Competing Demands for Healthcare Interests

Conflicts of interest abound in healthcare, presenting major ethical and legal problems. With the exception of insurer-owned healthcare institutions, hospital owners and insurance providers often have competing or conflicting interests. For the most part, though, managing costs is a tremendous concern for both parties. Hospital owners or administrators might be driven more by issues related to overall patient outcomes, human resources management, and organizational culture, whereas insurers frequently seek methods of denying care to better manage their own costs and promote profitability. Insurance companies are generally more transparently profit-driven, with healthcare institutions sometimes claiming to be driven more by the motive to provide care to patients at whatever costs. However, ethically motivated healthcare institutions are becoming less common in the United States as purely for profit institutions have come to dominate the healthcare landscape (Grey, 1986). Healthcare administration education programs have failed to provide competency measures ensuring that the leaders of the future are equipped to mitigate the financial concerns of insurers with the ethical and care-driven concerns of actual healthcare workers and the patients they serve (Huppertz, Strosberg, Burns, et al, 2014). As insurance companies and healthcare administration collude in the creation of a profit-driven model, the quality of care diminishes even as costs rise. As Pfeffer (2014) points out, the United States spends more than twice as much on healthcare, measured both by person and by total percentage of GDP, versus other industrialized nations and yet ranks 27th for life expectancy and similarly low on other public health measures. Insurance providers and hospital administrators frequently work within completely discrete ethnical universes. Clearly, the current system fails to live up to the ethical duties of healthcare, and needs to be radically reformed to provide an overarching ethical paradigm.

