No doubt about it: managed care is much maligned, but members of the school’s Department of Health Policy and Management say the promise, not just the pitfalls, of managed care need to be considered. Their verdict? The jury is still out.

Public opinion polls show managed care inhabiting the nether regions of popularity. Professor Robert Blendon, the country’s foremost public opinion expert on health care issues, says the industry is saddled with a "Kmart, low-quality, low-price" image. "And with consumers," adds Blendon, "that is a very dangerous image to have." Though legislative action on the federal Patients Bill of Rights may have stalled as Washington became preoccupied with impeachment proceedings and then Kosovo, the political pressures behind the legislation remain strong. Meanwhile, the number of uninsured people in this country has ballooned to 41 million as employers looking to control labor costs have either stopped offering health insurance coverage to their employees or made the premiums prohibitively expensive. Put it all together, and the health care glass doesn’t look half full. It doesn’t even look half empty. It looks broken, and managed care is the culprit.

But is it broken or have people just forgotten how much there was to fix in the first place? "We act as if managed care has banished us from the Garden of Eden--that before, we had a health care system in which everybody got high-quality care and if we could only get back there," comments Nancy Turnbull, lecturer in the School’s Department of Health Policy and Management. "But I don’t think that’s true. And a lot of discussion of managed care is based in some way on that assumption. Not everybody did get care--and much of the care they did get was unnecessary." Turnbull and other like-minded health care researchers are not blind to managed care’s problems, but they talk up the great--if as yet unrealized--potential that managed care has for shaking waste and disorganization out of American health care. The result, they say, could be more efficiency and accountability than ever existed in the supposedly good old days of fee-for-service health care. "The locus of accountability is more clearly defined under managed care," says Arnold Epstein, John H. Foster Professor of Health Policy and Management and chair of the School’s Department of Health Policy and Management. "Now we have people who are responsible for patient care in a way that we never thought of Blue Cross as being responsible. If people don’t get their flu shots, we can go to a health plan and say, ‘What do you mean, they didn’t get their flu shots?’"

Be it good, bad, or just occasionally ugly, managed care in one form or another is here to stay. Members of the health policy and management department are busy looking under the hood of this new way of organizing health care: inspecting its financial underpinnings, measuring public opinion, checking out all the pros and cons for patients, physicians, hospitals, and, ultimately, for American health. Blendon brings his polling expertise to the job. Epstein, an M.D. who still sees patients, is one of the nation’s leading authorities on access to health care and measuring outcomes. Turnbull, a former high-ranking Massachusetts insurance official, both understands the nitty-gritty of insurance finances and has an abiding concern with consumer protection. Other faculty members who are working on managed care include Assistant Professor Jack Needleman, who researches hospital systems; Assistant Professor Peter Buerhaus, who has a nursing degree and is an authority on the economics of nursing; and Lecturer Nancy Kane, who has a doctorate from Harvard Business School and is an expert on health care accounting and financing. This list of six is far from exhaustive. It is, however, an eclectic, if small, sample of faculty interests and opinions. The Review recently set out to interview these faculty members to get their take on a few select issues in the managed care of American medicine. Here are the results:

The short answer is that, so far, nobody really knows whether managed care has helped or harmed the quality of American health care, according to Epstein. Put aside the cases that have generated headlines, lawsuits, and movie plot lines, and the results from the carefully done quality-of-care studies have been mixed. Epstein says managed care has meant a trade-off: certain restrictions on patients and additional bureaucratic demands on providers in exchange for greater attention to some forms of care (mammography screening, for example) that lead to better outcomes. "How has it all balanced out at this point? We can’t be sure," he says. Blendon seconds the motion: his polls show him that while there is little doubt that the backlash against managed care is based on a widely held perception that managed care companies stint on care, there is no research consensus on the effect that managed care has had on health outcomes.

