Industrial Revolution, Managed Care and the Information Revolution
Samuel Wilson, M.D., President

History shows that significant social transformation follows major technological innovations. The Industrial Revolution transformed Western society from its essentially rural and agricultural orientation to a largely urban and industrial society. The introduction of power-driven machinery and the development of factories during the Industrial Revolution created an enormous increase in the mass production of goods. Power-driven machines replaced handcraft, and factories developed as the most economical way of bringing together the machines and the workers to operate them.

Managed care has been likened to the industrialization of medicine. Created in a response to the growth of health care costs for governments, private industry, and individuals as well as an attempt to establish consistency and quality in medical service delivery, it transformed the practice of medicine from a cottage industry run by individual physicians to a system characterized more by large health care organizations and individual and group practices tied together in networks.

Managed care organizations have become the most visible manifestation of change in the health care delivery system. Physician practice changed from traditional solo fee-for-service to single- and multi- specialty group practices that are contracting with managed care plans and, increasingly, are capitated or adhere to other risk-sharing agreements, including physician organized health plans. Between 1983 and 1995 the number of employed physicians rose from 24 to 45 percent, and solo practitioners fell from 40 percent to 29 percent.

The rise of managed care is documented in a report by the American Medical Association Council on Medical Services. This report indicates that between 1986 and 1995, the percentage of physicians receiving payment under managed care contracts rose from 56 to 83 percent, and while the growth of full-risk capitation contracts may have slowed recently, managed care remains a significant force in the healthcare marketplace. Traditional indemnity health insurance has almost disappeared as a source of payment (PhysicianExecutive, March/April 1998, The Industrialization of Medicine).

Like the Industrial Revolution, Managed Care eclipsed the need for individual delivery of services and for a while effected a decrease in the cost of health care, as large corporate purchasers of health care became increasingly aggressive in seeking to reduce their health care costs and make physicians accountable for quality care.

Ironically this standardization of quality care proved to bear a striking resemblance to the mass production characterized by the Industrial Revolution. Not surprisingly, individuals are averse to a health care system that delivers standardized health care in mass-production (non-individualized fashion of health care delivery). For example, stipulating to how long a new mother may stay in the hospital after she has delivered her infant, or routinely denying promising treatments because they are designated experimental. These strategies have gradually bred collective discontentment.

There is an art as well as science in the delivery of medical diagnosis treatment, and aftercare. So long as the state-of-knowledge is one of art (care has to be customized to the individual patient), the traditional craft organization of health care works well, but there is high cost. Where there is one clear best practice based on science, protocols can be developed and care giving can be streamlined; the caregivers learn that procedure and how to adapt it to an individual's needs effectively. The predictable costs can be bundled into one fixed price for managed care organizations. Can this tension be reconciled? Can high quality medical care be delivered at a reasonably low cost?

It has been said that managed care is essentially a snapshot of still evolving trends in health-care and very much a work in progress. Managed care has strongly influenced the practice of medicine and has exerted immense pressure on physicians and patients, because these changes occurred so rapidly and extensively final agreement on the overall benefits of managed care is still a matter of debate. Yet while we are adjusting to the long-term effects of this change, health care experts are already seeing another revolution poised to transform the everyday practice of medicine.

The Information Revolution has been another innovative agent and its sphere of influence is transforming society and the health care realm. The information revolution in health care is characterized by an increasing number of patients obtaining health information through the Internet as an alternative to obtaining information from their doctors. The information revolution has the potential therefore to reduce the asymmetry of information between patients and doctors and thereby to undermine a central pillar of physicians' claim to professional status: the possession of distinctive competence based on technical know-how selflessly applied. This revolution, like the Industrial Revolution, has its opponents who would much prefer to keep things as they were. How will we respond?

A close analysis of the Information Revolution's likely effects suggests that for some patients with some conditions, their access to more and better information will indeed reduce the magic, mystery, and power of the medical profession. However, the Information Revolution also offers opportunities for physicians to improve the accuracy and objective justification of their treatment and recommendations. To seize those opportunities, physicians must master new roles and skills. An increasing amount of information is becoming available to medical personnel who seek information through the Internet. It can be a useful tool if used judiciously. Physicians can now have access to just-in-time information by connecting the physician, in real time to a database of peer reviewed medical literature. Armed with pattern-recognition software the physicians can have an instant, omnipresent digital adviser. Connect the same database of the medical literature to decision-tree software and you have a powerful medical decision-making tool. E.g.

[http://www.medical-library.org/mddx_index.htm]


(www.sma.org.sq/whatsnew/ethics/premkumar_pres.ppt)

1 Key areas where medicine is being transformed in the information age include the new consumerism (which is the desire by patients to control their own health care). As the traditional payers (employers) driven by the need to reduce the cost of premiums shift the burden of premiums to patients they are in turn taking on increased responsibility and control of their own health care. In addition, employees are being forced by their employers to pay for a larger portion of their medical costs at the point of-service (e.g., through higher deductibles, coinsurance, or copays). Employers are hoping the consumer will "shop" more wisely. These are typical employer reactions in an increasing cost environment. Consumers are shopping for value and information about diseases and providers is abundant through Internet portals as a concession to increased cost sharing.

2 Secondly, recognition that the breadth and quality of care required cannot be delivered by a fragmented system has led to increasing integration of health delivery networks. To survive as a system, however, these organizations must build a common information system that facilitates information sharing across the entire enterprise. The most cost-effective option is to develop a health information network (HIN) using Internet technologies to facilitate electronic exchange of both administrative and clinical information: (http://www.findarticles.com/cf_0/m3257/3_54/60139652/p1/article.jhtml?term=%2BInformation+%2Bmanagement+%2BManagement) "Health Information Networks: Enabling Care Management in IDS", Healthcare Financial Management, March, 2000.

3 Cost management by payors in an environment of increasing costs generally means a decreasing investment in benefits with no expectation of decreased service. Nearly all respondents in a recent survey (92 percent) indicated that their organization's health care costs increased for the 2003 plan year, resulting in an 18 percent cost increase for employers and a 13 percent cost increase for employees. Nearly one quarter of those organizations that experienced an increase in costs have decreased other benefits. (http://www.businessknowhow.com/manage/hccosts.htm)

As barriers to health-care quality continue to be a focus and reduction of these barriers remain a societal goal, widespread use of health information systems will continue and will likely increase. The way doctors are paid (payment systems) for services, or punished for bad outcomes (causing concerns regarding liability) needs to be aligned if we are to improve efficiency and deliver consistently quality, affordable healthcare that contemplates and incorporates the breadth of information so readily accessible in this Managed-Care-Information era.

The information revolution is here and now. Reversing a genuine revolution is as unlikely today as it has always been. In the very near future physicians will need to demonstrate that we are expert at marshaling the new information technologies for the benefit of our patients. We must be as good at surfing the web as we are at listening to lungs or performing appendectomies. To be effective physicians, we cannot afford to stubbornly adhere to archaic routines and watch as the train of progress speeds by. If we would enhance our practice and retain our relevance in a technologically advanced society, we need to drive the train of progress, even lay the tracks if necessary.

Assistance and resources are available from the SBCMS Electronic Communication Committee and CMA. As always, I will appreciate your questions, comments and suggestions. Please write to me at admin@sbcms.org.