Monday, August 17, 2009

HMO Co-op, a World Class Memory

In the current Healthcare debate, Co-op is now the sound bite of the moment.

Public Option seems perhaps to be too much of a big government idea. The theory, if I am correct in deciphering all this political and paid for advertising rhetoric, is that the Public Option would operate like Medicare, Medicaid or the VA and as a basic not for profit system, it would set standards and drive down prices in competition with the for profit health insurance industry.

Here goes my Arizona HMO story. I have worked in two HMO setups in the boom and bust economy of Arizona of a little over a decade ago. The first HMO was a slick local, for profit entity that advertised on TV a lot and didn’t ruffle too many customers’ feathers.

What I saw in healthcare generally in Arizona with the big wide open spaces where you drive everywhere a unique setup for getting healthcare. Most competing HMOs had cluster offices. In some large office building or mall setting, your doctor had offices and he or she could refer you to a specialist etc with a doctor in the same complex and with the same HMO. So far so good.

There was also a thing for saving money with emergency care. With a small child and ear infections and fevers in the night, you call your HMO number and you get directed to an emergency care center in the middle of night rotated from day to day from the various cluster office centers and from HMO to HMO. HMOs co-operated and shared the emergency health thing. During the day you went to your individual HMO Cluster Office setting and at night you got immediate care at rotating centers. The hospital emergency room was the last place the HMO would send you unless the medical situation was critical.

The first for profit HMO I worked for got gobbled up by some mega-California HMO monster. The old quality disappeared overnight and people started switching to other HMOs still local to Arizona.

The second HMO I worked for was I think a not for profit Co-op HMO setup. I say this in retrospect because nobody at the time was calling it a co-op but going over my mental notes and the current MSM sound bites, that is what it was, a co-op.

A regional hospital was at the core of this co-op setup. Some doctors and their corporations were the driving forces in the gathering together of a HMO bureaucracy where I worked. These doctors worked as for profit corporations. They used the not for profit HMO bureaucratic setup to process the billing, Medicare, prescription co-pay items etc. In many ways it was not different than the for profit HMO. The one thing was that we the employees did not get bonuses or perks. We had basic salary, cheap co-pay HMO benefits and a 401K.

Putting that all aside, the co-op grew in a decade from several thousand to several hundred thousand members. I think this co-op thing worked from year to year. In the end, the not for profit thing was falling through the cracks and the regional hospital and the for profit doctor corporations supporting the membership started to experience losses which got written off by several of these for profit and not for profit entities. I will not say that bad management was the ultimate failure of this co-op HMO entity. The demands of new pharmaceuticals, new technology and slow, very slow payments from the state and federal governments were a contributing factor to the ultimate selling off – buyout of the not for profit HMO co-op to the monster national for profit HMO entity.

Overnight, local, personal, affordable, recognizable HMO services disappeared and with it a toll free number for members to talk to in need of referrals, prescriptions etc. As a result a lot of chaos for many individuals who had gotten comfortable with a user-friendly medical care situation. No more personal touch or local offices to walk into and fix your HMO billing and service problems. Just a toll free number!

Changing demographics and of course Arizona as a retirement state, pushed the cost of health care for Seniors through the roof with the HMOs. The federal government promised many tiered payment plans to the HMOs for Senior (Medicare) HMO coverage. But the federal government at its worst and slowest and dumbest way ended up reneging on promised payments for seniors and cited bureaucratic technicalities that tied up and delayed fair payments to the HMOs. In the end I think it was the Fed Government and its failed delivery of cash for services rendered that broke the back of this HMO co-op.

I have worked for about three world class companies in my life. One was a bank. One was a mortgage company. The third was a now defunct Co-op HMO in Arizona.

I wish good healthcare to all Americans. I wish innovation and creative management to cut costs but not services to the insured public. I fear the arm of the Fed government to destroy a well run, well oiled HMO co-op, by merely changing a few rules as means to provide road kill and easy profits for corporations to gobble up the co-ops after they have built and maintained lean, mean, streamlined healthcare machines.

I hope the future in American healthcare is better than the past.