Monday, January 1, 2007

Health Care Middlemen––Don't Forget Value!

Friday's Wall Street Journal ran the last of a series on health care "middlemen."

The theme was about people taking big money out of the already incredibly expensive health care system but questioning whether they leave a commensurate value.

The series included:
  • "As Patients, Doctors Feel the Pinch, Insurer's CEO Makes a Billion," April 18.
  • "Selling Generic Drugs by Mail Turns Into Lucrative Business," May 9.
  • "Health Care Consultants Reap Fees From Those They Evaluate," September 18.
  • "How Quiet Moves by a Publisher Sway Billions in Drug Spending," October 6.
  • "In Medicaid, Private HMOs Take a and Big Lucrative Role," November 15.
  • "In Nursing Homes, a Drug Middleman Finds Big Profits," December 23.
  • "As Health Care Middlemen Thrive, Employers Try to Bypass Them," December 29.

As managed care has grown, health care costs have continued to explode.

When managed care firms really did make a major attempt to rein in costs in the 1990s, it either blew up (capitation of physicians) or caused a major backlash (the patient and provider rebellion).

The result was that the managed care industry seemed to revert to this decade's version of the old indemnity health insurance model. Add to that lots of new "middlemen" ventures bringing big profits and questionable value.

The good news is that medical trend rates have been falling (note December 26 post below). Hopefully, this is evidence that the efforts of managed care are beginning to pay off.

Whether that is true or not, the Wall Street Journal series is a reminder that when the day is done, private sector success in health care will not be measured in how wealthy those of us in this business get but in how effective we are in solving the problem of unsustainable health care costs.

Health care trend at 7% is an improvement, but it is not sustainable!
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