“The health care system has changed more in the past 15 years than it has in the past 15,000,” proclaimed Steve DeToy, lobbyist for the Rhode Island Medical Society.
A hint of hyperbole, perhaps, but a review of health care dynamics over those tumultuous times shows some dynamic changes.
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The words “Health Care” don’t even appear in the first issue of Providence Business News back in May of 1986.
The business community was dealing with other major issues in the early to mid ’80s, and health care was on the back burner.
But that would rapidly change, as business and political leaders were studying the impact of health care costs on their bottom line.
1986 –‘Tumultuous Year’
In the summer of 1986, health care industry analysts were predicting that large chains would control delivery of more than half of health care by 1990. Reports predicted that most employees would be enrolled in managed care programs by the beginning of the decade, and fee-for-service would be nothing more than a memory for most.
“Free Market Rattles Health Care System” was the lead story that June, as two HMOs entered the market to challenge Blue Cross, with five more waiting in the wings for state approval.
Blue Cross dominated the market with 85 percent of the “lives” enrolled (600,000). RIGHA, the labor-sponsored HMO was a distant second, with 70,000 enrollees.
The Department of Health Director, Dr. Denman Scott, was carefully watching the “new competitive environment” created by the HMOs, telling PBN that he was “concerned about unscrupulous HMO providers.”
Health care issues quickly moved to the front burner that summer as doctors agreed to accept less than full payment for services from Ocean State Health Plan. After dominating the market for 40 years, Blue Cross wanted (and got) the same deal when it discovered that they were losing subscribers and having trouble getting their own HMO off the ground.
That was the beginning of the battle between the RI Medical Society and Blue Cross, a cold war that continues today.
The R.I. Business Group on Health, concerned about 25 percent increases in premiums, formed two years earlier to study health care costs and delivery. The group favored competition and supported new entrants in the market.
PBN called 1986 a “tumultuous year” for Health Care:
- The medical service business had become Rhode Island’s largest employer.
- The business community realized a need to control costs.
- Blue Cross had lost $20 million.
- There was a national trend toward outpatient and preventative services.
- The health care insurance industry was becoming competitive after years of BC/BS domination.
- An anti-trust suit was filed against Blue Cross by Ocean State and the doctors’ union.
- And there was a serious nursing shortage.
Chambers of Commerce in Rhode Island began to take a more active role at the State House in the late ’80s; pharmacists were fighting with the insurance industry; independent pharmacies were fighting the chains; medical malpractice insurance rates rose 42 percent; nursing homes were having problems with staff shortages and bottom lines; and there was this new disease called AIDS that was gaining in numbers at an alarming rate.
The Nineties
“Health Care” made the PBN Top Ten Stories of the Year list for the first time, logging in at number nine with reports of the poor fiscal health of both hospitals and insurers.
Blue Cross seemed to be turning its fiscal problems around, while RIGHA merged with Harvard Health.
While the state’s attention turned to the RISDIC situation, the hospitals appeared to have straightened their fiscal situations.
It was time to study the problem.
Aging 2000 was looking at the overhaul of the health care system, as was the RI Medical Society and the General Assembly. Gov. Bruce Sundlun introduced his new idea, Right Track, aimed at providing free care for children below the poverty level.
Rhode Islander Ira Magaziner worked with Hillary on the Clinton Health Plan that failed to gain congressional approval, while Sundlun appointed a 36-member commission to study health care in Rhode Island.
The uninsured and elderly became the targets for concern, as RiteCare concentrated on 75,000 uninsured women and their children under a five-year demonstration project using the techniques of managed care.
Aging 2000 introduced a health care delivery plan for seniors that was started by Magaziner before he went off to Washington.
Healthy People 2000 was formed to initiate an educational approach to health care.
Mergers
In 1994, Rhode Island and Miriam Hospitals formed Lifespan, while other hospitals
in the state seriously talked mergers, putting health care back in the Top Ten
Stories, where it would stay for the rest of the century.
The increase in outpatient services resulted in empty beds in most hospitals, fueling further merger considerations. On the insurance side, Harvard and Pilgrim announced merger plans.
United Health Plans started their networks, closing out some hospitals.
The least controversial health care related story of the year (and the last 15 years) was the opening of Hasbro Children’s Hospital.
Rapid Changes
The last half of the ’90s was replete with rapid changes at all levels.
