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Rural health care delivery systems with emphasis on the health maintenance organization concept

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Rural health care delivery systems with emphasis on the health maintenance organization concept

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Content RURAL HEALTH CARE DELIVERY SYSTEMS WITH EMPHASIS ON THE HEALTH MAINTENANCE ORGANIZATION CONCEPT by ( i j ^ D. Bryce Rose A Thesis Presented to the FACULTY OF THE SCHOOL OF PUBLIC ADMINISTRATION UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree MASTER OF PUBLIC ADMINISTRATION August 1975 UMI Number: EP64882 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dlsjssrtetion Rabhshirtg UMI EP64882 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 V) This thesis, w ritten by ... under the direction of the undersigned Guidance Committee, and approved by a ll its members, has been presented to and accepted by the F acu lty of the School of P u b lic A d m in istra tio n in p a rtia l f u l fillm e n t of the requirements fo r the degree of MASTER OF PUBLIC ADMINISTRATION G utdan/f Committee : Chairman .. r w . ' 7 6 R795 ACKNOWLEDGMENTS Many people were involved in the research and I organizing of this paper. The author wishes to thank the ; graduate program in Public Administration of the University of Southern California for their advice and assistance. Special appreciation is expressed to Alexander Cloner, Ph.D., Professor of Public Administration, who served as my faculty advisor and prodded me in the proper places when my tempo slowed. Additional gratitude is extended to the rural health organization Administrators, namely: Messrs. William Dettweiler, James Ensign, Donald Michaud, Robert Pollack, Emil Stahlhut, Michael LoConte, Donald Morgan and Ronald Lane. These men took time from their busy schedules to contribute their experiences, knowledge, frustrations and anticipations. This thesis is dedicated to my wife, Jean, my daughters, Anna and Donna, and my son, Stephen, who collectively encouraged and suffered during the preparation of this document. 11 TABLE OF CONTENTS ACKNOWLEDGMENTS i i Chapter I. INTRODUCTION....................................... 1 Purpose of the Study The Problem Basic Hypotheses Definitions Organization of the Study II. REVIEW OF THE LITERATURE.......................... 15 The Health Maintenance Organization Concept Background The HMO Structure Model Plans Summary III. METHODOLOGY...............' ......................... 66 Formulating the Objectives of the Study Designing the Methods of Data Collection Selecting the Sample Collecting, Processing and Analyzing Data IV. FINDINGS........................................... 76 Rural Plan Characteristics Summary V. SUMMARY AND CONCLUSION............................. 122 Restatement of the Purpose of the Study Restatement of the Problem Basic Hypotheses Summary of Findings Conclusion Recommendations 111 Chapter 130 APPENDIX 148 BIBLIOGRAPHY iv TABLE OF GRAPHS Graph Page 1. Rapid Inflation in Costs.......................... 30 2. Geographic Scarcity of Resources................. 31 3. Quality and Responsiveness of Care is Uneven 33 4. Financial Barriers to Care........................ 34 5. Inadequate Emphasis on Prevention................ 36 TABLE OP FIGURES Figure Page 1. These Are Proposals to Solve Problems............. 37 2. Health Initiatives— Additional 1971 and 1972 Federal Funding Requirements.................... 38 V I TABLE OP MODELS Model Page 1. Columbia Medical Plan............................. 42 2. Community Health Care Center Plan, Inc........... 45 3. Group Health Association, Inc..................... 47 4. Health Insurance Plan of Greater New York........ 49 5. Group Health Cooperative of Puget Sound.......... 51 6. Kaiser-Permanente........... 54 7. Sacramento Medical Care Foundation Plates 1 through 6.............................. 57 Vll TABLE OF ILLUSTRATIONS Illustration Page Letter Information Request 70 viii CHAPTER I INTRODUCTION Rural Health Care, a rapidly fading entity, needs massive rejuvenation if it is not to become entirely extinct. Diminution of medical services in these locations can be attributed largely to the migration of physicians toward the city and suburbs. This trend is readily understood when one considers the attrac tions of hospital facilities, social and educational advantages, and the predictability of economic success in areas of growing population density and affluence. Moreover, the current propensity for specialization, a choice almost always precluding solo practice in rural areas, compounds the situation. (McCormack and Miller, 1972, p. 73.) Purpose of the Study The purpose of this study is twofold; 1. To establish the means by which health care in the rural areas can be improved in quality and quantity. 2. To provide a health care delivery strategy for rural areas based on the Health Maintenance Organization (HMO) Model. The Problem The problem toward which this study is directed is the total absence of health care professionals in many rural areas, and in other areas only token representations of physicians, nurses, pharmacists and other supportive 1_________________________ I 2 I personnel are available. Citizens of rural areas may have some type of health insurance coverage. It may be an indemnity plan, medicare or medicaid. None of these types of health care protection provide for the delivery of health care. Rather, they reimburse physicians, hospitals and paramedicals. Proper fiscal incentives and physical facilities must emanate from the health care system in order to attract physicians and other supportive profes sionals. Thus, the one to be reimbursed, the means of reimbursing and, in many instances, the place in which care| can be provided, must all be part of the health care plan. McCormack and Miller summarize the foregoing in their statement, Although family background, regional origin, and individual attitudes strongly influence where physi cians choose to locate, economic considerations remain an important issue in these decisions. Rural and serai-rural areas offer less financial certainty and are particularly devastated by the maldistribution of physicians. General pediatricians and internists who compensate for the diminishing number of general practitioners are less likely to select rural locations devoid of their professional counterpart. Furthermore, there are indications that the future of health services might well be linked with varied organized financial mechanisms which will require or encourage collabora tive ventures such as group practice and use of para medical personnel. (McCormack and Miller, 1972, p. 79.) Basic Hypotheses The basic hypotheses in this study are; 1, If the Health Maintenance Organization Model is developed in a rural area then health care will be provided for the residents. 2. If a structured, well organized Health Maintenance Organization penetrates the rural areas then the accessibility and availability of various levels of care is more assured. Definitions The following is a list of definitions which are commonly used in reference to Health Maintenance Organi zations (HMO) or prepaid group medical practice plans. These definitions are of common usage rather than standard terminology. The definitions do not encompass the entire range of means of terms. The purpose is to present the definitions that seem to be most widely under- I stood (Group Health Association of America, Inc., a, no date given.) I ; BLUE SHIELD A medical service insurance plan which provides benefits covering specified physician rendered services and pays either the physician or patient. CAPITATION (Also per capita; capitation payment) The amount of money required per CARRIER CLINIC COMMUNITY CORPORATION COMPREHENSIVE CARE COMPREHENSIVE MEDICAL CARE PLANS CONTRACT GROUP COST CENTERS COVERAGE person to provide covered services to a person for a specific time. An insurer; an underwriter of risk. (Also health center); A facility for the provision of preventive, diag nostic , and treatment services to ambulatory patients, in which patient care is under the professional super vision of persons licensed to practice medicine in the political jurisdiction where the facility is located. Those organizations which have been developed by community interest groups or which provide for meaningful community input through Board parti cipation or input to the Board. Provision of a broad spectrum of health services, including physicians' services and hospitalization, required to prevent, diagnose and treat physical and mental illnesses and to maintain health. Plans providing a wide range of care, including physicians* services in the home, in the office or clinic, and in the hospital. The benefits typically include hospitalization. (Also enrolled group): A specific group of persons who are to be pro vided a particular program of benefits (e.g.. Local 59; Co-op group ; Federal employees; etc.). Functional areas that generate the basic costs incurred to provide the Plan’s range of benefits. In general, services or benefits provided, arranged, or paid for throu^ a health insurance plan, or the people eligible for care under such a plan. More specifically, a package of specified benefits (Federal program— high option; premium plan; etc.). DEPENDENT DIRECT SERVICE BENEFITS DUAL CHOICE i ECF (EXTENDED I CARE FACILITY) EMERGENCY CARE BENEFITS ENROLLED GROUPS ENROLEE ENROLLMENT Person other than the subscriber eligible to receive care because of a subscriber’s contract. See "Service Benefits." (Also multiple choice); An option offered individuals in a group to choose between two or more different arrangements for prepaying medical care; i.e., indemnity insurance and a group health plan. A nursing or convalescent home offer ing skilled nursing care and rehabil itation services. Indemnity benefits for care received from non-plan doctors and non-plan facilities in the event of accident or emergency illness, whether in or out of the plan’s service area. (Also contract groups): Persons with the same employer or with membership in common in an organization, who are enrolled in a health plan. Usually, there are stipulations regarding the minimum size of the group and the minimum per cent of the group which must enroll before the coverage is available. (Also beneficiary; eligible indivi dual; member; participant): Any person eligible as either a sub scriber or a dependent for service in accordance with a contract. The process by which an individual becomes a subscriber for himself and/ or his dependents for coverage in a health plan. May be done either through an actual "signing up" of the individual, or by virtue of his collective bargaining agreement of his employer’s conditions of employment. The result therefrom is that the EXPERIENCE-RATED PREMIUM EXPERIENCE Rating FEE-POR-SERVICE FEE SCHEDULE health plan is aware of its entire population of beneficiary eligibles. As a usual practice, it is incumbent on the individual to notify the health plan of any changes in family status that affect enrollment of dependents. A premium which is based upon the anticipated claims experience of, or utilization of service by, a contract group according to its age, sex constitution, and any other attributes expected to affect its health services utilization, and which is subject to periodic adjustment in line with actual claims or utilization exper ience. The rating system by which the Plan determines the capitation rate by the experience of the individual group enrolled. Each group will have a different capitation rate based on utilization. This system tends to penalize small groups with high utilization. With respect to the physician or other supplier of service, this refers to payment in specific amounts for specific services rendered— as opposed to retainer, salary or other contract arrangements. In relation to the patient, it refers to payment in specific amounts for specific services received, in contrast to the advance payment of an insurance premium or membership fee for coverage, through which the services or payment to the supplier are provided. A listing of accepted fees or estab-. lished allowances for specified medical procedures. As used in medical care plans, it usually repre sents the maximum amounts the program will pay for the specified procedures. I FIXED COSTS FOUNDATIONS GROUP HEALTH PLAN GROUP PRACTICE : HMO 7 Costs which do not change with fluc tuations in enrollment or in utiliza tion of services. An association of physicians that organizes and develops a management and fiscal structure that develops a fee schedule for individual physicians who join the foundations. Foundations usually market the plan to subscribers do peer review, claims payments, and set rates for subscribers. (Also direct service plan; group practice prepayment plan; prepaid care plan): A plan which provides health services to persons covered by a pre payment program through a group of physicians usually working in a group clinic or center. A group of persons licensed to practice medicine in the State, who, as their principal professional activity, and as a group responsibil ity, engage or undertake to engage in the coordinated practice of their profession primarily in one or more group practice facilities, and who (in this connection) share common overhead expenses (if and to the ex tent such expenses are paid by members of the group!, medical and other records, and substantial portions of the equipment and the professional, technical, and administrative staffs. (Health Maintenance Organization) The term health maintenance organization is specifically defined in the Health Maintenance Act of 1973 (Public Law 93-222) as a legal entity or organized system of health care that provides directly or arranges for a compre hensive range of basic and supple mental health care services to a voluntarily enrolled population in a geographic area on a primarily prepaid and fixed periodic basis. HOSPITAL AFFILIATION INDEMNITY CARRIER INDEMNITY PLAN INPATIENT CARE MEDICAL CROUP 8 The hospital or hospitals from which the Plan contracts to provide the hospital benefits of the Plan. Usually an insurance company or insurance group that provides market ing, management, claims payment and review, and agrees to assume risk for its subscribers at some pre-determined level. (Indemnity health insurance) A plan which reimburses physicians for services performed, or beneficiaries for medical expenses incurred. Such plans are contrasted with group health plans, which provide service benefits through group medical practice. Care given a registered bed patient in a hospital, nursing home or other medical or psychiatric institution. A group of physicians organized to provide medical services to members of a group health plan under a speci fied contract. Medical Group in prepaid group practice. a. includes a broad range of medical specialties, with capability for meeting most needs for medical diagnosis and treatment, including both primary care and specialty care (with the ability to purchase service beyond its capabilities on a fee-for-service basis); b. operates under common employment, or with a common financial inter est, under a capitation arrange ment or some system for payment other than fee-for-service; c. has available group offices and facilities, equipment, and the services of paramedical personnel and normedical assistance; NONPROFIT PLAN OFFICE VISIT OPEN ENROLLMENT OUT-OF-AREA BENEFITS : OUTPATIENT CARE I PHYSICIAN’S SERVICES PLAN PLAN ADMINISTRATION d. has responsibility for the care of a defined group of enrolled participants. A term applied to a prepaid health plan under which no part of the net earnings inures, or may lawfully inure to the benefit of any private share holder or individual. A formal face-to-face contact between the physician and the patient in a health center, office or hospital out-patient department. A period during which subscribers in a dual choice (see definition) health benefit program have an opportunity to select the alternate health plan being offered to them. Most fre quently, open enrollment periods are negotiated and held for one month during every one to two years. Those benefits that the Plan supplies to its subscribers when outside the geographical limits of the HMO. These benefits usually include emer gency care benefits, plus low indem nity payments for non-emergency benefits. Most plans stipulate that within the area services for emer gency care will be provided until the subscriber can be returned to the Plan for medical management of the case. Care given a person who is not bed ridden. Services involving a face-to-face contact with a physician. See "Group Plan." The management unit with responsibil ity to run and control the HMO Plan— includes accounting, billing, person nel, marketing, legal, purchasing. 10 PLAN SPONSORSHIP POLICYHOLDER PRE-EXISTING CONDITION PREMIUM PREPAID CARE PLAN PREPAID GROUP PRACTICE possibly underwriting, management information, facility maintenance, servicing of accountants. This group normally contracts for medical ser vices and hospital care. The group that organizes the plan and/or finances its facilities and/or makes up its governing board. (1) Under a group purchase plan, the policyholder is the employer, labor union, or trustee to whom a group contract is issued; (2) in a plan contracting directly with the indivi dual or family, the policyholder is the individual to whom the contract is issued. A physical condition of an insured person which existed prior to the issuance of his policy or his enroll ment in a plan, and which may result in a limitation in the contract on coverage or benefits. A prospectively determined rate that a subscriber pays for specific health services. Generally a comprehensive prepaid health plan will have a pre mium rate for single subscribers and a separate premium rate or rates for subscribers with dependents. In addition, separate premium rates may be established for optional health care coverage. See "Group Health Plan." Prepaid Group Practice Plans involve multispecialty associations of physi cians and other health professionals, who contract to provide a wide range of preventive, diagnostic and treat ment services on a continuing basis for enrolled participants. PREPAYMENT PRIMARY CARE PROVIDER SERVICE AREA SERVICE BENEFITS SUBSCRIBER UNDERWRITING UTILIZATION 11 A method of providing in advance for the cost of predetermined benefits for a population group, through regu lar periodic payments in the form of premiums, dues, or contributions, including those contributions which are made to a Health and Welfare Fund by employers on behalf of their employees. Professional and related services administered by an internist, family practitioner, obstetrician-gynecol- oglst or pediatrician in an ambulatory setting, with referral to secondary care specialists, as necessary. A person or organization providing health care services. The geographic area covered by the plan, within which it provides direct service benefits. (Also direct service benefits): Benefits provided by the plan itself. (Also policyholder; certificate holder): The person in whose name an individual or family contract is issued. (1) The entire process of issuing new securities. (2) The insurance function bearing the risk of adverse price fluctuations during the period in which a new issue of bonds is being distributed. The extent to which a given group uses specified services in a specific period of time. Usually expressed as the number of services used per year per 100 or per 1,000 persons eligible for the services, but utilization rates may be expressed in other types of ratios, i.e., per eligible person covered. 