6 Public hospitals limped through the 1950's and early 60's, sustained politically by the pub- lic perception of their position as the sole facility available to a large proportion of the poor and many of the near poor - who lacked hospital cov- erage. The elderly, mostly low income and on average high users of health care, comprised a major proportion of public hospital patients. The Medicare and Medicaid Acts of 1965 accelerated the decline of the public hospital. They did so by helping to drain the pool of pa- tients using the same hospital and by reimburse- ment mechanisms that disadvantaged the public hospital in comparison to private ones. Theore- tically, this didn't have to happen. Direct grants could have been allocated under these pro- grams to expand and improve public hospitals so that they could better care for the poor by themselves or in conjunction with private insti- tutions receiving fee service - for - subsidies. However public hospitals were in such dis- favor in left, right, and center circles that this alternative never had a hearing. The right wanted fee service - for - reimbursement to be the sole form of subsidy since this would enhance the " open marketplace " of " freedom of choice " and " competition. " The center and much of the left saw an opportunity to eliminate " second class " medical care: even the poor would be able to abandon inferior public institutions and enter the " mainstream " of privately owned and managed medical establishments. The public hospitals would then be justifiably left to wither away. Consequently, after Medicaid and Medicare were enacted the abandonment of public hospi- tals accelerated across the country. Localities that couldn't shed them entirely cut their sup- port. By 1970 the situation was so dire that the American Hospital Association devoted an en- tire issue of Hospitals, its journal, to " the plight of the public hospital. " By 1975 the survival of the public hospital was in doubt. An ad hoc Commission on Public Hospitals, set up largely through AHA initiative, began a major inquiry into their condition. " Of the ways in which Medicare and Medicaid weakened the public hospital two were particu- larly devastating, the reimbursement system and funding for patients to go elsewhere. Their effects were closely linked. When these programs began, the reimburse- ment procedures of Blue Cross and commercial insurers were already restructuring private hospital management. Medicare and Medicaid adopted many of the Blue Cross reimbursement methods based on reported hospital costs. Because Blue Cross paid cost, and in many lo- calities charges, the top priority for manage- ment became formulating charge structures and reporting procedures that maximized reim- bursement from Blue Cross, Medicaid, and Medicare. " True " efficiency, in the sense of lower costs per unit of care, became far less important. A hospital that rejected this principle and kept a tight rein on plant and equipment expenditures to keep costs and charges down risked losing physician referrals to institutions that kept their reimbursement rate up and were able to purchase the latest innovations. The prominence of reimbursement expertise in these circumstances created new territory for private entrepreneurs. Chains of private hospitals that admit only patients with guaran- teed paying ability and structure their services to maximize reimbursement rates have attracted a sizable number of new investors. In sheer self- defense some non profit - hospitals have also banded together in chains, although these are still less significant economically. Many of these chains have also established hospital management consulting firms. They contract with hospitals other than their own to manage them for a fee. At first these contracts were mostly with other for profit - hospitals, but they now have been signed with many private non profit - and even public hospitals.8 As profitable businesses whose repayment of debt is virtually guaranteed by Medicare, Medicaid, and private insurance reimburse- ment practices, the private chains have little dif- ficulty raising capital for renovation and expan- sion of their own hospitals. These loans are readily available in the public bond market or from banks. Most voluntary hospitals also keep their plant and equipment up to snuff by fol- lowing a similar strategy. Public hospitals, however, have been unable to obtain capital funds even if there is a reason- able expectation that higher reimbursement rates from Medicaid and Medicare would cover repayment of much of the debt. In California they are effectively blocked because local voter approval is required to float a public bond issue, and in recent years such proposals have been regularly turned down. As a result, the gap between the condition of their facilities and those of competitive hospitals has widened rapidly. Patients who can tend to choose the better equipped private facilities; the number who use public hospitals has accord- ingly steadily declined in many places, further eroding their financial viability. It has also add- ed to the perception of the public and legislators that they are not needed any longer. Dissatis- faction with their deteriorating plant, services, and occupancy has reduced local political sup- port, leaving them vulnerable to demands for further economies and efficiencies. The mechanism proposed for instituting cost- cutting and efficiency measures has often been contracting out of management. Many of the firms brought in operate their own profitable chains; all have " reimbursement experts " spe- cializing in ferreting out the highest possible insurance payments. Management contracts are a compromise position for local governments under pressure from those who wish to keep the hospital open and improve it with better public management and those who would like to sell it off or close it. Proponents of private institutions have argued that they have " better " personnel and that the profit motive increases their cost consciousness. Those who favor public management argue that these efficiency claims are largely based on myth. They believe concentration on the " bot- tom line " is not the best motivation for public service; some would say it is anti social - . By opt- ing for a management contract, officials can claim they are testing a new system without total- ly abandoning public control. Perspctives Planig Family The California Experience Nowhere have these trends been clearer than in California. A leader in the establishment of county hospitals, by the late 1950s it had 66, in 49 of its 58 counties. Yet by 1980 the number had dwindled to 37; only half of the state's counties had one. 10.11 Many of those that remain are under heavy pressure to close. In a belated recognition of these problems, in 1980 the state government appropriated $ 50 million for hospital construc- tion and rehabilitation over a two year period. 12 The attrition in public hospitals has not been accepted without protest in California. Various types of citizen groups have actively opposed closures and service curtailments. Some, such as the citizens coalitions against closing the Yolo County public hospital, have been successful. Others have won partial victories- -in Los Angeles, for example, house staff and public advocacy groups have slowed deterioration of patient services. In some counties members of the elected Board of Supervisors have bucked the trend with varying degrees of success, opposing closures on principle. Probably no county hospital would survive without personnel who work far in ex- cess of what their " contracts " require and then in many cases spend much of their off duty - time working in coalitions with citizen groups and with elected officials to protect and save their hospitals. Despite this resistance, the intensifying fiscal crisis at the state and local level and constant attacks in the media and administrative circles on alleged gross mismanagement in the public hospitals have put heavy pressure on super- visors to do " something " in their county. At one end of the spectrum, that " something " would be a generous increase in financial sup- port, but in a time of severe budgetary con- straints and widespread government " anti -" sentiment this is effectively precluded. A full 180 degrees away lies complete dives- titure. In some cases its advocates have been successful. In others only determined public and official opposition has blocked the way. Somewhere between these two possibilities officials found the management contract: A commercial firm would be brought in to operate the county hospital for a specified period under well defined terms. At the time it was initiated, this seemed a novel experiment. Although many American private non profit - hospitals had tried this approach, public hospitals had not. 14.15 After Merced County signed on with National Medical Enterprises in 1973 other counties soon followed with NME or other firms. Some dis- continued the contracts when they came up for renewal (usually after two years). Others signed up again. In all, 15 counties had tried private management by October, 1980. Eight of the con- tracts were still running, the oldest renewed every two years since 1973 and the newest just initiated in 1980. The following account is based on a study of the experiences of seven counties. Ruth Roemer and I visited the hospitals in all of them; inter- viewed numerous people involved; studied the contracts. reports, and documents; and asked an accounting firm to analyse the relevant finan- cial statements.17 The Findings Persons interviewed asserted that manage- ment contracts had yielded substantial benefits in three major areas finance - , staffing, and management recruitment. Finance. A number of hospitals reported that the new private management brought in a one- time windfall by collecting on unpaid (and often unsubmitted) bills of prior years from third party insurers - private, MediCal (California's Medi- caid), and Medicare. Current collection proce- dures were also tightened up, according to these accounts. Continued on Page 22 - - -- Important news for 10 million Americans Health Protection for Operators of VDTs / CRTs Find out the dangers eyestrain - , muscle pain, indigestion, stress - and some simple ways to minimize them in this booklet produced by the New York Committee for Occupational Safety and Health. Available from Health / PAC, 17 Murray St., New York, N.Y. 10007, for $ 1 plus 25 postage for in- 10 dividuals and $ 3 plus 25 for institutions and corporations. A Health / PAC Symposium: Is removing the prescription requirement from drugs a menace or a boon? When Health / PAC received an article on over the counter drugs it stimulated a lively discussion among members of the Editorial Board. We decided that our readers would enjoy sharing our differ- ing opinions. Still other points of view are most welcome for future publication. A (Non) Prescription for Trouble By Dana Delibovi Television viewers may have noticed an increasing number of pitches for diet pills, skin