Not for the faint of heart...

I think most everybody is now well aware that there has been a severe
economic crisis brewing for the last few years.

There are still some who would like to imagine that nobody could have
ever anticipated the unfolding of the mortgage market and its impact
on the nation's and the world's financial markets. These are however
the same people who could not imagine planes hitting buildings,
hurricanes destroying major cities, and they are, unfortunately, also
the people who will be blindsided when the disastrous situation we
face with respect to health care finance mechanisms also unravels as
it unfortunately will in the years (if not months) to come.

The number of people who have really understood what I have been
saying about capitation contracts, managed care, and the combining of
health care providers and finance entities can, in all honesty, be
counted on my fingers and toes. This may be the moment to help people
understand what is coming in health care in the next few months/years.

The mortgage situation developed because greedy and manipulative
mortgage companies and brokers sold foolish people on the idea that
with an income of $20,000 per year they could afford to live in a
$600,000 house, drive a new car every year, have a second home, and go
on vacations - all they needed to do was sign up for a 3 year ARM with
no interest or principal payments and then in three years they could
get another 3 year ARM based on the obvious future appreciation in the
value of their houses.

But it wasn't just really dumb people making $20,000 who fell for this
nonsense. Some of the dupes made very large salaries, had advanced
degrees, but simply couldn't understand that the RVs, boats, and
second and third homes they were buying with the equity in their
overvalued houses simply could not have been sustained any longer than
it has been. I won't begin to tell you how many colleagues I have
urged not to avail themselves of ARMs in the last 5 years. Eventually,
when the only thing driving up prices is the next sucker standing in
line willing to pay the price, markets inevitably collapse.

As I have watched over the last couple of years the thought that has
constantly run through my mind has been the ebullience that
characterized the country just before The Great Depression.

If the only people hurting were foolish people who signed such
mortgages and the foolish people who bought supposedly high return
mortgage derivatives, i could easily live with their pain. But the
greed knew no limits, and in the end, it isn't these most foolish
people who will shoulder the bulk of the burden of the bailouts, it is
the ordinary, everyday people who live within their means and who
avoided taking such risks who will ultimately pay the tens of
thousands of dollars per person in deferred taxes that it will take
us, our children, grandchildren, and great-grandchildren to pay off
the massive debts being assumed by the federal government for its
failures to stop the mortgage meltdown years ago.

How does this relate to nursing and my work on Professional Caregiver
Insurance Risk? Just as foolish people took the risk that they would
not be able to secure refinancing on their overvalued properties,
despite the fact that this risk was palpable to anyone paying
attention, the sheep kept walking willingly to their future slaughter.

But of concern to me is all the similar risks, in this case health
insurance risks, that doctors, hospitals, nursing homes, and clinics
have willingly accepted as they have signed on for managed care
agreements, capitation contracts, and the worldwide use of Diagnosis
Related Groups financial reimbursement formulae.

Just as mortgage brokers preyed on the ignorance of borrowers,
organizations that purport to be health insurers have effectively
transferred the actual insurance risks involved in the legitimate
practice of running an insurance company and transferred these risks
to health care providers. Over the short run this worked out pretty
well for a small number of greedy and predatory companies, executives,
investors, and sales people. Individuals made hundreds of millions of
dollars by limiting patient's choices and delaying diagnosis and
treatment – the most fundamental cornerstones of "caring". After all,
if you haven't figured out what sort of care your patient needs, how
can you possibly provide that care?

Who this massive transfer of insurance risks hasn't worked out too
well for are the tens of millions of people who lost the benefit of
separation between their health care provider's personal financial
gain/loss and clinical and professional duties and responsibilities.

If you walk into virtually any managed care or capitated group
practice, you won't need a PhD and a research background to note that
the offices are overcrowded, the staff are overworked, the waiting
time is absurdly long, and the amount of time each patient spends with
their physician or nurse practitioner is too short to provide
comprehensive diagnosis, treatment, and "care". These providers are
really good at giving low cost, immediate care, but they really
perform badly when it comes to delivering care to people with complex
needs – our best friends, the unitary human beings who have complex
needs, require longer visits not shorter visits, and whose needs are
not well addressed by a prescription pad and a pep talk...