12 WORKING CAPITAL Refers to an institution* s investment in short-term assets— cash, short term securities, accounts receivable and inventories. Gross working capital is defined as an institution* s total current assets minus current liabilities. If the term "working capital" is used without further qualification, it generally refers to net working capital. VOLUNTARILY An enrolled group of persons of which ENROLLED GROUP each individual has exercised an option to join the program. Organization of the Study The organization of this study synthesizes exten- I sive information relating to the metropolitan Health ; Maintenance Organizations and presents available informa tion of a more limited nature regarding individualistically constructed non-metropolitan (rural) Health Maintenance Organization. The study encompasses the entire geographic United States in which definable rural HMOs are operational. Chapter I is planned to place emphasis on the rural health I crisis. In some rural communities there is a complete lack I of care ; in others there will be no care as aging I physicians retire and other doctors in-migrate to more ' densely populated areas where specialists are immediately 1 i available. I I The purpose of the study is to provide suggested 1 I prototypes for the delivery of rural health care where i ' none exists and where care does exist to observe means of I ■ improving the quality and quantity. Also, it is known that care may be available but is not accessible. While patient care is identified within a geographic region, non emergency transportation is not provided for the delivery j of the patient to the center for health or conversely the I center for health does not reach out to the geographically I isolated patient. Because of the newness of Health Maintenance i I Organizations, a relatively separate and distinctive vocabulary has emerged. Therefore, an extensive glossary of terms is included. Chapter II is designed to review the literature relating to health problems as they exist in the varied geographic rural areas of the United States. Ruralness, geographic isolation and solutions to the ruralness problem are investigated within the context of the Health Maintenance Organization concept. Separate and detailed metropolitan Health Maintenance Organization models are diagramatically presented with written commentary on their 1 I differentiating characteristics. Each model is considered I as a potential organizational structure for the delivery ; of rural health care. : In Chapter III a factual data bank is presented. : The source of the researcher*s universe is identified and 14 illustrated. An informational request letter was used as the written instrument for the gathering of the data. Chapter IV examines the rural organizational i patterns of administration, management, formation and im- : plementation of the non-metropolitan HMO. The final chapter presents the conclusions and I recommendations. Pertinent suggestions relative to future : studies are offered for consideration to new investigators. CHAPTER II REVIEW OF THE LITERATURE Numerous studies have been conducted that testify to the need for a Rural Health Care Delivery System. I These studies are fragmented and usually concentrate on a ! specific need rather than the general requirements for a comprehensive health delivery strategy. In the literature, ' it is most difficult to discover what is meant by rural. ; Robert L. Kane, M.D. and Sister Diane Moeller in their study of rural service elements state, The word, * rural *, has no meaningful definition when it is applied to health care unless it includes reference to income level, size or density of the population and its rate of growth, geographic isola tion, weather, culture, life styles, and so on. It may be more appropriate to define *rural* in terms of travel time rather than distance. Delivery of health care in rural areas is vitally affected by these factors. For example, rural Mississippi has problems of poverty and culture that complicate its * ruralness * that rural Iowa does not face. (Kane and Moeller, 1974, p. 79.) Senator Dick Clark (Democrat-Iowa), Chairman of the subcommittee on rural development states. One of the country* s most precious assets is the health and well being of its people. Good health and good health care should be a right for every indivi dual. Good health and good health care should not be considered luxuries or frills, because no one can do without them. 15 16 But, right now, good health care is not a right in this country. Instead, it is a privilege that all too often depends on the size of an individual's pocketbook or place of residence. That is more than just a problem— it's a tragedy. The difference between the best health care in the world and the worst can be just a few miles— or a few hundred dollars— and the difference that the miles and the dollars can make is sometimes hard to believe. One aspect of the debate on national health care insurance that is of special importance to me is rural health care. Like the weather, it's something everybody talks about but few do anything about. As a Nation, we have failed to provide equal health care for people in rural areas. One health expert put it best when he said, 'Rural' Health conditions in this country are the heritage of decades of indifference. The problems of health care in rural areas are complex, serious, and above all, persistent.. The health care crisis experienced by the entire Nation— in terms of poor access to services, shortages of manpower, and high cost— are severely aggravated in rural America. We know that : — Rural areas are isolated from major centers of care; — Fewer and fewer doctors tend to locate in rural communities ; — The health needs of rural populations are greater than those in metropolitan areas— primarily because there is a bigger percentage of older people and low income families. (Group Health Association of America, Inc., 1974, p. (iii).) I At the First National Conference on Rural Health Maintenance Organizations conducted in Louisville, I Kentucky, July 8-10, 1974, Mr. Jeffery Cohelan, Executive I Director, Group Health Association of America, Inc., I stated in his opening remarks. 17 Clearly the development of HMO's or prepaid, direct service health care plans in rural America poses unique problems. Lack of manpower, limited number and types of support services, scarcity of financing, population disper sion and problems of accessibility are among the difficulties faced by those who want to develop rural health maintenance organizationa. (Group Health Association of America, Inc., 1974, p. (v).) James D. Burnstein, Chief, Office of Rural Health Services for North Carolina mentions in a Department of Human Resources Bulletin, Rural communities in North Carolina lack medical resources and the ability to attract resources, especially physicians. Over the past decade, efforts have been under way to develop new medical profession als to supplement the over burdened and scarce physician as the primary source of medical care. Clinics, called Rural Health Centers, have been developed in several North Carolina Communities to utilize these new medical professionals, called physicians assistants or family nurse practitioners. These new clinics have extended the use of these professionals to provide primary medical care. Primary care is the medical care required for the majority of people's health problems. (State of North Carolina, Department of Human Resources, 1974, p. 1.) j Savinija G. Kernaghan, the feature editor of I Hospitals, Journal of the American Hospital Association, ' states; Perhaps the most surprising aspect of the health care system's failure to solve rural health care problems is not the fact that it has failed; most surprising is the real but unrealistic expectations that attempts to improve rural health care should and will succeed. Moreover, the expectation is that each discrete, localized success will somehow become a permanent solution and that it will be transferrable to other 'similar' problems. (Kernaghan, 1974, p. 87.) 18 He further states. Rural communities and their small hospitals can be simultaneously optimistic and disheartened by reports of solutions that have 'worked* elsewhere. Their attempts to reproduce a given formula may be under mined by a missing ingredient; only the innovative administrator or board of trustees will be keenly enough aware of the community's resources to find a suitable substitute or to draw from neighboring capabilities. Were a multitude of such patches, such partial solutions to be applied to a rural community's health care delivery, however, the rural population's health— more often than not— would still be a peril, j (Kernaghan, 1974, p. 89.) I Kernaghan summarizes his observations in a general- I ized statement that should be a guiding principle to any I i health care system that intends to penetrate the rural i areas. That principle is. The basis of an approach that will enjoy the greatest longevity and will be the most responsive to a community's needs must be an honest, careful appraisal of those needs. Simply put, a community with limited resources must decide what services it needs most, what services it can reasonably afford to support, and what services it must 'buy* or 'trade for* from its neighbors. It must then invest its resources I accordingly. (Kernaghan, 1974, p. 90.) I I A review of the literature clearly indicated that ! a structured, well organized Health Maintenance Organiza tion model is not the only means by which health care may ' be more readily available and accessible in less populated I areas although it may be one of the more preferred, j Mercy Hospital of Johnstown, Pennsylvania is I located in the south central portion of the state.. The r 19 1 community of Bolivar, Pennsylvania, a rural community with ^ a widely scattered population of 10,000 persons and 23 miles west of Johnstown, approached Mercy Hospital and asked for assistance in acquiring medical care for their j community. Thirteen years previously a community medical j society was formed and had built a clinic which contained ^ four examinations rooms, a physician's office, clerical space, and a large reception-waiting room. Physicians, ' however, would come and go and during the past five years there had been no doctor for the clinic. ' Theodore R. Baranik, the administrator of Mercy I Hospital of Johnstown, relates how his Board of Trustees I I through his persuasion activated the Bolivar community clinic with a full time physician and supportive personnel. Mr. Baranik states, The ancillary personnel at the clinic, residents of the Bolivar area, are included on the hospital pay roll, and they receive comparable salaries and fringe benefits. The hospital does all billing for clinic services and provides all drugs and other supplies used in the clinic operation. (Baranik, 1974, p. 57.) Mr. Baranik goes on to state. Establishment of satellite clinics by hospitals immediately makes available all resources housed in the institution, including physicians, specialists, and specialty equipment. The hospital emergency department is as far away as the telephone when the clinic is closed, and in this situation, only a 35- minute ride from Bolivar. This means that the physicians have adequate amounts of available free time with the emergency department as their permanent backup. All clinic records remain the property of the 20 hospital, thus ensuring completeness and continuity. Another advantage in establishing a satellite clinic is that the physician may or may not choose to settle permanently in the community in which the satellite clinic is located. (A fact of life today is that many physician's wives will not settle in rural communities.) In our situation, both physicians involved in the clinic commute a total of approxi mately 60 miles daily to and from their homes. (Baranik, 1974, p. 59.) Two months after the Bolivar clinic was open under the sponsorship of the hospital a second physician was acquired. The clinic became self supporting shortly after i , the sixth month of operation. i In conclusion Mr. Baranik states. Extension of hospital services through the establish ment of satellite clinics in rural communities is a unique way of providing rural medical care. Mercy Hospital of Johnstown has demonstrated that such clinics can be developed in a rural setting in a relatively short time without state or federal grants and funding. Thus the hospital has a sense of accomplishment not only by providing quality medical care at its base in an urban setting but also by meeting the health needs of rural communities through the satellite clinic concept. (Baranik, 1974, p. 59.) Kane and Moeller reinforce Baranik's report when they state, * Hospital boards and administrations must recognize their potential and responsibility as the nidus of health care leadership to the point of yielding their sense of territoriality and of developing networks of shared services, facilities, and, possible, personnel. Unfortunately, true coordination of rural health services is probably going to be a rare accomplish ment. Local fears and the scarcity of medical man power in an appropriate mix will be barriers in a small community because of its geographic isolation, 21 its poverty, or its sparse population. Despite such drawbacks, some efforts have been rewarded by the potential present in an awakened community participat ing in its own health care planning. Informed of the alternatives, they tend to choose wisely, toward coordinated and cooperative arrangements in health care delivery. (Kane and Moeller, 1974, p. 83.) The Health Maintenance Organization Concept Well structured and time tested Health Maintenance : Organizations are versatile and operational. By means of i organizational diagrams, different types of goveranee will I be explored as will the availability and accessibility of i , patient care. Preparatory to reviewing the Health I Maintenance Organization concept it is important to know why the Nixon Administration directed so much effort toward the formulation of a national health policy. This is done in the research findings immediately following. The federal publication giving genesis to the HMO concept is discussed in small detail. From this locus forward an indepth analysis of seven highly structured, urban Health Maintenance Organizations are presented. These seven operational health systems are the basis for viewing an alternative health care delivery program that may be used in the rural health setting. Today in the United States there is not a health ; care delivery system. Physicians and/or hospitals set the price for services; the consumer or patient is delivered 22 the services as priced; and the services are paid for by the insurance carriers on an experienced rated premium. The patient-consumer has very little or no control over the price setting and little or no knowledge of the competency of his health broker, the physician. Indemnity insurance companies until recently showed little or no concern for physician or hospital charges as their expenses were covered by premium loading and contract exceptions. Max W. Fine, Executive Director, Committee for National Health Insurance states. For a long time now, there has been increasing evidence that the health care system in this country is coming apart at the seams. The United States spends more on health care than any other industrial ized country. In 1972, expenditures for health in the United States totalled S83 billion or $394 for each man, woman, and child in the population. It has been estimated that the average American family is spending 150^ more today for health care than it did ten years ago. The average man now works one month each year just to pay the doctors, hospitals, and health insurance companies. One of the prime reasons for the ever-rising cost of health care is the failure of the private insurance industry to exercise control over the providers of care. Most people with private health insurance policies are covered only when they are hospitalized. Naturally, many prefer to be treated in a hospital rather than at home or in the doctor's office since the insurance company doesn't pay for outpatient care. Hospitals are generally paid on a cost-plus basis. Thus, the hospitals have no incentive for holding down their costs. There is virtually no accountability to the public. Private insurance companies have ways of protecting themselves, if not their 'insureds.' They write policies containing a bewildering number of 23: 'exceptions* and 'exclusions' so that often people who have insurance discover belatedly that they are not covered for certain essential services. And because of these gaps in coverage, many families can be completely pauperized by one serious and prolonged illness. (Fine, 1973, PP* 10-11.) Charles C. Edwards, M.D., Assistant Secretary for Health, United States Department of Health, Education and Welfare in his address presented before the Third Annual Alcoholism Conference of the National Institute on Alcohol Abuse and Alcoholism stated. Despite all the talk to the contrary, despite the best efforts of government, the professions, and numerous other groups that are deeply concerned with health— we do not have a national health strategy. Indeed, I would suggest that we have never had one. This is not something that only we in government understand or are concerned with. On the contrary, I am convinced that all of us— the health professions, research centers, hospitals, academia, third party payment organizations, and the consumers of health— sense that this country is trying to cope with major health problems without a national strategy that could make our efforts more productive and effective. (Edwards, 1973, p. 11.) President Nixon's health message, February 18, 1971, endorsed HMO's as the new system for organizing I health care delivery for quality and economy. This was I I followed by the publication of "Towards a Comprehensive jHealth Policy for the 1970*s, A White Paper" issued by the jSecretary of Health, Education and Welfare in which it is stated. Another key part of the Administration's health strategy is the Health Maintenance Organization (HMO). HMO8 simultaneously attack many of the r 24 problems comprising the health care crisis. They emphasize prevention and early care; they provide incentives for holding down costs and for increasing the productivity of resources; they offer opportun ities for improving the quality of care; they provide a means for improving the geographic distribution of care; and, by mobilizing private capital and manager ial talent, they reduce the need for Federal funds and direct controls. (U.S. Department of Health, I Education, and Welfare, 1971a, p. 31.) j It is by means of this "White Paper" that the I administration prompted the health care industry to think ^in terms of alternatives for the delivery of health care. 1 It is noted that mention is made above of a means for I I improving the geographic distribution for care. The Health Maintenance Organization received legal status in the Health Maintenance Organization Act of 1973. This was forty-five months after the first i public appearance of the term "Health Maintenance Organization" when on March 23, 1970, the Department of Health, Education and Welfare (DHEW) Undersecretary, John G. Veneman first presented the Administration's "Health Cost Effectiveness" bill before the House Ways and Means Committee. Background Health Maintenance Organizations were legally identified in the Health Maintenance Organization Act of 1973. However, their quasi beginnings may be traced to the early private group practices of medicine; the prepaid I 25 I health plans; industries involvement toward protecting the ! health of its laborers ; and union activities to protect I the welfare of its membership. Mr. M. H. Ross, Adminis- I trator, Fairmont Clinic, Fairmont, West Virginia states, : More than four decades ago Dr. Michael Shadid and the I Farmers Union in Beckham County, Oklahoma, formed the Community Health Association and agreed on group I practice, consumer input, medical and hospital financing and prepayment.... Logging and other isolated industries often turned to prepayment of medical services as a way to furnish physicians to areas where none were located other wise. The Western Clinic of Tacoma, Washington, for 40 years was typical of similar goups which main tained prepaid arrangements with outreach offices manned by a single physician, but linked to the multi-specialty group base. Rural USA includes the hundreds of thousands of hard rock anthracite and bituminous coal miners in our Nation. Coal industry traditions with respect to payroll deduction prepayment go back at least to 1842 at George's Creek Coal & Iron Co., in Western Maryland, where 50 cents per month supported a physician in the community. To this day, copper firms in the Rocky Mountains, whose stock is listed on the New York Stock Exchange, operate the rural groups and hospitals resulting from early prepayment. On the Mesabi Iron Range of northern Minnesota, in a 100-mile long crescent, there is a fairly unbroken history of 75 years of physician-owned, group practice clinics, including mergers, separations and rural satellites; long experience with fixed monthly pre payment in a panorama of control ranging from steel company domination to a collective bargaining worker voice to voluntary enrollment in a prepaid group health plan. During the 1920's Consolidation Coal Co. had a chief surgeon who was responsible for 58 physicians working on a prepaid basis in communities scattered over several States. More than 70 years ago Colorado Fuel & Iron Coal Co., ran a comprehensive health care delivery system for 26 steel workers, coal and iron miners, underwritten by payroll prepayment, stretching from Wyoming to New Mexico. This comprised a modern hospital in Pueblo, Colorado, with specialists and residency programs which included lecturers from Vienna, broad health education, sanitation and social welfare programs, interlocked with dozens of transferable family physicians in isolated mountain communities, utiliz ing railroads and horse-drawn ambulances for trans portation. ^ ; In southern West Virginia during the first quarter of this century, an Episcopal Church-sponsored hospital, with salaried physicians and a school of nursing, coordinated inpatient care on a multicounty basis with thousands of coal miners from dozens of separate companies participating at the rate of 15 cents, and later 25 cents, per month for hospital ization. •.. The 1930 UMWA agreement with the Rocky Mountain Fuel Co., which provided for a Department of Medicine, Health, and Sanitation in Boulder and Weld Counties, Colorado, furnished a rural model. The prepaid program cost $1 for unmarried men