creams, " strength super -" cold formulas, and other nostrums for real and imag- ined ailments. As medical expenses become a greater headache for consumers, pharmaceutical companies have seized an opportunity to relieve symptoms. Many Americans have found sumers must be convinced that The trumpeters are already that a five dollar bottle of cough all their friends will drop them if blasting away, because the in- medicine is considerably easier their acne isn't cleared up im- gredients are here. All the com- to swallow than a fifty dollar fee for a throat specialist, and the mediately. The elderly must be. panies have to do is convert taught that a new OTC laxative products previously available drug companies are ready and will solve their problems. And only through professionals into eager to leap over the counter all must be persuaded to be- something anybody with spend- to oblige. So far the risk to pro- lieve that neither home reme- ing money can buy in a drug- fits has been minimal, and the dies nor nutrition supplements store or supermarket. risk to consumers is often for- will do the job. Druggists and " OTC Rx - to - " conversions gotten. medical practitioners must be became more than a gleam in Manufacturers report rapid drilled, cozzened, and free- the corporate eye in 1979, when growth in nearly every over- sampled into prescribing Ezy- Food and Drug Administration the counter - (OTC) drug cate- Off Pimple Sauce rather than a panels reported that the active gory. Cold products brought in less expensive substitute. ingredients of several prescrip- a gross of $ 400 million last year, A recent study by the market- tion drugs could be taken with- up 16 percent over 1979. Sales ing firm Frost & Sullivan found out prescription. One drug of laxatives, analgesics, and that pharmaceutical companies unleashed by the FDA, low dos- sinus products were up 10 to 18 spend anywhere from 15 to 35 age hydrocortisone, has al- percent. percent of their OTC revenues ready become a legend in the As surely as Madison Avenue on promotion, compared to the OTC industry. Upjohn, Scher- executives know that you don't three to 12 percent average for ing, Combe, Pfizer, Pharm- sell laxatives to relieve nasal all their products combined. craft, and Squibb all intro- congestion, they are aware that hypes must be targeted to par- Frost & Sullivan predicts this highpowered sales offensive duced OTC versions of hydro- cortisone cream in 1979 and ticular groups. Teenage con- will help win a five percent an- 1980. Aided by huge promotion nual growth rate through 1985, campaigns, they grossed $ 54 especially if manufacturers can million from a standing start " find special ingredients to and sales are expected to reach Dana Delibovi has written many articles on the drug industry. trumpet. " $ 100 million annually before leveling off. Burroughs- 11 Wellcome is just entering the market, and it probably won't be the last. The appetite suppressants phenylpropanolamine and ben- zocaine were also cleared in 1979. Within months, " miracle " diet aids were earning their manufacturers millions, again more significant side effects than other OTCs. Manufactur- ers are not required to include this information in their adver- tising, so consumers who fail to read labels and follow instruc- tions diligently may be in for trouble. Schering - Plough's Afrin, for example, induces the high they get from oregano - sold as marijuana with diet pills sold as amphetamines. This may appear to be a harmless scam; after all, the television program " 60 Minutes " has found phenyl- propanolamine the only safe and effective OTC diet medica- with the assistance of massive drowsiness, a side effect not tion. However National Public ad blitzes. Sales were over the $ 200 million mark in 1980, 43 found in other nasal sprays. Users who don't read the fine Radio recently reported an unusual incidence of strokes percent above 1979. This year print may discover this too late among people under 35 in New the gross is expected to rise another 25 percent. Inevitably, this success has prompted pharmaceutical com- panies to scour their medicine cabinets for other potential bonanzas. There " are a lot of while driving or working with po- tentially dangerous machinery.. es Even the best of the OTC products have begun to reveal Mexico, Illinois, and Wash- ington who were found to have " toxic non - " levels of phen- ylpropanolamine their blood. While not conclusive, this evidence coupled with the drug's previously known ten- marketers really watching for opportunities to move from Rx to OTC, " noted marketing con- sultant Letitia Mulcay - Makai in Drug Topics, a trade journal. negative social, political, and economic side effects. dency to raise blood pressure indicates a need for caution. Even the best of the OTC products have begun to reveal negative social, political, and OTC products which have tra- eee economic side effects. Their ditionally had " ethical " status, Consumers also could fall extensive development and re- with promotion limited to phy- victim to deceptive marketing lentless promotion undermine sicians, pharmacists, and other health care professionals, have also become " proprietary " and packaging practices in the sale of the new OTCs. Hydro- cortisones fall into this cate- the progressive aspects of self care, such as increasing con- sumer control of health and products pushed in ads di- rected at the general public. The most famous example of this shift from " ethical " to " pro- gory. Appetite suppressant brand names such as Dexatrim and Dexa Diet II remind con- sumers of dexadrine, giving the lowering medical costs. They whet the appetite of a wealthy and powerful lobby prepared to wave the banner of good health prietary " is Tylenol. Since it was introduced in the mid- 1970s, Tylenol has become the ads a potency which the com- panies couldn't claim for their products without running into as vociferously as the aerospace industry exploits the theme of national security to press its best selling internal analgesic, trouble with the Federal Trade wares. bringing in $ 135 million a year. Commission for false advertis- If any administration has ever Other profitable shifts are Robi- ing. had ears sensitive to the cries of tussin cough medicine and Metamucil, which currently corners 77 percent of the OTC Still more deceiving, even diabolical, is the practice of producing " alike look - " cap- the pharmaceutical industry, it is President Reagan's. Con- sumer advocates fear that the bulk laxative - market. sules. Thompson Medical Cor- FDA may cease drug reviews After reading drug company handouts, one might think poration, recently acquired by Revlon, sells Dexatrim in a altogether, opening the flood- gates to conversion. The Feder- restrictions on such products have been a perverse policy of black capsule with the letters " D - E - X. " What this looks like is al Trade Commission may scrap plans to insist on OTC advertis- government paperpushers de- Pennwalt's prescription - only ing more consistent with label- termined to stifle free enter- combination of amphetamine ling requirements. About the prise. Actually there are other and dextroamphetamine, better only thing which would save the reasons for regulation. known on the street as " black consumer then would be the in- Converted and shifted drugs beauties. " The result is a sec- vention of a greed suppressant - generally have more specific ondary market where the naive pill and - a popular movement 12 directions and indications and and inexperienced can boost to administer it. store assuming, that is, that they can find a physician and af- Richard ford to pay him or her. Would de prescribing - drugs lead to an increase in patient " abuse " or drug related - iatro- genesis? I doubt it, especially if the drugs were appropriately Younge: Let the Doctor Prescribe and extensively labeled and if we began to utilize the consider- able knowledge and skills of I would not support making ali medicines over the counter. Elim- pharmacists. An estimated 35 inating the physician intermed- percent of drugs currently pre- iary would have a minimal effect scribed by physicians have no on health care costs. Most of any effect (and are not designed to savings would probably be ex- have any effect) on the condi- tracted from the over the counter tions for which they are pre- consumer. scribed - not exactly a terrific The cost of physician services batting average. related to prescription writing is How many of us would have probably very small compared thought, on our own, to take to the cost of all physician ser- antibiotics for routine, viral vices, including high technol- colds; or DES for spotting in ear- ogy diagnostic procedures, ra- Barbara Ehrenreich: ly pregnancy; or chloram- phenical for acne? The medical profession's sycophantic rela- tionship to the pharmaceutical diology, surgery, and hospital care. Any physician in private practice will tell you that his or her money is not made in the of- Let the Patient Decide industry is well known -; they have done nothing to justify their continued monopoly over the prescribing of drugs. fice writing prescriptions. On the other hand, eliminat- ing the physician's role as a prescription writer would be another economic disincentive At the risk of being labeled a medical anarchist, I would like to propose that all drugs be sold over the counter. Consider the savings to the consumer: A chronic user of an anti hyper- - (Barbara Ehrenreich is co- author of For Her Own Good: 150 Years of Experts'Advice to Women, and a member of the Health / PAC Editorial Board) to primary care practice. Pri- mary care physicians and com- munity health centers derive a greater proportion of their in- come from prescription - related activities than do specialists. tensive or cardiac medication I'm also constantly surprised may spend $ 10 to $ 15 a month on it plus another 40 $ to $ 100 a year on physician visits just to get the prescription renewed. An epi- sode of cystitis may cost $ 20 or so in antibiotics and double that in at the extent to which my com- munity health center clients can already get medicines without prescriptions. Not uncommonly, a patient will come in with un- controlled blood pressure who physician and lab fees to entitle the sufferer to buy the drugs. In cases like these, where the prob- lem and the cure are familiar to CONSULT YOUR has been taking medicine which a pharmacy has been providing for a year or more without a new prescription. Because they the patient, why not just elimin- ate the intermediary? PHYSICIAN could keep on getting the medi- cine, they never went back to the Where the ailment and possi- primary physician to see if it was ble treatments are more myster- having its intended effect. Pen- ious, most people would still icillin can be obtained without want to seek a physician's advice prescription fairly easily. One before heading for the drug- patient told me, " You can get 13 anything if you have the (over the counter or OTC) being Therefore, the argument that money. " I have treated