At a recent conference on managed care, one of the speakers, a physician, complained that all too often we don’t call patients “patients” any more. These days patients are referred to as either customers, consumers, clients or covered lives. As is often the case at such physician meetings, the statement on nomenclature received a lot of support, and there was nostalgia for the “golden days” of medicine. But there was no serious reflection about what the language changes may signify or about the nature of the changes in medicine. Why did the golden age collapse? Was it as golden as some remember?
On first reflection, the change in language may be taken as a symptom of the central role that economics has come to play in the practice of medicine. The shift in language, however, indicates something far more profound than changes in health care finance. The struggle over the language of medicine reflects a deeper crisis about the purpose and role of medicine in our society. If one thinks about this crisis and its roots, one comes to realize that there can be no return to some past time, no matter how much that past is idealized. Nor is such a return desirable.
In the current crisis an older model of medicine, which focuses on the patient-physician relationship, is often romanticized. This older model, rooted in the traditions of Hippocratic medicine, empowers the physician to act on behalf of the patient. The model is described as a fiduciary relationship, in which the physician is an advocate for the good of the patient. In the American imagination, this view of the past evokes images of a Norman Rockwell painting. People imagine the physician and the patient alone in the doctor’s examination room, where the patient could reveal his or her fears or deepest concerns. The nostalgia for the golden days of medicine assumes that if we could only get the insurers out of the picture, or at least out of the clinic, everything would be fine. But this is not the case.
These Rockwellian images are woefully inadequate and inappropriate. Like it or not, we have come to desire the curing and technological interventions of modern medicine that have been shaped by the merger of clinic and laboratory. The development and application of basic scientific knowledge have led to advances in diagnosis and treatment that we have come to expect from medicine. As a result of these advances, we now expect medicine to cure people. This expectation is a significant change in understanding its purpose and goals. For most of history, people hoped that medicine might ameliorate their conditions and problems, but they did not expect physicians would actually cure them. If patients recovered health, it was a miracle.
The move to scientific medicine inevitably reshaped the patient-physician relationship. Medical knowledge is based on probabilities. Scientific knowledge in medicine is based, not on knowledge about individual patients, but on knowledge about populations of patients. Contemporary medicine has been able to help people because it has studied the health of populations and it uses that model of knowledge to guide the treatment of particular patients. It is this development of knowledge that has enabled contemporary medicine to develop the technical and medical interventions that work the “miracles” that have become commonplace. These miracles come from the application of scientific knowledge, not from divine intervention. The development of scientific medicine crowds out religious language from the clinical experience. And as Eric Cassells points out, scientific medicine follows a Cartesian model of the person, focusing on the body as a machine. The emphasis of the scientific-medical approach is to fix the machine when it is broken.
The patient-physician relationship is further complicated by the need of scientific medicine for a significant investment of resources and infrastructure support. Because of the need for organizational support, modern medicine has developed a bureaucratic culture that plays an essential part in the delivery of health care. Each of these developments further complicates the physician-patient relationship. Even in the Golden Age there were a lot of people in the clinic. Rockwell should have included basic scientists, nurses, financiers and administrators along with the physician and the patient.
Contemporary medicine now finds itself in a crisis about what it is and what it should be. Some may wish to return to the Rockwell-style physician-patient relationship. But this is not possible if one wants to maintain the advances of scientific medicine. Even if such a return were possible, it would be undesirable for at least three reasons. First, the traditional Hippocratic view of patients was extraordinarily paternalistic, though this paternalism was often covered over with the language of a fiduciary relationship. In the Hippocratic Oath the physician swears to act in the best interests of the patient according to the physician’s judgment. However, over the last 40 years we have come to understand that the physician’s view of the patient’s best interest and the patient’s view of his or her best interest may often be quite different.
A second reason not to romanticize the past is that the model of being a patient, overcome by disease, fails to take into account a great deal that we now know about disease prevention and health promotion. The patient model does not seriously address the responsibility people have for their own health. In the older model patients are simply overcome by illness, and there is no place for individual responsibility or choice in how the sickness occurred. We now know that many illnesses and diseases are brought on by the lifestyle choices of men and women. The older model often leads to the infantilization of the patient.