In Kane’s opinion, one of the big problems with managed care is that the ideal vehicle for delivering truly managed care is disappearing. "The best, most quality-oriented models are group and staff models," she says, referring to the kind of HMO that either employs physicians and other caregivers directly or contracts with a large medical group. Group Health Cooperative of Puget Sound in Seattle and Harvard Vanguard in Boston are prime examples of this kind of health plan. But consumers want choice, so managed care is increasingly dominated by the independent practice association, or IPA, model. In the IPA model, the HMO contracts with individual physicians, loosely affiliated physician groups, or business entities that in turn contract with physicians. The relationship between the HMO and physicians is more distant, in part because physicians may be juggling several such contracts. Also, people enrolled in IPAs usually are freer to pick their doctors, selecting from among a far-flung network, so in some respects it is a step back toward fee-for-service medicine. Kane argues that "with the IPA model it is much harder to achieve true managed care, as opposed to managed cost." American consumers equate choice with quality, "but the reality is that if you go to Vanguard, where there is less choice, you are going to get better quality."

Meanwhile, in Turnbull’s opinion, much of the current hubbub about quality of care is a distraction: the wide range of medical practice patterns, by region, as documented by John Wennberg and others, is much more important because it documents areas of severe under- and overtreatment. Turnbull also is critical of the way disease management is currently handled, "with each health plan having their own little asthma management program that is slightly different and interaction with the doctor that is slightly different-- it is ludicrous. I mean people should agree on what good asthma management is!" She says maybe purchasers--and particularly Medicare as the largest purchaser of health care--can come up with systems to make disease management uniform and thereby improve the quality of care.

Managed care may get the thumbs-down in opinion polls, but at least until recently it was getting rave reviews in boardrooms and benefit offices. Managed care seemed to be the tough medicine necessary to break the feverish, double-digit spending hikes afflicting American health care expenditures since the 1960s. Yet for Turnbull, the key word in the previous sentence is "seemed": "I have no faith in the long-term ability of managed care plans to contain cost." Turnbull believes that managed care, American-style, can do little, if anything, to stop the real driving forces behind health care cost increases: an aging population, the development of medical technology, and the mix of primary care and specialty physicians. "We have been unwilling as a country to use some of the techniques that most other developed countries use to contain costs, such as setting health care budgets," Turnbull continues. "So we have let the managed care companies do all the dirty work. We have sort of privatized cost containment." Yet she isn’t entirely dismissive: "We had a system where costs drove revenues. Now revenues drive cost. That is a fundamental shift."

Kane gives managed care plans a pat on the back for being "relatively successful at managing costs." But she also notes how managed care has been "outwitted by the pharmaceutical companies" and socked by exploding drug costs. Needleman is in the skeptical camp. In his view, rather than fundamentally taming health care spending by changing what care is provided, managed care companies have driven hard bargains with health care providers. "By and large, managed care has made money by putting pressure on the health care system," he says. "What they have done is hold down the prices they pay. Doctors have accepted lower incomes; hospitals have shortened lengths of stay so patients convalesce at home. But care is not being better managed." Needleman questions how long that strategy will work--if it hasn’t stopped working already.

For-profit managed care companies have been blamed for much of what ails American health care these days, but Turnbull is quick to point out that "managed care didn’t bring the profit motive to health care. Physicians have been for-profit entities forever. In fact, I think you could make the argument that the greed of physicians, manifest in many forms, created the milieu in which managed care could come and take hold." Kane, who has done some provocative studies comparing for-profit and not-for-profit hospitals, says from a business perspective it can be hard to distinguish the for-profit and not-for-profit health plans: "You find out that they are both cash machines. Kaiser [the large not-for-profit California HMO] uses its cash to build buildings and pay its physicians’ pensions. U.S. Health Care [now part of Aetna] uses its cash to pay dividends and build up cash reserves. But on a dollar per premium basis, it is roughly the same amount of cash."

In February, Needleman released a study arguing that for-profit takeovers of not-for-profit hospitals did not lower the level of uncompensated care or affect the availability of emergency care, principally because the converting hospitals had low levels of uncompensated care prior to conversion. The study was sponsored by the Boston-based Pioneer Institute for Public Policy Research, a pro-market think-tank.