at least a danger to the public health de- making prescription drugs one woman whose male friend serves comment. available to the consumer is po- inadequately treated himself for There is considerable evi- tentially more harmful than a re- gonnorhea. dence that the physician in the strictive ethical drug distribu- Physician prescription writing role of gatekeeper of the phar- tion system is questionable. I does not protect consumers from macopia does little to protect the know of no study which has incorrect dosage, adverse drug public from harm. Poorly edu- found that the health status of interactions, ineffective drugs, cated in pharmacology and se- populations abroad who have di- and other therapeutic misad- duced by drug advertisements, rect access to drugs restricted in ventures. A profit oriented - drug detailers and promotions, phy- this country is poorer as a result. industry selling directly to con- sicians appear hard pressed to sumers can hardly be expected evaluate increasingly complex to do much better, and could do and constantly proliferating a lot worse. drugs. Studies show that even in the Only drugs safe (Richard Younge is a family physician at the Council Center for Problems of Living, a Fed- supposed " best " of all possible medical worlds - the teaching hospital - poor prescribing and effective should be available. erally funded - community health practices occur with disturbing center, and a member of the frequency. Physicians often con- Health / PAC Editorial Board.) tinue to prescribe drugs whose effectiveness and safety are in People are harmed by irra- question and which present con- tional prescribing practices us- siderable potential harm to pa- ing ineffective and toxic drugs. tients. DES, for example, was Pharmaceuticals, whether pre- prescribed long after studies in- scription or OTC, should not be dicated it had little or no ef- marketed unless they have been ficacy; even after evidence ap- shown to meet high standards of peared that it caused cancer and safety and efficacy. Only drugs PEAT ME DON'T genital abnormalities in the chil- dren of women who had taken the drug during pregnancy. The battle to discourage phy- proven safe and effective should be available as part of a national drug formulary established and monitored by experts. The sys- sicians from prescribing oral tem should also include continu- chloraphenicol (Chloromycetin) ing surveillance for evidence of was waged between the Food side effects, adverse reactions, and Drug Administration and and other negative results. the manufacturer, who con- If such a national formulary tinued to promote it as safe and was in place we then could study encouraged physicians to disre- the benefits and risks of two dis- gard scientific evidence that tribution systems, one which al- said otherwise. It took two lows direct access by consum- Arthur A. Levin: decades for scientific rationality to prevail over marketing skill. While the number of prescrip- ers, the other controlled by phy- sicians. Hopefully such an effort would help us understand what tions written for chloraphenicol the health benefit or risk is from It Ain't has declined dramatically, too many are still written every year. each system. Necessarily So Tetracycline is still being pre- scribed for young children even The concern expressed about though the medical world has (Arthur A. Levin is Executive drugs that " move " across the known for some time that it Director of the Center for Medi- line from controlled public ac- causes permanent tooth discol- cal Consumers and a member of cess (prescription or ethical oration and effective substitutes the Health / PAC Editorial 14 drugs) to open public access are available. Board.) JOURNAL OF THE PLAGUE YEARS - The Fiscal Year 1983 Health Budget by Mark Kleiman If we still had a decent, sane Surgeon General, Although some politicians facing re election - the nation's top health officer would feel com- hope to see a shift from corporate and military pelled to declare Reagan's Fiscal 1983 budget spending back into social programs, it is far proposals a danger to the health of the American more likely that minor reforms in the tax sub- | people. The White House plans an assault on sidies and the Pentagon budget will be used to health programs that could well turn the AFL- reduce the staggering Federal deficit. CIO's charge of " Jonestown economics " into a The drama of the government's self inflicted - grim reality for millions of persons. The proposed budget cuts occur against a budgetary wound may capture congressional concern and national attention, but the leitmotif of blind acquiescence to military pro- Administration has different health problems on fligacy unparalleled in a " peacetime " economy, its mind. Were Defense Secretary Caspar Wein- and a set of giveaways to corporations which has embarrassed even the Republicans and Demo- berger to become a pacifist and the Fortune 500 corporations to come out for sharing tax burdens crats who shoved these proposals through the fairly, health programs would still be an en- last Congress. Barely one year ago, the retiring dangered species. Put simply, Reagan and his Comptroller General of the United States cau- key domestic advisors stubbornly deny any tioned Reagan that there was at least $ 15 billion Federal responsibility for our health care pro- in fraud, waste, and abuse in the " defense " grams. If the budget crunch did not exist, the budget. The President's response has been to fight fire with gasoline, fueling ever greater - waste at the Pentagon. The give away - has White House would probably create one as a cover for wiping them out. become so notorious that the Washington Post reported on February 20 that an unprecedented 40 percent of the people surveyed in a nation- wide poll said the government should cut mili- tary spending to reduce the Federal deficit. (Just over half opposed tightening the Pentagon's The proposal has been greeted with bipartisan derision by Congress and many governors. garrison belt.) The Federal largesse to major corporations is even more shocking. According to the Congres- sional Budget Office, corporate taxes will drop The proposed health budget has few sur- by a massive $ 127 billion through 1986. A prises. Because the aged vote and are better February 17 article in the Washington Post organized than the poor and minorities, Medi- reports that new tax laws have reduced the effec- care has escaped with nicks, while Medicaid as tive tax rate for 1982 dramatically - from 32.7 percent to 16.6 percent in agriculture; from 35 percent to 1.1 percent in petroleum refining; well as other low income health programs have been savaged. Even so, the combined outlays for these two major programs continue to dwarf from 31 percent to minus 2.9 percent in trans- miserly Federal outlays for primary care and portation; and from 28.4 percent to minus 3.4 prevention. percent in mining. These " negative " tax rates The only real stunner was the Reagan threat to mean that corporations in the affected industries " swap " Food Stamps and Aid to Families with will actually show an absolute profit for simply Dependent Children (AFDC) to the states in ex- purchasing new plant and equipment. change for assuming complete responsibility for Medicaid funding. Most stunned of all were Mark Kleiman is Executive Director of the Con- Health and Human Services Secretary Richard ~ sumer Coalition for Health in Washington, D.C. Schweiker and his top deputies, who only learn- 15 PROGRAM SPENDING FOR SELECTED PROGRAMS. 1981-1983 (in millions) 1981 1982 spending _ (estimate) 1983 Need ' Reagan Proposal % cut from '81 Budget MEDICARE 42.488 MEDICAID 16.833 HEALTH SERVICES ADMINISTRATION Primary Care Block ' 454 Community Health Ctrs. 327 Migrant Health Ctrs. 43 Black Lung Clinics 4 Family Planning 162 Natl. Health Svc. Corps NHSC Scholarships 92.3 63.4 " Services to Women, In- fants, & Children - SWIC MCH Block Grant WIC Program 1.381 454 927 CENTER FOR DISEASE CONTROL Venereal Disease Immunizations Chronic Diseases Environmental Health 245 48 30 22.4 9 Nat'l Inst. of Occupational Safety & Health 102.4 49.559 17.823 57.951 * 21,815.57 ' 358 248 38 3 124 95.5 36.4 1.282.08 358 934.08 625.14 381.38 50.15 4.87 188.94 107.65 88.78 ' 1.610.66 * 529.50 ' 1,081.16 213 38 28 17.3 8 60.3 285.74 55.98 36.15 * 26.13 10.50 119.43 55,352 4.5 17.006 22.0 416.8 33.3 , * ' * * ' ' . 103 4A 11 87.3 1,000 38.0 * * .. 217 45 29 19.5 4 50.5 24.1 19.6 19.8 25.4 162.0 57.7 FOOTNOTES TO BUDGET TABLE 1. Unless otherwise noted all estimates of 1983 need are derived by adjusting 1981 spending levels for 9 percent inflation in 1981 and a projected 7 percent inflation in 1982. There will be some error due to the differences in time periods covered by calendar and fiscal years. 2. The 1981 Medicare spending level was multiplied by 29.6 percent to reflect the compounded medical impact of medical care inflation of 15.2 percent and 12.5 percent, in 1980 and 1981 respectively. This was then multiplied by an addi- tional 3.43 percent to reflect growth in the population of eligible Medicare beneficiaries. Growth estimate made by Alice Rivlin, Director, Congressional Budget Office, in testimony before the House Subcommittee on Health and the Environment, December 15, 1981. Medical care in- flator factors derived from Bureau of Labor Statistics for 1981, and Health Care Financing Review, 2,3 (Winter: 1981) published by Health Care Financing Administra- tion, DHHS. 3. The 1981 Federal Medicaid spending levels were multi- plied by 29.6 percent (see fn. 2, supra). The level of 1983 need severely underestimates the actual level of need. Medicaid spends a much higher proportion of its funds for institutional care than do Blue Cross and private insurors. Hospital costs rose 16.8 percent in 1980 and 17.0 percent in 1981, much more rapidly than non institutional - medical costs. More crucially, the 1983 estimation fails to consider the greater need for Medicaid because of millions of workers and their dependents who lost private insurance coverage along with their jobs in the current recession. DHHS very conservatively estimates that over 1.1 million people who would have otherwise been eligible for Medicaid will receive no benefits because of new eligibili- ty restrictions in the 1980 Omnibus Budget Reconciliation Act. 4. Although there was no Primary Care Block Grant in 1981 and 1982 grant, the spending levels for the programs targeted for the block, are included to indicate the overall impact of the proposed cutbacks. 5. 