NEW DEVELOPMENTS IN HEALTH CARE GIVE MARKETPLACE OPTIONS

Recent announcements in the health-care industry have signalled that market-driven change is coming to Southeast Missouri. Managed care is coming to the region. Various forms of managed care have long prevailed in other parts of the nation, but until now, managed care hasn't reached this area as traditional, fee-for-service medicine held sway.

Last June saw the formation of the region's first physician hospital organization, usually called a PHO. It includes five hospitals and more than 200 doctors. Called MedAmerica HealthNet Inc., the PHO links the staff and services of both Cape Girardeau hospitals with Missouri Delta Medical Center in Sikeston, Perry County Memorial Hospital in Perryville and Dexter Memorial Hospital in Dexter. Health care providers in the network agree to provide services for discounted fees in order to keep patients from leaving the area for treatment.

Two weeks ago, officials of the PHO and Alliance Blue Cross/Blue Shield announced a proposed new insurance package. Available to all companies with three or more employees, the new insurance product is to be called HealthNet Blue. The plan will, according to promoters, offer higher benefits when using MedAmerica providers, but members may still choose a doctor or hospital outside the network. Promoters are awaiting approval from the Missouri Department of Insurance before they can sell the new product.

Humana, one of the nation's largest managed-care insurers, is working to expand its health-care products into Southeast Missouri. Initially, Humana is coming to the region as a provider of health insurance coverage to between 2,000 and 3,000 employees of state government.

At first, Humana will sell a preferred provider option, called a PPO. PPOs allow covered employees to choose from a rather generous list of doctors and hospitals. Patients pay an initial deductible amount in cash, beyond which the insurance company pays a set amount, for example 80 percent of all charges.

Later on, Humana intends to set up a health maintenance organization, known as an HMO. This is the most restrictive, least expensive arrangement for managed health care. Under an HMO, employees choose a primary care physician from an approved list. This doctor meets routine needs and serves as a sort of gatekeeper who has the authority to refer patients to specialists in various fields. The role of the gatekeeper is to hold down costs by avoiding unnecessary medical treatment. Deductible payments usually aren't required. Instead, patients pay a modest charge each time they visit their primary care doctor. The insurance plan pays the rest. The idea is that HMOs trade lack of choice for low cost.

Speaking for the Southeast Missouri Business Group on Health, an association of the area's largest employers, executive director Mary Dunn expressed excitement about Humana's bringing more competition to Southeast Missouri. "We feel more competition is needed in Cape." Dunn said the group hasn't encouraged its member companies to switch to Humana. "It's their choice. We just see this as another option."

It is to be hoped that choice and flexibility can be maximized as these managed-care plans seek to hold down costs. There is every reason to hope and expect that this will be the case. In any case, such reforms can be understood as market-driven responses to a changing medical marketplace. As such, they are infinitely preferable to any form of government-run medicine. These changes constitute one of the most important stories occurring today, one that all businesses and their employees should follow closely.