Most of us who have examined the managed care system have spoken about the evils of “corporate medicine.” We have done this because the managed care system is set up, to all intents and purposes, as a corporation. But, a recent article appearing in Transaction Social Science and Modern Society changed my thinking about this most important subject.(1) The article was written by Caroline Poplin, a graduate of the Yale Law School as well as a practicing internist. I would encourage all concerned doctors, as well as persons considering entering a managed care system, to carefully read this article.
The article is probably the most incisive, thoughtful, and honest appraisal of managed care systems I have seen in print. What makes it especially important is its honesty. While agreeing with the basic premise of managed care, she points out all of its festering sores as well. But most importantly, she makes the statement, “managed care is pushing medicine toward a more conventional industrial organization ... most manufacturers prospered by breaking down production into standardized tasks requiring little judgment, tasks that could be performed quickly and reliably by workers with relatively low skills.”
She points out that managed care is organized into owners, administrators, and laborers. So who are these laborers in the managed care system? The answer she says will distress doctors because it is they who have become the laborers. This is distressing because in the past doctors have been the owners, administrators, and laborers in their individual practices. This gave them individual control over how they practiced medicine. But under managed care, they no longer make major decisions and have relinquished their individualism to the industrial owners and bureaucratic administrators.
Poplin makes a very interesting statement that would have greatly distressed such thinkers as Richard Weaver(2) and M.E. Bradford,(3) men who loved the simplicity of the free enterprise system. She states:
In some ways, retail medicine — medicine at the level of a doctor and his patient — is the last cottage industry in America.... Doctors see themselves as the last of the rugged individualist, the prototypical small business owners, something like craftsmen of the eighteenth century, meticulously tailoring a custom product for each client, doing most of the work themselves.
Then she exposes the true nature of managed care when she says, “Nevertheless, a Norman Rockwell doctor can no more survive the economics of managed care than a cabinetmaker could survive the advent of the furniture factory.” This is a very interesting analogy. In her mind and in those of many modern politicians, liberal-leftists and social progressives, medicine can and should be organized as a mechanized industry, which necessarily means the product, sick human beings, can be treated on an assembly line as inanimate widgets.
People as Industrial Products
Her conclusion, that the idea of doctors as craftsmen is dead and can never be resurrected, is reminiscent of what the liberal-left has been saying for over a century, that one can never turn back the clock. But let us look closer at the idea of industrialized medicine. Mechanized industry requires several things. First, it must either start with raw materials or materials in their crude form and from this create a finished product. Industry can control every aspect of this creative process. Next, in order to mechanize the process, one must standardize the entire system so that all of the widgets will not only be created by the same process, but will end up looking and operating the same. During every assembly line process, there are widgets that are defective and do not fit the molds of industrial production. These are discarded since they interfere with production of standardized products.
In the case of medical care, the products are human beings created by God, not man. They enter the “factory” in non-standardized forms, that is, various sizes, states of obesity, biochemical individuality, degrees of illness, many with multiple illness, variable immune competence, individual psychological makeup, anatomical variables, races, sexes, fears, and preexisting states of health. Many diseases present in unusual ways and not as found in textbooks. And on top of all of this, there are yet to be discovered variables that significantly effect outcomes from medical and surgical treatments. The bottom line is that industrializing such patients would mean that a significant number would represent “widgets that did not fit the mold,” i.e. broken widgets.
But then, managed care has a system similar to industry to discard these “misfits.” They are simply rationed out of the system. That is, they are denied non-standardized care. Interestingly, the term used to describe this systematic removal of “medical non-conformists” — “cherry picking” — is one used frequently by the proponents of managed care to attack medical savings accounts.
For instance, Poplin notes that 10% of patients incur 80% of medical cost in the United States, and that the managed care company “thrives to the extent that it can identify and avoid members of this group while insuring others.” This is the purpose of insurance physicals, limitation of coverage for preexisting illnesses, and aggressively recruiting large employers who have primarily healthy employees. The bottom line is for the managed care factory to attract large numbers of healthy members and do all they can to avoid the sickest ones (broken widgets). This allows standardization of care to work better since sick “widgets” will not foul up the assembly line.
