The Coastal Post - May, 1996

Managed Care Puts Profits Before Patients


"If I had foreseen the insanity, the greed, the lack of respect afforded health care providers and their patients by hospital administrators, and the overall sense of desperation and cynicism that now pervade the hospital environment, I would never have become a registered nurse."

That grim remark was made by a veteran Marin County registered nurse, in a recent interview I conducted on the state of American health care in the '90s. Her attitude typified the responses I received in both formal and informal interviews with friends, business associates and professionals currently or formerly working in the health care industry. Most asked not to be identified for fear of losing their jobs.

The 1990s, like no other decade, has seen a trend toward the privatization of almost everything. Faced with serious federal funding deficits, schools, prisons, and even environmental agencies are increasingly turning themselves into for-profit businesses. Congressional zeal to transform the "welfare state" into a business, coupled with an ideological aversion toward anything remotely humane or "socialistic," has paved the way for the current healthcare nightmare euphemistically known as "managed care."

Your body on the line

Being admitted to a hospital in the '90s is a risky venture. Patients quite literally put their bodies on the line. But, as any healthcare professional will tell you, under the current profits-above-all system, it is money—not patients' health—that is reserved for the bottom line.

A little-known but increasingly common practice among HMOs like Kaiser, Blue Shield and Blue Cross is a profit-enhancing system known as "capitation." Capitation effectively functions as a care-disincentive program by paying doctors a set rate (usually from 7 to 10 dollars) "per head." By encouraging doctors to cram as many patients into a day's work as possible in order to maximize their own profits, the system serves to dehumanize the doctor-patient relationship.

Some capitation incentive include built-in rewards for doctors who keep patient costs down. If there's room for doubt as to whether a patient needs a specialist or even elective surgery, under the capitation plan, doctors get "points" for steering that patient away from these expensive procedures. Gag rules can impose strict penalties on any caregiver tempted to violate the confidence of these "internal policies."

The United States spend 14% of its gross domestic product on healthcare—more than any other industrialized nation. A full 20 percent of the population is uninsured with incalculable numbers underinsured. The infant mortality rate is one of the highest in the "civilized" world. Senior citizens covered by Medicare face rising out-of-pocket expenses and growing Congressional pressure to transfer Medicare patients to HMOs.

Downsizing leaves nurses sick and tired

"Frankly, most of us are sick and tired of this whole mess," one Bay Area occupational therapist told me. "We're exhausted, overworked and cranky a lot of the time... I'm so disillusioned... It seems like compassion has just gone out of style."

Disllusionment seems to be the operative mood of healthcare workers in the '90s. Little wonder. Scenarios like the following, documented in the March, 196 issue of California Nurse, are rapidly becoming the norm in the for-profit healthcare industry.

Kaiser Permanente Oakland Hospital announced last month that it intends to close the Oakland hospital as part of its new profit-motivated business strategy to abandon acute care facilities and limit community access to safe and adequate care. According to the Alameda County Labor Council, the Kaiser Oakland Hospital closing could result in job loss for 2,250 Kaiser employees and additional job loss for more than 700 employees in related and dependent area businesses.

The Labor Council believes that, "If Kaiser succeeds in this first test of its commercial business strategy to redline healthcare and abandon critical community health resources, Kaiser's lead will result in more hospital closings throughout the industry, less access to care for members and poorer quality care for those who are fortunate enough to gain access."

The Labor Council has issued a list of demands to the Oakland City Council that include an investigation by the City Council and a public hearing.

In 1994, two months after it was acquired by the hospital chain HealthTrust, Ogden Regional Medical Center laid off 44 employees, including 25 nurses. When Salt Lake Regional Medical Center was purchased by Champion Healthcare Corporation of Texas, 52 people were fired—a full six percent of the staff. Thirty-one employees fired from St. Marks Hospital in Salt Lake City included a dozen nurses.

In Santa Clara County a total of 274 employees, 61 of them nurses, were eliminated from the staff of Columbia-HCA's three-hospital Good Samaritan system. Columbia, a for-profit chain, also recently acquired Henrico Doctors Hospital, in Richmond, Virginia, resulting in 50 positions being eliminated, 30 of them nursing. Last year when Aetna Insurance purchased U.S. Healtcare Inc. CEO Leonard Abramson turned a $500 million profit—not much of a consolation prize to the workers left unemployed as a result.

Norma Wagner reported in the Salt Lake Tribune that, "The 2.2 million nurses in the country who were once in short supply and wooed with generous salaries and shorter work stand in unemployment lines, competing with too many colleagues for too few jobs and worrying about former patients receiving care from less experienced staff members."

This trend continues across the country unabated.

Managed carelessness—California's failed experiment

In the U.S., the ratio of RNS to population rose between 1980 and 1994 to 684 RNs per 100,000 population. Over that same period, the ratio in California declined to 500 per 100,000 residents. That fact, says Judith Shindul-Rothschild, assistant professor at the Boston School of Nursing, "combined with California's record of low lengths of stay and growing numbers of uninsured, means that California RNs take care of more patients who are sicker, discharged faster and less likely to receive care in a timely way than any other place in the country."