1981 spending levels have been adjusted to reflect a 36.87 percent increase in medical school tuition since that year, 16 PROGRAM SPENDING FOR SELECTED PROGRAMS, 1981-1983 (in millions) 1981 spending 1982 (estimate) 1983 Need ' Reagan Proposal % cut from '81 Budget INDIAN HEALTH SERVICE 820.5 644.88 723.69 650.88 10.0 HEALTH RESOURCES ADMINISTRATION Health Planning Health Facilities Primary Care Family Medicine Trng Support Disadvantaged Asst. Trng Financially Distressed (mostly black med schls) Public Health Nursing Education 381 128.2 9.8 3825 2302 228 228 228 287.3 61.7 51.2 ' 51 17 7 9 42.1 444.36 147.19 11.2 88.79 ' 27.37 ' 13.69 ' 17.5 80.140 9.68 22.21 28.26 35 41 41 6 5 12.5 62.2 97.7 23.3 53.9 53.9 57.2 71.4 84.4 OFFICE OF ASST SEC. HEALTH Alcohol, Drug. Mental Health Block Grant 540 432 629.80 432 31.4 Prevention Block Grant 92 81.8 107.3 81.8 24.0 Health Services Research 34 15.8 39.65 16.1 59.4 - Health Statistics 38 37.3 44.32 40.3 9.1 Health Promotion 2.2 1.1 2.68 2.3 142 " Adolescent " Family Health " (Chastity Prgm) . * .7 * 16.0 as reported by the American Association of Medical Col- leges. Estimates were based on a straightline projection of 1980-1 to 1981-2 (resident non - ) tuition fees. 6. Although there is no SWIC " " Block Grant for FY 1981 and 1982, the spending levels for the programs which have been proposed for the block grant are included. It is im- portant to note that if this program were actually block granted states would be confronted with either cutting even deeper into an already weakened MCH program, or drastically reducing food benefits to pregnant women, in- fants, and young children. 7. The 1983 estimate conservatively uses the CPI inflator rather than a mix of the CPI and Medical Care cost in- flators, which would reveal a substantially higher level of need. We cannot quickly disaggregate MCH spending into its medical care, prevention, education, and outreach components, which would presumably inflate at the more general CPI level. Even a 50-50 split between actual medical care and health programs would raise the 1983 need level to $ 545.66 million. 8. The Congressional Research Service reports that 29 per- cent of these funds were used in 1981 to purchase vaccines which were then distributed to state immunization pro- grams. From 1980-1982 there has been a 30 percent in- crease in vaccine costs. 1983 need was estimated by adjusting 29 percent of the immunization program to ac- count for the 30 percent increase in vaccine costs. The re- mainder of the immunization budget was adjusted by the general two year - combined CPI inflator of 16.63 percent. 9. This increase was due to a special time one - expenditure for planned construction costs. 10. The level of 1983 need was estimated by projecting in- creases in nursing tuition from 1979-80 / 1980-81 for the period of 1980-81 1982-83 / , based upon a weighted aver- age of tuition costs for public and private baccalaureate programs. Source: Nursing Data Book National League for Nursing, New York, 1981. 11. The Prevention Block included programs receiving $ 92 million in FY 1981. The Administration proposal not only cuts it 24 percent, but moves it from the professional con- trol of the Center for Disease Control to domination by a political appointee, the Assistant Secretary for Health. 17 ed of the Reagan proposal shortly before the Medicaid. President broadcast it to the nation. The next The majority of Medicaid beneficiaries qualify day Reagan gave Schweiker his marching orders: prepare a detailed plan for the mythical " swap " in sixty days. because they receive AFDC. Ten million of the nation's 22 million Medicaid patients are chil- dren; another five million are their mothers. The proposal has been greeted with bi- When Congress changed the rules for AFDC partisan derision by Congress and many eligibility, HHS estimated that it also eliminated governors, who have no desire to take the heat for the devastating Federal cutbacks Reagan has 1.1 million people who would have qualified for Medicaid. A great many of them are marginally made and is proposing in these programs. above the poverty level, but only a portion of this As California's governor, Reagan mastered group has managed to hang on to Medicaid eli- the art of shifting costs from state government gibility as " medically needy " -too " well off " for onto the backs of cities and counties (see the welfare, but too poor to pay medical bills. previous Health / PAC Bulletin for details). Now as President he practices the same cruel art The " medically needy " working poor are now right in front of the Reagan buzz saw. Although upon the states. Medicaid and Medicare are prime targets. The budget proposals would not restructure the health system to hold down costs; some states choose not to, currently they can of- fer a medically needy program and receive par- tial Federal support for Medicaid coverage (in instead they shift the financial burden onto the the same amount as for the " categorically backs of the poor, the elderly, the states, insur- needy " AFDC and other patients). The Reagan ors, and providers. The Administration does budget proposal pares these payments by three claim its " competition " proposal will save $ 5 billion in just a few years. Yet only the truest of percent, which would push states to eliminate the program or drastically curtail benefits. his true believers think it even has a chance of Reagan wants to lop off another three percent being considered seriously in Congress. (See the Health / PAC pamphlet, Survival of the Fit- of the Federal payments for " optional " medical services, such as drugs, artificial limbs, dental test, the " Competition " Model for Health Care care, eyeglasses, and intermediate nursing for an analysis in depth of what the plan would home care. Although the President, who is mean.) legally blind without his contact lenses, may believe his visual acuity deserves a government . subsidy, he does not feel the same way about the poor. " Savings " from the categorically needy and optional programs alone will cost the states Ten million of the nation's 22 million Medicaid patients are and / or the poor 600 $ million. Another $ 329 million in Medicaid " savings " would come from forcing poor people to pay children; another five million part of the bill. Experience has shown that the $ 1 are their mothers. and $ 2 payments the Administration describes as nominal deter the poor from seeking medical care they desperately need. California under Reagan is a prime example. When he instituted such a plan there, many people forced to choose The nearly $ 5 billion slash Reagan has pro- between medical care and feeding their chil- posed for Medicare and Medicaid comes on top of cuts of $ 897 million and $ 696 million respec- dren postponed visits to the doctor until their health deteriorated so drastically that care was tively suffered last year. Ironically, for an administration which complains so loudly about vital. The eight percent drop in outpatient Medi- caid charges was consequently immediately fol- welfare costs, this year's Medicaid cuts - and lowed by a 17 percent leap in hospitalization ex- last year's penalize - the working poor most penses for the same population. heavily of all. According to a new University of Chicago study, many of them would now be bet- ter off financially if they quit their jobs and relied Medicare This is to be cut in the same ugly pattern. The entirely on government assistance, pathetic as it is. Administration wants the elderly to pay an ad- ditional $ 65 million - a 25 percent hike - in their Here is the sorry picture in the major pro- deductible for Part B, which even now covers 18 grams: -, only 38 percent of their physician bills. Other " savings " would compel the elderly to pay more for home health care and physicians'services. By tightening constraints on Medicare payments to doctors, the government is simply dumping another $ 600 million expense onto the elderly, since they will have to make this money up if they want a physician to treat them. Instead of proposing legislation designed to encourage real cost containment, the Adminis- tration has also gone along with a proposal by the Federation of American Hospitals, the trade group of for profit - institutions, to slash Medicare reimbursement by a flat two percent for each facility. " There's not a hospital in the country which can't get around that by simply raising its rates, " commented Walter Weinstein, president of American Medical International. historical roots, " explained a clinic adminis- trator in South Carolina, " These people just didn't like giving up their slaves. " Again surprising top officials at HHS, the White House made a last minute decision to fold family planning back into a proposed block grant of primary care programs which the states could control. Although some states would offer The intensity of the Reagan onslaught has provided new resistance. Resistance to these onslaughts will probably follow last year's strategy, with consumer and provider groups banding together to fight for the highest possible authorization level, or " budget mark " for Medicare and Medicaid. Once this mark is established, the real fun begins as hospitals and doctors square off against the poor and the elderly to see who will bear the brunt of the cutbacks and which ser- vices or eligibility levels will be slashed. As Woody Allen has observed, " The lion and the lamb may lie down together, but the lamb won't get much sleep. " Public Health Service. As brutal as the Medicaid cuts have been, private sector providers who rely on Medicaid dollars for their hospitals and nursing homes have been able to stave off worse. Direct service primary care and prevention programs, how- ever, have no " private sector hostages " to hold off the assault. And Reagan has shown no mercy. Taking inflation into account, Community Health Centers lost 28 percent of their funding last year. They are slated for more of the same in the next budget, for a two year - (inflation ad- justed) cut of 33.3 percent. Last year's cuts leave over 2.8 million Americans without their com- munity health centers entirely or dependent on severely curtailed services. In a response to con- gressional inquiries, HHS has admitted that 71 percent of those harmed will be Black and another 11 percent Hispanic. The imminent state control over CHCs and better than the anti choice - clique tightening its grip on HHS, citizens in many states would do much worse. Health advocates contemplating many other block grant programs fear the potential for mali- cious mischief in states with profound racial or urban / rural splits. Recent health cutbacks in St. Louis illustrate the reasons for their concern. The state of Missouri, which now controls lead paint screening money under the Maternal and Child Health block grant, decided that each of its 80 counties will receive an equal share, some $ 6,200. St. Louis thereby loses half its lead paint money and will probably fail to diagnose 500 cases of poisoning this year as a result. Cuts in the St. Louis program for high risk pregnancies will run up at least $ 1.8 million in additional costs for neonatal intensive care over - seven times the expense saved. Other cutbacks will terminate the highly cost- effective vaccination services for 80,000-100,000 children in North Carolina alone. The list is as long as it is appalling. Small wonder, say Washington watchers, that Reagan's New Federalism is designed to toss this social, fiscal, and administrative time bomb back to the states before it explodes. That might