The Administrator Perspective
Administrators of healthcare organizations are taught, and often profess, to be “moral leaders who articulate the hospital’s mission and vision to the public community,” (“Becoming a Hospital CEO,” n.d, p. 1). For the most part, healthcare administrators will live up to this duty, but when insurance companies own their hospitals or institutions, the mission of the administrator shifts away from a moral message and more towards one that is responsible for meeting financial objectives. Granted, administrators always work with their institution’s Chief Financial Officers because all institutions must work within their operating budgets. Whether the hospital is run as a for-profit or a non-profit matters a lot less than the overall “macro environment” in which administrators operate (Shi & Singh, 2014, Digital Edition). That macro environment is complex and includes medical ethics, legal parameters, reimbursement models, delivery modes, governmental regulations, and a host of other critical variables. Whereas the insurance provider has a much simpler objective, driven by financial expediency, the healthcare administrator has been pulled in a number of different directions, serving too many competing interests. One of the greatest challenges from the administrator’s point of view is balancing the ethic of beneficence with the responsibility to operating within the institution’s budget.
Patients are essentially clients of the healthcare institution. Like clients who patronize other businesses, patients sometimes want or need medical treatment for which they cannot afford. When those treatments or interventions are medically necessary in an obvious way, the administrator may authorize treatment in spite of the patient’s insurance company having denied coverage. In cases like these, the administrator risks serious financial or political repercussions. Yet withholding treatment from patients based on the insurance company’s reluctance to pay also puts the administrator in danger of liability and malpractice. Insurance companies serve as cost mediators, presumably increasing access to medical tests and procedures that would be cost-prohibitive out of pocket. Each patient has a unique insurance plan, meaning that each patient’s decisions need to be considered independently. From the administrator’s perspective, meeting patient centric-goals is usually a major priority that would mandate the delivery of services. Complicating matters is the fact that administrators are also responsible for meeting specific population health outcomes: the metrics that they can use to show how effective their institution is in offering quality care. To prove to all stakeholders that their institution is meeting its obligation to provide care for patients, healthcare administrators need to offer quantifiable evidence. Patient outcomes can be measured in a number of different ways, though. Some administrators might want to claim that reducing the amount of time a patient has spent in the institution is a key metric; others may focus on mortality rates, others yet on funds allocated to nonessential services. Administrators can easily manipulate their institution’s performance metrics, via institutional policies related to recording data or focusing on only the metrics that matter. As Hailsmaier (2013) also points out, “there are still disagreements over what should be considered necessary or appropriate care, or where to draw the line between personal and collective financial responsibilities,” (p. 1). Both insurance providers and administrators need to decide what procedures and practices constitute essential services.
The Insurance Perspective
Health insurance theoretically “helps keep people functioning normally and it protects their financial security,” (Saloner & Daniels, 2011, p. 815). Unlike healthcare administrators, though, insurance providers do not operate within an ethical landscape. Their businesses are driven by purely commercial reasons, and they are not at the front lines of care. Healthcare administrators work with their teams of doctors and nurses to provide for patient needs, and are held accountable to overarching ethical goals like beneficence, patient autonomy, and non-maleficence. Insurers generally maintain a hands-off approach to ethical questions, deferring that responsibility to the healthcare provider. Instead, the ethical framework within which the insurance company operates is related more to maximizing shareholder value. Their different ethical paradigms are one of the main reasons why healthcare administrators and health insurance providers are not always on the same page. When an insurance provider refuses to cover what an administrator deems to be a service that is essential to ensure a positive health outcome in an individual patient, the administrator is in a difficult position. Legally and ethically obliged to provide care, the administrator then meets with serious ramifications when operating costs skyrocket. Acquiring healthcare groups and hospitals as part of their overall financial strategy has been one way the insurance sector has responded to challenges. However, the success of payer-owned hospitals has been mixed at best (Gamble, 2011). In some cases, the payer manages costs better when its organizational mission and goals are perfectly aligned. Yet in other cases, the payer-owned facilities “alienated” healthcare workers uncomfortable with the idea that they are more answerable to the insurance company than to patients (Gamble, 2011, p. 1). Because the insurance providers are footing the bills, though, they do take aggressive stances on their policies, and pressure administrators to conform to their goals.
Also complicating matters of insurance companies is the fact that there is great diversity among healthcare institutions. Whereas all insurance companies are to a degree similar in their overall objectives, healthcare organizations are pluralistic. In the United States, there are profit-driven and non-profit institutions, institutions that are linked to government organizations and those that are fully independent. Different ownership models complicate the relationships between the provider and the payer. Unlike healthcare administrators, insurance providers do not consider uninsured patients as clients. Insurance providers may operate within the managed care format, which allows for strident cost accounting (Sekhri, 2000). However, insurance providers have come under increasing scrutiny and are now facing existential crises due to “unsustainable” business practices, “too low” provider reimbursements, and most importantly, a “substandard” quality of care (Sekhri, 2000, p. 835). Pfeffer (2014) also points out that collusion between payer and provider has led to bloated administrative costs. Denial of coverage and care is one of the main means of cutting costs from the payer’s point of view, and complicated contracts also prevent patients from understanding their rights.
Mutual Goals
Effective resolutions to the conflicts between healthcare providers and insurance companies are possible when both parties and all stakeholders focus more on mutual goals than on clashes of interest. Both insurance companies and healthcare administrators have a shared goal of reducing and/or managing costs. On this basic level, the insurance provider and healthcare institution can collaborate on the best means of consolidating administrative costs and marketing budgets.
Both insurance provider and healthcare provider have a vested interest in helping patients achieve their healthcare objectives as cheaply as possible. The hospital owner or administrator also wants to empty beds, liberating them for the next patients who need them, and both the insurer and the provider are interested in providing high-cost, cutting-edge treatments to patients who can afford them. Making all the best treatments and technologies available to all patients, regardless of ability to pay, may be an idealistic goal but one that can potentially be reached via effective policy interventions. If insurance is made to defer to an ethical dimension of healthcare, then a conversation between healthcare providers, patients, and policy makers can create a more effective insurance program.
Beyond the need to keep costs down as low as possible and maximize overall public health outcomes, the goals of the payer and the provider may clash. All other shared goals, such as reducing legal liabilities, can be subsumed under the umbrella of financial management. Focusing on the shared goal of effective financial management, insurance companies and healthcare administrators do need to collaborate on effective solutions to the problem of bloated healthcare budgets.
Suggestion: Focus On Prevention and Public Health
Maintaining long-term health through preventative care is something that both healthcare institutions and insurers can agree on, because preventative care can lead to lower long-term costs. Health care administrators, policy makers, and insurance providers need to collaborate on a system that actively encourages patients to receive regular screenings. Likewise, healthcare administrators and insurers need to work with physicians and nurses to more actively work with patients whose lifestyle is causing them to seek medical treatments for preventable problems.
Suggestion: Transforming Leadership
Healthcare administrators do work within various organizational cultures, depending on whether their institutions are private and for-profit, public, or religiously affiliated and non-profit. Leadership models for healthcare administrators do not need to change depending on the structure of the organization, though. As Trastek, Hamilton & Niles (2014) point out, a servant leadership model is the one most conducive to balancing the equally important demands of operational cost management with the ethical objectives to providing the best quality of care for patients.
Conclusions: Policy-Driven Initiatives
The Affordable Care Act has helped raise awareness about the fundamental weaknesses in a healthcare system that is driven by two competing demands, two ethical frameworks. Affordability and accessibility are ethical problems that can be resolved with effective public policy. Insurance companies need to subsume their demands for profitability to the overarching ethic of patient care. Patient care in the United States can be both cost-effective and accessible. A single-payer system might resolve some of the current problems, but until the American political landscape changes, public health policy needs to be driven more by the healthcare administrators than by insurance companies.



References

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Gamble, M. (2011). The quiet takeover. Becker’s Hospital Review. July 11, 2011. https://www.beckershospitalreview.com/hospital-management-administration/the-quiet-takeover-insurers-buying-physicians-and-hospitals.html
Grey, B.H. (1986). For-Profit Enterprise in Healthcare. Washington DC: National Academies Press.
Hailsmaier, E. (2013). The complexities of providing health insurance. The Heritage Foundation. Feb 25, 2013. http://www.heritage.org/health-care-reform/report/the-complexities-providing-health-insurance
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Pfeffer, J. (2014). Why health insurance companies are doomed. Fortune. Oct 20, 2014. http://fortune.com/2014/10/20/health-insurance-future/
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Sekhri, N.K. (2000). Managed care: The US experience. Bulletin of the World Health Organization 78(6): 830-844.
Shi, L. & Singh, D.A. (2014). Delivering Health Care in America. Jones & Bartlett, eBook.
Trastek, V.F., Hamilton, N.W. & Niles, E.E. (2014). Leadership models in health care. Mayo Clinic Proceedings 89(3): 374-381.