and $1.50 for employee and family, deducted monthly from wages. It called for a qualified physician as medical director to head the physician-nursing team including consult ants. A commission was established 'made up of one representative from each mine, elected by the miners, and of the same number of officials selected by the company. ' The commission was authorized to hear and investigate patient complaints and make final deci sions by arbitration. The commission organized the department and adopted rules to carry out the pur poses which were 'to render the best and most skilled* health services to employees and their families, and to 'provide scientific and adequate prenatal' care, to promote health and prevent illness, to maintain sanitary conditions, and provide general health edu cation especially 'on matters affecting children's health and development' (or what in our learned alpha betical terminology we today call MCHÎ).... Private group practice of medicine started 8? years ago in tiny Rochester, Minnesota, but the concept of the Mayo Brothers never swept the entire nation. Groups became dominant form of practice only in the upper Midwest and did not penetrate the urban East. 27 Recent years have seen the rapid growth of single specialty groups which hold out little promise for comprehensive care or consumer hopes. Indeed, the prepaid group health model has not spread to rural U.S.A. (Group Health Association of America, Inc., 1974, pp. 4-10.) The concept of prepayment, group practice, out reach clinics, outreach physicians, capitation, consumer and provider input in concert with preventive medicine and sanitation are not new ideas. Health, Health Care, accessibility, costs, rising costs, cost containment, quality of care, and myriad strategic problems face labor, government, industry and the individual private citizen while confronted with various shades and hues of the foregoing problems. These problems are not new to our health care economy. The Group Health Association of America, Inc., in its pamphlet. The Prepaid Group Practice HEALTH MAINTENANCE ORGANIZATION states. More than forty years ago doctors and consumers began to react to the patterns of individual physi cians working alone, to fragmented and impersonal care because of intense specialization, and to the lack of access to the complex, expensive facilities and equipment needed for diagnosis and treatment. Physicians did this by pooling their varied resources and skills to work as a balanced medical team. Consumer groups— labor unions, rural and urban cooper atives, and community organizations— and, later, industries and government also organized to sponsor prepaid group health plans. The first real medical cooperative, begun in 1927, was the Community Hospital of Elk City, Oklahoma. The first urban cooperative. Group Health Association, Inc., was developed in Washington, B.C. in 1937 by the 28 employees of the Home Owners Loan Cooperation...it now provides comprehensive care for almost 100,000 members. The Kaiser Foundation Medical Care Program, which began as a response by industry to the health needs at isolated construction projects, presently operates in six regions— Northern and Southern California, Hawaii, Ohio, Oregon and Colorado— with a physician staff of about 2,300 organized in six medical groups, providing health care to a total membership of about 2.5 million people. The Health Insurance Plan of Greater New York was the first government sponsored prepaid group practice. In Seattle, a grass-roots movement provided the impetus for the development of the consumer owned and oper ated Group Health Cooperative of Puget Sound. Prepaid group practice plans continue to be estab lished in many cities throughout the nation. The initial hopes for and the excitement about prepaid group practice has never paled. This is borne out by the recent passage of the Health Maintenance Organization Law which is an acknowledgement by government, professionals, and consumers alike, of the value of this innovative and responsive health care system. (Group Health Association of America, Inc., p. 1.) In addition to the prepaid health plans described above, the models of the Columbia Medical Plan in Columbia, iMaryland, and the Community Health Care Center Plan, Inc. located in New Haven, Connecticut and the Medical Care Foundation of Sacramento, California are described in order to highlight their approach to an alternative delivery of health care. InterStudy states in its January 1975 census of HMDs that at the beginning of 1975 there were 183 known HMO8 delivering prepaid health care (Wetherille, 1975). These 183 operational HMOs extend over 32 states and the District of Columbia (Wetherille, 1975). 29 As of April, 1975, states containing operational Rural HMOs total 12. Colorado, Illinois, Kentucky, Maine, and Wisconsin each have two operational Rural HMOs. The total operational Rural HMOs is 17 (Wetherille and Nordby, 1975). Eight of the Rural HMOs have been studied by this researcher. These eight Rural HMOs are separately reviewed in their non-urban settings after several HMO structures are explored. In order to do this seven well ! organized urban HMOs are presented. i The HBIO Structure There are five major areas retarding health progress. These are: 1. Rapid inflation in cost. 2. Geographic scarcity of resources. 3. Uneven quality and responsiveness of care. 4. Financial barriers to care. 5. Inadequate emphasis on prevention. (U.S. Department of Health, Education, and Welfare, 1971b, p. 2.) The preceding five items are best demonstrated by Graphs 1, 2, 3, 4, and 5 that follow (U.S. Department of Health, Education, and Welfare, 1971b). As a solution to the orderly progression of health jcare problems the Department of Health, Education and I Welfare supported the following proposals as outlined in I Figures 1 and 2 (U. S. Department of Health, Education, and iWelfare, 1971b). GRAPH 1 ,30 m 9 Ksaa < ; î î î î s é i Üa ,E^ ema 6ma tmm a. < g I R K f f i a a m t s s p n iÉi s s m a i v s a i ¥ W i ) m ' e : ^ s a s M (0 m m o' h o o o mS.E K ® 5* 0 i l - ï oO*'® r %'S. m < f > UJ IB L v 2 f l . a ^ <c o 2 ^ o Ô to w m a. yj Jk5 « < 0: m | a « S B yj O %) o a i ü _ o w m EZ (5 o: ■yj w g O LW >3 U) 0. ( / ) m >< W S Q : Ci * w ^Awwrii T xw/MU t*Z,«U M5 k3 u K n ^ % ztf.TwogrtK'.'acrAwnrMm , &,W!TlMe,*^alp%*!'. W fR f*,.K*#aN aStm Aaf idw f.M M M tTTat'iü ^ 3 5 M #W K a» aly o o o o o c * ^ o o c < 3 " C \ { C 3 C O m c v O C O o B 3 m c \ E o , § c \ 3 c \ a C > s ! : r H ! 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O .K .= G o c e S S ÿ i «sS ^ ü G ^ = m If <M CO *n ^ &. g 0 @ @ . o E Ô m (s#^ Ü S 35 GRAPH 5 36 yj o m yj =) C z o o p %: m LU mUI g = a O î J J Ûi X fe < Uj K m o UJ UJ yj § m yj < 0.^ ' t t > < * 3 S ^ o c k . m s >• >•8 .c a. is m 03 j= o ( 9 0> m "O c O O O C O O rC (D cn c CO to # ® £T yj C z : c o “ © o o IP .S < Q .O E - s : E s © >, f e O M 2 g 5-S (A (A ^ II ? ‘ o « * <w O g i s O • “ * * —4 r - 4 13 yj O 5> O < -j LU ;z h» G m uT G G yj «J s © LU X h” lü < t = UJ yj (O m O <c LU G ^ W ( S S z J S UJ < glA. O W 4/î > < Z T3 0 ) c .c c o o 3 ( A E « ► - » C O O i r > O .S jr E C 3 •w ( A c m jC 3 m C W ï >% c e E G ) C c e o .2 5 2 "O m C i ? e g G o m G îE r H I o s i ^ m H Z W o o h" LU O yj C O (K < Ou >» > "P % = " E G) o m O < LU. X m FIGURE 1 37 © | ; s s i m ® E=J O ^ BC > û . y j E m w K B S ïS t - s l « s |ssss m m O G u G © o o O m Ë L # — LU s: tn LU _1 >- o «sC KlZ Lu. CL O C3 O as 2: «Sg 03 _J =) L S . J o 2Z &: 2K 3© O >“ H— < / ■ > CD C/) œ 3Z LU C© LU LU eu O 2Z 1 co L r — %) LU LU ©0 es: o « ï S c© CÛ o 23 Lt. O L >J CD CD ©C g 5 g E Ë g l i X: o # e s » =3 En C3 “ J oo < L e J Z3 D£ O g i/i O LU O « t a ; i —” a. co X o L>.! O m m O u G Z m S c o CK CJ> (% O O. D_ r© v O G: 0 3 «.J « 3 C o o — » M « 2 2 i ! L . : x : I L " 5 5 — s: CD >» LU g ; g x> x: o o I— ‘ ^ ■ ‘ ^ 3Z =C ' C g H- : c O — f _ u « 2 3 C . = J - f S «a; ^ o LU ID (X « s : h — « K l c / ) ® © © V S o a >. ^ M » i i ï W w O m m (4 LU I . ë S es « r c " E î | s S S | o Î3i p g £ £ O m : ~ o -u o P g =) 2 = (fi (fi _ & M 5 æ 6 E&E < > > titnl 3 w c5 " O Z g < Z ^ LU ^ % «æ a Ëââ & LU Ou es g o O Lu w co >- o o mU es fâ_ gE ÉS LU S s lL h— « s t î ; _3 LU OO r . u ; LU C/> LU (% O CD CL. S: LU • s a c ( 2 ? : SS o =3 W LU >- co O LU O _u 31 *aZ (/) a- LU _J «Q: Lu. O O o 2Z LU 23 Cu =3 s: O LU ©g O Lu -u < zz î — . C 3 C ES * s s s : s GC & g X> (/) as Lu. LU iS @ © © o s ^ 5 ^ z < z ^ w eg Qg tâ. ^ u (fi 38 FIGURE 2 ‘ tË S S S m ^ M ^ ^ F - Œ E.av.rj ^ « s î , o< #:2& yj 3§ >u_ë « a a G Ü '& E0 : ïss s i t . W S ^ 1 ^ j s s f f i â g ® X m s g □ « j g g m K S - f O G CM m w N , m i o s ku K S a %: ,u o 3S ÙZ LU CD b O % s < < < O u. w râ n m &> u ? C v S eo U T J 2 I t n t m < « f p M ^ e s t a CM m u > s : a s o o H « a s f . ca 5 m 2 K f » 0 # e 2 t e C 3 C J ce iu O a. 2 2 < oc o LW CD 3 E < 2 2 a o 2 2 C - « £ ■ < 1 § - ^ H - ta g ë t j o 2 2 < t e e s . e s B e . e > O e ’ * S G O g G U J L U S î t « J t a < t 2 S B# o g z CQ œ o o " il te s < / 5 S < e n c £ » o 6 m ^ f = s — CM • C J 3 e j o O 39 This illustrates in a simplified form those I I elements of the major proposals which are suggested as i solutions to the problems. It is of special note that in three of the five problem areas, the major proposals suggest the use of the Health Maintenance Organization. By a series of direct governmental declarations from the I executive branch and the President of the United States ^the HMO concept gained substance. HMOs (prepaid group I practice) were given official sanction as an alternative I method for the delivery of health care when on December 29, 1973 HMOs became legally defined in the "Health Maintenance Organization Act of 1973." Frequently this is referenced as Public Law 93-222, To understand better the prepaid health or HMO concept, it is necessary to study the successful and in some cases not too successful urban accomplishments in prepaid medicine. The following models are excellent detailed examples of highly structured Health Maintenance Organiza tion. The legal definition of an HMO is cumbersome and severely technical. A less mechanical yet descriptive jand accurate definition follows. 1 InterStudy defines a Health Maintenance Organiza- !tion as an organization in which the HMO itself and/or 40 participating physicians accept contractural responsibility to assure the delivery of a stated range of health services, including at least ambulatory and in-hospital care to a voluntarily enrolled population in exchange for an advanced capitation payment (and assume at least part of the financial risk and/or share in the surplus for the delivery of ambulatory and hospital services) (Wetherille, 1975). Model Plans Seven different types of plans are used to demonstrate various means of sponsorship. The Columbia Medical Plan of Columbia, Maryland is sponsored by an indemnity insurance company and a major hospital. The Community Health Care Center Plan in New Haven, Connecticut is an example of lay sponsorship, while the Group Health Association, Inc., of Washington, D. C. is a consumer- sponsored HMO. The Health Insurance Plan of Greater New York is a local (city) governmental health program. The Group Health Cooperative of Puget Sound is a consumer owned corporation, and the Kaiser-Permanente Medical Care Program is a consortium of primary, secondary, tertiary I and supportive services organized by private industry. The Independent Physicians Associations are sponsored by jlocal, state or county medical associations. I_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 41 The Columbia Medical Plan The Columbia Medical Plan in its pro-forma development appeared to have all the built-in elements of success. It was sponsored by a major indemnity company, Connecticut General Life Insurance and a hospital, the Johns Hopkins University and Medical Center, The plan was well designed (Model I) (Prussin, 1974), However, the plan did not develop as forecasted because of an overly optimistic membership forecast (Judge, 1974), One of the creators of the Columbia Medical Plan, Robert Heyssel, M.D., Executive Vice President of Johns I Hopkins University and Medical Center stated that the I defects in the Columbia Medical Plan, a prepaid group jpractice billed as a Health Maintenance Organization by I its developers, have made it a financial failure at the moment. But he also characterized it as an artistic "success because of a highly satisfied public in the main.,,innovations in the use of health care personnel,,, and a supplemental benefit plan which allowed us to enroll people with other coverage who otherwise would not have I j been enrolled"(Judge, 1974). j The management structure of the Columbia Medical I Plan is composed of three separate entities; Johns Hopkins jMedical Partnership (physicians group); the Columbia I Hospitals and Clinics Foundation, owned by the Johns ___ 42 MODEL 1 COLUMBIA MEDICAL PLAN 43 I Hopkins Board of Trustees; and the insurance carriers. It I is noteworthy in the diagram that Connecticut General Life I : Insurance Company has invited other companies to partici- I pate in the plan. These companies are Blue Cross of 1 Maryland, the Equitable Life Assurance Society of the 1 United States, and Metropolitan Life Insurance Company. Each insurance company underwrites the losses according to the number of members it has enrolled. There is still a high level of confidence that the Columbia Medical Plan will be successful. Connecticut General has sufficient confidence that is is currently planning two other prepaid group practices in Brooklyn, New York and Phoenix, Arizona (Judge, 1974). Of importance to this researcher is the fact that the plan shows a concerted effort by a major teaching health care university and a prominent indemnity life insurance company to design a comprehensive and alternative system of health care delivery. i i j Community Health Care Center Plan, Inc. I I The Community Health Care Center Plan (CHCP) is a lay sponsored organization that in effect acts as a brokerage for the procurement of health, medical and hospital services for its individual enrollees and groups. It is a direct service family health program (Community Health Care Center Plan, 1973). 44 MODEL II COMMUNITY HEALTH CARE CENTER PLAN, INC. o < <2 2 - >2 I::! w&oy I " ^ 5 Model II demonstrates the capability of a plan to own and hold physical property and to employ physicians, j nurses, technicians, and other professional personnel (Prussin, 1974). The corporate structure provides the enrollees with representative agents within the plan who are responsible for the availability and accessibility of their health care needs (CHCP, 1973). Jeffrey A. Prussin describes the Community Health Care Center Plan, Inc. as; '...a New Haven, Conn. based nonprofit corporation which became operational in 1971 and currently serves approximately 12,000 members. Enrollees are covered under group contracts between employers and the plan.... The medical group is employed directly by the plan on a salaried basis. All physician appointments are made in consultation with the Yale-New Haven Medical Center since plan physicians are also appointed to the medical school and hospital staffs and must meet the qualifications for such appointments. The plan is self-insuring and owns and operates its own outpatient facility. The Yale-New Haven Medical Center and Hospital normally supplies all the in patient care provided to plan members in the New Haven area. Other hospitals may be used when necessary or where indicated. When the plan is unable to provide needed specialists* services, it reimburses the medical center for services of affiliated specialists on a negotiated global (annual or monthly) or fee-for- service basis. ^Prussin, 1974, p. 56.) As seen in Model II, the Community Health Care Center Plan enrollees elect one quarter of the Board of Directors and, these persons so elected by the enrollees in turn select and elect the other three quarters of the 46 Governing Board. Connecticut Blue Cross Association is the Administrative agent in processing health care claims (Prussin, 1974). The Group Health Association, Inc. The Group Health Association, Inc., Washington, D.C. is an appropriate HMD organizational option describing the consumer-sponsored type of HMO. As seen from the following organizational model. Model III, the enrollee- members elect the Board of Trustees from their membership (Prussin, 1975). The Board of Trustees as the represent atives of the total membership contract for medical services through the medical group. This arrangement between the corporate Board of Trustees and the medical group does give rise to the question of the corporate practice of medicine (Epstein, 1973). The health plan owns, leases, and operates out patient facilities. However, GHA does not own its own hospital, but rather uses teaching hospitals that are primarily university-affiliated. Group Hospitaliza tion, Inc. (Blue Cross of Washington, D.C.) is GHA*s fiscal agent for processing and paying all hospital claims, including those out-of-area. GHA reimburses Group Hospitalization for all the claims it pays, plus an administrative fee of approximately four per cent. Through Group Hospitalization, GHA benefits from any discounts received by Blue Cross from hospitals. (Prussin, 1974, p. 58.). 47 MODEL III GROUP HEALTH ASSOCIATION, INC. S 3 A l i V l N 3 S 3 k j 3 H II iJi < u m 48 The Health Insurance Plan of Greater New York (HIP) The Health Insurance Plan of Greater New York (HIP) was initiated by Mayor LaGuardia in 1944. It was not until 1947 that the developmental stage had been completed and the plan was ready for imple mentation (Bates, 1971). The Health Insurance Plan of Greater New York (Model IV), has several unique features among which are: consumer and provider members serving on the same Board of Directors ; basic hospitalization plan such as Blue Cross is required by the plan but is not a part of it; there are approximately 40 medical groups throughout Greater New York that provide medical services on a I capitation and fee for service basis (Bates, 1971 and Prussin, 1974). The Health Insurance Plan of Greater New York is the largest prepaid group practice plan in the eastern United States. Its membership consists of approx imately 750,000 subscribers and their eligible dependents who are enrolled through group contracts that must cover a minimum of 10 subscribers. Member ship is also available through medicare and medicaid enrollees on an individual basis. Since HIP is not hospital based and does not insure for hospitaliza tion, all members must have a basic hospitalization plan (Blue Cross or an equivalent), which can be obtained through their places of employment, con currently with HIP. (Prussin, 1974, pp. 58-59.) This plan demonstrates a high degree of diversifi cation and shows how independent entities may be coordi nated into a composite whole (Model IV) (Prussin, 1974). 49 MODEL IV HEALTH INSURANCE PLAN OP GREATER NEW YORK S 9 . i f 50 In a marketing pamphlet produced by the Health I Insurance Plan of Greater New York the subscriber is I i reminded that HIP provides its services through groups of physi cians. These groups are paid in advance to give you and your family without charge any medical services that may be necessary. For this reason it is necessary that you use the services of H.I.P. physicians in order to benefit by H.I.P.’s full prepayment system. However, provision is made for the services of non-H.I.P. physicians in certain emergencies. (See Emergency Situations under Extended Benefits Program.) Except in a few areas, it is possible for you to change medical groups freely if you so desire. It is also possible for you to change family doctors within your Medical Group. (PUB 112, 1970) The pamphlet goes on to briefly describe .family care .surgery .specialist care .obstetrics .pediatrics .immunizations and drugs .x-ray and laboratory procedures .allergies .eye care .neurology .physical medicine .psychiatry •private ambulance service .visiting nurse service .emergency situations The plan describes itself as Tomorrows Medical Care Today. (PUB 112, 1970) Group Health Cooperative of Puget Sound The Group Health Cooperative of Puget Sound is different from all of the preceding models because it has I --------------------------------------------------------------------------------------------- 7^1 r no real sponsoring group or entity other than the consumers themselves (Model V) (Prussin, 1974). The Group Health Cooperative of Puget Sound is a I ; prime example of multi-specialty physicians and supportive health workers who are highly organized and focused into groups. Natalie Davis Spingarn, writing in the Washington Post of Sunday, October 7, 1973 states. There are a variety of health education and mental health groups open to them; the middle-aged can air their problems in *middlescence* group therapy, the very fat in a GOP (Grossly Obese Patients) group. Smokers can leam how to break the habit, and it’s hard not to stumble over a young couple in a natural child birth class. A Women’s Caucus currently is demanding that contra ceptive drugs and devices and their fittings be covered, and that vasectomies be paid for. Members, especially women, want more health education programs — in nutrition, for example, or in special women’s problems like menopause.