Rose Ann DeMoro, CNA Executive Director, is a resident of the state of Utah. DeMoro says that her state "is on the cutting edge of the managed care revolution." In Utah, "Perilous experiments are being carried out on healthcare providers, patients and communities' health, designed to reduce the cost of providing care to a minimum while maximizing the profits derived from it." The health care crisis in California, says DeMoro, "is the first cresting of a wave that is rolling across the country."

Kit Costello, a registered nurse and president of the California Nurses Association (CNA), recently visited Australia to conduct a series of workshops for Australian nurses. She reports that Australian nurses "were shocked to learn of the multi-million dollar salaries and stock holdings of the CEOs of HMOs, medical equipment companies and for-profit hospital chains here. The idea of choosing to spend their healthcare dollars on paying off CEOS and investors versus delivering healthcare was quite foreign to them."

Healthcare is no longer immune to globalization. The migration of international capital and corporate interests overseas has brought about the phenomenon of U.S. consultants peddling de-skilled nursing care models in other countries—even those that have established universal access to healthcare.

Corporate health care—Code Blue for consumers

A recent survey conducted by the Institute for Health and Socio-Economic Policy entitled "Wealth and Power: The U.S. Healthcare Industry" took on the topic of executive income. The report emphasizes the importance of understanding how, in a time of unprecedented corporate profits and political influence, "corporate power to dominate market is also power to set national policy."

The survey suggests that, "Executive income should be viewed as the mere tip when compared to stock-based income and wealth. Wealth, as distinct from income, is also something from which the vast majority of Americans are virtually exempt."

The survey estimates that "at average trading prices per share" for the week ending January 31, 1996, the stock-based wealth of 25 healthcare executives is sufficient to:

• Save over six million lives. Some estimates indicate that every hour 11 people die because they do not have health insurance and the access to care insurance provides;

• Insure over six million people or about 14 percent of the nation's uninsured, and about 18 percent of the entire population of California;

• Provide about 762,000 minimum wage jobs and about 230,000 jobs at $30,000 a year;

• Lift about 674,000 families from poverty levels into the ranks of the middle class;

• Pay for the entire Los Angeles County School District Budget—education of a population base of around 10 million—for about 22 years.

Adding the $6.9 billion in healthcare executive stock wealth to the combined five-year profits of 12 selected for-profit health care institutions and the $134 billion in healthcare mergers and acquisitions over the last four years represents a total dollar value of about $149.7 billion. That amount is sufficient to:

• Pay for 133 percent of what the federal government spent on health service payments in 1994 and 151 percent of that spent in 1993;

• Provide health insurance for about 130 million Americans—or about half the total population of the United States, and three times the number of uninsured;

• Pay for all of the following social programs for a period of about 2.7 years: AFDC, food stamps, school lunches, school breakfasts, WIC, child and adult care, summer feeding and elderly nutrition.

• Pay for what the federal government spent on education service payments at the 1994 levels for three years;

• Eliminate 65% of the projected deficit increase to the year 2002;

• Pay 66 percent of the net interest on the federal debt for 1995.

Edward N. Wolff, author of Top Heavy: A Study of the Increasing Inequality of Wealth in America, stresses that income is referenced to cash flow over a period of time, usually a year or more. Wealth, on the other hand, is not bound by cash flow, and can be leveraged and/or used as collateral. At the corporate level, that "collateral" often translates into political policymaking power to secure profit structures.

It has become clear in the late 1990's that this system of doing business is, more often than not, at the expense of ordinary people when layoffs, reduced standards of living and diminishing life prospects are totaled into the equation.

Patient Protection Act puts people before profits

With well over the required 700,000 signatures, the Patient Protection Act of 1996 will likely pass the initiative process and appear on the November ballot. Introduced by the California Nurses Association and Harvey Rosenfield, Director of the Foundation for Taxpayer and Consumer Rights (author of Prop 103), the PPA has the support of consumer advocates across the country, including Ralph Nader.

Supporters of the PPA believe it may be the last chance to stop the decline in standards of care in California. In summary, the PPA would:

• protect patients' rights to necessary services and procedures;

• bar conflict of interest for physicians;

• guarantee full disclosure of medical information to patients;

• protect doctors and nurses from retaliation for advocating for their patients;

• prohibit increases in deductibles, premiums or charges for health care services;

• set safe standards for staffing in all health care facilities;

• establish consumer oversight;

• establish community health and safety funds.

Ten industry CEOs last year alone were paid $2.4 billion in salary and stock compensation. The PPA requires these companies and executives to return some of those dollars to the community. The PPA would be paid for by imposing fees on the wealthiest health care corporations and executives, and if passed could bring the concept of care back into the business of healthcare.