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Meet The New Boss: Insurance Companies

July 4, 2011
Written by: , Filed in: Medical Ethics, Practice Management
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Insurance companies have begun quietly seeking to control health-care costs by controlling physicians.

A joint Kaiser Health News-Washington Post report reveals that four of the five largest U.S. health insurers—UnitedHealth Group, Humana, WellPoint, and CIGNA—are buying medical groups and launching physician management companies. Of the “big five,” only Aetna has decided against this strategy.

Smaller regional insurers have also embraced the idea. For example, Highmark, a Pittsburgh nonprofit that runs BlueCross BlueShield plans in Pennsylvania and West Virginia, has announced plans to buy West Penn Allegheny Health System, a Pittsburgh-based chain of six hospitals.

The Kaiser-Post report quoted Wayne DeVeydt, chief financial officer of WellPoint, as saying:

Health care costs are still going to rise. But the only way to stem those costs in the long term is to manage care on the front end.

Ah, yes. “Managed care.” Attempting to restrain the use of expensive treatments—such as advanced imaging scans—when less-expensive measures would do just fine, according to someone who may or may not have the medical background to make that judgment. Everybody loves managed care, right? Except health care providers. And consumers. Especially consumers.

Of course, that’s a harsh and, to be honest, unfair depiction of managed care. These days, all care is “managed,” and it has been getting more so. “The doctors, at the end of the day, control the patients, and currently they’re financially incentivized to do more tests, more procedures,” said Chris Rigg, a Wall Street analyst for Susquehanna Financial Group. “But if they’re employed by a managed care company, they’re financially incentivized” to do less.

Both Rigg and Gail Wilensky, PhD, a UnitedHealth board member and a health official in the administration of the first President Bush, downplayed the impact of the moves, at least so far. Said Dr. Wilensky:

It’s just trying many different ways to see what appeals to the American public and what adds value. Whether it will actually mark the trend of the future, I don’t know.

Propelling the trend of the moment, in part, is the health care reform law. The insurance companies might end up running some of the still–ill-defined accountable care organizations that the law envisions to restrain costs. That’s not exactly the result that some proponents of the law—the ones who saw it as a means of restraining the power of insurance companies—had in mind.

“There’s a gigantic Murphy’s law emerging here,” said Ian Morrison, a health care consultant based in California. The very people who were the demons in all of this, that the public can’t stand, are the big winners.”

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