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An Insurance CEO Speaks to Doctors


One of the ongoing problems in health care is that there is no effective interaction between insurance companies and practicing physicians. None. At least, none at the policy level.

One of the ongoing problems in health care is that there is no effective interaction between insurance companies and practicing physicians. None. At least, none at the policy level — just at the paperwork/clerk level, which hardly helps.

"Insurance companies' number one job should be to bridge the gap in trust and understanding that now exists with physicians," said Leonard Schaeffer, the former chief executive officer of Blue Cross of California, which grew to include WellPoint and Anthem.

When I spoke with him recently, he was engaging and candid about the major problems in our health care tangle. He noted that health care is the only major sector of our economy that is still largely run as a series of mom-and-pop shops. It is the only place where supply determines demand, not the other way around, which has so befuddled economists

Schaeffer pointed out that for the system to make any economic sense we need to understand that health care discussions in America are now largely shaped by economics. Secondly, any future, more rational system will have to find a way to pay for health care based upon the health status of large populations or communities. Schaeffer asserted that fee-for-service is not viable in the long run. Why? Because there is unlimited incentive to keep doing more without any entity taking responsibility for the management of the overall cost of our medical activities.

Another key issue in what is wrong with our approach to the community's health, according to Schaeffer, is that doctors — and the non-profits that they often work with and for — do not have the necessary discipline and leadership to effectuate necessary changes. For-profit corporations do have the necessary discipline, access to capital, etc., but are tethered to their primary goal of profits for shareholders, not the overall welfare of an entire community. For instance, for profit corporations would never offer insurance to everyone regardless of cost or pre-existing conditions. Only government intervention can do that.

Schaeffer agreed that the American belief in individual needs being met through markets doesn’t always work. In fact, more and more people are coming to accept that these values are perhaps the opposite of what would work to control costs, increase access and improve quality in medicine.

“We do not have a macro philosophy about health care; things just happen," he said.

And as we have heard so often in this year of election hyperbole, when the word "planning" comes up, especially in regard to health care in America, the ill-conceived substitute "socialism" rears its ugly head. Unfortunately, such code words only emotionally cloud the issue and minimize any potential problem-solving possibilities.

Schaeffer was likewise pessimistic about any quick agreement to change our system, saying "We only make big decisions in this country based upon a crisis."

So instead of waiting for such a dire event, what can doctors do to actively promote positive change? That is in lieu of sitting back in traditional mode and simply reacting, usually negatively, to proposed changes?

Followers of this column will recall that I have been legislating, for all these many years, to initiate a sea change in the way physicians are trained to include some basic understanding of how economics and organizations function in health care. Every doctor needs to know how and why this knowledge has a great impact not just on our lives but also the actual health outcomes for our patients. And for any positive change to occur there has to be physician buy-in at the ground roots level, not just at the isolated leadership level. Buy-in can only come from a basic re-thinking and agreement on how physicians could best function.

As Schaeffer noted, doctors are trained to deal with individuals and events rather than thinking of how medical activities operate as a process or system.


In an article he co-authored in (6/7/12), he stated "...physicians have undervalued and underinvested in systems, administration, customer service and financial functions that (are) necessary....”

Because of the business training that health care administrators and executives receive, they have a language and point of view that doctors as a group are not trained to speak, understand or work with effectively. "This is (one reason) why there is mistrust all around," he wrote.

So I asked Schaeffer what he thought the future held, short and long term.

"[The Affordable Care Act] will not be implemented as written. Period,” he said. “There will be all kinds of unpredictable interventions; 10 to 15 years of constant congressional and regulatory revisions. Piecemeal corrections will lead to discontinuous policies, which will be disruptive to the current level of care, no matter who is elected." He added that “health care legislation rarely has to do with health care itself as much as it does with social values and the role of government."

I asked if he thought there were any positive signs from the bill? Yes, he was happy to report, 2 things; 1) increased coverage for substantially more people and 2) vastly more data collection for analysis and new conclusions regarding quality and outcomes.

"A stepping stone,” Schaeffer said. “But net, net we do not have the money to support health care as it is now envisioned."

Sobering coming from an insurance industry leader. The accelerating health care economic shortfall requiring major adjustments is obvious, but all of us have an ox that we are afraid will be gored by whatever changes are instituted.

So as I pointed out at the top of the story, all physicians, not just our remote leaders, insurance companies, hospitals, the public and the other involved entities need to begin a new dialog. Our time and options are running out. But we can hope that people from all sectors of health care — like Leonard Schaeffer with knowledgeable input that matters — will be as willing and candid enough to make a difference.

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