The Danger of Sick Widgets
Poplin notes that managed care may actually aggravate the problem of adverse patient selection since the highest quality plans (those practicing better care for sick patients) will attract the sickest people, making these plans more expensive and less attractive to industry. She notes that this would leave such a plan with two choices, either significantly raise premiums or ration services further.
While traditional medical coverage by indemnity insurance has traditionally resorted to doing all it can to avoid sick patients, managed care has developed it into an art. You may remember when HMOs were first trying to make a major impact in the medical marketplace, they were being given government approval. But when politicians on the left began insisting they accept Medicare and Medicaid patients as a condition of that approval, they screamed like banshees. They have been “cherry picking” from the very beginning.
Industrialization of Doctors
As laborers within the managed care factory, doctors incur cost on the company that, in the minds of the owners and managers, must be controlled. The laborers do this by ordering “too many tests and referring patients to specialist too often.” This must be controlled in any industrialized system. After all, if the laborers (doctors) spend too much time and company money trying to make the damaged widgets fit the standardized mold, it will steal profits from the owners. They must be made to simply reject the damaged widgets.
One method is to simply deny laborers (doctors) access to widget repair. This is done by utilization review, pre-admission certification, or outright denials. But, there is another way to control the laborers. You simply pay them a certain amount (capitation) to run a set number of low cost widgets through the system. If they spend too much of that money trying to fix a broken widget, it comes out of their pocket. They soon learn that the broken widget isn’t worth the personal price. Recalcitrant widget fixers may necessitate dismissal from the factory.
With time, laborers will be retrained to forget about the broken widgets and to be more concerned with company profits and pleasing the owners. New laborers who have never known individual practice will grow up within the industrialized system, never recognizing that there is another way to provide medical care.
As with communism and other forms of socialism, people learn not only to adapt, but to become dependent on the rulers of the system. This is why the elderly and the lifetime state workers in the Commonwealth of Independent States long for a return to communism; they have never known anything else, i.e. they are willing to trade their liberty for security.
Doctors under managed care are made to do the dirty work for the owners and managers. Poplin correctly points out that patients within a managed care system have the illusion there exists a doctor-patient relationship as in days of old. But in reality, it is the managers who decide how medical care will be given. Dr. Poplin explains, “More important, managed care will alter what care is ultimately provided, who makes the decision, and how.” When denials are necessary or rationing methods are implemented, it is not the managers who break the bad news to the patient members of the managed care group, it is the hapless doctors. After all, the doctors are on the lowest rung of the corporate ladder. They are the laborers.
The Impersonal World of Industrialized Medicine
So how do patients fit into the managed care industrialized system? Multiple studies have shown that no more than 50%-55% of managed care patients are happy with their choice. But, they enter under several illusions. First, they assume they will be able to continue being treated by their personal physician, which may or may not be true. Second, they assume that when they are seriously ill, they will be referred to an appropriate specialist promptly. And finally, they assume they will have access to advanced medical test and diagnostic studies. None of these assumptions are true. In fact, as we have seen, the industrial system discourages each of these desires. Individuals joining managed care groups assume also that medical decisions will be based on their best interest. What they don’t know is that the primary consideration of both the managed care owners and the industry sponsoring the individual is cost. When cost and quality medical care compete, cost considerations win out.
Poplin, in her essay, assures us that the medical “cottage industry,” practiced as a craft individualized for each patient, is dead and gives the impression that she sheds no tears at the funeral. But most of us, especially when we are seriously ill, want and deserve individualized care that has our primary interest at heart. We do not want to be treated as an expensive screw-up in the industrial system, or feel that we have entered an impersonal corporate world where we are not treated as an individual but as an insignificant segment of a collective.
Socialism is based on treating people as a collective. Individuals do not matter. They are merely cogs in the all embracing wheel of the State.(4) Cogs that do not fit are ground off or hammered until they fit. The industrial system also treats its assembly line items as a collective. Items not fitting are either made to fit or are discarded. Workers on the assembly line are not encouraged to think as individuals. The managers and supervisors will do all the thinking. Laborers (doctors) are there to keep the widgets (patients) rolling through the system with the greatest efficiency.
One of the primary characteristics of managed care systems is that they tend to grow in size and complexity as does any industry. With increasing size and complexity the laborers become less and less important as individuals. They are expendable and can be replaced by less skilled workers as the system becomes more standardized, with secretaries sitting at computer terminals being able to make most medical decisions.
Should managed care continue to grow nationwide one can envision mega-corporations running national medical care networks, where doctors are moved around the country like chess pieces. For example, they may decide there are too many cardiologists in Atlanta, Georgia, and they may tell a number of them to pack their bags and move their families to Billings, Montana. Corporations do this all the time. Once the bulk of doctors become dependent on corporations for their income, they will do as they are told. And once international networks of managed care systems are created, it would not be unreasonable to expect doctors to be assigned to foreign countries by the “ factory system.”
Once managed care becomes the dominate or only system of providing medical care, doctors who continue to resist the industrial system and yield to the impulse to practice medicine as an art will be removed from the system and be denied the right to practice medicine. The collectivists, as seen with the Clinton’s Health Security Act, are not above passing laws that would criminalize independent medical practice. They would do this because allowing “craftsmen” to exist would be a stark demonstration of the superiority of medicine practiced as an art over the industrial system. This is why they continue to fight the medical savings account concept so aggressively. It is also why the communists erected an iron curtain between the oppressed people of the Warsaw Pact and the free people of the West.
Industrialized Medicine as a Malpractice Trap
Poplin points out a fact that is routinely ignored by the proponents of managed care. She says, “The subtlety of the system, however, comes at a price: It is a set-up for litigation.” We have seen the reality of this recently in the virtual explosion of malpractice suits being levied against doctors and managed care groups nationwide. Poplin explains:
...the patient’s expectations are exactly the same: The patient expects the system to do everything, whatever may help, no matter the cost. Managed care gives no reason to demand less. When there is a bad outcome, and the family learns that an expensive alternative was rejected without so much as a by-your-leave from them, there may be no twenty-year doctor-patient relationship to hold them back. Indeed, the company’s increased involvement in therapeutic decisions will make the company itself, with its deep pockets, that much easier to sue. (Of course the company’s lawyers will contend that medical decisions are made only by the doctor and the company just does “administration.” ...This is truly a lawyer’s paradise.)
So what is managed care’s proposed solution to this vexing problem? Tort reform. Isn’t it strange that insurance companies and managed care entities never had interest in tort reform until they became the center of litigation’s focus? Of course, until that comes about they intend to simply shift the blame for malpractice into the laborer’s camp. In a way, that is good because if a physician, who has taken an oath to always do what is best for his patients, prostitutes himself to industrialized medicine, he should pay the price for their decision. Benjamin Franklin said that those who would trade security for liberty deserve neither security nor liberty.
Litigation will increase dramatically now that the sharks have smelled the blood. They know managed care institutions are hot beds of malpractice, especially towards the sicker patients, the very patients that demand the highest awards in malpractice cases. Interestingly, the center of malpractice litigation will be the very ones who have always been most enthusiastic about the concept in the first place, the gatekeeper. After all, it is the gatekeeper who enforces the administration’s rationing policy.
Another reason managed care will invite malpractice claims is it will impose an impersonal care system on people who generally want more individual attention, not less. As stated, the managed care contract never lets the individual know that quality care will be discouraged. He only learns about it after the fact, which leaves him no other resource but the courts.
How Should Medicine be Practiced?
Those of us who have studied Dr. Faria’s impressive review of medicine’s history, Vandals at the Gates of Medicine, know that the one characteristic of health care providers throughout history is their individualism and dedication to their patients and their community.(5) The one main characteristic of patients throughout history has been their desire to be treated as individuals and not as cattle. They seek dignity and personal care from their physician.
