HMO Execs Debate How to Heal Their Image

Dorothy Guellec


HMO top brass have been meeting in Texas to find ways to improve “their

battered public image.” They are divided as to how to do this. The three big

ones United Health Group, Kaiser Foundation Health Plan and Humana suggest

industry wide changes that would restore physicians to their rightful place

making treatment decisions, while the other CEO’s favor a multimillion-dollar

PR campaign. The companies are split as to what to do but they all see the

drastic drop in stock values. They are also worried that Congress will pass

legislation containing a patient bill of rights sometime this year. The CEO’s

of the nation’s 15 largest managed-care companies began meeting in the fall of

1999. The decline in stocks of all the managed care companies has not been

discussed in Dallas, according to two officials who have attended, rather the

goal is “a recognition that you need to have public approval and public trust,

and a desire to build it,” says Roger Bolton, an Aetna senior vice-president

who is president of the Coalition for Affordable Quality Healthcare.


group of managed-care companies and related trade associations, formed two years

ago to promote “a better perception of managed care, has been working with the

15 CEO’s since they began meeting in the fall of 1999.” The Business Week

article continues to say “last year the coalition spent $10 million on TV and

print ads. But the PR campaign hasn’t done much to blunt criticism of the

managed-care industry.” The ads have done little to stem the flow of lawsuits,

including 17 class actions filed since October. The heads of such giant

companies as Aetna, WellPoint Health Networks, Group Health Cooperative of Puget

Sound, Cigna, PacifiCare Health Systems are considering spending as much as $40

million on an advertising blitz. Analysts think such a move would be

“cosmetic”. Todd Richter said “it’s taken them 20 years to get into the

predicament they’re in now, and it can’t be reversed in a short period of



on the other hand is genuinely trying to heal this industry. The Committee to

Defend and Improve Health Care filed a proposal to be on the November ballot in

Mass. In order to succeed 57,100 signatures are needed, but they are well on

their way according to economist Rashi Fein. I reached him on Sunday February

13th. Lead signers include


Bernard Lown, winner of the 1985 Nobel peace prize and the chair of the

Committee To Defend & Improve Health Care


Daley, President of the MA Nurses Association


Kenneth Galbraith, economist and author


Fein, member of President John F. Kennedy’s Council of Economic Advisors


Mitchell Rapkin, professor of medicine at Harvard Medical School, CEO of Care

Group, Inc., former president of Beth Israel Hospital


Charren, founder of Action for Children’s Television


purpose of this act is to ensure that there will be access to health care for

all Massachusetts residents, including strong patient protections and a bill of

patient’s rights.


2 of the act provides for a patient centered system to be in place no later than

July first, 2002. HMO’s would be required to abandon most efforts to control

costs. Closed networks would be banned, so patients would be guaranteed the

right to freely choose their health care providers, to have second opinions and

to appeal denials of care. Additionally, patients would have the assurance that

health care personnel would act solely in the patients’ interests. Plans’

and insurers’ administrative expenses would be capped at 10% of revenues, with

the other 90% mandated to be spent on patient care, for-profit HMO’s would

stop selling in Massachusetts. A moratorium on conversion of nonprofit care

insurers and hospitals to for-profit institutions would be declared until all

the other provisions of the bill were met.


course this is a broad act, and I could not outline all the provisions in a

commentary, but Massachusetts, it seems, has paved the way for big changes. The

Legislature has the option until May 3rd to pass the law itself, or try and

satisfy the zeal and hard work of the petitioners with a watered down version.

If it fails to do so, and if the petitioners collect another 10,000 signatures,

which seems a foregone conclusion (remember they collected 57,100 to get this

far) the measure will be on the ballot in November.


all know where this effort came from. It started 4 or 5 years ago and now there

is growing anxiety, despair and anger from patients, physicians, nurses,

everyone except shareholders, the CEO’s of HMO’s and those who persist in

thinking that government has no place offering services in a democracy. What a

challenge – to try and “supplant capitalism with democracy.” History is

clear in this, an expression of the collective will of the people, at least in

Massachusetts, on controversial issues of importance to the community can make

all the difference. I believe that some civil disobedience is inevitable.


certainly worked in the 60’s to halt our illegal and unethical participation

in Vietnam. Recently it worked in Seattle. An expression of the collective will

to contrast with savage capitalism. The fictions of the market system are

focused upon individual transactions, giving a few ride to capital, while

disregarding society and the environment as mere “externalities”.



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