DIAGNOSTICIANS: Freedom Through Managed Care
Diagnosticians
Freedom Through Managed Care
Since the early 1970s, businesses have become increasingly concerned as employee healthcare costs have soared and threatened their balance sheets. In the early 1990's, companies began adopting effective strategies to bring the cost of their employee health plans under control.

The main strategy was to shift from traditional indemnity plans to HMOs and other managed care plans. By 1994, 45 million persons received their care through an HMO, compared with just 25.7 million in 1986, and many more were in other types of managed care plans.

More recently, a Bureau of Labor Statistics Survey (Bulletin 2719, 2008 ), reported that only four percent of private industry workers are enrolled in a traditional fee-for-service plan in which members could choose their providers without affecting their reimbursement, 58 percent were enrolled in a Preferred Provider Organization (PPO), 10 percent in a Point-of-Service (POS) plan, and five percent in an Exclusive Provider Organization (EPO). The remaining 22 percent were in Health Maintenance Organizations (HMOs).

With managed care, many of the bad incentives found in fee-for-service medicine—such as the tendency of providers to overtreat patients—were eliminated. However, the downside of managed care has been to restrict the patient's choice of doctors, choice of treatments, and other choices as well. The response of patients who regularly access the healthcare system has not been positive. They also have balked at the necessity of going to a gatekeeper who must approve their access both to specialists and costly medical procedures.

The RE·MEDI system also includes a managed care component—a network of primary care doctors and specialists we call Diagnosticians. Superficially, our Diagnosticians may bear some similarity to the traditional gatekeeper, but the purpose of the Diagnostician is not to restrict the patient's access to specialists and advanced treatments, but rather to make it possible for the patient to easily receive the information she needs to identify the best values in the healthcare marketplace. Indeed, the Diagnostician is the gateway to the patient's ability to freely exercise informed choices. To further emphasize this point, our Diagnosticians include medical specialists, and a patient is free to go to any Diagnostician who is available.

The RE·MEDI system's managed care network offers a number of advantages that other managed care plans do not. At the same time, it avoids their disadvantages.

Diagnosticians are under contract to provide certain medical services to plan members. The primary role of a Diagnostician is to perform or order whatever diagnostic tests are necessary to diagnose his patient. If the patient requires more than routine care, he prepares a written treatment plan. However, he does not perform any of the treatment procedures he includes in the treatment plan, unless the delay in obtaining treatment from a downstream doctor would compromise the patient's recovery. [Another exception discussed later allows the patient to specifically choose treatment from her Diagnostician.] The Diagnostician also may provide a dollar-limited amount of non-routine care, dispense medical advice and prescribe drugs.

It is helpful to view the Diagnostician as a medical specialist, who concentrates his knowledge and skills to determine the patient's illness. The required knowledge base is at least as extensive as that of many other specialties, and the skills required to determine a correct diagnosis are different from and may be as difficult to acquire as those required by the most challenging medical procedures. In short, finding the correct diagnosis can be a major obstacle to achieving a successful treatment. Most patients probably realize this already and therefore would happily avail themselves of the opportunity to first consult with a diagnostic specialist before seeking treatment.

Most doctors who are selected as Diagnosticians will also want to treat patients. This is no problem since a Diagnostician may treat any patient whose treatment plan has been prepared by a different Diagnostician.

Even though the separation of diagnosis from treatment constitutes a relatively minor change in the way many people receive care under managed care plans today, even this minor change can lead to dramatic changes in the healthcare system as a whole, enabling most of the system's current defects to be eliminated. However, before considering these significant benefits, let us scrutinize the Diagnostician concept more closely to ensure that we have not unwittingly introduced a Trojan horse that would lead to unexpected increases in costs or declines in the quality of care.