(Washington Post, 1973). The Group Health Cooperative of Puget Sound is not a new organization. It was founded in 1947 and is in its l8th year. The plan has approximately 180,000 members today, and its problem has not been one of demonstrating its value but actually living with success. The coopera tive, Model V, owns its own hospital; controls the hospital policies with a voice in its management and that of the outpatient, clinic type, facilities (Washington Post, 1973 and Prussin, 1974). 52; MODEL .V GROUP HEALTH COOPERATIVE OF PUGET SOUND ISs iii _ 7 53 Kaiser-Permanente Medical Care Program The Kaiser-Permanente Medical Care Program was established in the early 1930*R on a construction project in the Southern California desert. There was no precon ceived pattern for the program. Rather, it was an out- * growth of a Workmen's Compensation Insurance carriers i agreement to pay a percentage of an insurance premium to an organization who would care for the health services of covered workers. This same process was applied at the ! Grand Cooley Dam project in Eastern Washington but families were included in the plan. Kaiser shipyards in Oregon and Northern California, and steel mills in Southern California I during World War II received health care protection under similar arrangements. At the conclusion of the war and the shutdown of these shipyards Kaiser management decided to remain in the health care field with its then membership of approximately 40,000. Today it numbers approximately 2.7 million enrollees in Colorado, Hawaii, Northern I California, Southern California, Ohio, and Oregon. There ; are four separate entities that constitute the Kaiser- I Permanente Medical Care Program. They are: 1. The Kaiser Foundation Health Plan. 2. Permanente Medical Groups. 3. Kaiser Foundation Hospitals. 4. Permanente Services, Inc. 54 The first three above are non-profit corporations while Permanente Services, Inc. is a legally constituted for-profit corporation (Fleming, 1971 and Prussin, 1974). Scott Fleming, Executive Vice President of the ! Kaiser Foundation Health Plan and Kaiser Foundation t ^ Hospitals, writing in the Journal of the American Hospital Association, March 16, 1971 states. The enrollment organization is called the Kaiser Foundation Health Plan and is what Doctor Paul Ellwood would call a Health Maintenance Organization. It issues contracts to individuals and groups for health care benefits that are comprehensive— with outpatient and inpatient services. However, the Health Plan is the arranger of these services, not the provider. It subcontracts responsibility for pro vision of health care in two directions. The crucial sub contract is made in each region with one of the Permanente Medical Groups.... A contract is negotiated annually between the Health Plan and each medical group.... The third organization in this system is another corporation, Kaiser Foundation Hospitals. It is a not-for-profit corporation that contracts with the Health Plan to provide all health facilities and services necessary to satisfy the Health Plan's obli gation to its membership.... There is a fourth organization which is formally separated from the medical group-hospital-Health Plan structure and which provides services to the operating organization— Permanente Services. It is a central service organization providing data processing, accounting, transportation, purchasing, and other services to the three operating organizations. (Fleming, 1971, p. 57.) The diagramatic Model VI emphasizes the foregoing organizational relationships. Close inspection of Model VI clearly indicates that no indemnity insurance carriers MODEL VI KAISEH-PEIMANENTE 55 56 j or service plans such as Blue Cross/Blue Shield are utilized (Prussin, 1974). The Kaiser-Permanente Medical Care Program is the most complex, detailed and multi-structured prepaid health program investigated by this researcher. Medical Care Foundations The San Joaquin Foundation for Medical Care and the Medical Care Foundation of the Sacramento County Medical Society are examples of Independent Practice Associations i (IPA). I j The Foundation concept utilizes an existing Medical Association or Society as the basis for the crea tion of a Foundation. The Foundation as a subsystem of the Medical Association or Society recognizes each doctor's office as a clinic or subsystem of the Foundation. By this means, the medical society through their formal ! organization are capable of negotiating contracts with other providers of the total health care system (Schubert, 1971; Harrington, 1971). Dr. James Schubert, President of the Medical Care Foundation, MOP, an organization of the Sacramento County Medical Society states that. The spotlight of the medical world is now focused on Sacramento. A New and exciting prepaid health plan, centered around the primary physician and based on 57 individual practice and fee-for-service begins July 1. This is Sacramento’s alternative to closed panel HMO’s. We’ve called it the Foundation Community Health Plan. It has confounded the planners, con fused the legislators, stunned the bureaucrats, amazed our friends, angered our enemies, and pleased our patients. It has finally placed the management of medical affairs in the hands of the practicing professionals. (Sacramento Medicine, 1972, p. 5.) The Foundation Medical Organization as an inte grated system of the Sacramento County Medical Society submitted on May 23, 1975 a grant application in which they requested funds for the initial development of a Health Maintenance Organization. The following are excerpts taken directly from that grant application; The Sacramento Medical Care Foundation, an organiza tion of the Sacramento County Medical Society, was incorporated separately in 1958. In February, 1965, the Foundation was activated by the Sacramento County Medical Society.... Until 1971, Foundation activities were mainly limited to ambulatory and inpatient peer review, initially emphasizing manual claims review of Foundation- sponsored health insurance carrier programs and the precertification of hospital admissions under the Certified Hospital Admission Program (CHAP).... The history and development and activities of the Foundation show steady growth in medical and peer review since it was activated in 1965 for the first commercial group. With a service area of five counties including almost one million individuals, the Foundation now administers 201 commercial groups covering about 70 thousand beneficiaries for whom 5,500 to 6,000 claims are reviewed and processed each month. In addition, the Foundation processes about 30 thousand claims a month for Medi-Cal recipients who have enrolled in the Foundation Community Health Plan.•.. Besides administering CHAP for 64 commercial groups, as well as for the FCHP, the Foundation administers 58 MODEL VII SACRAMENTO MEDICAL CARE FOUNDATION PLATE 1 MODEL ^VII' SACRAMENTO MEDICAL CARE FOUNDATION PLATE 2 59 I I ci Lu rx U ) Hi [j- .lLJ O d L -J G/ oS§ s | | it 2 O' O C S S <C S :z u3 M i l C. LU O UJ «:X C4 » — ra. : 5 £ DU :3 ZXCi o Lu g H: o <C l _ r J t>{ O- CSi iïS U'i n ZSl t j w J :E ^ l.U c2 ^ ii C C , Z: c6 o I I < £. o - s jj-i _Ï — t I 8 v5 1 LL# g => s o C £ l a . cn Cf‘ ) ill III CO %=) o_ g CO I I i". <C < r . r> G H l ï ê ë o CP LU O H* Z ÜJ gs Cu LU CP O § cP g - = c <u> u. O c3 s l l SI 8i z uJ iJ J “ S ^ ' i c> o CJ> i —* rzz « n r * g§i| S3ii 61 MODEL Æ l SACRAMENTO MEDICAL CARE FOUNDATION PLATE 4 î=2caH^ CLJ i-XJ C2— UJ U^t C/> o o Î.O rzD U-l W c^. oc cr> CO 0 » ea È ? %o __1 CSu. Î - Î - J Ck:: CD — J 62 MODEL'V/II SACRAMENTO MEDICAL CARE FOUNDATION PLATE 5 gss LXJ O ^ c 6 Q o co ®^ O n / g g ë 8 O oC z: UJ z Q il CL ru o i x i > g 5 -1 z Si 50 (T c r > LU CL X O- co ai I —' Hi o î — o z CT> LU __J ^ «< z u 2 8 g o cT) ^ { — 5^-V fi§3 p § o 9c C L o ( / > 6 3 MODEL.'VII SACRAMENTO MEDICAL CARE FOUNDATION PLATE 6 <C >T s! s - <c ^ OL xcC ^ UJ S z ii Û--% , (A Z o Mg Cxi C f > <3 cO CL (J3 C v - U J /^64' CHAP for Medi-Cal beneficiaries in two counties and Medicare beneficiaries in five counties. Addition ally, the Foundation is actively utilizing its grants under the Experimental Medical Care Review Organiza tion (EMCRO) and Health Maintenance Organization (HMO)• Foundation involvement also includes activ ities of a conditional Professional Standards Review Organization.... From August, 1969, through April, 1973, the Foundation opened a Medi-Cal (Medicaid in California) regional claims processing office. Through a subcontract with the fiscal intermediary. Blue Shield, the Foundation reviewed, evaluated and processed claims for physi cians, dentists and clinical laboratories under the direction of the Foundation’s Medical Review and Appeals Committee.... ...FCHP providers now include 933 physicians, and 403 non-physician providers, including chiropractors, durable medical equipment dealers, hearing aid dis pensers, home health agencies, hospitals, laborator ies, nursing homes, ocularists, optometrists, ortho pedic appliance dealers, pharmacies, podiatrists, pulmonary therapists, registered physical therapists, and speech therapists. (U.S. Department of Health, Education, and Welfare, 1975c, pp. A-1, 2, 3, 17.) Model VII consisting of six plates illustrates the vast diversification and influence that an Independent I I Practice Association can exert on the consumers and pro viders of health care within a defined area (U.S. Depart ment of Health, Education and Welfare, 1975d). i Summary The necessary data and diagramatic models that are used for the description of urban HMOs were located without too much difficulty from recent Journals and Association Seminars or Proceedings. Literature within the last year. 65 1974-75, became more concerned with the implementation of I Public Law 93-222, the Health Maintenance Organization Act. Further, much written space and time was devoted to amending the HMO Act of 1973 rather than constructing new and innovative types of organizational models. Mr. James P. Doherty, Legislative Counsel for the Croup Health Association of America, Inc., in a letter of May 30, 1975 stated. We have participated in a ’concensus’ group, consist ing of organizations representing prepaid systems— American Group Practice Association, American Asso ciation of Foundations for Medical Care, Health Insurance Association of America, Blue Cross Associa tion, and insurance companies which have made commit ments to HMO development. By achieving such a broad base of support for amendment, the chances of success have become much greater. (Doherty, 1975, p. 1.) The review of the rural HMO literature was, and is extremely shallow. Much has been contributed to the literature by fragmentation. Sporadic articles on rural nurse practitioners, rural clinics, rural health care, rural medicine, small rural hospitals, and the rural crises is scattered throughout the reportings of numerous Medical Societies, Hospital Associations, University Programs, ; and Prepaid Medical Systems. Because of the wide dispersal I I of information over a vast number of unrelated associations jand organizations the following methodological approach was followed. CHAPTER III METHODOLOGY I I The purpose of this chapter is to provide a usable j means by which functional rural (non-metropolitan) Health I 1 Maintenance Organizations can be observed for accessibility I ; of care and availability of care. The foregoing will I j include investigation of doctor patient relationship, I nurse practitioners, social services, health educators, I ! transportation corps, emergency medical technicians, first aid stations, dental care, nutritionists, and other supportive personnel that a well organized formal or semi- formal health management team can provide to non-urban, rural and sometimes remote areas. The Health Maintenance Organization Act of 1973 defines the "non-metropolitan" or rural Health Maintenance Organization. In order to establish a base line for future researchers this writer confined the study to the letter and limit of the law. This report is designed to serve as an analytical I descriptive study* Five methodological procedures are ^ stated by Sellitz. These are: 1. Formulating the objectives of the study. 66 67 2. Designing the methods of data collection* 3* Selecting the sample* 4. Collecting, processing and analyzing the data* 5. Reporting the findings (Sellitz, 1963). Formulating the Objectives of the Study The study of objectives is structured from assign- ; ment8 received by this reporter while serving as the Community Hospital Consultant to the Sisters of Mercy* One of the major hospitals is located in a rural area, and the Health Maintenance Organization concept was studied as a means to: 1. Deliver health care in population areas of 2500 or less. 2. Improve the quality of care. 3. Make health care available. 4. Provide an access to the available care* 5. Illustrate how other rural areas coped with the care deficiencies* I 6* Ascertain current stages of development* Î 7. Discover the genesis and evolutionary process (if any) of existing rural HMOs or prepaid group practices. 8. Evaluate the various non-urban HMOs with their non-urban counterparts. 68 9. Provide a base for future research. Designing the Methods of Data Collection After reviewing the literature, a letter (see Illustration 1) was sent to the seventeen rural HMO's in existence as of April, 1975 (Wetherille and Nordby, 1975). Certain specific information was requested from which definite general information could be extracted (see Illustration 2). Selecting the Sample Since the total number of rural HMO’s was so small, it was decided to send the request for information to the seventeen rural HMO’s operational April 1, 1975. This represents 100 per cent of the HMO’s operational on April 1, 1975 (Wetherille and Nordby, 1975). The data gathered is for an information base and not statistical analyses. This sample represents the entire rural HMO universe as reported by InterStudy on the iabove date (Wetherille and Nordby, 1975). I I I Collecting, Processing and Analyzing the Data i j This portion of the study is used to synthesize ; the research materials. Responses from the questionnaire ! is the basis upon which generalized predictions could be I 69 I ILLUSTRATION 1 ' 14 i May 1975 Mr. I. M. Somebody 123 Adjusted Street j Anywhere, U.S.A. I Dear Mr. Somebody; I , Your organization is one of seventeen rural HMO’s in the United States as of April 1975 as listed by InterStudy of Minneapolis, Minnesota. ; Presently, I am completing my master's thesis for the 'University of Southern California on rural HMO*s. There ' is very little information available at present, and I I would appreciate any help you can give me. The information j needed is listed on a separate sheet. A self-addressed, j stamped envelope is enclosed for your convenience. The data sought will make the thesis as up to date as possible, and will be a worthwhile contribution by your organization and myself to the literature on rural HMO*s. Thank you for your cooperation. If possible please respond by May 28, 1975. Very truly yours. D. Bryce Rose Community Hospital Consultant enc ; 1 BBH/jr 70 ILLUSTRATION 2 ■ Information requested for Master's thesis of: I Mr. D. Bryce Rose Community Hospital Consultant ! Sisters of Mercy I 535 Sacramento Street I Auburn, CA 95603 ; Return all information by May 28, 1975. Please send any available data on the following: .Pertinent information relating to the establishment of your Rural HMO Preformation Formation Implementation .Organization chart .Floor plans (reduced as used in Journal articles) New construction Converted building(s) Mobil unit(s) Etc. .Grant application •Articles in: Journals Newspapers Etc. .Speeches .Any information not covered above which you think essential to the development of the total concept of your Rural HMO, will be appreciated. Thank you. I D. Bryce Rose Community Hospital Consultant dbh/jr I 71 I i forecast. This area served as a testing point between facts and the hypotheses. I The following rural HMO's were sent the request I for information; Operational I Address Date_______ ! ! 1. Wm. J. Dettweiler, Executive Director 11/44 Community Health Center, Inc. 4th at 11th Avenue Two Harbors, Minnesota 55616 ! 2. T. W. Corum, Health Plans Coordinator 7/70 : Clinic Health Care Plan I 42431 Clinic Drive j Madisonville, Kentucky 42431 : 3* James M. Ensign, Executive Director 3/71 Greater Marshfield Community Health Plan Marshfield, Wisconsin 55549 4. Clinton Conant, Executive Director l/72 Rural Health Associates North Main Street Farmington, Maine 04938 5. Don Michaud, Administrator 7/72 Penobscot Bay Medical Center Ambulatory Care Unit 12 Maple Street Rockland, Maine 04841 6. Barry Strettmatter, GHP Coordinator 9/72 Geisinger Health Plan & Medical Center Danville, Pennsylvania 17821 7. Robert Pollack, Executive Director l/73 Portage County Health Guard P. 0. Box 251 Stevens Point, Wisconsin 54481 8. Charles S. Walker, Executive Director 11/73 Mountain Trails Health Plan 1718 Alexandria Drive P. 0. Box 4238 Lexington, Kentucky 50504 72 Operational Address Date 9. Robert Hilton, Associate Director H/73 Delmo Family Health Services 982-415 N. Kings Highway Sikeston, Missouri 63801 i 10. Gibbs Kinderman 12/73 Mountaineer Family Health Plan P. 0. Box 1149 Beckley, West Virginia 25801 ,11. John Harrison, Executive Director l/74 I Rocky Mountain Health : Maintenance Organization : 2525 N. 7th Street Grand Junction, Colorado 81501 12. Emil Stahlhut, Project Director 7/74 : Abraham Lincoln Health System, Inc. I 315— 8th Street I Lincoln, Illinois 62656 13. Michael LpJConte, Manager 7/74 North Quabbin Health Plan Athol Memorial Hospital 465 Main Street Athol, Massachusetts 01331 14. Donald Morgan, M.D., Medical Director 7/74 Southwest Nebraska Health Plan 301 E. 1st McCook, Nebraska 69001 15. Ronald Lane, Executive Director l/75 Imperial County Health Care Services Foundation 502 Holt Avenue, P. 0. Box 336 Holtville, California 92250 16. Malin Jones, Executive Director 5/75 El Valle Health Plan P. 0. Box 1284 Alamosa, Colorado 8IIOI 17. George O'Neill, Executive Director 6/75 Shawnee Health Care Systems P. 0. Box 2527 Carbondale, Illinois 62901 73 Processing the data consisted of scoring common I answers to the mailed request for information. The data was also reviewed for volunteered— not requested— informa tion of substance, and this data was batched for analysis. Trends of like rural HMOs were studied and significant findings were set for analysis. In-a like manner the rural HMOs were compared with the urban models for parallel patterns of operations such as: marketing, promotion, and consumer acceptance. Data analysis encompassed a review of the replies. Ten of the seventeen rural HMO's responded to the request for information. This is a 58.,82 per cent response. However, only eight replies were usable. One HMO could only send the information— mainly the Grant Application— for a fee of $50.00. The other would send the information after the Administrator returned from vacation. Unfortun ately, this fell outside of the requested time limit. Therefore, the data analysis encompasses a review of the eight replies which is a return of 47.05 per cent. The analyses focused on: .availability of care .accessibility of that care .number of HMO start ups which have received governmental grants . means by which programs were implemented in the rural area. 74 It became increasingly evident as the information above unfolded that "rural" is a vague term. This research person, in reviewing his tape recordings of the National Conference on Rural Health Maintenance Organizations held in Louisville, Kentucky, July 8-10, 1974, did recall Ms. Ann Haendel, Special Assistant to the Director of the Bureau of Community Health Services, Health Services Administration, Department of Health, Education and Welfare and Mr. Sidney Edelman, Assistant General Counsel for Public Health, Department of Health, Education and Welfare in their delivery on,"Rural Provisions in the HMO Act" stated in their opening paragraph; Before embarking on this topic, I think it appropriate since this is a 'National Conference on Rural Health Maintenance Organizations,' to note that the HMO Act does not recognize a category of 'rural' HMO*s. While the term 'rural area’ does occur several times in the statute, it is used in the context of 'medic ally underserved area' which I shall touch on again in a few minutes. A more significant term for this conference— to start with— is 'non-metropolitan area.' This term is defined in section 1302 (9) of the act (and in the proposed HEW regulations) as follows: The term 'non-metropolitan area' means an area no part of which is within an area designated as a standard metropolitan statistical area by the Office of Man agement and Budget and which does not contain a city whose population exceeds fifty thousand individuals. Msè Haendel and Mr. Edelman go on to state, The term rural area is defined in section 110.101 (j) of the proposed regulations as: 75 'Rural area* means any area not listed as a place having a population of 2,500 or more in Document No. PC(1)— A, * Number of Inhabitants,* Table VI, *Popu lation of Places,* and not listed as an urbanized area in Table XI, *Population of Urbanized Areas* of the same document (1970 Census, Bureau of the Census, U.S. Department of Commerce). (Group Health Associa tion of America, Inc. 7, 1974, pp. 21-22.) As the law does specifically state the boundaries of the non-metropolitan HMO, this researcher did confine the "informational request letter" to those seventeen non metropolitan (rural) HMO*s as listed by InterStudy in ' their inventory of April, 1975 (Wetherille and Nordby, 1975). Therefore, when reviewing Chapter IV, Report of Findings, and Chapter V, Summary and Conclusion, the reader must be aware that rural and non-metropolitan are used as interchangeable terms. CHAPTER IV FINDINGS 1 Each area of the United States in which a non- I 1 metropolitan (rural) Health Maintenance Organization could j be established has distinct and unique problems in that I j particular area alone. This uniqueness does not preclude , the fact that their ruralness also causes a great deal of ' sameness. This "sameness" is the data that is analyzed below. This data was gathered from the eight respondents to the "informational request letter" solicited from the seventeen HMOs listed by InterStudy of Minneapolis, Minnesota (Wetherille and Nordby, 1975). The eight HMOs who responded are listed below: 1. William J. Dettweiler, Executive Director Community Health Center, Inc. 4th at 11th Avenue Two Harbors, Minnesota 55616 2. James M. Ensign, Executive Director Greater Marshfield Community Health Plan Marshfield, Wisconsin 55549 3. Donald Michaud, Administrator Penobscot Bay Medical Center Ambulatory Care Unit 12 Maple Street Rockland, Maine 04841 4. Robert Pollack, Executive Director Portage County Health Guard Box 251 Stevens Point, Wisconsin 54481 _______________________________ 76_____________________________ 77 5. Emil Stahlhut, Project Director Abraham Lincoln Health System, Inc. 315— 8th Street Lincoln, Illinois 62656 6. Michael LoConte, Manager North Quabbin Health Plan Athol Memorial Hospital 464 Main Street Athol, Massachusetts 01331 7. Donald Morgan, M.D., Medical Director Southwest Nebraska Health Plan 301 East First McCook, Nebraska 69001 8. Ronald Lane, Executive Director Imperial County Health Care Services Foundation 502 Holt Avenue, P.O. 336 Holtville, California 92250 The nine non-respondent HMO*s are listed hereafter 1. T. W. Corum, Health Plan Coordinator Clinic Health Care Plan Clinic Drive Madisonville, Kentucky 42431 2. Clinton Conant, Executive Director Rural Health Associates North Main Street Farmington, Maine 04938 3. Barry Strettmatter, GHP Coordinator Geisinger Health Plan and Medical Center Danville, Pennsylvania 17821 4. Charles S. Walker, Executive Director Mountain Trails Health Plan 1718 Alexandria Drive Southwest Kentucky Lexington, Kentucky 50504 5. Robert Hilton, Associate Director Delmo Family Health Services 982— 415 N. Kings Highway Sikeston, Missouri 638OI I ' 7 ^ I 6. Gibbs Kinderman Mountaineer Family Health Plan P. 0. 