Finally, because of the view of illness as overtaking the patient, the older model led to modern medicine’s focus on acute care. In general, the patient only went to see the physician when something was wrong. The overall emphasis in our medical and health care system was on fixing the parts of the machine that are broken, not on preventing the breakdown.
The older model does not work from another perspective. It cannot account for medicine as a social enterprise, since it too narrowly focuses on the individual patient. The development of scientific medicine has opened up all kinds of new treatment possibilities for men and women. These possibilities raise important moral and economic questions about how we deploy health care resources. The question of cost containment and resource allocation is a moral question as well as an economic one. In a world of limited resources, how a society stewards its resources is a moral question. But the older Hippocratic ethic is incapable, conceptually, of addressing the questions of allocating health care resources (as Alan Buchanan argued in a recent issue of the Kennedy Institute of Ethics Journal). Nor can the older physician ethic incorporate other social questions, such as who has access to the system. The Hippocratic tradition is focused only on the patient, in a paternalistic way. The tradition does not have a social ethic. Yet contemporary medicine is a social enterprise.
There are at least two other models in which to frame the patient-physician relationship. One is the market model, in which the patient is seen as an informed consumer. This is a model we have flirted with, but have not really tried, in the United States. In spite of all of the contemporary language about markets, individuals are not true consumers in our current health insurance system. The major choices in health care are made not by individuals but by human resource officers and benefits managers who decide which plan(s) will be available to employees. But employees are not true consumers, as they are not empowered to shop for health care. So one approach would be to develop and try a true market model for medicine, in which individuals are understood to be informed consumers. Another model is the political model. Here health care is less a business and more a community. This is a model that stresses health care as part of the common good, the importance of all parties having a voice and considerations of public health. Both models present possible ways to re-imagine and redefine medicine.
I would argue that while each model contains some good insights, neither model is fully appropriate for contemporary health care. If one builds upon the insights from these models, it is possible to begin to develop a new model for the patient. The strength of the community-based model is that it understands there are communal obligations to provide health care for men and women. The weakness of the model turns on its strength: the idea of community.
The first problem with the community model is that secular societies are not themselves communities, though they are often collections of communities. Furthermore, ideas about health, disease and health care are often interpreted by the values of a community. The difficulty with using the community model is that there will be differing views of health care depending on the model of community deployed. We are left with the question, to paraphrase Alasdair MacIntyre: “Whose community? Which health care?” We have no way, in a secular society, to decide which model of community and health is the one we should use.
The strength of the consumer model is that it allows freedom of choice. It allows the individual the liberty to make health care choices appropriate to the person’s own life and moral commitments. The consumer model is a procedural way to avoid the interminable debates about what should or should not be included in packages of health care. I believe it is possible to bring these models together. We can argue that society is obliged to provide basic access to health care for all citizens, but it must structure this in a way that allows individuals freedom to make their own health care decisions. Here one might think of a system of vouchers for health care.
It is clear that medicine has changed and there is no going back. Indeed, the only way to go back to an idealized view of the physician-patient relationship would be to roll back the development of scientific medicine. Few would want to do that. The real crisis before us is to determine the purpose or purposes of medicine in our society. Such a determination can take place only in open discussions within a free, democratic society.
s Congress moves toward enactment of a bill of rights for patients, it is important to recognize the complex legal, economic and ethical issues that surround health maintenance organizations.
In a decision last year, the United States Supreme Court upheld the right of H.M.O.’s to provide financial incentives to physicians as a way to control costs. It did so, wrote Justice David H. Souter for a unanimous court, because Congress made a political decision when it passed the Health Maintenance Organization Act of 1973: that managed care, with its capitation (a uniform per capita payment or fee), rationing and financial incentives, was the way we as a society were going to control the cost of health care delivery. Congress is, of course, free to amend or change that system, but that choice, said the Supreme Court, belongs to the Congress, not the courts.