Separating Diagnosis from Treatment

A Modest Departure from Current Medical Practice

The extent to which RE·MEDI plan members encounter Diagnosticians depends to some extent on how large a deductible they have for their insurance coverage. The deductible is the amount of covered healthcare expenses that must be incurred during the policy period (usually a year) before benefits are paid out by the insurer. Thus, until the deductible requirement is met, all expenses are the responsibility of the insured. Moreover, the insured need not participate in the RE·MEDI managed care network until and unless the deductible has been met.

As an example, consider a RE·MEDI member who has obtained a healthcare insurance policy with a $2,000 deductible. Such a high-deductible policy might be acquired in conjunction with a health savings account (HSA), from which tax-free dollars can be drawn to pay for legitimate healthcare expenses. If the member during the coverage period has covered expenses that are less than the $2,000 deductible, then he need never see a Diagnostician. However, as we will show, Diagnosticians can offer members substantial benefits and cost savings, so members may well choose Diagnosticians for their health problems even though they are not obligated to do so until their deductible requirement has been met.

As we have mentioned, the separation of diagnosis from treatment is not uncommon within some managed care environments. Doctors who oversee the subsequent treatment of patients—a function performed by some medical gatekeepers—are an example of the separation of treatment from diagnosis. In addition, primary care doctors commonly refer their patients to specialists after performing a preliminary diagnosis of the patient's medical condition. In other circumstances, a case manager may, on behalf of an insurer, request that a physician do a consult on a patient. This physician examines the patient, arrives at a diagnosis, and then offers advice on how to treat the patient. A key difference between the Diagnostician and these other managed care providers is that the Diagnostician prepares a written plan of treatment for the downstream treating doctor to follow. However, as we shall see, the treating doctor is not even obligated to follow this treatment plan if the patient concurs.

Certainly, most doctors have become comfortable with performing treatments on patients they have diagnosed, and, understandably, they may be reluctant to accept changes in this arrangement. However, once they realize that the changes work to the advantage of their patients and provide some nice benefits for themselves as well, we believe they will come to embrace it.

A Patient's Encounter With the
RE·MEDI System

When a patient who has satisfied the deductible requirement of her health insurance policy comes down with a new illness, her first stop in the RE·MEDI system is with a Diagnostician of her choosing. The Diagnostician's total focus is to diagnose the patient so that treatment may proceed. Typically, the Diagnostician examines the patient and conducts or orders diagnostic tests. If the Diagnostician is unsure of his diagnosis, or if he is a primary care doctor and wishes to have a specialist prepare the treatment plan and assume the lead, he refers the patient to another Diagnostician. The diagnostic phase may require several visits to one or more Diagnosticians before the diagnosis can be established, but there is no reason to expect the diagnostic phase to take longer than it does in other types of healthcare delivery systems. In fact, it should take less time on average because, as explained later, Diagnosticians are recruited from among the best doctors in the local health care market. Moreover, to the extent that doctors specialize in performing diagnoses, with time we should expect gains in efficiency.

After a Diagnostician has first examined a patient, it will usually happen (roughly, nine times out of ten) that the patient can be treated completely with routine care, prescription drugs and/or home care and advice. If medication is needed, the Diagnostician writes out a prescription, which is recorded in the patient's elecronic health record (discussed in our article "Other RE·MEDI Concepts") on her encrypted flash drive. Unless the patient's illness should require subsequent medical attention, her current encounter with the RE·MEDI system ends when she has her prescription filled. For those relatively few cases in which the Diagnostician determines that the patient needs further medical attention, he will prepare a formal treatment plan. It is clear that the vast majority of medical encounters under the RE·MEDI system conclude with the visit to the Diagnostician.

Good medical practice sometimes may dictate that treatment begin while diagnosis continues. In such cases, the downstream doctor performs the treatments contained in a provisional treatment plan prepared by the Diagnostician, even while the Diagnostician attempts to narrow the diagnosis and refine the treatment plan.