secure the President's political safety, but it does little for the rest of us. the migrant health program is even more alarm- Campfires of Resistance ing. So far 14 states have indicated they want to Local and national groups, still reeling from take up a Federal offer to run their own centers. last year's mauling, feel uncomfortably vulner- Most of them are Southern, and health ad- able as they brace for the new fiscal assault. vocates fear the worst. " This problem hs Even groups which had congratulated them- 19 TRIGH Sweden Now selves for avoiding dependence on Federal dollars have discovered to their dismay they they must compete for small foundation grants with much larger organizations deprived of Federal support. National advocates who had relied on strong grassroots alliances are finding these local bases can barely afford phone calls to Washington. Unions, pressed harder than ever on bread and butter issues for their member- ship, can't spare resources to fight 30 or 40 cut- back battles at once. The Legal Services net- work, which had sometimes helped mobilize its clients, is similarly at bay in its own battle for survival. Nevertheless, a reversal of fortunes may be on its way. The intensity of the Reagan Adminis- tration onslaught has provoked new resistance from potentially powerful constituencies. Only days after the budget was released, the American Public Health Association fired back with a major press conference attacking the cuts and denouncing the increase in military spen- ding. The tremendous successes (and excellent media attention) which Physicians for Social Responsibility has achieved in sounding the alarm on nuclear warfare have prodded even the American Medical Association to declare its opposition to the arms buildup. These attacks and the growing impact of the cutbacks are beginning to raise public opposition to un- bridled military spending. On the fiscal front, 75 organizations have banded together in a Fair Budget Action Coali- tion under the broad banner of opposition to militarism and welfare for the rich and support for social programs. They promise a full blown - grassroots campaign which will galvanize public anger at the Reagan policies. And they just might succeed. The same national poll which found a surge in discontent with the bloated military budget showed nearly two Americans in three think Reagan should aban- don his program of cutting taxes and domestic spending. Fully 57 percent expressed dis- approval of his handling of the economy. Such resistance is not without precedent. And neither is the Reagan strategy. As Bertolt Brecht observed in Germany some 50 years ago, " Those who take meat from the table, Preach contentment. Those for whom the taxes are destined, Demand sacrifice. Those who lead the nation into the abyss, Call ruling too difficult for ordinary men. " 20 The Bulletin Board Consumer Report Are consumers better off this year than last? The answer is a resounding " no " in energy, health, housing, transportation, product safety, etc. The National Consumers League explains why in Warning: Reaganomics is Harmful to Consumers. With the help of Congress Watch, Consumers Union, and other groups, the League has catalogued many of the abuses per- petrated in President Reagan's first year in of- fice. Copies are $ 5 from NCL, 1522 K Street, NW, Washington, DC 20005. University which involved health, environment- al, labor and community groups. It includes case histories of chemical dumping, transpor- ting hazardous materials, herbicide spraying, and legislating the " right - to - know " in Love Canal, Newark, New York City, Long Island, Philadelphia and other danger zones. There are also sections on tools and tactics of organizing, with special attention to building new coalitions for health protection in metropolitan regions. For a copy, send $ 3 to Washington Heights Health Action Project, 601 West 181st Street, room 22, New York, NY 10033. Taxing Decisions It's almost April 15th and with 25,000 nuclear warheads in stock and 17,000 on order, time to read the War Resisters League Guide to War Tax Resistance. Contents include mechanics and metaphysics of war tax resistance, the long his- tory of the movement, and its most famous ad- herents. Send $ 6, plus $ 1 for postage and handl- ing, to War Resisters League, 339 Lafayette Street, New York, NY 10012. Gas Pains One of the main uses of benzene, a carcino- gen, is to boost the octane in lead - free gas. So before your next tankful, read CIP Bulletin # 19 (Benzene " and Cancer "). For a free copy, send a long self addressed - stamped envelope to Car- cinogen Information Program, P.O. Box 6057, St.Louis, MO 63139. CIP's goal is to provide the public with reliable, understandable informa- tion about carcinogens. Body Language Like the rest of us, the subjects of medical ex- periments can now benefit from regulatory relief. Public Responsibility in Medicine and Re- search will hold a conference, entitled " Institu- tional Review Boards (IRBs) and Their Institu- tions, " on April 23 and 24 at the University of Texas Health Science Center in Houston. IRBs are the committees in hospitals and universities that are responsible for the conduct of research on humans. The Administration has dramatical- ly changed the rules governing these boards, and the conference will provide the latest in- structions on proper behavior for researchers, subjects, and regulators. For more information, contact Joan Rachlin, PRIM & R, 15 Court Square, Boston, MA 02108, (617) 367-4992. This is Your Life Metropolitan Death Hazardous Materials in the Metropolitan Re- gion: Towards a Strategy for Protection is the report of a conference last year at Columbia A new - and vital page - 62 - pamphlet for workers (and, one would hope, employers) is Occupational Hazards to Reproduction: An An- notated Bibliography, by Wendy Chavkin, M.D. with Laurie Welch, M.D. Available for $ 5 prepaid (institutions, $ 10) from Health / PAC. 21 Private Management of budget. It was able to do so because it had suf- ficient private pay patients to make up for losses Public Hospitals Continued from page 10 on other patients - a very atypical situation. There appear to be several reasons why management companies, so adept at turning a profit in their own hospitals, were unable to In at least one case the new procedures in- cluded more rigorous efforts to obtain install- ment payments from patients not covered by third parties. The amounts demanded were pre- sumably established by ability to pay (a means test). This could conceivably deter some people from seeking care at the public hospital (that is, in all probability, from seeking any care at all), depending on how the means test was adminis- tered. Ambulatory care statistics tended to sup- port this suspicion, but were not conclusive. Evi- dence from our interviews with members of the community and public advocates did not defin- itively answer this question either because of limitations in the scope of our study. duplicate their success (except in Sonoma) in public institutions: I. Northern California Blue Cross pays hospital charges. Medicare, however, looks at both charges and costs and pays whichever is less; some costs are not reimbursed at all. Unreim- bursed costs, known as " contractual allowances, " are even higher with Medicaid. 2. Commercial insurance generally does not pay costs. Hospitals are reimbursed a stipulated amount for each service billed. Charges beyond this fee service - for - schedule are paid by the pa- tient in what is known as " sharing cost -. " 3. Therefore, if a private hospital has few if any non paying - patients and most of the patients it does have are covered by Blue Cross and com- The hospital must rely on direct mercial insurers, their fees (charges) can be set high enough to cover the losses on Medicaid and Medicare " contractual allowances, " as well county appropriations or replace the poor with a better clientele. as on some patients whose bills are unpaid. 4. Most public hospitals have relatively few Blue Cross or commercially insured patients. Their principal third party payer is Medicaid, which " reimburses at the lowest rate. Many of their pa- The greatest asserted financial advantage of tients have no coverage at all. Thus improving reimbursment rates can never erase the deficit. _ private management was an ability to recast cost reports to obtain the highest possible MediCal and Medicare reimbursement rates. The Medi- Cal improvements were most important, Medi- care second. Blue Cross and commercial in- The hospital must rely on direct county appro- priations or replace the poor with a better in- sured clientele - even if this were possible, it would remove their reason for existing. surer fees were also raised (both pay charges in Staffing. Many persons interviewed asserted Northern California), but because few patients that the management firm had helped to reduce covered by these plans go to county hospitals, " overstaffing. " The primary technique they this source of revenue increase is usually not mention is " variable staffing " of nurses to cover available to them. the service needs (acuity " ) of the current pa- Since these revenue enhancement measures tient load as efficiently as possible. County man- involve primarily tax supported - programs, it is agement personnel lauded these changes, but clear that money was obtained for the county by generally no net reduction in county obligations passing on costs to the state and Federal govern- attributable to this feature was visible. Employee ments. There was no clear evidence that the unions, not surprisingly, condemned the new overall operating cost per unit of service was measures. Some nurses complained about over- substantially decreased or " controlled, " which ly thin staffing, but we could not establish con- would have been a true cost saving. Indeed, ex- vincing evidence that patients were worse off. cept in the case of Sonoma County Hospital, However, since nurse recruitment is a problem there was no clearcut evidence of a permanent across the country and county pay scales pro- and sizable reduction in the county contribution vide less than optimum attractions, it is hard to to the net cost of the hospitals. Sonoma was the determine if management policies were not in- 22 only hospital that achieved a " break - even " deed contributing to hiring difficulties. Is private contract management then good for public hospitals? In general, I think not. But... Management Recruitment. In most cases the management company brought in a well trained they were unable to use these techniques, the reasons were political and not managerial. executive director, a controller, and, less often, In two sparsely populated counties, Mendo- a director of nurses. The typical contract includ- cino and Sutter, the competition of local private ed a county commitment to pay for at least two of hospitals and physicians was pushing the public these. hospital to the brink and management com- While not all of the new managers were satis- panies haven't pulled it back. The county hos- factory, they were generally better than the pital in Ukiah (Mendocino) is up against two counties particularly - those with small hospitals were likely to find locally. As a rule competitors, one run by a commercial chain and the other by a non profit - religious order chain. 