The case Pegram v. Herdrich dealt with the claim of Cynthia Herdrich that her H.M.O. physician breached her fiduciary duty to act in the patient’s interests when, after diagnosing an inflamed abdominal mass, she had the patient wait eight days for an ultrasound examination to be performed at the H.M.O.’s imaging facility. During the delay, Herdrich’s appendix ruptured, causing peritonitis. While this would ordinarily be a straightforward medical malpractice case (and a jury in a malpractice suit awarded the plaintiff $35,000), the plaintiff claimed further that under the complex federal Employee Retirement Income Security Act standards governing H.M.O.’s, the H.M.O. organization breached its fiduciary obligation to its patients. This was done, the plaintiff asserted, when the H.M.O. used financial incentives as a way to constrict costs. If the physicians succeeded in lowering costs, they received bonus payments. The plaintiff charged that these financial incentives created an inherent conflict of interest that pitted the physician’s commitment to serve the patient’s interest against the physician’s financial self-interest.
That claim was dismissed in the federal district court on E.R.I.S.A. preemption grounds but was given credence on appeal by the U.S. Court of Appeals for the Seventh Circuit, which ruled that the fiduciary trust would no longer exist in situations where “physicians delay providing necessary treatment to, or withhold administering proper care to, plan beneficiaries for the sole purpose of increasing their bonuses.” The Supreme Court reversed that ruling, stating that to uphold such a standard would not only transform malpractice cases involving H.M.O’s into federal issues—and thereby flood the federal courts with what were traditionally state common law concerns—but also would destroy H.M.O’s entirely. No H.M.O. organization could survive without some incentive connecting physician reward with treatment rationing. In Justice Souter’s blunt phrasing: “Whatever the H.M.O., there must be rationing and inducement to ration.”
The federal government recognized this when in 1996 the Clinton administration revised rules regulating but not prohibiting the common practice of linking physician compensation with cost-cutting and control of services. As originally proposed, the federal guidelines on payment for Medicare and Medicaid services would have precluded any interrelationship between payment to physicians and delivery of services. Such a restriction, however, would have gutted the primary mechanism in managed care plans to curb the unacceptably high cost of health care delivery—making physicians directly responsible for cost control by placing them at direct financial risk.
At first blush such a linkage seems to involve an obvious and irreconcilable conflict of interest. How can a physician be responsible for the well-being of a patient while at the same time being aware that a proportion of his or her income is linked to the provision of cost-conscious care? That conflict led many of the leading commentators in medicine and bioethics to denounce such arrangements. Support for that criticism is found in a statement by the American Medical Association’s Council on Ethical and Judicial Affairs in 1995 that while physicians have a concern for society’s resources, they “must remain primarily dedicated to the health care needs of their individual patients.” The council believes this consideration is so overriding that “[r]egardless of any allocation guidelines or gatekeeper directives, physicians must advocate for any care they believe will materially benefit their patients.”
Devotion to the patient’s goals, indifferent to all other concerns, including the physician’s self-interest and comfort, reflects the highest aspirations of the profession. But this mission of selfless service presupposes a situation that no longer prevails: a private patient-physician relationship in which the treatment proposals are within the financial means of the patient and the patient assumes the responsibility, both personal and financial, for the choices made. That simple era—when most of what medicine could provide was contained in the physician’s little black bag and 80 percent of patients paid for their treatment out of pocket—lasted through the 1950’s.
Over the past three decades, vastly advanced technology, third-party payment and a nearly exclusive focus on patient autonomy has transformed medicine into an institution with no apparent limits on what can be demanded and what will be attempted. The furthest reaches of this out-of-control system is seen in the now infamous case of Baby K, in which at a mother’s insistence an anencephalic infant was resuscitated, ventilated and maintained with intensive care measures for some two-and-a-half years. Such an open-ended, unrestrained approach to the delivery of care ( over one million dollars was expended to maintain an infant born without a brain) would soon lead to bankruptcy if left unchecked. That threat forced us into managed care and its mechanisms for controlling costs—such as capitation, mandatory second opinions and physician bonuses.
The U.S. medical system is market based and will necessarily utilize market forces to assure constraint and efficiency. Financial incentives such as capitation, salary “withholds” and bonus arrangements are designed precisely to place the physician at financial risk for providing marginal or superfluous treatments. Such risk, as Ezekiel Emanuel notes, is “the most effective if not the only way to ensure that physicians seriously evaluate services and refrain from providing those that are unnecessary or marginal.”