1149 Beckley, West Virginia 25801 ; 7. John Harrison, Executive Director j Rocky Mountain Health Maintenance Organization I 2525 N. 7th Street j Grand Junction, Colorado 81501 i 8. Malin Jones, Executive Director El Valle Health Plan ! P. 0. Box 1284 Alamosa, Colorado 81101 9. George O’Neill, Executive Director Shawnee Health Care Systems P. 0. Box 2527 Carbondale, Illinois 62901 Map 1 (appendix) demonstrates the geographic location of the eight respondents, and they are identified by a solid square. The name of the HMO plus the city and state in which it is located are identified in the rectang ular plates with a solid line pinpointing the geographical location from the identification plate. Map . 1 (appendix) also shows the nine non-respondents and these are identified on the map by an empty square. The identifica tion plate plus the solid line show the exact location of the non-respondents. Observation of the solid and empty squares demonstrates the distribution of these seventeen ! non-metropolitan HMOs as recorded by InterStudy as of April 1, 1975. These seventeen represent 100 per cent of the universe as of the above date (Wetherille and Nordby, 1975). 79 Rural Plan Characteristics Community Health Center, Inc. The Community Health Center, Inc. (CHC) is approx- ' imately 25 miles north of Duluth, Minnesota, and is in the ; southeastern portion of Lake County. Population of Lake I j County in the 1970 census was 13,351. The Community ' Health Center, Inc. was established on November 1, 1944 by a representative consumers group which organized to recruit medical doctors who would serve Two Harbors and the surrounding environs now that the original doctors were retiring. The Community Health Center, Inc. was successful in acquiring three young physicians for its original medical staff, and the consumer subscribers elected a Board of Directors who took the responsibility for the I establishment of the plan. Within the first ten years of operation, the medical staff was expanded to include a general surgeon, an internal medicine specialist and a part time radiolo gist. The medical staff today includes a surgeon, four family practice physicians, a part time radiologist and pathologist. In 1957 a new hospital and clinic was constructed. This was only accomplished after two years of squabbling and court actions with the local Medical Society. One of the trade-offs demanded by the Medical 80 Society was that the physician and clinic facilities would be completely separated organizationally and physically from the hospital— even though the buildings physically adjoin each other and despite the fact that the physicians i using the hospital are employees of CHC except for three ; physicians who reside in the Silver Bay area which is 30 miles north of Two Harbors. Therefore, the x-ray and laboratory are duplicated while they reside side by side. A new 50 bed nursing and convalescent care unit was added to the hospital in 1967, and the old former hospital was converted into a board and care home for the elderly. During this same year the CHC organized a home health nursing service for home bound patients. A 100,000 dollar addition to the Health Center Clinic building was completed in 1970 and this provided additional physician examining and treatment rooms, offices for the home health service and enlarged the business office space (Burke, 1972). Management The Community Health Center, Inc. is a 501 C-3 Corporation. This is the designation for a non-profit corporation. There is a nine member Board of Directors who serve without pay and are nominated and elected at the annual meeting by the Community Health Center, Inc. 81 Because the Officers and Directors are not members of the medical staff, any situations related to the professional conduct of the physicians is made jointly by the Medical Staff and the Board of Directors. A vote of two-thirds of the Medical Staff is binding without the prior or joint approval of the Board. The Administrative Staff of the Community Health Center consists of the administrator, a secretary, a bookkeeper and assistant and a single clerk. The total administrative cost is less than thirty thousand dollars, and approximately one-half of this cost is applied to the prepaid operations. CHC presently owns the boarding home and the clinic both. Lake View Memorial Hospital was constructed with Hill-Burton funds and CHC has no financial interest in the hospital. CHC provides two Plans. One is a comprehensive hospital and clinic plan, and the other is a supplemental doctor and clinic plan for those employees of the Iron Ranges who have indemnity insurance but must pay deduct ibles, coinsurance, maternity benefits, drugs and injec tions, ambulance services, and out-of-area, not-insured services. 82 Services CHC owns and operates its own ambulance for the convenience of the subscribers. Community Health Care health maintenance activity involves preventive care through routine or annual physicals, diabetic screening programs and immunization drives. During one drive when excess vaccine was available the entire Two Harbors Community was inoculated at no charge to the patients involved. There is no formal marketing program or sales staff. Requests for information on the Plans are referred to the Administrator. The plan has a mild indebtedness which could be eliminated if the capitation rate were inflated to cover those losses. However, the Board of Directors has not agreed to such an arrangement. The physicians are on a modified fee-for-service basis and do accept non CHC members through their clinic. There is a plan for persons over sixty-five years of age who are covered by Medicare. The sixty-five and over plan does have limitations in its benefits structure. Plan [members who attain their sixty-fifth year must convert to the sixty-five and over plan (Burke, 1972). There is a stable physician population. The Community Health Center Plan, Inc. is a good example of 83 how, over a lengthy period of time, a local, rural commun ity consumers group involvement sustained good health care, I improved physical facilities, extended the scope of care, I preserved their medical community and expanded levels of I care. The Plan also illustrates how medical doctors through their Societies cause expensive tests and equip ment to be duplicated. This causes excessive capital I j budget expenditures which debt service must be borne by ' the patient. This is an artificial but controllable form , of inflation that could be eliminated if physicians : remained in the practice of medicine and left business administration to the professionals. Greater Marshfield Community Health Plan Marshfield, Wisconsin is a city of 15,000 popula tion located in the central part of the state. The original Marshfield Clinic had its beginnings in 1890 when Dr. Karl W. Doege established his practice in this central Wisconsin town. Marilyn Kefauver, writing in the Health Service World in April of 1973, said: Dr. Doege chose Marshfield because it was the hub of railroad activity in those lumbering days. Besides the local population, the number of patients those trains brought to him from miles around, soon expanded his practice into a six-man team, including the first radiologist in the state of Wisconsin. Today the team practice still exists, and moreover as a vanguard in health care delivery in the State. 84 It is now called the Marshfield Clinic, with a staff of 120 physicians, representing almost every major specialty and subspecialty in medicine. (Kefauver, 1973, p. 1.) Russel P. Lewis, M.D., writing in the Wisconsin Î Medical Journal states: Central Wisconsin physicians were encouraged in January, 1968 by (at that time) Congressman Melvin R. Laird, ranking Republican member of the Health Subcommittee of the House Appropriations Committee, to do something positive to meet health care problems. Mr. Laird contended that public pressure was so great that Congress would be compelled to enact sweeping health reform measures, probably by 1972 but certainly no later than 1975. He and we were concerned that background information being utilized in Washington had been accumulated primarily from the Kaiser, HIP, and other plans, the only sources of adequate statis tical data. However, we felt that these groups were selective and not representative of the population area they served. This and other factors caused us to question whether the statistics were meaningful in our context. (Lewis, 1973, p. 17.) The physicians of the Marshfield Clinic realized that more than just an insurance plan was needed to reach families having an income of less than $8,000 a year. Dr. Lewis noted: Because no other physicians practice in Marshfield, we Clinic physicians believed that we could retain our original objectives and yet conduct a meaningful experiment without creating a problem of competibon. (Lewis, 1973, p. 18.) The objective of the group was to establish the ' real cost of high quality care in a prepaid health program in a non-metropolitan area. The second objective was to provide this good quality of care to all citizens within the defined limits of their geographic location (Lewis,’73). I j The outer limits of their geographic limitations was a fifteen mile radius. The City of Marshfield con tributes a 15,000 population base and the surrounding areas another 15,000 people. The Marshfield Clinic in cooperation with St. Joseph’s Hospital and Wisconsin Blue Cross and Surgical Care Blue Shield of Milwaukee formed the Greater Marshfield Community Health Plan. Dr. Lewis goes on to state : ...we have been very fortunate in securing a grant from the Family Health Center Program in HEW to which we applied in April, 1972. In June we were awarded slightly more than $500,000 renewable each year for three years, to help subsidize on a sliding scale those families with annual incomes of less than $7,000. Currently we are trying to arrange details and implement this program as an integral part of the Greater Marshfield Community Health Plan. (Lewis, 1973, p. 18.) Management I Mr. Donald A Nystrom, Manager, Prepaid Programs of ! the Marshfield Clinic, describes the Greater Community t Health Plan organization as follows: ! St. Joseph’s Hospital is responsible for inpatient and outpatient facilities and it is responsible for contracting with extended care facilities and home care services. The Marshfield Clinic is responsible for all medical care, which includes that provided by its own staff as well as by contracting physicians and osteopaths who are affiliated with the program. The clinic and the hospital both have contracts with Blue Cross or Blue Shield in which each organization agrees to provide the specified services in return for specified payments. Blue Cross and Blue Shield then issue the master contract which is available both to groups and to directr-payment subscribers. You 86 will note that this arrangement is basically a part nership. It was not necessary to incorporate the health plan as a distinct and separate entity- (Group Health Association of America, Inc., 1974, p. 109.) The Greater Marshfield Community Health Plan— Component Linkages are shown in Figure 3 (appendix) (Greater Marshfield Community Health Plan, a. Undated). Growth of the plan is shown in comparing the participation graph for 1972-73 as compared to 1973-74 in Graph 6 (appendix) (Greater Marshfield Community Health Plan, b. Undated and Marshfield News-Heraid, 1974). The expansion program has moved steadily east, west and north. Note the upward and lateral movements by comparing the service area of 1972-73 with the 1973-74 report (Figure 3, appendix) (Greater Marshfield Community Health Plan, b. Undated and Marshfield News-Herald, 1974). This expansion and an increase in enrollment has been created by the clinics reaching out to the smaller areas surrounding the hospital. This covers a radius of 20 to 25 miles from Marshfield. It is the intention of the Marshfield Clinic not to be in competition with the Rural Health Care Primary Physicians. Marilyn Kefauver in her article on the Avant Garde of Country Medicine quotes Mr. James M. Ensign, Executive Director of Marshfield Clinic who explains. 87 We have an education job to do if we are to be successful. It is important that those physicians in private practice in some of the small towns we serve understand that we are not in competition with them. On the contrary, we can't do our jobs without them. For the family 50 miles away, we cannot provide primary care. We are the local doctor's referral service, his backup. But if the doctor leaves, he leaves a gap we can't fill. (Kefauver, 1973, p. 2.) Services Marilyn Kefauver goes on to explain that the Marshfield Clinic in return provides the primary physician 1 1 in the small rural area with telephone electrocardiagrams I that are fed into a computer at the clinic and interpréta^ j tions are returned to the rural area by teletype. Elec- ! troencephelograms are interpreted by mail. If the local I physician wants a speedier service the electroencephelo- grams are picked up as are laboratory specimens which are brought to the clinic for interpretation and the results are telephoned to the outlying physicians. Further cooper ation is seen in the decision of the Marshfield Clinic to build on property adjacent to St. Joseph's Hospital and by so doing the hospital and clinic have agreed to elim inate duplication of the clinical laboratory, radiology, medical records, central supply, general stores, building services, telephone communication, pharmacy and parking. The laundry and dietary departments are the only services in which there is not an accord (Kefauver, 1973; Ensign, 88 1974). Marshfield is also pursuing the Emergency Medical Services (EMS) Program. This is sometimes referred to as the Cranston Emergency Medical Services Bill. In conjunc tion with the Emergency Medical Services Program the regional medical program director J. L. Salzmann, Chief of the Emergency Health Services section of the Department of Social Services, describes in the Kefauver article how the town of Loyal of 1,100 people, thirty miles northwest of Marshfield wanted to know how they could receive a much I needed emergency service vehicle. Mr. Salzmann describes jhow the regional medical program supplied the vehicle. I The physicians of the Marshfield Clinic donated their time j to teach the emergency services course. Greater Marshfield Community Health Plan with monies they have received from the regional medical program are constructing a state wide radio network that will permit the proper dispatching of ambulances, wreckers, police cars, fire departments or utility trucks to the scene of an accident. This will avoid the error of many vehicles congregating in one spot ' leaving vast regions unprotected because there are not 'sufficient communication networks (Kefauver, 1973). I Contact with the enrollees is maintained through the Community Advisory Committee. The 1974 Community Report states: 89 The Committee plays an active role in the direction and growth of the Plan, through its communication function, educational programs, and its review of the financial aspects of the Plan, The Committee acts as the voice of the community, taking members ideas to the Plan's organizers; The Marshfield Clinic, St. Joseph's Hospital, Blue Cross of Wisconsin and Surgical Care Blue Shield. (Marshfield News-Herald, 1974, p. 2.) Dr. Lewis in his conclusions states: There must be a system that will provide accessibility of health care for all and which will ensure that the already sick and poor get adequate care.... We believe that physicians and hospitals must get actively involved in the evolutionary process that is taking place in medicine.... It is my belief that prepaid capitation for an area like ours can be a voluntary mechanism for providing maximum medical services to all by spreading the risk to all. This, of course, is in contrast to the history of insurance programs which have stressed taking in well people and letting the poor and ill fend for themselves....(Lewis, 1973, p. 23.) Financially the Greater Marshfield Community Health Plan is doing well by utilizing credible capitation rates and aha aggf.essiye marketing program. Its contributions to rural health will be profound. Penobscot Bay Medical Center Penobscot Bay Medical Center is described as being in midcoast Maine and is located in the city of Rockport. They are approximately 1ÜÜ miles north of Portland, Maine, and service a population base of close to 40,000 persons. The Medical Center serves a radius of approximately 25 90 miles and the population base is located in 28 small 1 communities* They also service several off shore islands which are connected to the mainland by a ferry. Management Mr. Jefferson D. Ackor, Associate Executive Director, Penobscot Bay Medical Center states; Penobscot Bay Medical Center is a new 106 bed acute general hospital currently under construction. Penobscot Bay Medical Center is also a sort of holding company incorporated in January, 1969, for the purpose of merging two existing small rural hospitals 8 miles apart. Penobscot Bay Medical Center is also the parent of an emerging rural HMO which became opera tional just two years ago. (Group Health Association of America, Inc., 1974, p. 97.) Mr. Ackor goes on to state: Following development of the initial Penobscot Bay Medical Center Plans in 1969, a great deal of interest was shown by the Department of Health, Education, and Welfare and the Office of Health Affairs, Office of Economic Opportunity. With OEO planning funds and HMO feasibility funds, Penobscot Bay Medical Center designed an HMO-like program which became operational in July, 1972. The program is a prepaid, comprehensive Health Care Plan created on a modified foundation for medical care basis. (Group Health Association of America, Inc., 1974, p. 98.) Penobscot Bay Medical Center assisted the Knox County Medical Society in 1970 in incorporating as a separate group called the Penobscot Bay Medical Associates. The Associates receive a prepaid amount of money monthly from the Penobscot Bay Medical Center for each person or 91 family enrolled in the HMO. The Associates then divide these funds on a fee-for-service basis (Group Health Association of America, Inc., 1974). Services i ^ Penobscot Bay Medical Center established three firm objectives in order to service the most needy in the community. 