19 the management advantages were most visible The local private physicians use both and want in counties such as Merced, Sonoma, and San more beds in them. Since the state planning of- Mateo with a modest - sized hospital in a rela- fice has declared the area overbedded, they can tively small community where there was little competitive pressure from private hospitals and the doctors that use them. get them only at the expense of the public hospital. In Yuba City (Sutter County) some of the In the large urban centers, including public hospital's important services have Oakland (Alameda County) and San Jose8 (San- ta Clara County), people interviewed generally already been transferred to the competing private hospitals - one for profit - and one non- agreed that the management firms hadn't helped very much. Big city unions and minority com- munities blocked personnel manipulation that profit. The county's official emergency room is now in the for profit - institution, and all obstetrics services are in the non profit - . The county would have reduced employment. The hospitals hospital hobbles along with an inadequately already had the expertise to bring in the highest small number of patients and range of services * return from collections and reimbursements. If and its future therefore remains uncertain, de- a it oo - \ ma 1 23 HEALTH PAC BULLETIN THE HEALTH CARE HIERARCHY The Health / PAC Bulletin doesn't have to boast that it's better than the competition; there is no competition. No one else offers independent analysis of health policy issues from prenatal care to hospices for the dying; covers medical carelessness for women and on the job poisoning; offers incisive international reports and lively briefs on domestic health developments. If you already know all this and have a subscription, why not do a friend a favor and fill in in his or her name on the form below before you run out of 20 stamps? Remember, nine out of ten radical doctors recommend the Health / PAC Bulletin for fast relief of health care policy mystification. Please enter. Check: Y' Individuals $ 15.00 Y' Institutions $ 30.00 Name Address _subscription (s) for the Health / PAC Bulletin (six issues) City State_ Zip. Y' Bill me (plus postage and handling) Y' Charge: Y' Visa Y' Master Expiration date No. Signature Send your check or money order to Health / PAC Bulletin, 24 17 Murray St., New York, N.Y. 10007 spite improvements obtained in two years of pri- vate management. These improvements were primarily in collection and reimbursement pro- cedures and recruitment of a skilled adminis- cedures without the aid of the management com- pany. At the end of this period the hospital would at most contract out a few operations unbun- (" dled services "). | trator. The administrator was retained by the county after the management contract expired. Conclusions and Public Welfare Considerations Is private contract management then good for public hospitals? In general, I think not. But when the other option is complete and ir- reversible public divestiture through closure or giving the facilities away, 20 the experience at the sites Ruth Roemer and I surveyed indicate that contracting can in some instances be an accept- able fallback position for defenders of public services. It is also useful to remember that con- tracting out of the management function of a hospital for a management fee is not the same as contracting out the total patient care to a con- tractor for a fixed total cost. The latter practice, giving the care of a group of poor patients over to the lowest bidder, is the practice referred to at the beginning of this article, and has been for many years totally discredited. It was tried only recently in California on MediCal patients when Ronald Reagan was governor, with disastrous results. 2. Smaller communities with relatively smaller public hospitals are likely to find contracting more useful. Larger institutions in the urban centers, if they derive any benefit at all, are probably going to find it in limited contracts for specific narrow tasks, such as doing a cost report. (We all await the results of Cook County's experiment with contract management for Chicago's public hospital. To date we have not seen success in a very large hospital serving a strongly defined " central city " anywhere.) 3. The financial stability and track record of firms bidding for the contract must be carefully checked. If the company owns hospitals, the likelihood that the public institution could become a target for future acquisition must be carefully evaluated. Medicaid has never covered the entire population, nor is it likely to. The implementation of the management con- tracts we observed did not assign the care of pa- tients to the management firm, only the hospital technical management function. The two are not If these precautionary measures are taken, management contracting's worst problems can be avoided and it could be helpful. Still, it re- entirely separate of course, and management contracts could in the future lead to turning over all patient care to the firms for a fixed fee, but as of now this has not happened. The contracts are clearly reversible, that is, they can simply be discontinued if the political picture should change.:. If the community considers this alternative, it should be aware that success is more likely if mains at best a necessary evil, one which should . be avoided if continued direct public operation * is feasible. - There are ample historical reasons for this |'_ conclusion. The public general hospital, " with its charity stigma inherited from poorhouse antecedents, did not emerge mainly in response to a powerful movement among progressive or _ radical workers and farmers for a public medical several caveats are kept in mind: system. The pressures for improved care for 1. The contract should be limited to two or three working people have typically been directed years and spell out the obligations of the firm toward better health insurance, to making the precisely. We found that the best results were , - private system more accessible. Public hospitals typically with contracts that provided for: a were established because the private medical management fee that included an executive system was not providing sufficient services for director, a controller, and, sometimes, a director low income people. of nursing; specified services from the contrac- The main impulse for extending the public tor's technical personnel, especially help in pre- paring reimbursement cost reports and hospital came from muckraking, reformist ' sources, people who saw it as an one more of the establishing improved data systems; a target date when the hospital would be ready to " stand social services they advocated to lessen the har- sher effects of an unchecked entrepreneurial alone, " that is performing the improved pro- system. They suggested it as part of the same 25 category as settlement houses, free milk stations for children, and free prenatal care in public health departments. It was, therefore, clearly a philanthropic measure, and not intended to establish equal access to medical care for all as a matter of right. Because they were established only to fill one of the many gaps left by the private medical system and not in response to popular insistence that a public medical service is preferable to a privately run system, public hospitals have always been regarded as the poor track of " two- track medicine. " With good reason. Aware of this history, many philanthropic- liberal reformers and socialist and other radical workers and activists argued in 1965 that the new Medicare and, particularly, Medicaid programs offered a unique opportunity to eliminate two- track medicine. Therefore public hospitals should be permitted to dwindle away or to shrink into emergency trauma centers of some sort. When the day came that Medicaid covered everyone who needed it (by 1975 according to a provision of the original 1965 law repealed in 1972) everyone would have access to the " main- stream " of private hospitals. Public hospitals would no longer be needed. As we know, this never happened. Medicaid has never covered the entire population, nor is it likely to. Its funding has been slashed and fur- ther cuts are slated. Many physicians will not serve Medicaid patients. Many hospitals claim they cannot afford to because reimbursement is " inadequate. " Instead of eliminating the " second track, " Medicaid is fully part of it, and perhaps even helping to direct it downhill. Service cutbacks in public facilities and even closures are justified by suggesting that Medicaid allows patients to go elsewhere. The program's reimbursement method cripples the public hospitals until they compare so poorly with private institutions that whatever political base they had is weakened and the local government has an added excuse to close them. This frontal assault on the health care of mil- lions confronts advocates of an equitable and comprehensive national health plan with a cruel dilemma. On the one hand, supporting the cur- rent public provider system seems to entrench two track - medical care. On the other, pressing for extension of market payment programs such as Medicaid and Medicare pumps money into an inequitable system that will not deliver what it is paid for. With the clarity of 2/20 hindsight gained through observation attempts to rally public support, form successful coalitions, and achieve at least limited expansion of health care ac- cessibility, I believe that advocates of equitably distributed medical services who acquiesced, actively or passively, to the denigration of the public hospital committed a political error. Until we have a national health plan that provides for . universal eligibility and de facto universal ac- cess to comprehensive medical care services, the idea that the private system will offer the same care for destitute and low income working Pfordesher Pfordeshr Pfordresher 26 Kate persons that it provides for other patients is a sad delusion. and teaches how to evaluate progress in achiev- ing them. The fountainhead of their motivation Middle income persons hard pressed to main- must be the same we expect of firefighters, tain their own status in a contracting economy teachers, police officers, and forest rangers- historically have favored reducing tax- not that of business promoters. supported outlays for a medical care system ex- clusively serving the most powerless members of society. This has certainly been the pattern in At a time when such dedicated and competent public servants are more crucial than ever, find- ing them is increasingly difficult. As public ser- periods of Hooverism, Nixonism, and Reagan- ism. In more liberal eras, much of the relatively vices are