Why is this so? Reinhold Niebuhr, in his now classic text Moral Man and Immoral Society, observes that, given our sinful fallen state, self-interest governs almost all of our activity. Only in the limited circumstances of close family or the most intimate of associations are we capable of transcending that instinct. Consequently, exhortations to moral good will fall on deaf ears. The only way to change behavior is with what Niebuhr labels “a measure of coercion” involving the individual’s perceived self-interest.
Applied to managed care, this means that to change physicians’ behavior, we must appeal not to their moral sentiment but to their self-interest. Since nothing gets their attention more efficiently than money, we must tolerate the conflict of interest inherent in financial incentives. This is not something new. All financial incentives, including fee-for-service, involve a conflict of interest, a danger noted by Justice Souter in Herdrich when he tartly observed, “In a fee-for-service system, a physician’s financial incentive is to provide more care, not less, so long as payment is forthcoming.” The check here, as in capitation, where the incentive is “less care,” not more, is in Souter’s words “the professional obligation to provide covered services with a reasonable degree of skill and judgment in the patient’s interest.” Conflicts of interest have also arisen when physicians mandate tests that will be done by equipment or facilities owned by the doctors.
The ethical issues involved in using financial incentives to control cost are multiple. Do they serve a public good? Do they help control spiraling costs? Do they eliminate marginal or useless interventions? Are they effective in guaranteeing a more equitable access to common resources? These are questions of societal as opposed to individual claims about equity and fairness. They involve what Aquinas calls the “general justice” of the system as a whole. In managed care that justice requires a concern not only for the particular patient, but for the well-being of all those affected by the plan: patients, physicians, payers, providers and, most particularly, all the other participants in the plan.
Despite the traditional belief that the physician’s primary duty is to the needs of the individual patient, an emphasis on distributive justice and collective control of resources held in common is an even more demanding imperative. For without it we would all suffer what Garret Hardin labels “the tragedy of the commons,” i.e., a situation where overuse depletes all the resources and leaves nothing for anyone. To avoid that outcome we must organize our lives within some shared vision and sustain that vision by our actions.
What is hoped for in formulating and implementing that shared vision with regard to health care is that physicians will extend their benevolent sentiments to encompass all citizens in need, reflect seriously on the principle of fair distribution and make unnecessary the Niebuhrian “measures of coercion.” But because of the idiosyncrasies of American cultural and professional history—as well as our human nature—a “measure of coercion” now seems necessary.
The Supreme Court was therefore unwilling to unleash the chaos that would follow if, by judicial fiat, it ruled that the Congressionally mandated mechanism for controlling physician behavior was so inherently flawed that it had to be totally restructured. It deferred the highly charged political issue of how to organize our health care delivery system to Congress.
Left unaddressed in Justice Souter’s Herdrich opinion, which upheld the legitimacy of financial incentives, was the issue of whether these incentives can, in fact, have the perverse outcome feared by the Seventh Circuit. Might they induce the physicians to put personal economic interests ahead of the patients’ well-being? Another recent federal case, Bowman v. Corrections Corporation of America, illustrates the dangers financial incentives can pose. Bowman is an atypical example in that it concerns not an enrolled H.M.O. patient, but an inmate in a for-profit prison in Tennessee. The issue of the influence of financial incentives on physician behavior, however, transcends the setting.
The case involved the terms of a contract by the Corrections Corporation of America for the total care of prisoners in a new facility in rural Tennessee. In writing the contract, C.C.A., in the words of its financial vice president, made a “mistake in the pricing model.” C.C.A. projected the per diem costs for health care at its new institution, South Central Correctional Facility, on those of an existing prison located near a charity hospital. The charity hospital did not bill for the hospitalization of prisoners. South Central, however, had no charity hospital nearby and so was charged each time a prisoner was hospitalized. The result of that “miscalculation” was that in each of the first three years of its operation the health care costs at South Central, which were projected to be $500,000, exceeded $1 million. (This $500,000 “unanticipated expense” occurred in a facility that projected an annual profit of $750,000.)