Proposed hospital mergers dominated the news; a new concept in health care delivery emerged, as 23 doctors formed Coastal Medical Services; RiteCare, after a difficult start, had enrolled 70,000 patients.
And, in 1996, the Zainyeh law, sponsored by Rep. George Zainyeh of Warwick, a lengthy legislative venture that came out of a study commission that included health care professionals and politicians from all interest groups, passed. Officially called the Health Care and Quality Assurance bill, it protected patient rights and had strong disclosure provisions.
Pharmacy changes
Meanwhile, the business and profession of pharmacy was undergoing radical changes.
At one time there were over 200 neighborhood drugstores throughout Rhode Island.By the turn of the century, there were 35.
CVS and Brooks were in a bidding war, offering the independent pharmacist big bucks and a job in their stores for their prescription lists and stores. Dozens accepted, tired of fighting low reimbursements, long hours, loss of business to the large chains, competition from mail order houses, and cash flow problems.
They sold to the chains, and in most cases their stores were closed and they started working regular hours at CVS and Brooks.
The chains, once the enemy of the independent pharmacist, became their salvation. Locked out of many contracts with insurance providers, the independents, who had spent many years and many dollars fighting for “Freedom of Choice”, were allowed into the networks.
Alliances were formed between the small number of remaining independent pharmacies, CVS and Brooks to the wrath of Walgreens and Stop and Shop, which found themselves outside the network.
The rising cost of pharmaceutics has caused the federal and state governments to take a closer look at that industry. Drug costs are sure to be one of the major issues in the next few years.
State of chaos
As the nineties came to a close, Health Care issues dominated the news.
Business costs for health care insurance had gone out of sight; labor and business negotiated heavily over insurance co-pays; unions fought mergers of “Health care systems” (they were no longer hospitals); and more insurers left the market, leaving a growing number of uninsured.
Tufts and Harvard-Pilgrim left the market, with only Blue Cross and United remaining.
With former Attorney General Jeffrey Pine kiboshing the Care New England/Care Group Boston merger, Roger Williams and Columbia HCA calling off their merger plans, threatening hospital strikes, large increases in insurance premiums, and government’s failure to enact any major health care reform, the state of health care entered the new millenium in a state of chaos.
The present state of health care
The year 2001 brings with it a problem similar to one that the health care industry faced 15 years ago: a labor shortage, ranging from nurses to pharmacists to numerous support positions in hospitals and nursing care facilities.
Competition still remains a major issue, contributing to the high costs of health care.
The Medical Society’s DeToy says the problems in health care over the last 15 years have gone full cycle.
“Blue Cross has 65 percent of the market, and it is gaining,” he said. “We have come a huge way in health care delivery. Technology is changing the way health care is delivered. In 1986 there was only one CAT scan machine in the state. Now patients have their choice of where they go for an MRI, CAT scan, and other health care services.
“Hospital stays are shorter and outpatient services are more readily available. Of course, new technology costs money.”
DeToy is concerned that physicians are not properly reimbursed, a situation echoed by other health care providers, including mental health professionals, pharmacists, specialists.
“Lack of competition, predatory pricing, late payments leading to cash flow problems, a lack of understanding of what providers do, and greater government regulation are all making it difficult for providers to properly care for their parents in today’s health care environment,” DeToy added.
The Medical Society lobbyist predicts that health care costs will continue to escalate ahead of premiums, and that employees will have to increase their share of those costs.
He also foresees that, with less competition there will be greater government regulation.
Dr. Vincent More, professor of medical science and chairman of the Department of Community Health at Brown University, sees a need for change in the insurance structure.
“I believe that the slow gain in health care costs is now over,” he said. “What we have is a transfer in indemnity. Insurance pays. Providers charge. Managed care, in the last 15 years, has limited the scope of providers. They have to accept deep discounts for the privilege of providing their services, putting the onus on the providers to control consumption.”
Dr. Nolan looks to the future
Dr. Patricia Nolan, director of the R.I. Department of Health, has seen how the managed care model has completely changed the way we pay for health care.
“The Health care delivery system has rapidly changed in New England over the past 15 years,” she said. “We now look at not only how we pay for health care, but how we control it, and how we can be more efficient in its delivery.”
“The idea of managed care has been around for a long time,” she continued, “but strategies have shifted, making everybody uncomfortable. Providers often feel that they are punished for the good things they do and rewarded for the bad things.”