transferred to private, profit oriented - institutions, demand for skills inevitably shifts in the same direction - down toward the bottom more generous funding has been siphoned off in line. Hundreds of educational institutions are the reimbursement game playing - of the private medical system that is known formally as " optim- izing the bottom line. " The resulting improve- ments in services are real, but not at all com- mensurate with the higher costs. Therefore religious, liberal, or radical coali- tions fighting for more equal services for low in- come people (full equality must await a uni- versal program) have only one effective interim strategy: directing their primary energies toward improving the public system while at the same time attempting to hold the line against at- training administrators for private business; on- ly a relatively few offer rigorous training for future public administrators, especially in the health field. Many public hospitals are forced to rely on managers imbued with a narrow private business outlook that often includes a mythology of evils of public service. In fact, their training commonly entails memorizing the anti public - service rhetoric as a catechism. A public hospital compelled to seek their skills is not like- ly, in the long run, to find its public goals well served. tacks on Medicaid. Besides offering greater pro- mise of improving health services for low income persons in the short term, this strategy would be most effective in mobilizing popular support for a truly equitable national health plan in the long term. Had this approach been followed in the past 15 years, we might at least now have a national network of local public hospitals supported by Federal and state funds. Part of the Medicaid and Medicare budget would be flowing directly into this network as institutional grants instead of pouring exclusively into mostly private fee for- - service channels. As a stay against the wave of cutbacks and a beachhead for future advance, it is more impor- tant than ever that our public hospitals not only be maintained but improved and enlarged. For these reasons private management con- tracting by public hospitals is a regressive ex- pedient that should be used only as a temporary stopgap measure when the hospital is pushed to the wall. The vital expansion and improvement Perhaps the most ominous aspect of this threat to the survival of public hospitals is the explosive growth of for profit - hospital chains. Many of the firms most aggressive in the 1975 post - rush to make acquisitions also have contract manage- ment departments. These have won the lion's share of the public hospital management con- tracts. The specter of a hospital industry consisting largely of huge private conglomerates that also manage public institutions is not a pleasant one to contemplate. A public hospital under con- tract for an extended period could become so dependent that it would be easy prey for acqui- sition if the management firm determined this would be profitable. Something like this has already occurred in at least one case in Cali- fornia, where the Eureka (Humboldt County) public hospital is now leased by the company which originally contracted to manage it; this might well be a transition stage to outright private ownership. of public system administration must be directed by managers and health workers devoted to public service. That is, to the concept that good Management firms also operate subsidiaries that provide hospital services such as laundry, laboratory and private physician groups to staff care, improved access, and true cost contain- ment - not manipulating cost reports to pass ex- emergency rooms or clinics. A manager brought in under contract could, and in some penses on to a different level of govern- ment are the criteria of excellence. Their pro- fessional training must generally be provided in cases has, routed hospital " business " to these owned wholly - subsidiaries. Abuses which may arise out of this conflict of interest can of course an educational milieu that shares these goals be minimized by close monitoring under appro- 27 priate purchasing procedures of the local government, but then this is likely to arouse cries of " bureaucratic red tape. " Over the long term, the growing concen- tration of ownership in the hospital industry could wrest principal control of hospital policy from the public. Decisions to improve or main- tain public facilities might be pre empted - by a few giant conglomerates that manage them as well as own most of the private institutions. In summary, over the long run private management is not likely to provide first class public service. We found that under restricted conditions contract firms did aid public hospi- tals in California, but at best this was, with one exception, limited relief provided in the initial years. History and the current political scene as well as the structure of American health care financing provide strong arguments for vigor- ously supporting publicly owned hospitals managed by trained administrators dedicated to the public interest. Readers interested in a more detailed report of the research discussed in this article should write to: California Policy Seminar, Insti- tute of Governmental Studies, University of California, Berkeley, 109 Moses Hall, Berkeley, CA 94720. 1. Goldmann, Franz. Public Medical Care: Principles and Problems. New York, Columbia University Press, 1945 pp. 93-94. 2. Stern, Bernard J. Medical Services by Government: Local State and Federal. New York, The Commonwealth Fund, 1946. pp. 22-23, 25 pp. 78-82. Stern and a number of others who cite the conditions of medical care in poor- houses and the practice of " contracting out " lean heavily on: Bruce, Isabel Campbell and Edith Eickhoff. The Michigan Poor Law, Chicago, University of Chicago Press, 1936. 3. Cihlar, Carroll. " Solutions to Public Hospital Problems, " Hospitals, vol. 44, no. 13, July 1, 1970. 4. Cihlar, Op. Cit. p. 53. 5. Burlage, Robb K. New York City's Municipal Hospitals: A Policy Review, 1967. Institute for Policy Studies, Wash- ington, D.C. 6. Shonick, William and Walter Price. " Reorganization of Health Agencies by Local Government in American Ur- ban Centers: What Do They Portend for'Public Health'"? Milbank Memorial Fund Quarterly / Health and Society. Spring 1977. 7. Hospital Research and Educational Trust. The Future of the Public General Hospital: An Agenda For Transition, Report of the Commission on Public General Hospitals, Hospital Research and Educational Trust, Chicago, 1978. 8. These matters are more fully treated and further references are given in: Shonick, William and Ruth Roemer, Private Management of California County Hospitals: Expectations and Performance, a Report to the California Policy Seminar, August 1981, especially Chapter VI. The California Policy Seminar, Berkeley, California California. Continued on Page 32 Continued from page 5 sucking bugs. The parasites in- tine Chaco is now systematically vade tissues of the victim, who cultivated, allowing the trees may show no symptoms for years and grasses which once covered Parasites on the Poor after an initial bout of fever. Then the effects are all too much of the area to return. The trees provide lumber for sale visible - severe damage to the and modest homes, the cattle " If you find a disease, develop heart, the large bowel, the auto- provide meat, removing the a drug or vaccine " is often the nomic nerves. Sometimes the need for the goats. Since the response of modern medicine. Or, if the disease is transmitted person dies because the heart just can't pump enough blood, land can support a higher popu- lation density, people can live by insects, " develop a pesticide. " These methods can be suc- particularly after unaccustomed exercise. According to an article in the closer together, sharing safe water and a school. There is still no known cure for cessful witness - the eradication October 29 English magazine Chagas disease, but in this one of smallpox - but sometimes New Scientist, from the time area its devastation is declining. eliminating a basic factor like Carlos Chagas first described The proof is in that. With a frac- poverty will solve the problem the disease in 1909 poverty has tion of what the Argentine and and prove more beneficial to its been identified as its close com- Brazilian governments are victims as well. Chagas disease may infect panion. The poor of the sparse- ly vegetated - , dry Chaco region spending annually on arms, mil- lions of their citizens could live more than 10 precent of the population of Brazil and Argen- tina. It is caused by a protozoan live in mud brick huts next to a goat corral - an ideal habitat for one insect carrier. happier, more productive lives, free of an " incurable " disease. - -Arthur Levin closely related to the one which Under the impetus of a private causes African sleeping sickness landowner, reports the New Sci- (Arthur Levin is a member of the 28 and is transmitted by blood- entist, one part of the Argen- Health / PAC Editorial Board.) ing, etc.), which " stresses " the Body English heart, and to reveal any asymp- tomatic, underlying disease which would make such rigorous quetballer's scars, and activity unwise. swimmer's ear infections, How well it does this is open to chances are you will be told that question. A 1979 study pub- you should first have a stress lished in the August 2, 1979, test. In fact, most health clubs New England Journal of Medi- and cardiovascular fitness pro- cine looked at the results ob- grams will not let you begin tained in a trial involving over without one. Even if you are 2000 symptomatic men and STRESS TEST FAILURES under 35 years of age, but guilty women. The subjects all had of a particularly slovenly and symptomatic angina pectoris by Arthur A. Levin slothful recent past, health pro- fessionals will most likely en- (chest pains), had completed cardiac catheterization and took Exercise has become a nation- courage you to hook up the wires a stress test within one month of al obsession in the past decade. and get on the treadmill to dem- A great part of the movement onstrate your cardiovascular may be spurred by a desire to re- main youthful. Many are jog- ging and touching their toes be- cause they have become con- vinced that it benefits their heart and lungs. Some may want a proclivities. In fact, if spending money needlessly makes you anxious, if taking a test that is highly inac- curate gets you nervous, and if being put at risk of being told A more recent study found that significant ST depression was not necessarily longer life, others better quality life when they've got it. And how much of this affair with exercis- you need coronary angiography (cardiac catheterization) leaves you scared, the stress of stress associated with poor prognosis. ing one's heart is related to af- fairs of the heart is an interesting testing may not be worth it. A stress test is a graded, car- SR question which bears (or bares) study. diogram (ECG) monitored exer- cise test, in which the subject