The consequence of this, of course, is that hundreds of millions of
patients spend far too long waiting to be seen and even when they are
seen, the "focused visit" supersedes clinical efficacy. If there was
no financial gain or loss in this situation for providers we might
just all rail about the declining quality of care and how overburdened
practitioners are. But there is a financial benefit to providers in
this situation.

Providers (and obviously not all providers) who overbook themselves,
their offices, and their staff in order to add more managed care
patients to the office roster are doing so to maximize their revenues
without regard to the declining quality of the care they provide. They
chose to accept health insurance risks but they have not, by and
large, stood up and accepted the inevitable costs, their needs for
bigger offices, more equipment, and more staff. That is one side of
the financial gain/loss picture, the other is nowhere near so pretty.

The other way providers (Hospitals, nursing homes, group practices,
integrated health care delivery systems) optimize their financial
performance is by ignoring, even denying, the clinical needs of their
patients. Over the last few decades more and more patients have not
been diagnosed early and correctly. Even when their physicians and
nurse practitioners have finally acknowledged their needs, they have
often been denied the very treatments they so desperately needed as
their providers tried to escape their obligations to cover these costs
– precisely what they agreed to do when they signed up to assume
health insurance risks. In the end, the very providers that patients
need to be able to rely on unquestionably, have violated the trust of
their patients, just as the people selling no interest/principal
mortgages and mortgage based derivatives to unwary borrowers and
investors, many health care providers have benefited financially in
their actions by delaying and denying diagnosis and care – passing the
risks on to their unknowing patients.

That individuals, even very large aggregations of health care
providers cannot effectively manage health insurance risks is sort of
a no-brainer for anyone familiar with elementary sampling theory, the
core of my work on professional caregiver insurance risk. Large
insurers manage risk by knowing their business, aggregating millions,
even tens of millions, of policyholders, thereby reducing the
variation in their insurance operating costs.

But when companies that act like, talk like, and walk like health
insurers transfer their health insurance risks to various health care
providers, the risk aggregation is undone. Mortgage companies evaded
the small amount of risks of non-payment due to poor underwriting, by
transferring the risks of future non-payment to home buyers by selling
them mortgages they couldn't afford and for short terms that virtually
guaranteed defaults. What the mortgage companies failed to recognize
is that eventually the houses they would be repossessing wouldn't be
worth anything.

Similarly, year after year of mismanaged care has led to a situation
where millions of patients needs have been ignored, tens of millions
are completely uninsured (Though i would argue that we can probably
count the number of Americans with real health insurance with a very
small number of beads).

When large "health insurers" transfer insurance risks to health care
providers, they KNOW that the health care providers cannot manage
these insurance risks as efficiently as insurers can. The consequence
of this is that health care providers do the only thing they really
can to cut costs – remember, if health care providers were making
their operations more efficient we would already have electronic
medical records, and your waiting time for an appointment would be
moments not hours.

Capitated providers clearly cannot operate their practices efficiently
and this is the area of their presumed expertise. Insurance
operations, a field considerably older and far more developed than
modern medicine and nursing, is way out of the domain of expertise of
health care providers. So what do health care providers do to manage
the financial risks they face? They reduce the level of services they
provide.

It takes longer to get appointments. Even when you get to the
office/hospital, they don't want to take care of all your needs, they
want to take care of the easiest needs you have and have you come back
some time in the future when you can wait too long for too little care
again. Delaying costs is a common insurer practice. Obviously delaying
costs for one policyholder doesn't mean much. But delaying payments to
millions of policyholders, precisely what happened after Katrina and
which will happen with Gustav and Ike, dramatically affects the bottom
line, for a while anyway.

It is, in my humble opinion, long past time for nursing to champion a
restructuring of our failing health care finance system and way past
the time when nurses should be talking about working with managed care
systems. The consequence? If you own stock in a managed care company –
bail out while you can!

I know it is one of my long rants, but I would feel remiss if I didn't
point out that one of the next big ripples in our financial services
sector is our 'about to collapse' system of health care finance and,
by extension, our wildly dysfunctional health care system.

Health care providers, like mortgage derivative investors, signed up
for risks that are simply unmanageable. It is time to stop a system
that hasn't worked for providers or consumers.

Selfishly, I don't want anyone on this listserver to ever say that
nobody could have possibly anticipated what is so clearly coming...

Bear