FIFTH STOP 1997
New York City

MSA includes adjacent counties in New Jersey and Connecticut

Population: 17,515,472

New York State
Population: 18,138,686

1997: New York City, Author Explains HMOs to Big Apple Audience

If you can do it there, you can do it anywhere."
"New York, New York," song title
New York City is not a complete stranger to HMOs. Many observers have the mistaken notion that Kaiser Foundation health plan was the only major HMO formed in the U.S. in the 1940s. That is not so. Under the Health Insurance Plan (HIP) established in 1944, medical groups were created throughout New York City to provide prepaid medical care to city employees. But HIP had little impact on most private physicians. Other HMOs didn't enter the market for about four decades.

In 1987, I spoke at a meeting of the American Hospital Association at the Waldorf Astoria in New York City. I remember the occasion well One of the other speakers, Thomas Pyle, CEO of the Harvard Community Health Plan, warned HMOs would a have a tough time controlling the health system. He compared HMOs to the Pentagon. Pyle's message went something like this. Here I'm paraphrasing. I didn't take notes. Compared to the Pentagon, he said, the healthcare system was:

* Twice as emotional.
* Twice as strewn with psychological landmines.
* Twice as secretive.
* Twice as expensive.
* Much more complicated.
* Much, much, more bureaucratic.
* Much, much, much, more decentralized.
* Much, much, much. much, more fragmented.
* And much, much, much, much, much, more dominated by professionals.

Pyle doubted the ability of HMOs to harness a sprawling healthcare system. He was to be proven right. Every city has its own culture. New York City is no exception. It considers itself the cultural center of the world. It is tough. But it is liberal. Its hospitals cater to the masses. But its doctors aspire to Park Avenue practices. Its citizens want doctors for everyone, but its citizens want to choose their own doctors. It says healthcare costs are too high, but its hospital and physician fees are among the nation's highest. Given these paradoxes, it did not welcome the HMO invasion in the mid-1990s.
But I'm ahead of myself. When I left Oklahoma City in 1995 after the Oklahoma City bombing, I moved on to Old Saybrook, Connecticut, to become editor-in-chief of Physician Practice Options. Old Saybrook is roughly 100 miles from New York City. I visited New York City and befriended Doctor John Connolly, who was formerly president of an academic medical center. He is now a partner in Connolly Castle Medical Publishers, Inc. His company has published a series of books on "Top Doctors in America." When I met John, he invited me to write a preface to a book he was publishing about HMOs for New York City healthcare consumers. That preface is the essence of this chapter.

HMOs Impact New York City
By June 1997, HMOs, especially Oxford Health Plans, were penetrating New York City; theretofore a protected bastion against managed care. New Yorkers preferred choosing their own doctors. HMOs had entered the New York City marketplace like a tornado. Its whirlwinds were triggering panic among physicians and hospitals. New York City is an ideal place to stop and see how one physician (myself) looks at HMOs at this stage in their evolution

The ABCs of HMOs
What follows appeared as a foreword to The Castle Connolly Guide to The ABCs of HMOs -- How to Get The Best From Managed Care (Castle Connolly Medical Ltd., New York, 1997). That book, compiled and written by John Connolly, D.Ed, was directed mostly to a New York City audience. Here is my foreword.
"Nothing brings you closer to reality than being a physician. For 25 years, as a practicing physician, editor and commentator, I grappled with HMO realities. Do HMOs provide better care? Do HMOs lower cost? At what human price? Are HMOs good for patients? Do HMOs improve quality? Do HMOs deliver on their promise of maintaining health? What are the real HMO trade-offs? As a physician, I can vouch for the fact that this book intelligently and accurately responds to these questions:

"When you consider healthcare marketplace realities, this book's timing is excellent. The market has spoken. Nationwide it is picking HMOs over traditional indemnity plans. Most big healthcare buyers, both and corporations and government, have-embraced market-driven HMOs to reduce cost.

"The reality is that managed care is now the medical mainstream of America. Nearly 85% of physicians now contract with HMOs. For doctors to practice, they must now accept HMOs as their economic lifeblood. Managed care is now rapidly replacing the old fee-for-service system. Why? Because managed care controls premiums; lowers cost and now satisfy most enrollees most of the time.

"This, then, is a book of the here and now, not of the then and there. It is a practical, not a theoretical book. The book roots itself in the managed care realities.

It says plainly that the main reality for HMO enrollees is choice vs. cost. If you want the old-style unlimited choice of doctors, hospitals and benefits, you'll pay more for it. If you want lower premiums with less choice, you'll choose HMOs and you'll receive care that compares favorably with fee-for-service care.

"The book plainly says HMOs are here to stay, that some are better than others and that you'll have to do your homework, ask the right questions to pick the right one. It even gives you a useful form to calculate the best HMOs based on the needs and preferences of your family and a list of penetrating questions to ask.

"It says plainly what managed care alphabet soup-HMOs, PSOs, POSs, PHOs, EPOs and PPMCs --- is all about. It doesn't bewail the managed care world complexities. It confronts them, simplifies them and tells you how to sort them out. To wit the most important thing to remember is all these acronyms represent different organizational forms. They all take specific steps to control the use of resources and to control cost.

"It says plainly what capitation means and portends: The practice of capitation, now common in HMO agreements with doctors, is at the heart of managed care philosophically, financially and operationally. It is a fundamental principle of putting the physician of care at some risk for the cost of care provided. The logic behind capitation makes sense. If doctors' decisions are behind 80 % of healthcare expenditures, give them financial responsibilities as well as medical responsibility.

"It says plainly why most doctors dislike HMOs. In many physicians' eyes, HMOs negatively impact their independence, interfere with patient relationships, lower quality and discount fees, monitor their activities, challenge clinical judgment and judge their patients' satisfactions. Doctors' negative opinions have not slowed HMOs' momentum. Most doctors now contract with HMOs. They have little choice. HMOs control 50 to 60% of many major metropolitan markets. As a physician, you can dislike HMOs, but you can't ignore them or hide from them.

"It says plainly the HMOs have pitfalls for some Americans. Although Americans may actually like their longtime doctors, those with chronic disease may be restricted to the number of paid visits, those who are dying may be denied heroic or experimental treatment, those who desire certain care-cosmetic surgery, sex-- change operations or chiropractic care--may be excluded from that care and those who seek care in emergency rooms outside the HMO's sphere of coverage may find the payment will not be forthcoming from the HMO.

"But, on the whole, it says plainly that the American people public and the other participants in the system --buyers, hospitals, physicians, other physicians and suppliers-- recognize HMOs and other forms of managed care are now the dominant force in healthcare and offer reforms as radical as any proposed by the government. It is, as the authors tell us, the new reality to which doctors, hospitals-and especially consumers must adapt."