HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Thursday, December 8, 2011

Local 6's Integrated Delivery System

Robert Kuttner has an excellent article on the Local 6 Union's health plan in the American Prospect.  The plan's success at reducing costs and improving quality may make it a good model for those who claim we need to go beyond ACO's to integrate delivery.  A few quotes from the piece:

Insurance costs generally are increasing at 9 percent to 10 percent a year, according to the Kaiser Foundation. By contrast, the costs of the hotel workers’ plan have been increasing at about 1 percent a year for the outpatient services that it provides directly and about 10 percent per year for inpatient services that are contracted with area hospitals. So the plan’s overall costs have been going up at about 3.5 percent a year. . . . 

[B]y dispensing with insurance-company middlemen, the plan eliminates a whole layer of costs. A doctor treats the patient according to his or her best medical judgment. There is no army of staffers dealing with patient billing, claims, and insurance reimbursement; no arguing with insurance--company case reviewers.  Second, doctors are all on salary. So there is no incentive to undertreat or overtreat . . . .

Further, the plan’s core principle is unlimited access to primary care, with all of the prevention and early--detection benefits that approach brings. . . .All doctors are salaried, with general practitioners being paid slightly more than specialists, in order to reward primary care. The scale for GPs ranges from $85 to $115 an hour, or around $200,000 a year or more. The plan has no trouble enlisting good doctors, since the conditions of medical practice elsewhere have been deteriorating under relentless pressure from insurers to cut costs and justify their medical decisions. . . .

The article also mentions tense negotiations with the RAPER specialties (Radiologists, Anesthesiologists, Pathologists, and ER doctors), which apparently have a good deal of bargaining power: 

Most New York hospitals now contract out these services to specialists’ groups who charge whatever the market will bear. In recent bargaining with one of its hospitals over a proposed rate increase, the hotel workers were told that the increase partly reflected higher charges billed by anesthesiologists. Greenspan [a union negotiator] requested the hospital to push back. Not our problem, the hospital contended; we don’t control these costs. “We told them, OK, next week our members stop using your hospital,” Greenspan says. The costs came down.

The plan's success may be complete when robots can reduce the cost of radiology and pathology.


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