1. To service that section of the population deprived of medical care because of financial inability to pay for care. 2. To identify the medical problems of this group and by serving this population and detailing these problems project rates of use and costs. 3. The medically needy accounted for the greatest share of the bad debts and through an organized system access toAquality service could be assured and bad debts reduced (Group Health Association of America, Inc., 1974). Mr. Ackor stated: By developing a careful plan of care we could provide access to quality services for those financially unable to gain entry into the system. (Group Health Association of America, Inc., 1974, p. 100.) The Penobscot Bay Medical Center HMO Plan includes. All medical care and hospital care, as required, is provided. This includes annual health evaluations; all pharmaceuticals as prescribed; transportation to the center; emergency transportation; superspecialty referral services; all radiology and laboratory services as ordered; home care; outpatient mental health care; preventive and curative dentistry for enrollees through age twenty-one ; medical-social services; homemakers; eyeglasses and exams; and emer gency out-of-area coverage. The program also includes 92 health screening for children covered under Medicaid, and hearing and vision screening follow-up for the Maine Department of Health and Welfare* Excluded are certain organ transplants, hearing aids, certain prosthetic devices, certain medical appliances, and nursing home and boarding home care. (Wheeler and Ackor, 1974, pp. 93-94.) The Penobscot Bay Medical Center of 106 beds contains five distinct areas as shown in the aerial view (Figure 5, appendiz). These are listed as: A. Support Services Wing B. Administrative Area C. Diagnostic & Treatment Wing I D. Nursing Wings (patient rooms) E. Nursing Wings (patient rooms) These five areas can be further described as: A. Support Services Wing (Figure 6, appendix) This houses dietary, maintenance, housekeeping, SPD, morgue, autopsy, soiled linen, clean linen, inhalation therapy, pharmacy and locker rooms. B. Administrative Area (Figure 7, appendix) This area contains all the supportive personnel for , Administration. ! C. Diagnostic & Treatment Wing (Figures 8 and 9, 1 appendix) I This houses all the supportive medical ancillary services I such as: clinical laboratory, radiology, emergency, out- j patient, special services, operating rooms, delivery rooms. ! 93 I labor, recovery, isolation, locker rooms and a few patient I rooms. ! D & E. Nursing Wings (patient rooms) are shown in Figure 10, appendix. Note that all are private rooms. According to Donald Michaud, Administrator of the Ambulatory Care Unit, in a telephone conversation on July 2, 1975, there will be a medical office building con structed in front of building C. Diagnostic & Treatment Wing (Figures 8 and 9, appendix) in the near future. This will have suites for up to thirty medical professionals (Group Health Association of America, Inc., 1974). At the present time, according to Mr. Michaud, the physicians are scattered throughout the town of Rockland in a smaller medical building and separate medical offices. With the new medical building will come the elimination of duplication of services. Both the hospital and physicians in the medical building will use the facilities in building C. Diagnostic & Treatment Wing (Figure 8 and 9, appendix). The physicians have HMO as well as fee-for-service patients. The patients who are HMO subscribers can make their appointments at any time. Therefore, there is no ^ discrimination made between the HMO subscriber and the :fee-for-service patient, according to Mr. Michaud. 94 The use of the same ancillary services results in cost containment for the patients. This is accomplished by the elimination of duplication of services and suppor tive medical personnel. Messrs. Wheeler and Ackor, through their experience in establishing a hospital based HMO, are of the opinion that they are: ...in the best position to own and operate a rural HMO. (Wheeler and Ackor, 1974, p. 95.) They feel their objectives have been satisfied due to the enrollment of some twenty-three hundred medically ; needy persons and that through their medical information system they are now gathering sufficient data in accurate batches to render a unit for unit cost. These two gentle men observed that their bad debts have been reduced (Wheeler and Ackor, 1974). Mr. Ackor, in his address to the Group Health Association of America in Louisville,Kentucky, July 8-10, 1974, did point out that at the time of the commencement of ' planning for the new hospital and the HMO there were . twenty-five physicians in the region. In July of 1974 Mr. Ackor mentioned that the number has grown to forty-five full time physicians, and there are some part-time medical consultants who are not included. He further mentioned I that of the forty-five physicians, twenty-five are eligible for their Boards or Board Certified. Also, they presently have senior dental students from Tufts University assigned to Penobscot Bay Medical Center on seven week externships (Croup Health Association of America, Inc., 1974). i I Mr. Ackor concluded in his comments: The rural hospital is the key rural focal point. The continuation of rural hospitals on the basis of patient day income may be the wrong kind of incentive. Perhaps a fixed level of funding with adjustments for utilization is indicated. In any event, if the hospital can develop and own an HMO-like program, a reasonable care system might be established. (Group Health Association of America, Inc., 1974, p. 103.) Portage County Health Guard Portage County Health Guard is based at Stevens Point, Wisconsin. This is in the mid-eastern portion of the State. Stevens Point has a population of approxi mately 24,000 people. Its service area is described as Portage County whose population is 30,000. Mr. Robert 0. Pollock, Director, HMO Services in i his personal response to the "informational request letter" I I by this researcher stated: The present operation originated as an experiment developed by the Portage County Medical Society, St. Michaels Hospital and Sentry Life Insurance Company. The purpose was to develop an alternative health care delivery system, and emphasize the preventive aspect of medicine. At the same time it was recognized that this would afford an excellent opportunity to test some of the concepts and operational characteristics of HMDs on a first hand basis. (Pollock, 1975, p. 1.) 96 The Stevens Point, Wisconsin Daily Journal, indicated the initial enrollment target areas as being employees of Sentry Insurance Company, St. Michaels Hospital and physicians offices when Health Guard went into operation on January 1, 1973. At the year’s end, there were 436 individual subscribers plus 3,490 persons in 831 family units. The plan was opened to industrial firms with twenty-five or more employees on the first of January, 1974 and this increased enrollment by about 400 persons (Stevens Point, Wisconsin Daily Journal, 1974). Health Guard is alive and well, the treasurer stated. We finished the year in the black, not by much, it is true, but the results are admirable for the first year of operation of a health maintenance organiza tion. (Stevens Point (Wis.) Daily Journal, 1974, p. 23.) See Figure 11 (appendix) attached "Highlights of 1973 Operations." A "Highlights of 1974 Operations" is also included as Figure 12 (appendix). It is noteworthy I when comparing the Highlights of 1974 Operations with I 1973 that the "income" less "out-go" generated a loss of i 14^741 dollars (net). By calling upon surplus funds of I 14,766 dollars from 1973, a balance forward of $25.00 for i 1974 puts the plan in the black. This 1974 loss occurred in spite of an increase in enrollment of 1,126 enrollees. The 1975 year-end publication, "Highlights" of Portage ' County Health Guard will be a strong fiscal indicator of 97 the future financial solvency of the Plan, Management Mr. Pollock, Director, HMO Services in his response to the "informational request letter" pointed out that the most attractive possibilities for the success of an HMO I I resided in the consumer cooperative because the co-op j movement was generally accepted in the Portage County area. I , He goes on to state: ...All Portage County physicians in private practice agreed to participate as contractural providers, and at the same time to assume some financial risk in controlling cost and providing quality care. Further, the hospital agreed to a contract arrangement for the first year on a per diem arrangement for the three standard levels of care (regular, acute, intensive and self-care). And, all pharmacies in Portage County also agreed to participate by filling prescriptions for legend drugs. Sentry Life Insurance served as Administrator, and also provided insurance on both a specific excess and aggregate excess basis to protect the financial solvency of Health Guard. (Pollock, 1975, p. 1.) An important section of Mr. Pollock’s answer centered around the fact that they have the "open carrier" I principle. He explains the meaning of the "open carrier" principle. I This simply means that any Group Insurance carrier is able to make Health Guard available on an annual dual choice basis to Portage County employer accounts I with a minimum of 15 participants. The insurance I carrier simply signs an agreement form with Health I Guard agreeing to the timely remittance of monthly charges, and some other administrative type points. Thus, the HMO is not the exclusive property of any 98 one carrier, nor is its availability confined to a marketing function of the HMO itself. (Pollock, 1975, p. 2.) Services Portage County Health Guard is doing preventive type medicine and has engaged in clinical laboratory analyses through the use of a SMA-12 analyzer on all sub scribers over thirty years old. They are actively con cerned with the children’s immunization records and are currently moving toward the implementation of a program for early diagnosis of breast cancer and they will be encour aging on an on-going basis other tests for the early detection of carcenoma (Stevens Point (Wis.) Daily Journal, 1975). Abraham Lincoln Health Systems, Inc. j Lincoln, Illinois is located northwest of Spring field and south of Peoria. The population of the city is approximately 18,000 and the regional population surround ing the city identifies 22,000 additional inhabitants. The total regional area that would be serviced by the Abraham ILincoln Health Systems, Inc. is approximately 40,000 [Persons. Lincoln is centrally located in the County of Logan and there are peripheral linkages with two other counties (Stahlhut, 1972a). 99 In a personalized paper prepared by the Adminis trator of Abraham Lincoln Memorial Hospital, Mr. Rtni 1 . Stahlhut states: In 1968, the Joint Conference Committee at ALMH, consisting of the Executive Committee of the Hospital Board and the Medical Staff, began to see with alarm ing clarity that the Logan County Area might well become a medical care ’desert* if aggressive steps toward changing the situation of declining physician services were not pursued. The trend was quite clear. Over the past decade 15 physicians had either left the area, retired, or drastically reduced their practices due to health reasons. Four new physicians came into the area. This was a net loss of 11 physicians during theten year period. (Stahlhut, 1972b, p. 1.) A consulting firm was employed in 1970 to conduct physician and community surveys to gain their reactions concerning a hospital based group practice (Stahlhut, 1972a). Mr. Stahlhut, in his Notes On Group Practice of October 17, 1972 remarks: The hospital based physician group idea is also a good one for attracting new physicians. New physicians, family practicloners and other specialists alike, today seek out groups instead of solo practices. If we want new doctors in this area we are going to have to make an attractive group setting for them.... (Stahlhut, 1972b, p. 1.) Writing in the Illinois Medical Journal, Mr. Stahlhut remarks; It was recognized that the formation of a group from among solo physicians already in the community would be an experience different from what might usually occur in group formations.... Psychological examinations were therefore recommended 100 and undertaken by the physicians to determine whether there was really a nucleus available who would be amenable to working together, socially, intellectually and professionally. On the basis of the outcome of the tests, there were at least seven candidates who were amenable and, furthermore, desirous of forming a group.... Six months after the completion of the consultant’s feasability study, discussion continued among the physicians about the entire idea of hospital based group practice.... Finally, in March, 1971, ten physicians who felt strongly about the idea of hospital based group practice asked the hospital board for lease of space at the hospital. This most certainly was a landmark decision. (Stahlhut, 1972a, p. 1.) During the time this local community effort was spawned and developing, the Federal Government was issuing its "White Paper" and the "Partnership in Health." At the time the Abraham Lincoln Memorial Hospital had made its landmark decision, the Department of Health, Education, and Welfare was issuing data on a design and development of Health Maintenance Organizations and grant applications were being funded. Mr. Stahlhut states in Notes on Group 1 I Practice: I Within the next few months we are committed toward j moving along in the direction of the establishment of I the health maintenance organization, otherwise called I the health delivery system. I We are in the stage of creating an actual partnership of the medical group, the hospital, and representative ; persons of the health delivery system task force of the New Logan County Health Planning Council, just organized this past summer. This will permit consumer representation along with representation of the medical group and the hospital to set up a "package" of health care benefits. (Stahlhut, 1972b, p. 1.) _______________________________________________ 101 I ! Management I j Abraham Lincoln Health System, Inc. has thirteen I members on its Board of Directoro* Four of the partici- ; pants on the board are representatives of the subscribers I and are selected by the membership. Logan County Chapter ’ of the Central Illinois Health Planning Council, the I ! hospital based medical group and the hospital board contribute three members each for a total of nine persons. These nine plus the four subscriber representatives constitute the thirteen member Board of Directors. The foregoing permits a good interaction of the health planners, providers and consumers. The Board has control of policy decisions and has a signed agreement with the physicians medical group and the hospital for the pro vision of care. The marketing functions are provided by Blue Cross which does the acturial, subscriber enrollment, underwriting and extramural administrative-management function (Bloomington-Normal, 111., 1974). I I I Services ! The basing of the physicians at the hospital : avoided the duplication of equipmeriL and testing all of which adds to the patient’s bill. Further, the hospital I was able to contribute its available equipment; a hospital 102 social service program; a family counseling service; a mental health service on an outpatient basis; a medicare certified home health service. Therefore, the new sub scribers were availing themselves of extended levels and scope of care without suffering the financial penalty of administrative and capital equipment expenses (Stahlhut, 1972a). Miriam Engelhorn writes : The first phase of an innovative project to provide prepaid health care for Logan County area residents will get under way April 1. It is the first of its kind in Illinois. (Bloomington-Normal, 111., 1974.) Referring to her interview with Mr. Stahlhut, Ms. Engelhorn states: The prepaid health care package will be offered first to employees of Abraham Lincoln Memorial Hospital, Abraham Lincoln Medical Group and their participating physicians of the community. The effective date of coverage is April,, 1. This will give the health system a chance to iron out any wrinkles before the plan is offered to other groups, Stahlhut said. (Bloomington-Normal, 111., 1974.) Ms. Engelhorn goes on to explain. This project is the culmination of nearly three years* work to design and develop a Health Maintenance Organization (HMO) type delivery system. The project was one of the first 13 in the nation selected to receive three yearly grants from the U. S. Department of Health, Education and Welfare (HEW). These earliest grantees were selected under experi mental provisions when Elliott L. Richardson was secretary of HEW. (Bloomington-Normal, 111., 1974.) 103 The new Southern Illinois University Medical School in Springfield has given positive indications that senior medical students will be trained by the hospital based medical group (Stahlhut, 1972a). This well organized health system (Figure 13, appendix) has just passed its first birthday. This researcher regrets that statistical information regarding its first year’s performance is not available during the construction of this thesis. The North Quabbin Health Plan Athol, Massachusetts is located in the northern middle section of the State, and is approximately 25 miles south of the New Hampshire border. The city’ s population fluctuates slightly over and under the 12,000 mark. Athol Memorial Hospital services a rural and residential area of nine towns, and the eleven staff physicians care for a regional population of 23,000. The hospital is the only such unit for these cities as seen in Figure 14, appendix) (Community-Oriented Health Care, 1974). Management - Frederic W. Hillis is the Executive Director of the North Quabbin Health Plan. Mr. Hillis also serves as 104 the Administrator of Athol Memorial Hospital and is respon sible to that Board of Trustees. Mr. Michael T. LoConte manages the Plan. Karl H. Boll, M. D., is the Medical Care Coordinator, and is responsible for the Plan services relationship with the hospital. The North Quabbin Health Plan Community Council inputs policies and guidelines for !the Plan. The Plan, by a jointly signed agreement, brings j I an accord of operations between Athol Memorial Hospital and Massachusetts Blue Cross/Blue Shield establishing the North Quabbin Health Plan. Services Athol Memorial Hospital, recognizing its responsi bility to the community, in 1968 began to expand its service base. Prom 1968 to 1972 the following levels of care and services were added; ambulatory and preventive services; additional inpatient beds; expanded outpatient services which included laboratory, radiology, physical therapy, pharmacy, electrocardiography, social services, a community health service agency with visiting nurses program, school nursing services in other towns, a public health program, a home health aid service for the entire -nine town area, a Family Planning ^Clinic, and a Medi^Van offering a non-pay transportation vehicle to and from the I outpatient department. 105 In Health Care Today the editor states: Athol Memorial’s success in implementing these home and ambulatory services, and the positive public reaction to them, led the hospital to consider other methods of health care delivery. The idea of an HMO as a center to incorporate and expand on earlier health care delivery innovations, evolved from dis cussions among area health care leaders. (Community- Oriented Health Care, 1974, p. 7). The same article in the opening paragraph states: The North Quabbin Health Plan, the first HMO in the country being developed under the sponsorship of a rural hospital, is the culmination of efforts by Athol Memorial Hospital to provide a type of health care delivery that best suits the particular medical needs of the Athol-Orange area. (Community-Oriented Health Care, 1974, p. 7). In an undated publication as a supplement to the Athol Daily News and Enterprise and Journal, Arthur E. Hamm, President, Athol Memorial Hospital Board of Trustees, identified the hospital’s mission as: It has been the continuing mission of the Athol Memorial Hospital to enlarge its role beyond just hospital care for the acutely ill. The present 103 bed hospital is modern, well equipped, and balanced to community needs providing outpatient and emergency services as well as multi-diagnostic and therapeutic services....