Speaking as a researcher whose work depends on close analysis of cash flows and the like, Kane says for-profit companies tend to be more, not less accountable, than not-for-profit health care entities such as many hospitals. "You can get an audited financial statement off the SEC [the Securities and Exchange Commission] database on the Internet," says Kane. "If I want to get Oxford Health Plan’s quarterly statements, I can get them. But if I want to get Kaiser’s, I have to go ask them and say, ‘Please, can I have your financial statements?’" Epstein agrees that managed care could be good for accountability, but for different reasons. As an expert on quality of care, he believes that managed care’s integration of health care services--combined with the increasingly sophisticated information systems needed to keep track of the patients--will make it easier to measure health outcomes and their causes. But better measurement requires better tools. Epstein is currently working on "Q-Span," a "quality expansion" of the Health Plan Employer Data and Information Set (HEDIS), which is the standard way of measuring the performance of health plans. HEDIS is based primarily on quantifiable aspects of health care such as immunization rates. A pretty good health plan can look awful under HEDIS because HEDIS doesn’t do much to take into account the characteristics of the health plan’s patient population, according to Epstein: "The concern is that the plan in Beverly Hills will by the nature of its enrollment, no matter what care they give, score better than a plan that services an indigent area." Q-Span will factor in socio-economic and other elements into a health plan’s score.

Buerhaus, the nursing economics expert, says that managed care has put the nation’s nurses on a rollercoaster ride, first losing out and then doing well. Anticipating cost pressure from managed care companies, he says many hospitals cut back their nursing staffs in the mid-1990s, only to hire many nurses back a year or two later: "Managed care plus other forces caused the hospitals to react. Then they realized they couldn’t maintain high-quality services without the right amount or skill mix of staff." Also, notes Buerhaus, managed care and the time pressure it puts on physicians has increased the demand for nurse practitioners, which has rapidly expanded this career track for advanced-practice nurses.

In Blendon’s opinion, employers have been the biggest winners in the managed care era as they saw their benefit costs--and therefore their labor costs--come under some semblance of control. Physicians have been the big losers, he says, with many absorbing sizable cuts in income. Kane puts hospitals in the winners circle, though she is quick to exclude smaller community hospitals, many of which are financial wrecks or have gone completely out of business. "Never have hospitals been so profitable or cash rich as they have been in the last five years. Those that are still around are doing very, very well," Kane asserts. She agrees with Blendon about physicians, noting that specialists have been hit hard and that "mental health has been clobbered by managed care." Kane observes that the "the mood among physicians is that this is a terrible, terrible time. The hassle factor for doctors has gone way up--I hear that constantly--and the job isn’t fun anymore and they are working long hours."

Epstein puts a more neutral spin on the current condition of doctors and doctoring: "It is a changing time for physicians. When I trained, no one really stressed the ability to make a judgment about whether a therapy was worth it. The idea was to do everything possible, though the upside was minuscule and the cost was large. Now doctors have been thrust into the position of making these judgments on whether a therapy is worth it, and many of them feel ill equipped to do it and that isn’t why they went into medicine. It may be that with a new ilk of doctor who knows what he or she is getting into--they will be more comfortable in that role." Epstein adds that managed care may yet give physicians "a certain sense of shared enterprise, the educational and decision supports that they find effective, the organizational framework that allows them to take even better care of their patients than they would otherwise." He pauses. "I am not telling you that we are headed for Nirvana, but I could imagine that the story could yet turn out positive."

Turnbull likes the fact that "managed care plans are shaking things up." But she confesses to a former government official’s view that some targeted regulation (and perhaps Medicare’s power of the purse) is needed to rein in the excesses and errors of a new market-driven system. In fact, one of her current projects involves documenting how managed care plans violate Medicare marketing rules.

Buerhaus sees managed care as having injected some much-needed economic discipline and outcomes orientation into the health care system generally and into nursing in particular. "I think it is good. It has made the nursing profession say, hey, what is the scientific basis for the profession?" The change to a more market-driven approach to health care has been nerve-racking and stressful for many nurses, says Buerhaus, but "ultimately, there are no good substitutes for professional nurses. Registered nurses are a good buy for the money, and the market will reward them."

"It depends on what the alternatives are," begins Kane when asked to give a bottom-line assessment. "I think in some ways, yes, it has been good for American health care. In other ways, it has been truly disgusting. We are not really good in weeding out the crooks in the private-sector delivery system. In fact, we are not really good in weeding out the crooks in the public sector either."

Epstein weighs the pluses and minuses, pauses, and then delivers a healthy dose of reasonable doubt. "Consumers have sacrificed choice and now incur greatly increased bureaucratic impediments, but they have gained a system that is more accountable and provides incentives for integrated care. It should give them better care overall. Maybe it will, maybe."