By Gary Brown, M.D.

Gary Brown, M.D., is chairman of Pennsylvania Physicians Care.

Published October 1997

• Introduction
• Physician Unions
• Physician Organizations
• Physician-Owned Insurers
• National Health Insurance

• React to this article in the Discussion Forum.

In southeastern Pennsylvania, there are two major health insurers: Independence Blue Cross/ Pennsylvania Blue Shield and their subsidiaries; and Aetna U.S. Healthcare. Others have moved in, and the market will certainly not remain static, but the direction is unclear. Nevertheless, unless the premiums drop substantially, two insurers will not be able to dominate the market indefinitely.

Additionally, there are large health systems (Jefferson, University of Pennsylvania, Allegheny, Temple and Penn Care) in the stages of developing and expanding. They are all backed by substantial sums of money, are in the process of accepting risk contracts with the insurers, and may well contract directly with the payers (varied government agencies and employers) at some time in the future. Will these systems be successful? Perhaps. But if patients have the option to be in their limited panels, versus other entities that provide broad choice and reasonable price, it is likely they will chose the latter.

People want choice! So simple, yet so true.

When two hundred employers were recently surveyed in Central Pennsylvania, they consistently stated they wanted two major features in a health plan: reasonable cost and a thick book listing providers. They wanted choice of their doctors. Keeping this in mind, it is of interest that in Minnesota, where the employers are attempting to contract with smaller groups, there are difficulties enrolling patients because of lack of choice. People wish to have the ability to choose among thousands of providers, rather than from limited panels. The same phenomenon occurred in the New York City area, when Oxford, with twice as many professionals as U.S. Healthcare, fared far better in patient enrollment.

As the large insurers and big business entities in medicine evolve in the Delaware Valley, one wonders what will happen to the private practicing physician in the next five to ten years. Will he or she go the way of the typewriter? I sincerely doubt it, and I believe the public fervently hopes not. But are there groups out there working on behalf of the practicing physician which are not owned or employed by a health system? Groups that actively provide a voice for all physicians as well?

The answer is yes—on both counts.

Pennsylvania Physicians Care (PPC) (the brand name of the Pennsylvania Physician Healthcare Plan), a managed care organization owned by 4000 Pennsylvania physicians, has begun to insure patients through its PPO subsidiary in central Pennsylvania and is a proponent for all physicians. The medical societies and physician organizations (POs) are strong physician advocates as well. The key is having all these groups work in synergy. I believe they will.

A crucial issue for any successful business (and medicine is indeed a business today) is giving consumers what they want—in this case: quality, choice, and a reasonable price. Pennsylvania Physicians Care offers all three, and can enhance each more so by working in conjunction with organized medicine and physician organizations. By intimately involving physicians in the quality aspects, gathering large panels of professionals and hospitals, and employing solid management and sound business techniques, we as physicians will be able to provide the public with what it wants.

As is often the case, the question arises as to how Pennsylvania Physicians Care will remain competitive with large capitalization insurers? There are several important factors that favor a physician-owned health insurance company:

The investors have a key stake in the future of health care. It is the intent of Pennsylvania Physicians Care to place the profits back into health care. Unlike in the past with for-profit insurers, PPC does not intend to put almost twenty cents of the dollar into the pockets of Wall Street investors. This gives a financial cushion that will allow us to compete more effectively.

Quality, to date, has been given only lip service. Nevertheless, as premiums likely come to a common denominator in the next five years, quality issues will become key. And who understands quality better than physicians? As a physician and businessman, I can tell you: no one. Despite existing endeavors (such as the NCQA) to understand quality, it is nearly impossible to do so effectively unless one comprehends firsthand the complex field of one-on-one medical care delivery and the actual treatment of patients. To put it simply, physicians must be eagerly and intimately involved or a health plan will not have the highest quality.

The Pennsylvania Medical Society, in conjunction with specialty societies, and perhaps the AMA, could play a major role in this area, particularly working with physician insurance companies. It is our duty as adherents to the Hippocratic Oath to work proactively to take the lead and give the public the true quality it demands and deserves.

