Home > August 2009 > A Physician’s Perspective on The Issues of National Healthcare #13

A Physician’s Perspective on The Issues of National Healthcare #13
By Dr. Chuck McGowen

Solution-#1: Eliminate the Middleman

It is axiomatic that the “middle man” in the business world increases the cost of goods and services by virtue of the fact that some of the money paid for a commodity is siphoned off by that middleman. The word middleman in business refers to independent businesses that form the distribution channels through which a product passes on its way from a manufacturer to the end user or customer. In the realm of medicine the “manufacturer” is represented by the physician and/or hospital that provides well designed and efficient healthcare while the “user” is the patient. In healthcare the middleman is the insurance company’s health maintenance organization (HMO) that manages a physician’s practice and a patient’s care.

Generally goods are manufactured in large quantities at a few centralized locations, to reap the advantages of the economy of size. The analogy in medicine is the multi-specialty group practice (I.e. the Cleveland Clinic Foundation or Kaiser Permanente) that allows patients “one stop shopping” for their healthcare. The “customers” (patients) are widely dispersed over large geographical areas. Using the services of middlemen in the business world, the manufacturers of automobiles, PCs, appliances, and gadgets of all sorts distribute their product economically and quickly, but at the cost of jacking up the price of the product. The middleman in medicine (the HMO) distributes the product (healthcare) at the price of increasing the cost of healthcare and slowing the process by means of countless delays and regulations. As pointed out in a previous article HMOs siphon off an average of 25% of all of the dollars an employer spends on providing healthcare to its employees. General Motors spent $12,000 per employee/family per year in 2008, $3,000 of which went to the insurance company “middleman.” We can immediately eliminate that portion of the employers’ costs by 25% if we simply return the care of the patient back to the discretion of the physician and the patient that has chosen him or her.

The Middleman in the business world supplements the resources of the manufacturers in many ways. They invest substantial amounts of money in stocks, credit extended to customers, warehouse storage, offices, shops and other facilities used for distribution of products. The middleman in the medical system (The HMO) provides jobs to the hundreds of employees within its bureaucracy and dividends to its stock holders, while services to patients are limited and the remuneration to their panel of physicians is continually reduced. Being a business, the HMO is most concerned with its bottom line in the profit column. Reducing your care and your physician’s income will improve the bottom line, which is what all prudent business men will do. It is time to get rid of the annoying, intervening and costly middleman in the delivery of healthcare and leave the decisions as to when, where, how and why a patient needs medical care up to the two primary people involved; the patient and the physician. Health insurance companies need to return to their roots, the original intention for their development in 1934, and deal solely with hospitalized patients.

Saturday, August 08, 2009, 11:37 AM

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