Exceptions

There are three exceptions to the requirement that a doctor must follow the treatment plan of a Diagnostician. The first is a medical emergency. In a true emergency, there usually is not sufficient time to go through the Diagnostician-downstream doctor process. Therefore, all of the treatments performed by a doctor other than a Diagnostician are automatically approved by a Diagnostician after the fact. If it is a Diagnostician who is responding to the emergency, it may be necessary for the Diagnostician to perform some or all of the treatments if the patient's recovery is at risk. A related situation is if a person is undergoing surgery and an ancillary problem is discovered. It would often be prudent to resolve the newly discovered problem while the patient is in surgery, rather than to operate again at a later time.

The second exception is that, consistent with the maximum freedom philosophy that permeates the RE·MEDI system, a member can simply choose to bypass the Diagnostician. However, the member would be required to pay an additional fee. An appropriate fee would be the expected savings that result from the separation of diagnosis from treatment. At any rate, it is unlikely that the fee would be so large as to make the patient's cost greater than what it would be under the current system.

The third exception is that if the patient opts for treatment under the bundled price option, discussed in our article on The Doctor Shopper, the doctor need not follow the treatment plan. Rather, he can substitute and manage an alternative treatment plan that is acceptable to (and is accepted by) the patient. There is a very important reason for this major exception: it creates a wide highway over which innovative medical techniques and new technologies can enter the RE·MEDI system.

There are two reasons why we are confident that this third exception will not result in an abuse of the system. First, the RE·MEDI system brings intense competition to the local healthcare market, especially through its display of prices and the RE·MEDI Outcomes Index in The Doctor Shopper. Moreover we believe that doctors will be striving continually to position themselves on The Cutting Edge. Measures that reduce costs by seriously compromising performance will therefore prove counterproductive. Consequently, doctors will find it contrary to their self-interest to try to seduce patients with cheap but ineffective treatments.

The second reason is an operational principle that gives us an added safeguard. We encourage patients who are offered an alternative treatment by a doctor under the bundled price option to seek their Diagnostician's opinion of the treatment. For example, it could turn out that the treatment being proposed by the downstream doctor has been shown by outcomes research to be less effective than the treatment written into the treatment plan by the Diagnostician. Such information could be valuable both to the patient and to the doctor who proposed the alternative treatment.

Other Considerations

There are several other aspects of Diagnosticians that bear discussion because either they affect the patient or they influence how well the Diagnostician concept operates in practice. These include:

Benefits from the
Diagnostician Concept

There are many substantial benefits provided by RE·MEDI's managed care concept. Through this key concept, we:

Potential Concerns with the
Diagnostician Concept

Because Diagnosticians are generally prohibited from working on their own treatment plans, occasionally the patient will require an extra medical appointment. There are four potentially adverse effects from the Diagnostician concept that need to be assessed:

We have examined the principal objections concerning the separation of diagnosis from treatment. We believe they do not merit serious concern. At the very least, they should be weighed against the several substantial benefits that this separation makes possible.

Summary

We have considered how patients are likely to fare under the RE·MEDI system. In particular, we have been sensitive to whether a patient would view his experiences in the system positively or negatively. We have noted that while patients might occasionally experience some inconvenience, this would differ little from some current managed care systems. Any inconvenience that might occur is more likely to be outweighed by the RE·MEDI system's many beneficial features, even when considered solely from the viewpoint of the patient. These include protection for the patient against both overtreatment and undertreatment—deficiencies which characterize the current system. There is also the reduction in medical risk to the patient because of the automatic second opinion whenever the patient requires treatment from a downstream doctor. The complete freedom to choose among all Diagnosticians and among all providers is also a feature that patients should highly value. But perhaps the most important benefit to the patient is the ability to receive and use the information in The Doctor Shopper so that he may identify the best values in the local healthcare market.

The RE·MEDI system has been structured to produce high quality healthcare at highly competitive prices. Diagnosticians are selected from among the best doctors within the local market. They are encouraged to work as a team with their fellow Diagnosticians and with downstream doctors to achieve the best results for their patients. They are also encouraged to recommend to their patients the best doctors for their treatment. Because healthcare consumers will be focused on the patient outcomes information in The Doctor Shopper, doctors will become highly motivated to practice at the highest levels.