(Athol Daily News and Enterprises and Journal, undated.) A feature editorial of the New England Journal states : In both concept and development, the new health care delivery system has contrasted with the basic tenets of standard Health Maintenance Organizations and with the convictions of health planners in many areas. The goal is to establish a hospital-based primary-care center for residents of the Athol-Orange area....No patient will be denied the care he needs. It is not intended to establish a multispecialty group. Instead 106 primary-care generalists will operate exclusively with the Athol-Orange area. The organizers of the North Quabbin Health Plan have taken issue with the ’all-under-one-roof’ theory. They have concentrated on bringing together existing medical facilities into a co-ordinated-care system. As a result, capital expenditures have been kept down, and, they conclude, medical care has remained closer to the patients. (Editorial, 1974, p. 580.) The Department of Health, Education, and Welfare in the final quarter of 1972 awarded Athol Memorial Hospital 129,000 dollars to begin a feasibility study for a Family Health Center. In June of 1973, 550,000 dollars was awarded to the hospital as an operational grant (Community-Oriented Health Care, 1974). Mr. Arthur E. Hamm, President of Athol Memorial Hospital on the signing of an Administrative Agreement with Massachusetts Blue Cross and Blue Shield, had the following remarks. Today’s signing of an Administrative Agreement between Athol Memorial Hospital and Massachusetts Blue Cross/ Blue Shield is a major breakthrough in establishing the North Quabbin Health Plan as the first truly hospital-based rural health maintenance organization in the United States. It represents an important advance in the concept of broad based organizational responsibility for health care offered on a prepaid basis. Plan enrollment is expected to begin early in June. Today’s events, under current social and economic conditions, has significant meaning— to the Department of Health, Education and Welfare it indicates the possible achievement of some of its major health care goals. In fact, various national health care proposals include consideration of efforts such as this. to Massachusetts Blue Cross/Blue Shield the 107 North Quabbin Health Plan presents a tangible manifestation of its concern for effective delivery of health care services as well as their financing. to both professionals and institutional pro viders country-wide, the North Quabbin Health Plan may provide some key answers to more effec tive health care at lower cost. to the 23,000 residents of the Plan’s service area and the 54 million people in the country who do not live in populated metropolitan areas, the efforts of the North Quabbin Health Plan are an indication that the small hospital, the isolated physicians and the residents of small towns need not be subordinated to the more visible interest of large metropolitan areas. Mr. Hamm concluded by stating: It is my hope today’s event has at least these two results ; First, that the expectations of those to be served by the North Quabbin Health Plan are not only met but are exceeded, and that the Plan’s participating pro viders share in the satisfaction associated with that effort. Second, that today’s event is of reproducible value to communities in similar situations elsewhere. (Hamm, 1975, p. 1.) On June 1, 1975, enrollment began in The Family Health Plan. This is the first operational phase of the North Quabbin Health Plan. I The purpose of The Family Health Plan, the opera tional phase of the North Quabbin Health Plan, is to provide care for those families having no health insurance coverage or insufficient health insurance coverage. The family income chart and membership fees are shown in 108 Figure 15, appendix). (The Family Health Plan, Undated). The Plan’s efforts to increase health care avail ability is shown by this excerpt where in the April, 1975 Highlights, the North Quabbin Health Plan Newsletter announced : A new Medical Arts Building will be constructed on a two-acre plot of land on East River Street in Orange, opposite the Pine Crest Apartments. The land has been donated by State Street Development Corp. of Boston and has received the approval of both the hospital and the Orange Conservation Commission last week. The building will arrive in sections and be assembled at the site this spring. It will serve the towns of Orange, New Salem, Erving, Wendell and Warwick. Dr. Andrew Mitchell of Orange will occupy one of the four professional offices in the new Orange Medical Arts Building. Dr. Mitchell confirmed that he will be moving from his office in the Medical Arts Building behind Athol Memorial Hospital as soon as construction is completed. (Highlights, The North Quabbin Health Plan Newsletter, 1975.) The Plan expects to maintain its autonomy and individuality through recommendations of the North Quabbin Health Plan Community Council whose members consist of low income groups, the Board of Health, residents from all nine towns involved and segments of the business community (Community-Oriented Health Care, 1974). The North Quabbin Health Plan already lists among its accomplishments; 1. Three additional physicians to the area. 2. Obstetrical and gynecological services for area I residents. I 13. Twenty-four hour emergency room service. 109 4. Renovation of their Medical Arts Building to accommo date clinics and visiting specialists (Athol Daily News and Enterprises and Journal, Undated). Southwest Nebraska Health Plan McCook, Nebraska is located in the southwest por tion of the State and is a short distance from the northern border of Kansas. The city’s population approximates 9, 000. After six months of negotiations with the physi cians, the Southwest Nebraska Health Plan was implemented on July 1, 1974. There are 1,594 participants enrolled as of May 14, 1975 (Williams, 1975). In reviewing the "informational request letter" and the data supplied by Blue Cross/Blue Shield of Nebraska, there is no mention of any involvement by the local 83 bed hospital. Although, on the Metropolitan Health Maintenance Program distribution flow chart. Figure 16, (appendix) the lower right hand box indicates the hospital services will be receiving fifty-five per cent of eight y-Apercent'/of the total enrollee dues. (The Metropolitan Health Maintenance Program, Undated). Mr. Ted Williams, Director, Alternate Delivery Systems Blue Cross/Blue Shield of Nebraska states in his response to this researcher’s "informational request 110 letter"; Physician payment is based on capitation for basic medical services. There is no risk sharing involved for the physician, therefore. Blue Cross and Blue Shield of Nebraska is totally at risk for the hospi talization of the program. A sales representative was hired in the McCook area with the sole responsibility of selling the plan and maintaining contact with the physicians in the plan. This was done because the plan is approximately 300 miles from our Home Office. The physician has remained in his existing practice environment and there has been no new construction involved with this program. At this juncture, we are not planning on submitting a grant application to have this plan certified by DHEW. The exposure in journals and newspapers has been limited due to the nature of the program and its small size. (Williams, 1975, p. 1.) Management The Plan is administered by Blue Cross/Blue Shield of Nebraska. It is not possible with the material supplied ! to establish the ownership and control of the Plan. The greatest emphasis is on sales and marketing. Services The plan does not identify any preventive services or health maintenance programs. The only service identi fied is the commencement of a prepaid health plan. The remainder of the information supplied by Mr. Ted Williams, Blue Cross/Blue Shield of Nebraska, deals 111 with the Metropolitan Health Maintenance Program which in an information type sales promotion folder states : The Metropolitan Health Maintenance Program is a program for prepaid health care. The M.M.P places ^ emphasis on the day-to-day care in the physician’ ^/, office as well as care for major illness. The H.mT¥. protects your family by emphasizing the detection of diseases in their earliest stages and the immediate treatment of the illness. (The Metropolitan Health Maintenance Program, Undated.) Further review of the above promotional material did not relate to; .need for an HMO .need for a health delivery system .need to improve the utilization of physician and hospital equipment .need to avoid duplication of capital expenditures, especially equipment .need for any outreach programs .need to relate to any educational programs .need to update the education of supportive health professionals .need for any direct or indirect community involv- ment The availability and accessibility of care is ignored or overlooked. Mr. Ted Williams concluded his response to this researcher by stating; 112 •••Basically, all of the plans that we will develop in the State of Nebraska are based on the H.M.P. concept and not the certified Health Maintenance Organization as defined by the DHEW. (Williams, 1975, p. 2.) Other information supplied by Mr. Ted Williams of Blue Cross/Blue Shield related specifically to the Omaha- Lincoln area and is not relevant to McCook, Nebraska. Imperial County Health Care Services Foundation Holtville, California is in the southeastern section of the State. It is approximately ten miles north of the Mexican border and 11 miles east of El Centro. The present population is approximately 3,500. The regional population to be served by this plan is 75,000. Management The Imperial County Health Care Services Foundation (I.C.H.C.S.F.) was formed as a non-profit Health Care Corporation after three years of regional research and development. There is a seven-person Board of Directors which has five members who represent the consumer interests. The Board of Directors together with Committee Chairmanship and a Consumer Advisory Council assist ICHCSF management in policy and program development. They also help solve any complaints from the Subscribers (Subscriber’ s Handbook, lUndated). 113 Services ICHCSF is a system which provides health and accident care. It covers catastrophic illnesses much the same way as commercial carriers or Blue Cross or Blue Shield. In addition, ICHCSF covers preventive services I such as: well baby clinics, innoculation and annual physicals along with doctor and non-hospital services, emergency, hospital and specialists care. The Foundation guarantees care will be available when needed by a subscriber, and everyone will have their share of scarce medical manpower. Care is provided through medical centers and individual practices. One monthly payment covers comprehensive health benefits. Dental and eye care are optional (Subscriber’s Handbook, undated). Mr. Ronald A. Lane, Executive Director in his letter of May 16, 1975, in response to this researcher’s "informational request letter" explains. The organizers of our ICHCSF have donated most of the more than 15,000 hours that have gone into the Research and Development of our Foundation. The present program has evolved as a result of apathy and unjustified resistance by several members of the Imperial County Medical Society. We have persisted in the development of the organization because many local citizens are determined to change the present system of financing and delivery of health care. Among these residents you will find four physicians, the Pharmaceutical Association, the Optometrie Association, some dentists, the Chiropractic Associa tion, three Attorneys, one Certified Public Account ant, a Federally funded Clinica De Salubridad, 114 approximately thirty-two businessmen, and many individuals. Total Capital outlay at this time is approximately $125,000.00. (Lane, 1975, p. 1) A comprehensive feasibility study was conducted by Imperial County Health Care Services Foundations in July of 1973. The survey had an 11 percent response. The feasibility study indicated that 52 percent of the responders were satisfied with health care as provided in Imperial County; 48 percent were not satisfied. However, 46 percent went outside of Imperial County for medical services. Thirty-eight percent of those responding had changed doctors recently because: a. extended waits before being seen by the physician b. ho confidence in the physician c. overcharged The feasibility study revealed some twenty changes which approximately 95 percent of the respondents favored. The upper ten are : 1. Dental care 2. Eye care 3. No restrictions as to age, sex, ethnic background or occupation. 4. In and out-patient medicines 5. Free choice of physician, hospital and other providers. 6. A copy of each paid claim sent to each patient 115 7* AU claims paid directly to each provider within 30 days 8. Out of area benefits 9. Office, home, in-hospital physician visits 10. In and out-patient mental illness benefits (Lane, 1973). The plan has numerous letters of support from different agencies such as the United States Department of Justice, Immigration and Naturalization Service, U. S. Border Patrol. In the letter of support, Mr. Henry C. ■'Pelchlin, Chief Patrol Agent, states: i What seems very important to us is the concentration I of all the management and administration responsibil- I ities in Imperial County. It is quite impressive to I note that all businesses, and individuals are repre sented on the Board of Trustees and/or the consumer advisory council. (Pelchin, 1974, p. 1.) Chief Deputy Coroner, Lieutenant J. Leonard Speer, Imperial County California states: My organization recognized the many advantages which should be realized by our citizens of Imperial County from this new system of delivering health care. (Speer, 1974, p. 1.) Mr. Quentin Burke of the Hopeville Tribune states : Over the past two years, I have had the pleasure of working with Mr. Ron Lane on preparations of pamphlets and other proposals for the Imperial County Health Care Services Foundation. It is my personal opinion that in Imperial County, which is desperately short of medical practitioners and treatment facilities, and which is the home of many people well below national income averages, his plan for a Health Care Center would be an important and viable asset to overall community health. (Burke, 1974, p. 1.) 116 Judge James M. Bucher, Imperial Justice Court, County of Imperial, State of California, mentions: The need for improvements in the delivery, access ibility, management, and administration of health care services in Imperial County is uneomfoi'tably evident. The City of Imperial, for example, is one area that has no primary care physicians available. We believe this problem will be alleviated by the Imperial County Health Care Services Foundation which plans to establish a medical doctor in our city. I understand the concept of the Foundation and think this is an ideal approach for improving the services and costs of health care in our county. This letter constitutes a formal endorsement of this organization and its goals and objectives. (Bucher, 1974, p. 1.) Kathryn Healey, Project Director, Clinica De Salubridad De Campesinos, states in her letter: The main purpose of the Clinica is to provide a coordinated health care program for the rural poor here in the Valley. Directives from the Dept, of HEW encourage our participation in various reimbursement modes to test the feasibility of such modes for long term planning towards economic self-sufficiency. Within the restraints of available professional personnel and program priorities, the Clinica would like to participate in your plan by making available to your membership the full spectrum of services that it provides. We are pleased that another entity here in the Valley is working towards providing a comprehensive health care program for Valley residents. (Healy, 1974, p. 1.) The Imperial Valley Health Care Services Foundation has identified a philosophy of providing care, treatment, habilitation and rehabilitation services based on the j I principle of total comprehensive health care, preventive 117 medicine on a prepaid basis within a geographic area and local consumer control of the Plan. The goals and objectives are clearly stated as the delivery of the five components of comprehensive health care. That is: .health maintenance .primary care .specialty care .restorative care .health related custodial care Quality of care is assured by peer review. An objective is to stimulate growth through the appropriate and economical use of all resources by a coordinated effort between the Foundation, the Comprehensive Health Planning Agency, the State and Federal Agencies and the local health providers to assure that the duplication of facilities and services that are unnecessary will not prevail upon the residents of the region. The Imperial County Health Care Services Foundation is designed to eliminate the non-professional administra tive function from the health care providers; curtail unnecessary hospitalization; provide financial and other incentives for health maintenance; give consumers and providers a management forum to express their concern; organize fragmented categorical sources of money and unite 118 them in a common health need; provide a continuity of care; guarantee accountability of health dollars used; provide access for all subscribers to health care regardless of economic status; improve the availability of accessibility to and transportation to and from health care facilities for those individuals who may be aware that care is avail- iable but not accessible to them. (Lane, undated). Mr. Ronald A. Lane, Executive Director, stated in the close of his responding letter to this researcher: As you can see from the information enclosed, we have a most successful program for those people who have joined. I believe that within the next 12 months our enrollment will reach over 10,000. (Lane, 1975, p. 1.) Summary The eight non-metropolitan HMOs which responded to » the "informational request letter" survey have in seven of their organization and management patterns demonstrated the vitality and technical ability required to construct a health maintenance organization. Location The geographic distribution of the respondents is throughout the northeast (Maine and Massachusetts), west (California), Great Lakes (two in Wisconsin and one in Illinois), north central (Minnesota) and central (Nebraska) 119 regions of the United States. Operational Dates With the exception of the Community Health Centers, Inc. of Two Harbors, Minnesota, the other seven HMOs have less than five years of operational experience. It is evident that here is a new concept that may be used as an alternate method for the delivery of health care, but has not been time tested. Grant Monies Four of the responding organizations (namely. Greater Marshfield Community Health Plan, Penobscot Bay Medical Center, Abraham Lincoln Health Systems, Inc., and North Quabbin Health Plan) have received direct govern mental financial assistance while the remainder (that is. Community Health Center, Inc., Portage County Health Guard, Southwest Nebraska Health Plan, and Imperial County Health Care Services Foundation) have not. Size, starting date, or geographic location does not appear to have influenced the seeking or receiving of grant money. However, the form of management of the four grant recipients does indicate definite similarities, Penobscot Bay Medical Center; Abraham Lincoln Health Systems, Inc. and North Quabbin Health Plan are managed by practicing Hospital 120 Administrators. Greater Marshfield Community Health Plan employs an Executive Director. It is expected that all four administrators would be skilled in grantsmanship. Cause for Organizing System Greater Marshfield Community Health Plan, Portage County Health Guard, Abraham Lincoln Health System, Inc. , - North Quabbin Health Plan and Imperial County Health Care Services Foundation .indicated their desire to provide more comprehensive programs in an organized health care delivery system. Community Health Center, Inc. stated their cause as gaining and retaining physicians. Penobscot Bay Medical Center expressed a special concern which was the care of indigent patients. Southwest Nebraska Health Plan did not express a reason for its formation. General Observations Six of the eight respondents, though not identical, have "out-reach" programs, preventive programs, direct community involvement, improved the accessibility to health care and stated there is a need for an organized system or strategy. Greater Marshfield Community Health Plan, 'Penobscot Bay Medical Center, Abraham Lincoln Health System, Inc. and North Quabbin Health Plan are engaged in the training of supportive professionals. Community Health 121 ; Center, Inc., Greater Marshfield Community Health Plan, Abraham Lincoln Health System, Inc., North Quabbin Health Plan and Imperial County Health Care Services Foundation are involved with the health education (extensive care) of the consumers. Community Health Center, Inc.^ Greater Marshfield Community Health Plan, Penobscot Bay Medical Center, Portage County Health Guard, Abraham Lincoln Health System, Inc., North Quabbin Health Plan and Imperial County Health Care Services Foundation identified programs for or the expansion of available services. The foregoing are organized into Exhibit 1, Composite of Findings. CHAPTER V SUMMARY AND CONCLUSION Restatement of the Purpose of the Study I The purpose of this study is twofold and is now I repeated: I I 1. To establish the means by which health care in the rural areas can be improved in quality and quantity. 