is the angiography. After examin- ing what they called the " classic We do know that the national placed on an exercise treadmill response to ischemia " on the ex- interest in fitness and freedom from cardiovascular death and or bicycle and made to " work ' his her / cardiovascular system. ercise test - ST segment depres- sion - the researchers con- disability has combined with miracles of modern technology " Graded " refers to the gradual increase in the intensity of the cluded that for most of the pa- tients the information obtained to produce the exercise stress exercise load through increas- from the stress test added little test. And in the true American ing both speed and incline if a additional that was helpful in tradition, an industry has grown treadmill is used, or the resist- predicting coronary artery dis- up around stress testing, and ex- ercise programs for persons with cardiovascular disease. ance and pedalling speed when a bicycle is used. " Monitored " means the subject's heart activ- ease (CAD). They also found that for the patients in whom the prevalence of CAD is high (men If you are over 35 years of age and contemplating leaving your ity is constantly observed on the ECG recorder, and an oscillo- with definite symptomatic an- gina) a negative exercise test sedentary, sugarcoated, over- weight, smoke - filled life and en- tering the promised land of the marathoner's gauntness, rac- scope is usually used for contin- uous monitoring before, during, and after the test. All facilities monitor blood pressure and was poorly correlated with the absence of disease (false nega- tives). Although a negative test result was usually accurate in some oxygen uptake (lung capa- patients with a low prevalence of Arthur A. Levin is a member of city). Test results are considered CAD (women who had " non - is- the Health / PAC Editorial Board " positive " if the subject develops chemic " pain, i.e. not typical of and Director of the Center for any ECG abnormalities. The definite angina symptoms), posi- Medical Consumers and Health graded test is designed to tive test results correlated poorly Care Information, publisher of duplicate the effects of strenuous with presence of CAD (false pos- HEALTH FACTS. aerobic exercise (running, bik- itives). 29 A more recent study reported exercise programs were advis- death during or immediately in the same journal in the No- vember 5, 1981, issue found that significant ST depression found on exercise (stress) tests was not necessarily associated with a poor prognosis. The researchers pointed out that it was common practice to refer patients who had positive ST depression read- ings for cardiac catheterization and possible bypass surgery. They concluded that the evi- dence they had obtained raised serious questions about this clinical practice policy. The June 16, 1978, Medical able. Reporting on their data in the October 4, 1978, New Eng- land Journal of Medicine, the physician surveyers concluded that " In our opinion cost con- tainment in medical practice would be better served if the physician applied the same good judgement about his patient's need for pre exercise - examina- tions as he does in his own life and reserved more costly tech- nological evaluations for those relatively few instances where more extensive investigation is indicated clinically. " after vigorous exercise such as running. A report in the Oc- tober 17, 1980, Journal of the American Medical Association followed 2,935 adults (mean age, 37) who visited an exercise facility in Dallas. All had been screened with a maximum exer- cise ECG, another at rest, and a brief cardiovascular exam. The authors concluded that their data suggested a small, although not negligible, risk of cardio- vascular events for those adults who participate in strenuous physical exercise. There was Letter noted that as a result of Not only does stress testing some suggestion from this and stress testing, " healthy people may be led to think they have serious coronary disease, or asymptomatic people with ser- ious coronary artery disease produce a high percentage of false positives and false nega- tives, it is very expensive. In the New York City area the cost av- erages around $ 200; some previous studies that the risk would be increased by factors such as the presence of coronary disease, regularity of exercise, smoking, and competition. may feel free to pursue vigorous evaluations can run as high as exercise programs. " The authors went on to point out that false positive test results can not only $ 500. Enterprising investors have set up a number of proprie- Only 15-20 percent of tary centers that do stress testing doctors indicated lead down the path to coronary angiography and bypass sur- and also run " supervised " car- diac exercise programs. Several belief in stress tests. gery, they can cause damaging psychological effects and un- necessarily restrict physical ex- ercise. regularly run full page ads in newspapers such as the New York Times and the Wall Street Journal. % In the absence of sufficient scientific evidence to suggest otherwise, it appears that the ex- ee Much of their marketing ap- ercise stress test is of limited The normal adult pears to be aimed at executives and corporations that employ value in screening healthy, asymptomatic adults for disease. with no symptoms large numbers of managers. The should probably pitch implies that companies can maximize executive productivity heed trite advice . by offering " perks " such as an Therefore its prescription as a necessary and prudent prere- quisite for adults beginning ex- ercise programs is questionable. exercise program, which has the Those people who are over- Another study looked at added benefit of lessening the weight, smoke, or have any whether physicians who were athletes practiced what they preached. That is, did they real- incidence of disability from CAD. What is the risk of death or symptoms of disease might re- duce their small risk of cardio- vascular incidents as a result of ly believe that stress testing was disability due to vigorous exer- exercise by taking a stress test. necessary for asymptomatic peo- cise and is that risk lower in a However, the high number of ple prior to starting an exercise program. An attitude survey was sent to 115 primary care physi- population that has been " screened " by stress testing? Unfortunately we have been un- false positives and negatives makes even this limited recom- mendation tenuous. The normal cians who had run in the 1978 able to find a study that com- asymptomatic adult should pro- Boston Marathon. 69 doctors re- pared two such groups. There bably heed what is seemingly sponded to the questionnaire have been numerous reports in trite advice: start exercising and only 15-20 percent of this the press (and some in the slowly and do not push too hard sample indicated that they be- medical literature) of arrhyth- at the beginning. In other words, 30 lieved that stress tests prior to mias, heart attacks, and sudden test yourself. REAGAN CUTBACK SERIES SURVIVAL OF THE FITTEST: The Competition Model for Health Care. 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TOTAL PURCHASE POSTAGE AND HANDLING (Add 15% of total purchase.) TOTAL ORDER Please fill in name and address on reverse side. All orders must be prepaid. Bulk rates available. Allow four weeks for delivery. We will send orders marked " rush " by United Parcel Service and bill you for the charge. 31 Continued from page 28 management contract expertise that is comparable with the other cases we studied. Nevertheless, the difficulties 9. Tierney, Thomas M. Jr. " Capital Formation Issues Hospi- experienced by the company that prevented it from tals Will Face in the 80s, " Capital Analysis and Priority obtaining a full management contract, and that forced it Setting Project, Technical Assistance Memorandum, to withdraw early, are symptomatic of the special difficul- Western Center for Health Planning, San Francisco Francisco, California, June 1981. ties of management contract operation in large urban centers. These difficulties are centered in the social, 10. Health Care Costs and Services in California Counties, Report to the Legislature SCR117 () , County Health Care political and economic factors present in central city life, as sketched in the text. Costs Study (Jerome L. Schwartz, Director), Office of 19. Despite the fact that the latter hospital is run by a religious 1 Planning and Program Analysis, California State Depart- organization, it is formally listed in American Hospital ment of Health, February, 1978. Association compendia as a voluntary non profit - and not 3 11. Office of County Health Services and Local Public Health under religious sponsorship classification. Assistance (Peter Abbott, M.D., Chief and Associate 20. For fuller description of methods by which local govern- Director of) California Department of Health Services, ments divest themselves of control over their public Annual Report to the Legislature on County Medical hospital see: Shonick, William and Walter Price, cited in Facilities, January 1, 1981. 12. Shonick, William. " The State of the Public Sector Health note 6 above, pp. 236-239. 21. There can be confusion about the meaning of this term. Services in California, " Journal of Public Health Policy, For example, the Report of the Commission on vol. 2, no. 2 June 1981, pp. 164-176. 13. Ibid. Public General - Hospitals (see note 7 above) lists 1,905 public hospitals out of 5,679 " community " hospitals in the we ne 14. Derzon, Robert A., Roger B. LeCompte, and Lawrence United States as of 1976. These include all hospitals ge S. Lewis. " Management Contracts Seen as Largely Re- owned by some public authority. Most of them are the on- solving Needs, " Hospitals, June 16, 1981, pp. 59-62. ly hospital in a county or other local area, and are used by FO 15. Federation of American Hospitals. " Companies Lead the all persons living there. Others are the 45 teaching Way as Investor - Owned Industry Continues to Show hospitals attached to State owned medical schools. In this Overall Growth, " 1981 Directory of Investor - Owned article, I use the term " public hospital " to mean only Hospitals and Hospital Management Companies. 1981, those publicly owned hospitals that are generally situated Little Rock. pp. 6-15. in areas that also have other hospitals and that are sup- 16. See Shonick and Roemer, Note 8 above, Chap. III. ported primarily to ensure access for all persons who may 17. For further detail, see Shonick and Roemer, Note 8 not be able to go to other hospitals, primarily poor per- above. sons. I refer, in other words, to that public hospital about 18. In San Jose, the contract was for consulting rather than whose " plight " so much has been written in the last twenty " managing " and the management company withdrew after only 10 months of the 2 year contract had expired. The San Jose experience is, therefore, not a test of years or so. 22. See notes 14 and 15 above. 23. See note 8 above. 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