Smaller Is Looking Better
Fam Pract Manag. 1999 Nov-Dec;6(10):8.
While HMOs may not be on the ropes, the House passage of the Norwood- Dingell bill has at least rung their chimes with a punishing left to the jaw. The fact that the House-Senate Conference Committee probably won't have a crushing right to follow it up with doesn't affect the mood embodied in the House vote. Over time, HMOs are likely to find it harder and harder to compete with PPOs and other more loosely managed insurance products. They may well be forced out of certain markets and forced to raise premiums in others.
And health care integration isn't working all that well: hospital-run networks are having problems reminiscent of those that killed major physician practice management companies (PPMCs). Large provider organizations are cutting their avowed losses by shedding physician practices the way trees shed leaves in the fall (see the cover story). There's even some indication that large multispecialty groups may be finding their size an encumbrance. Some have found it hard to compete with smaller, more agile single-specialty groups, and at least one is talking about ways of decentralizing to recapture the small-practice feel.
And the bulk that is supposed to give these big groups leverage in managed care contracting is often proving to be embarrassingly inadequate. They stalk into the ring like sumo wrestlers only to find themselves facing managed care elephants — national companies, the product of who-knows-how-many mergers, that seem to be able to walk away from a good-sized regional deal without much pain if they can't get contract terms they like.
So mass may not be the solution to health care problems. But beware: If you're reading this from the vantage of a cozy solo practice, it may be too easy to watch what's going on and think, “See? Big-time health care is a fad, like wide ties. Just wait, and we'll come around to the old ways again!” Now really, do you think there's a chance that medicine will go back to its 1960s ways any time soon? There are too many forces at play for that — from health care's continuing drain on the GDP to the current massive integration of the managed care industry. Smaller may be looking better, but it's a new kind of small:
Small enough that every member of the group has a major stake in its success, but large enough to support an excellent computer system.
Small enough that the leaders know firsthand that the primary goal of the organization is to take good care of patients, but large enough to afford knowledgeable, business-minded leaders.
Small enough to avoid bureaucratization, but large enough that physicians don't have to spend time doing the billing.
Small enough that aligning all members' incentives is not an impossibility, but large enough to develop a good system of incentives.
No matter how many large health care organizations fail or falter, make no mistake: It's still a brand new world out there, and time is still flowing just one way.
Robert Edsall is editor-in-chief of Family Practice Management.
Copyright © 1999 by the American Academy of Family Physicians.
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