Consumers, the elderly, will be next focus of managed care

June 1, 1998

Pharmaceutical Representative

Paul Pinsonault, president of Pinsonault Associates, a managed care educational organization, spoke briefly with Pharmaceutical Representative on recent trends in managed care.

Paul Pinsonault, president of Pinsonault Associates, a managed care educational organization, spoke briefly with Pharmaceutical Representative on recent trends in managed care.

PR: We hear reports that health maintenance organizations and other managed care organizations are losing profitability. Why is this happening?

Pinsonault: The managed care market is becoming a highly competitive, volatile environment. Part of that is due to the fact that employers want accountability.

Employers are beginning to realize that they truly drive the health care dollar, and they have an extraordinary amount to say about how that health care dollar is spent. As a result, employers are not signing multiyear contracts with managed care plans. They are signing them for one or two years, and then reviewing them very carefully for performance.

Employers will play one managed care plan against another to see who gives them the best value for their dollar; then they will evaluate them every six months to a year. They will also ratchet down cost. They will tell HMOs how much money they have, or they will demand to see HEDIS scores, which reflect patient satisfaction. Employers are demanding much more from HMOs, as opposed to just taking their word that they will deliver the best possible health care to their employees, as they did in the past.

PR: How are managed care organizations going to react?

Pinsonault: They're going to have to improve their organizational structure. Many of them grew too big too soon. They can't handle their data and they can't handle the number of people coming into their plans. There is a problem with their ability to communicate with their plan members. As a result, patients call their employers and say, "I'm dissatisfied because I don't have access to the doctor I want, I can't get through to my health plan and they're not helpful to me." Until managed health care plans get these things fixed, they will continue to have problems.

PR: Does this mean managed care will develop a stronger focus on consumers?

Pinsonault: If the consumer, or employee, is not satisfied, then the employer or the employer coalition will do whatever it has to do to make that employee happy. If that means dropping a health plan, then it will drop that health plan. Health care plans will have to be more consumer-friendly.

Consumers want options and they want access. More of them are going to what are called POS plans, or point-of-service plans. For example, if I'm with Oxford, then Oxford has a panel of physicians to whom I may go. But if I choose, I can go outside that panel. I may have to pay a higher copay to do so, but I have that point-of-service option, so I can go to anyone I want. Therefore, a lot of employers are offering these point-of-service plans to give the employee better access.

PR: Where does all this leave doctors?

Pinsonault: Doctors are not happy campers. Most are making less money than they did two or three years ago. Many are running as fast as they can to become provider-sponsored organizations, which are organizations in which physicians band together to form their own HMO. Once they are an HMO, they can contract directly with the government to get Medicare patients.

PR: Why do they want to enroll Medicare patients?

Pinsonault: Because that is how a physician can truly make money. It's the most profitable way. If a physician gets a Medicare patient, then he or she receives a paycheck from the government of $350 to $400 per month for that patient. He or she is responsible for that patient's health care, but by adding three or four hundred Medicare patients to a practice, the money adds up.

PR: How will that change in physicians' patient populations affect pharmaceutical companies?

Pinsonault: In terms of pharmaceuticals, Medicare beneficiaries account for more than 37% of prescription expenditures. Think about that. These people take countless medications daily and it helps them live better lifestyles. It's driving health care costs up, but this trend is going to continue. The rapidly growing population of American elderly will demand good health care, and they'll get it because they're bright and they vote.

Pharmaceutical companies are going to have to spend more time in the area of long-term care, especially with major providers. More and more pharmaceutical companies are going to form long-term specialty divisions, in which sales people call only on providers such as PharMerica, OmniCare Inc., Vencor Inc. and Genesis. Pharmaceutical companies aren't going to have a choice. PR