Physicians have responded dramatically to work with Pennsylvania Physicians Care. The talent and enthusiasm of the physicians in central Pennsylvania volunteering to work on committees for Quality Assurance, Medical Management and others is gratifying and reassuring. When their company is working for them and their patients, physicians respond and overwhelmingly support it. When you disempower and demoralize physicians, they naturally have difficulty functioning. But give them the proper forum and they rally and focus like heat-seeking missiles. This focus occurs not only with medical management and quality issues, but also in the public relations and marketing arenas. Why? Because people trust their physicians. There are few better public advocates for a physician-owned health plan than the physicians themselves.

The top management at Pennsylvania Physicians Care has over one hundred years experience in the managed care field. Additionally, the Board of Directors has the benefit of doctors who are not only practicing physicians, but MBAs and JDs as well. If additional capital is needed to expand more rapidly, the expertise will be there to acquire it.

Physician health insurance companies are organizing in other states and working with Pennsylvania Physician Care. With the help of PPC, which has superb management and a superior management information system, these groups will require less capital to start than we did in Pennsylvania. Additionally, there will be economies of scale by sharing costs among the states.

Pennsylvania Physicians Care is an inclusive organization. It is not the intent to exclude good, practicing physicians. Again, people want choice. And as Ben Franklin once said, "Either we all hang together, or most assuredly we shall all hang separately."

Pennsylvania Physicians Care has the management skills and management information systems sorely needed by many physician organizations (POs). Pro-physician groups doctors can trust, such as Pennsylvania Physicians Care, have the information systems and management skills to help physician groups manage contracts they receive. If in this effort we can promote cost-effective, quality physician endeavors and make Wall Street insurers unnecessary, so much the better. And what group can physicians better trust than a group owned by themselves? Imagine physician groups someday taking contracts directly from Medicare, Medicaid and other large payers. And imagine if this were done in conjunction with a physician-owned insurance company working in tandem with the state and county medical societies helping to organize thousands of physicians.

Will it be a cakewalk? Of course not. To date, the results with other physician-owned insurers have varied. Dakotacare, in South Dakota, the prototype of the physician-owned health insurance company, has been extremely successful and continues to dominate the state. MD Health Plan in Connecticut was sold, but at a very high return on investment, and it appears that the Physician Healthcare Plan of New Jersey may also be sold. In our state, Pennsylvania Physicians Care has striven to incorporate the features that have allowed others to be successful, while at the same time avoiding may of the pitfalls.

It is the intention of PPC to eventually expand to become a statewide organization in Pennsylvania. Nevertheless, the company intends to focus in a fiscally responsible fashion and not outrun its capital. On the other hand, the Board of Directors realizes the importance to the physician community, and to the public, of expansion. Properly balancing the needs to both focus and expand will give us the greatest chance for ultimate, large-scale success.

Polls have shown that the public is very positive toward a physician-owned health insurance company. The time is right and the concept of cutting out the Wall Street entrepreneurs is appealing to many. In a recent national poll, the profession was once again elevated to the number one spot in prestige among all professions. We can apply this brand-equity of the profession toward making physician-owned insurance companies a dominant force in American medicine. The public and the politicians are willing to give us a chance to provide cost-effective, quality care because they know we care.

To repeat, this is surely a time of draconian change in medicine. As with any era of substantial upheaval, there is also great opportunity. Rather than look upon this as a time of despair, we physicians should view it as a time of opportunity and think proactively to provide the consumers with what they want.

I am confident that physicians will rise to the occasion. Why? Because four thousand Pennsylvania physicians have already done so in supporting Pennsylvania Physicians Care with their hard-earned dollars. Because we are intelligent, have the potential to be extraordinarily focused, and are hardworking to the nth degree. But, most importantly, because we truly care about our patients and know what they want. It won’t be easy, and it will take broad-minded thinking and the same type of down-in-the-ditches sweat we put into our medical training and careers.

But it can be done.

And it must be done.

For our patients.

For our profession.