|
Originally published in Business & Health, Vol. 15, No. 9, Sept. 1997, p. 81 The Real Cost of Micromanagement By Joseph J. Petrillo, Esq. A close look at the government's approach to health care purchasing reveals the perils and price of micromanagement. As the nation's largest purchaser of health care, the federal government is a virtual laboratory of approaches to the acquisition of medical services. In addition to buying health care for nearly 9 million employees, retirees and dependents, the government provides direct care for diverse populations, from military retirees to native Americans to prisoners. This makes it a huge force in the marketplace -- and a king-sized testbed offering vital lessons for employers. Outstanding among them is the government's tendency to micromanage its health care contractors, a habit that does not always equate with cost savings and that vendors' protests have yet to deter. Consider CHAMPUS, the program to provide health care benefits for military dependents and retirees. It has always relied on some private providers to supplement the armed services' medical corps. Administering the private portion of this hybrid system was not hard when it was fee for service. Problems arose with the shift toward manage care, as CHAMPUS put in place seven regional contracts, including an HMO option. To have a uniform system, all seven contracts mandate administrative and medical matters in great detail. For instance, only a two-tiered utilization management system is permissible. If a non-physician denies care, then the matter must go to an MD. If the requesting physician is a specialist, the second-tier reviewer is a doctor with the same specialty. One bidder, Qual-Med, protested this arrangement, but to no avail. Prevented from using its normal procedure -- a single-tier system staffed by physicians who are generalists -- the vendor had to implement what is viewed as an inferior and more costly system to compete for the CHAMPUS contracts. The General Accounting Office, which resolves most such protests, does not question the choices of the agencies it oversees. Protesters prevail only when they can show a specific and prejudicial violation of statute and regulation. Evidence that a contractor could do the job more efficiently by deviating even slightly from the official protocol is not persuasive. Another protest came from one of the physician groups that provides fitness-for-duty and sick-call exams for civil service mariners. Originally, the contract required each physician to see up to 30 patients per day. After vendors objected, this was cut to 20 patients per day. Still unsatisfied, the provider group protested -- unsuccessfully. In yet another example the VA sought to standardize its formulary and use its considerable bargaining power to cut drug costs. This led to some difficult decisions. The VA decided to trim its use of one class of cholesterol-lowering agents from four to two -- one primary and one alternate. But there was no consensus about the relative strength of the four alternatives or the protocols for their use, so the VA analyzed a series of studies and used the results to make selections and estimate comparable dosages. The move prompted a formal protest from a major drug maker, which argued that the decision was unfair to its product. Although the firm was able to poke many holes in the VA study, it couldn't show that the analysis was so unreliable as to be illegal -- and thus did not prevail. An HMO is barred from using its normal utilization management system. A doctor cannot tailor the length of an examination to the patient's needs. The superior drug for a particular condition does not emerge from extensive clinical practice and treatment options are narrowed before practitioners arrive at consensus. These instances of micromanagement are seemingly reactions to managed care and a reaction to economic pressures. But cost does not always drive the process. Institutional pressures are at least as powerful. The Secret Service recently moved its fitness-for-duty exams to the Public Health Service, for example, at a considerably higher price charged than that of its well-regarded contractor. And the Defense Department recently chose a higher-priced national organization over a coalition of local providers for one of its CHAMPUS regional contractors. In contract settings, micromanagement can force medical care into assembly-line procedures and lowest-common-denominator practices. One way out would be for the feds to prescribe quality in terms of outcomes rather than processes and procedures. But the Government is a skeptical buyer, and will wait for well-accepted, quantified measures. The footdragging of the nations's biggest health purchaser not only means the private sector will have to squeeze into the federal mold as the price for winning a government contract, it inevitably slows employers' move to outcomes-based buying as well.
|