2. To provide a health care delivery strategy for rural j areas based on the Health Maintenance Organization i (HMO) Model. Restatement of the Problem The problem toward which this study fs directed is the total absence of health care professionals in many rural areas, and in other areas only token representation of physicians, nurses, pharmacists and other supportive personnel are available. Citizens of rural areas may have jsome type of health insurance coverage. It may be an i ! indemnity plan, medicare or medicaid. None of these types of health care plans provide for the delivery of health care. Rather, they reimburse physicians, hospitals and paramedicals. Proper fiscal incentives and physical : 1.22_____________________________ 123 facilities must emanate from the health care strategy in order to attract physicians and other supportive profes sionals. Thus, the one to be reimbursed, the means of reimbursing and in many instances the place in which care can be provided must all be part of the health care system. Basic Hypotheses The basic hypotheses in this study are now stated: 1. If the Health Maintenance Organization Model is devel oped in a rural area then health care will be provided for the residents. 2. If structured, well organized Health Maintenance Organizations penetrate the rural areas then the accessibility and availability of various levels of care is more assured. Summary of Findings The research investigations confirmed the Health Maintenance Organization as a health care system for the i I provision of care (Burke, 1972; Kefauver, 1973; Group I I Health Association of America, Inc., 1974; Pollack, 1975; Stahlhut, 1972b; "Community-Oriented Health Care," 1974; Lane, 1975). The investigations ratified that the Health Maintenance Organization system sponsors multi-level health care in the rural regions which is readily attain able (Burke, 1972; Lewis, 1973; Wheeler and Ackor, 1974; 124 Pollack, 1975; Stahlhut, 1972a; "Community-Oriented Health Care," 1974 and Lane, 1975). The health care strategy best suited for rural use I was discovered in the joint venture or cooperative asso- 1 elation design between hospitals, physicians, consumers and plan underwriters (Burke, 1972; Lewis, 1973; Pollock, 1975; Stahlhut, 1972b; "Community-Oriented Health Care," 1974 and Lane, 1975). The quality of care was improved by the concerted effofts of the participants through the expansion of existing services (Burke, 1972; Kefauver, 1973; Group Health Association of America, Inc., 1974; Stahlhut, 1972a; "Community-Oriented Health Care," 1974 and Lane, 1975). The quantity of care increased through the establishment of combined hospital-clinic activities broadening the operational base and perm'i;tting the hiring of additional or new technically trained supportive medical personnel for patients and physicians (Burke, 1972; Lewis, 1973; Group Health Association of America, Inc., 1974; Stahlhut, 1972a and Editorial, 1974). The combining of hospital-clinic personnel in a centralized physical facility creates fiscal economies by avoiding the duplica tion of persons and buildings. Further, this shared services program retards the loss of physicians. In fact, it stimulates the acquisition of new doctors, different 125 types of specialists and supportive health care personnel (Burke, 1972; Kefauver, 1973; Ensign, 1974; Group Health Association of America, Inc., 1974; Stahlhut, 1972b; Athol Daily News and Enterprises and Journal, undated). To sustain a well population, health education of consumers, ancillary medical personnel and supportive services personnel is sponsored and directed by the various Plans (Burke, 1972; Marshfield News-Herald, 1974; Kefauver, 1973; Group Health Association of America, Inc., 1974; Stahlhut, 1972a; "Community-Oriented Health Care," 1974 and Lane, undated). Comparison of the rural Health Maintenance Organi zations indicates their location is in population centers I averaging about 12,000 people. The health service area provides care for a radius of approximately twenty miles. This contains a subscriber base of about 35^000 persons. All of the Plans but one show less than five years of operation. The three most significant causes for the formation of a Health Maintenance Organization are as follows : 1. To retain the physician 2. To care for the indigent 3. To deliver comprehensive health care The most cited cause, by a margin of five to seven or 71.4 per cent, is the delivery of comprehensive health care. 126 Conclusion The structured, well organized Health Maintenance Organization does provide more accessibility and increases the availability of care to rural area populations. The Health Maintenance Organization model is a working health care system and strategy which is adaptable jto the rural regions for the delivery of comprehensive I jhealth care programs. Re c ommendat i ons The recommendations suggested below are directed toward items which may enhance the quality and quantity of health care offered to rural populations. 1. Physicians a. Federal and state income tax forgiveness which will increase net earnings and will not cause higher subscriber dues which usually accompanies increased earnings. b. Related medical care study seminars for a minimum of two weeks each year (ten working days) and a maximum of thirty continuous days (twenty-two working days) after five years with travel, lodging and seminar costs borne by parties other than the physician. 127 c. Regular and dependable physicians available to relieve the local physician for study and vacation. d. Paid vacation for a minimum of one calendar month per year. This is not part of the i education time. e. A retirement plan that will grant financial security upon retirement from practice. The retirement plan should be equal to or better than similar plans offered or obtainable in metropolitan practice. f. Prepaid malpractice insurance or other types of protection to provide peace of mind and security of finite holdings. g. Recent medical school graduates of State Universities and Colleges who have received their medical education from tax supported institutions, as a part of their contract for education received, be assigned to family physicians in non-metropolitan settings. 2. Ancillary medical and supportive personnel a. Wages and fringe benefits equal to or better than their counterparts in metropolitan areas including retirement. b. Educational seminars that will complement the physician's programs. 128 c. Regularly scheduled continuing education programs with outside instructors. d. Ability to attend special education programs in other geographical areas in order to improve technical skills and rise on their career ladder. e. Education and skills improvement course costs will be the responsibility of the employer if all course requirements are met and success fully passed by the employee. 3. Health Maintenance Organization a. Subsidy payments to the rural HMO during those times when they suffer seasonal operational losses. b. Financial encouragement to establish satellite clinics for ambulatory medical and surgical care. c. Assistance in providing transportation vehicles for routine and emergency care. d. Aid in forming communications networks for coordinating the dispatching of all types of life saving equipment and personnel e. Program of rewards for cost containment. Finally, to the future researchers of rural health care delivery systems, it is sincerely hoped that this 129 gathering of facts may serve as a benchmark for their ; investigations APPENDIX MAP 1 131 ■ ' i ' v P Ï ^ \c^ . - o A ^PHOf ïSnë-m . Æ M k^f.SS i A ' - » % WfîMii 132 FIGURE 3 GREATER mRSHFIELD COMMUNITY HEALTH PLAN — COMPONENT LINKAGES 1. Marshfield Clinic: Provides medical services in and out of the hospital amd makes separate contractual arrangements with affill ated physicians. 2. St. Joseph’s Hospital: Provides inpatient services and makes arrangements for nursing home and home health care. 3. Blue Cross - Blue Shield: Perform marketing, enrollment, actua rial, claims and out of area services and administration. 4. Community Committee: Advice and guidance to the Plan partners. OTHER EOF ST. JOSEPH’ S HOSPITAL MARSHFIELD CLINIC D. O. s HCS COMMUNITY COMMITTEE BLUE CROSS BLUE SHIELD GREATER MARSHFIELD SUBSCRIBERS GRAPH 6 , GREATER MARSHFIELD COMLÎUNITY HEALTH PLAN 133: 'w 18 b o o 15 1 — 12 CL Ü 9 t: TO 0. 1971 1972 1973 18 15 12 9 6 3 TOTALS 21,122 ■■■ iw u. i — 1 y Y18 MARSHFIELD ENROLLMENT umiaawwMMOBpy m uw xBaorosw riaW ’ --K«Ke«eï*3i COUNTY CLARK 1.749 TAYLOR COUNTY ‘*7 O 1,655 1972 1973 1974 FIGURE 4 GREATER MARSHFIELD COMMUNITY HEALTH PLAN ; Expansion 134 1972-1q?3 W a u s a u S t e v e n s Point 1973-1974 w .fh*# y c o iu v * N e m t w - ' i i ! * u T FIGURE 5 PENOBSCOT BAY MEDICAL CENTER AERIAL VIEW 135 I V , . f 7 - 4 4 4' % : % Ÿ» V,V , ■ . ’ ■ • ' > i Wb' \ \ f ' f # \ « ' £ 1 ,.< CD 0 :0 y i B >7/ \ '^ ‘ V / r / /' } ' i . ''i-' h f ' l S y ■ÿfS â\ \ ^ Ü ■/;] 0 /, ;/ . r : /f'/V 4 > v A t ? ? * W m & Ê Ê Ê ^ M M FIGURE 6 PENOBSCOT BAY MEDICAL CENTER SUPPORT SERVICES WING 136 c 137 FIGURE 7 PENOBSCOT BAY MEDICAL CENTER ADMINISTRATIVE AREA J >- d; < r m g 6 5 §# O U ' J A IHHLVJ __I PICURE 8 PENOBSCOT BAY MEDICAL CENTER DIAGNOSTIC AND TREATMENT WING 138 139 FIGURE 9 PENOBSCOT BAY MEDICAL CENTER DIAGNOSTIC AND TREATMENT WING d A FIGURE 10 140 PENOBSCOT BAY MEDICAL CENTER NURSING WINGS rA T IfN T W iN G I ] >- of ' 6 5 II C t , O N IM IN S IiV d 141 figure 11 WISCONSIN r * 4 4 e î Portage County HeaIthGuard - A Cooperativ- Hiqhîfqhts of ?973 Operations : Som e financial statistics: Subscription Fees Claims Incurred Expenses Incurred Gain from Undeiv/ritfrig = $605,058.00 = 491 ,840.87 = 109,695.44 4,521.69 pjialysis of claims incurred: Hospital Claims Medical Claims = $179,453.34 = 312,387.53 HealthGuard enrollment at yearend 1 Numl)er of Members Classification 435 831 Indivi dual Family Total Number of Participants ' 436 3,4^0 3;926 Hospital u tiliz a tio n per 1 ,000 lives Average length of Hospital stay = 356 = 3.9 days Som e HealthGuard u tiliz a tio n totals: 9,073 visits to the Doctor's o ffice 1,292 Doctor visits in the Hospital 7,613 prescriptions fille d by phanrsacists ,164 out of area referrals 142 FIGURE 12 in P .O . BOX 251 o STEVENS POINT. WISCONSIN 54481 PHONE: (715) 344-2345, Ext: 6 78 Highlights of 1974 Operations Som e Financial S tatistics: Total Income , Total Outgo Net Result Balance from 1973 Balance on 12-31-74 $ 834,662 849,403 -14,741 14,766 25 ting Totals: Subscription Fees Claims Incurred Expenses Incurred $ 810,897 674,882 147,521 Analysis of Claims Incurred: Hospital Costs Medical Costs $ 282,074 392,808 HealthGuard Enrollment as of 12-31-74: NumblV Subscribers C lassification Number Enrollees 520 1,079 Single Family TO TAL * 520 4,532 5,052 Som e Healthcare U tiliza tio n S tatistics: Total Days Hospital Care = 2,216 days Physician Office V isits = 9,482 Physician Hospital Visits = 1,586 Legend Prescriptions Filled = 12,123 143 FIGURE 13 Abraham Lincoln Medical Group, S.C._ Non-Croup Physicians (Local) Non-Group Specialists; Non j Foundation Members Physicians! ALMH Hospital Out-Patient/ Eniergency/Rx Services______ Carrier BÇ-ES Enrollees Medical Foundation Special- ist Physicians . 1 . ■ • : ____________ ALM Hospital and Ext. Gare Services Emergency Out-of Area Hospitals Services Emergency Out-of-Area Physician Services ABRAHAM LINCOLN HEALTH SYSTEM, INC 1/3/74 EOS 144 FIGURE 14 WARWICK ROYALSTON GEOGRAPHIC BOUNDARIES ORANGE OF THE NORTH QUABBIN SERVICE AREA ATHOL 145 FIGURE 15 NORTH QUABBIN HEALTH PLAN Hav D O E S ' Y O U R m ILY JO IN ? Pie « T iO L ia t you w ili pay for.your share of your family membership and your benefit coverage is deter mined by your family size and incom e. Families under this program must consist of at least one adult and a dependent child. There are 5 types of Fmi iy Health Plan coverages. C heck this Family Incom e Chart to find out under which type your family qualifies. num ber in. Y E A R L Y F A M IL Y IN O C M E family 2 0 -1,400 1,401-1.900 1,901-2,400 2,401-2,900 2,901-3,400 3 0 -2,200 2,201-2,700 2,701-3,200 3,201-3,700 3,701-4,200 4 0 -3 ^ % 3,001-3,500 3,501-4,000 4.001-4,500 4,501-5,000 5 0 - 3 # # 3,801-4,300 4,301-4,800 4,801-5,300 5,301-5,800 6 0 -4,400 4,401-4,900 4,901-5,400 5,401-5,900 5,901-6,400 7 or m ore 0 -5,000 5,001-5,500 5,501-6,000 6,001-6,500 6,501-7,000 G roup 1 2 3 4 6 C O V E R A G E G F O J P S A N D (V D N T H L Y M E M B E R S H IP F E E S G roup I ....................nothing Group 2. 2-08 G roup 3...................$2.91 G roup 4...................$ 5.00 Group 5................... $10.00 *There is a small per visit charge for doctor, physical therapy, mental health, radiation therapy and minor surgical appointments. M em bers eligible under coverage groups I and 2 pay nothing for these services. Those eligible under groups 3 and 4 pay $1.00 per visit and those m em bers eligible under coverage group 5 pay $2.00 per visit. Ail m em bership fees and per visit charges are billed monthly. Terms m a y be arranged upon request. FIGURE 16 TEE.METROPOLITAN BEALTH tIAINTENANCE PROGRAM 146 lOOZ OF ENROLLEE PUES ASSIGNED TO PROGRAM ESTIMATED BEGINNING DISTRIBUTION 100% OF ENROLLEE DUES ALLOCATED TO PROGRAM OPERATIONAL COSTS 50% ■BEYOND THE CONTROL OF THE 20% •MANAGING (ASSOCIATED) PHYSICIAN 50% 35% Fu n d s-AVAILABLE for the 10% MANAGING PHYSICIANS USE IK 80% PROVIDING ENROLLEES NEEDED COMPREHENSIVE HEALTH CARE SERVICES • 55% PROGRAM OPERATIONAL COSTS AND CONTINGENCY OUT OF AREA FUND AND "STOP LOSS" RESERVE TO ABSORB PROBABLE COST OF ENROLLEE CATASTROPHIC ILLNESS 1. MANAGING (Primary Care) PHYSICIAN MONTHLY HEALTH MAINTENANCE PAYMENTS 2. MEDICAL SPECIALIST FEES .INCURRED BY ORDER OF ILANAGIKG PHYSICIAN HOME HEALTH CARE HOSPITAL SERVICES ORDERED BY MANAGING PHYSICIANS AND/ OR MEDICAL SPECIALIST TO WHOM ENROLLEE HAS BEEN REFERRED BY THE MANAGING PHYSICIAN EXHIBIT 1 COMPOSITE OP FINDINGS 147 Loca t. i on TopuTa't 1 o a - c 1.1 y Operational Date-month year Vas grant money recteivea "Cause Tor organizing system ^ Soüglit solution to ** Was â syftem needecT Cb'jC'Ctives described [mprovcsi utilization ox equipment and/or services TTjrTTioipîTâTXsl assist information Vvas there an out-reach V.'as there a preventive program "I'duf;"n"of Tûpqÿôr tive "pf TesTicma 1 s'" i!eaît}7~ë7ucation of~consuinei's THrcct CoTminmTty irrvoTv'Fmslit; ” 7ïi"aliability" of~serviccs expandFu” ”A<f c s sTbT'I Tty'1. mp rov-e "d 13K 11 1944 M E yes yes ye; ye: yes yes yes 05 l971 FSOT 4 OK r-Qÿ- i.972 yes yes yes yes ye; yes yes yes y * c s yes yes yes ye; yes yes M l I I , 2 4k 50 K . 1 1 TBT' 40K 04 5 19 74 yes yes yes yes yes yes ye; yes yes yes ye yes “ 3 ~ yes yes" yes : e w c Rg o u. o ^ MA • NB CA 12K 25K ' 0 7 1974 yes 9K 0 7 1974 ye; yes ye: yes yes yes yes yes yes yes yes yes yes y c T ye: T2ÔÜ 72K 01 1979 no yes yeT yes yes yes yes yes yes ye: yes LHGHND: * 1. Retain ph.ysicians 2. Care to indigents 3. Delivery of compichenslvo health care not supply the information. a. No phy sic ia ns b. Botter c arc at less cost c. Be Lier c a ! ■ f j d a t d d. Phys i ci ans 1caving area e. Cmal 1 amount of . care to low income groups f. Narrow range of care orvice or qual ity. Research d BIBLIOGRAPHY 148 149 Athol Daily News and Enterprises and Journal. Supplement, Undated. Baranik, Theudoi-e R. "Hospital Sponsors Rural Facility." Hospitals, Vol. 48 (April 16, 1974), 55-59. Bates, L. E., M. D. "Health Insurance Plan of Greater New York." Hospitals, Vol. 45 (March 16, 1971), 58-60. Bloomington-Normal, 111. "Logan Health Project First of Kind in State." March 8, 1974. Pantagraph A-3. Bucher, James M., Judge. Personal Letter. County of Imperial, Imperial Justice Court. June 28, 1974. (Typewritten.) Burke, Quentin. Personal Letter. Holtville Tribune. Undated. (Typewritten.) Burke, Richard T. "Community Health Center, Two Harbors, Minnesota." 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The Journal of the American Associations of Medical Clinics, August, 1973f n.p. 150 Felchlin, Henry C. Personal Letter. United States Department of Justice, Immigration and Naturaliza tion Service, U. S. Border Patrol. June 28, 1974. (Typewritten.) Fine, Max W. "Our Delivery System Is Sick." Viewpoint Magazine (Third Quarter, 1973), 9-16. Fleming, S. "Kaiser Foundation— Permanente Program," Hospitals, (March 16, 1971), 56-57. Greater Marshfield Community Health Plan. Community Report, 1973. Undated b. Greater Marshfield Community Health Plan. "Greater Marshfield Community Health Plan— Component Link ages." Undated a. (Mimeographed.) Group Health Association of America, Inc. An HMO Dictionary. Washington, D. C. Undated. Group Health Association of America, Inc. "The Prepaid Group Practice Health Maintenance Organization." Pamphlet. Group Health Association of America, Inc. Proceedings of a National Conference on Rural Heal% Maintenance Organizations. 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"Summary of Feasibility Study by ICHCSP." July, 1973. (Typewritten.) Lane, Ronald A., ed.,fPolicy and Operations Manual. Holt ville, California; Imperial County Health Care Services Foundation, n.p. Lane, Ronald A. Personal Letter. Imperial County Health Care Services Foundation. May 16, 1975. (Typewritten.) Lewis, Russel P., M. D. "The Greater Marshfield Community Health Plan— A Community Experiment," Wisconsin Medical Journal, Vol. 72 (June, 1973), 17-23. Marshfield News-Herald, Supplement, June 12, 1974. McCormack, Regina C., J. D.; Miller, Charles W., M.B.A., M. D. "The Economic Feasibility of Rural Group Practice: Influence of Non-physician Practitioners in Primary Care." Medical Care, Vol. 10, No. 1 (January-February, 1972), 73-80. Pollock, Robert 0. Personal Letter. Portage County Health Guard. May 12, 1975. (Typewritten.) Prussin, Jeffrey A. "HMOs: Organizational and Financial Models— Part 1." Hospital Progress (April, 1974), 33-35. Prussin, Jeffrey A. "HMOs: Organizational and Financial Models— Part 2." Hospital Progress (May, 1974), 56-59, 84. Prussin, Jeffrey A. "HMOs: Organizational and Financial Models— Part 3." Hospital Progress (June, 1974), 60-63. Sacramento Medicine. President * s Report. June, 1972. 152 Sellitz, Claire. Research Methods in Social Relations. New York; Holt, Reinhart and Winston, 1963. Speer, J. Leonard, Lieutenant. Personal Letter. Sheriff- Coroner, County of Imperial. June 25, 1974. (Typewritten.) Stahlhut, Emil. "Group Practice in Lincoln and an HBÎO." Illinois Medical Journal, (January, 1972a), 46-47. Stahlhut, Emil. "Notes on Group Practice." Personalized Paper, October 17, 1972 b. State of North Carolina, Department of Human Resources. Introducing the Office of Rural Health Services, 1974. Stevens Point (Wis.) Daily Journal. "Health Guard Plans Preventive Medicine" (May 2, 1974), p. 23. Stevens Point (Wis.) Daily Journal. "Health Guard Offsets 1974 Defici-tfV(May 2, 1973, n.p. Subscriber*s Handbook. Imperial County Health Care Services Foundation. Undated. The Family Health Plan, North Quabbin Health Plan, Undated. The Metropolitan Health Maintenance Program. Blue Cross/ Blue Shield of Nebraska. Undated, The United Hospital Association and Western Center. Considerations in Developing an W O , Los Angeles, California, 1971. U.S. Department of Health, Education, and Welfare. Toward a Comprehensive Health Policy for the 1970*s, A White Paner. . M b, shington. D. C. : Government Printing Office, May, 1971 a. U.S. Department of Health, Education, and Welfare, The National Health Partnership; A Comprehensive Health Policy for the *70*s. Washington, D. C.: Government Printing Office! February, 1971 b. U.S. Department of Health, Education, and Welfare. Health Maintenance Organization Initial Development Grant Application, Vol. T% Sacramento, California; Medical Care Foundation, May, 1975 c.> 153 U.S. Department of Health, Education, and Welfare. Health Maintenance Organization Initial Development Grant Application, Vol. 2. Sacramento, California: Medical Care Foundation, June, 1975 d. Washington Post. October 7, 1973. Wetherille, Rhona L. A Census of HMOs, January, 1975. Report by InterStudy. Minneapolis, Minnesota, January, 1975. Wetherille, Rhona L. and Nordby, Jean M. A Census of HMO*8, April, 1975. Report by InterStudy. Minneapolis, Minnesota, April, 1975. Wheeler, John R. ; Ackor, Jefferson D. ''Should Smaller Hospitals Operate HMOs?" Journal of the American Hospital Association* Vol. 4b (October 1, 1974), 93-95. Williams, Ted. Personal Letter. Blue Cross/Blue Shield of Nebraska. May 14, 1975. (Typewritten.)</u></s>

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University of Southern California Dissertations and Theses

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Asset Metadata

Creator Rose, D. Bryce (David Bryce) (author)

Core Title Rural health care delivery systems with emphasis on the health maintenance organization concept

School School of Public Administration

Degree Master of Public Administration

Degree Program Public Administration

Degree Conferral Date 1975-08

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag health and environmental sciences,OAI-PMH Harvest

Format application/pdf (imt)

Language English

Contributor Digitized by ProQuest (provenance)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c39-145606

Unique identifier UC11311308

Identifier EP64882.pdf (filename),usctheses-c39-145606 (legacy record id)

Legacy Identifier EP64882.pdf

Dmrecord 145606

Document Type Thesis

Format application/pdf (imt)

Rights Rose, David Bryce

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA