MANAGED CARE PLANS AND THE BIG CLINIC ERA (1983 TO THE PRESENT)

Twenty years have passed, and still the managed care plan offered by my old clinic or its clinic-friendly insurance company is not performing as expected. In our town, I am familiar with the owner of a small business with ten employees. His company premium went up an insupportable 34.1 percent in 2005, and he was forced to cancel the policy. In making that decision, the employer went through terrible anguish. His employees understood that the premium increase took more than the entire profit from the company for the entire year. What a stark, simple and typical snapshot of our health care crisis’ economic impact: an employer is saddled with the terrible decision of either setting his employees adrift, uninsured, or sacrificing his annual profits and taking a loss on top of that.

And it is not just my former clinic’s problem. Car manufacturers and unions are very aware of the economic impact of high insurance costs. GM readily quotes a sum of $1,500 to $2,000 per car for health insurance for its retirees and workers, and is wasting no time exporting jobs to Canada, to take advantage of its less expensive comprehensive health care system.

Administration kept growing. All the new people worked—but for substantial salaries. The average salary for a medical director recently ranged from $250,000 to $400,000 per year. To pay that kind of money, a doctor has to see a lot of sore throats on a revenue versus expense basis. Those of us on the board who questioned large executive salaries or administrative growth were always shown statistics comparing us to clinics of equal size. These statistics were used to justify more administration and higher salaries as most clinics of our size had about the same administration and paid like salaries. Yes, we all were making the same mistakes and it is still happening. Let’s look at some more of those mistakes.

Excerpted from Health Security America: Fixing the health care crisis. Copyright © 2006 by Fred Bannister, M.D. All rights reserved. Lundquist Hills Publishing Company.

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