To bring those “excessive” costs under control, C.C.A. changed from its practice of hiring a prison physician for a set annual salary to a capitated payment plan that paid the physician $9.40 per inmate per month. Twenty percent of that capitated payment was withheld. If the physician could reduce the costs of hospitalization, specialty services and medications from $3.07 per day to $2.77, he would recover that 20 percent “withhold.” If he reduced the costs still further, to a stated cost per day, the physician would recover 15 percent of the savings. If he could achieve still greater reduction to a cost of $2.17 per man per day, the physician would receive a bonus of 25 percent of those savings.
In sum, if the prison physician could reduce the cost of medical care for a population of prisoners from $3 per day to $2.17 per day, he could increase his income from a base of $137,000 to a maximum of $232,000. The intensity of these incentives raises ethical concerns. What impact would an incentive of such magnitude have on the care of patients in an H.M.O., let alone in a prison?
The claim in this case was that a prisoner with sickle cell anemia, who had been hospitalized some dozen times the previous year for sickle cell crises, was never hospitalized or seen by a specialist under the new “managed care” contract, despite 14 visits to the infirmary over a two-month period by an increasingly debilitated patient. Only after the prisoner’s mother complained to a state official was the prisoner transferred to a hospital. The patient died of pneumonia within 24 hours of his admission.
The use of financial incentives of the magnitude found in this case—which would allow a single physician nearly to double his income if he succeeded in substantially reducing the cost of medical services delivered to a fixed population of patients—makes vivid the sense of “conflict of interest.” Such an incentive is more than a conflict of interest; it is an open inducement for the physician to put personal gain before patient welfare. As such, it erodes the trust essential to the patient-physician relationship and is a substantial violation of the ethical standards of medical practice.
As the Council on Ethical and Judicial Affairs of the A.M.A. made clear in 1996 in its “Current Opinions of the Code of Medical Ethics”: “There should be limits on the magnitude of financial incentives, incentives should be calculated according to the practices of a sizable group of physicians rather than on an individual basis, and incentives based on quality of care rather than cost of care should be used.”
The council’s views on the ethical constraints in the use of financial incentives have been adopted by the federal government, which restricts “withholds” in physician salaries in Medicare and Medicaid payment to no more than 25 percent of a physician’s income.
The use of financial incentives of the intensity used in C.C.A.’s contract with the prison physician seems designed not to enhance the medical care of the patients but to increase the profit of that corporation. In fact, in this case the physician succeeded in lowering the medical cost below the $2.43 per day payment received from the state to $1.70 per man-day. The difference, spread over 1,500 inmates, amounted to a substantial profit for C.C.A. While profit maximization may be a legitimate corporate goal, there are ethical constraints that bind all corporations in a free society on how that goal may be achieved. Among them is the concern that the employee’s or patient’s health may not be unduly put at risk.
Financial incentives themselves are not inherently unethical. Indeed, in a nation that has no other mechanism to control upwardly spiraling health care costs, costs that threaten to bankrupt the society, they might be an ethical imperative. Their ethical character depends on their design and intensity. Poorly designed and disproportionate financial incentives can have a perverse influence even on good, caring, dedicated physicians. That is why the A.M.A. rejects them as unethical. It is also the reason the government bans them in federally funded programs.
Now that the Supreme Court has upheld the legitimacy of managed care and its mechanisms of controlling health care costs—capitation, withholds, bonuses, financial incentives and rationing—it is society’s responsibility to guarantee that these measures are utilized in a way that both serves the common good and protects the well-being of the patients. That is no easy task.
Some guidance for that task is found in the ruling of federal district court Judge William H. Hayes Jr., in Bowman. Though the jury found that the physician’s actions in this case did not cause the death of the patient, Judge Hayes ruled that the C.C.A. contract with the prison physician itself “violates contemporary standards of decency, by giving a physician who provides exclusive medical services to inmates, substantial financial incentives to double his income by reducing inmates’ necessary medical services.” He ruled that because the contract acted to thwart the inmates’ Eighth Amendment right to necessary medical care, it was unconstitutional.
Judge Hayes was careful to note that his ruling should not be construed as barring a managed care system with physician incentives even in a prison setting. Nor was it an attempt to set an appropriate price for the delivery of health care. What his ruling did was to recognize that, though legitimate, there are limits to how far financial incentives may go before they cross the threshold from what is necessary to motivate physicians to treat in a cost efficient manner to a practice that offends the conscience of the community.