The idea of collectivist medicine, in which patients are treated as widgets in a factory, is relatively new. Under socialist medicine, the sickest individuals are treated as expendables in a collective society. They cannot produce, and hence, do not pay tribute to the state (taxes). Therefore, they are looked upon as a social liability. Treating the chronically ill and the extremely sick is very costly. Since the cost is mostly paid by the state (taxpayers), these individuals receive minimal care for two reasons: First, to minimize immediate cost, and second, to allow such patients to die earlier, thereby lessening the cost burden on the State. Dead patients are very cheap for the State to care for.
Managed care gives one the illusion that the free market is in operation. But is it? Many states are favoring managed care groups through special legislation and by giving preference to managed care groups for state employees. That is, they are herding large numbers of patients into managed care groups without offering true free market alternatives. In truth, managed care more resembles Corporatism as seen in Fascist Italy.(6)
Outside of the traditional fee-for-service system as existed before the explosion of third-party payer systems, no other proposal even remotely resembles free enterprise except for the idea of Medical Savings Accounts (MSAs). Under such a system, decision making returns to the patient-doctor relationship. The doctor advises the patient and the patient decides what treatment options he wishes to pursue. He is not only free to shop around for the best quality at the best price, but he is encouraged to do so through financial incentives that favor the patient.
The patient can choose any doctor, treatment facility, medication, or type of treatment he wishes. He is encouraged to be frugal because he is allowed to keep whatever money is left in his MSA at the end of the year. What could be simpler or more fair?
Collectivists always feel they should make decisions concerning the individual’s life. They are horrified by the idea of individuals making their own decisions. One of the frequent collectivist retorts is that patients do not know what is best for them. Are we to assume that some faceless industrial bureaucrat or a secretary sitting before a computer terminal is in a better position to make these vital decisions? Are we to assume that individual sick patients can be treated by cookbook medical standards, that all diabetics are the same, or that all cardiac patients can be treated by the same standardized system?
Can anyone familiar with the process of scientific innovation really think that standardization, where every physician is made to practice medicine in the very same way year after year, is conducive to creativity and progress? Should we be made to depend on edicts passed down to us by government or corporate approved groups of scientific experts? Nonsense. Progress grows only in the fertile field of individual creativity, in which the innovator can challenge the status quo with new ideas and apply those ideas constructively. Interventionism stifles creativity and progress.(7)
While Poplin does a beautiful job analyzing managed care, she falls flat with her proposed solution, a single payer system as in Canada. She erroneously describes this system as decentralized, and thereby, preserving fee-for-service. It is beyond the scope of this article to fully challenge this notion but anyone familiar with Canada’s system knows that it represents statist control of medical care. It is socialized medicine.
To save our “cottage industry,” we must promote the one system that most closely adheres to individualized patient care, Medical Savings Accounts. Those who would join managed care systems in hope of saving what little security they have left will find themselves in the situation suggested by the sagacious Benjamin Franklin — without either security or liberty. As for me, I choose liberty.
1. Poplin C. The Piper’s Tune. Trans Soc Sci Mod Society 1995;33(1):8-15.
2. Weaver RM. The Southern Tradition at Bay. A History of Postbellum Thought. Washington, DC, Regnery Gateway, 1989.
3. Bradford ME. Remembering Who We Are: Observations of a Southern Conservative. Athens, GA, University of Georgia Press, 1985.
4. Heller M. Cogs in the Wheel. The Formation of the Soviet Man. New York, NY, Alfred A. Knopf, 1988.
5. Faria MA. Vandals at the Gates of Medicine — Historic Perspectives on the Battle over Health Care Reform. Macon, GA, Hacienda Publishing, Inc., 1995.
6. Ryn CG. The New Jacobinism. Can Democracy Survive. Washington, DC, National Humanities Institute, 1991.
7. von Mises L. A Critique of Interventionism. New Rochelle, NY, Arlington House Publishers, 1977.
Dr. Blaylock is a neurological surgeon in Jackson, Mississippi, and a member of the Editorial Board of The Medical Sentinel. His address is 9 Lakeland Circle, Jackson, MS 39216.
Originally published in the Medical Sentinel 1996;1(1):19-22. Copyright©1996 Association of American Physicians and Surgeons (AAPS)