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Jim Astuto has been a regional manager in the GTE Healthcare Management Group since 1991. He came to GTE through its merger that year with Contel. His experience with mergers will come in handy later this year when GTE, ranked 55th on the Fortune 500, completes its merger with 33rd-ranked Bell Atlantic to form Verizon.
Astuto is responsible for the health benefits of more than 65,000 union, nonunion, and retired employees in 22 states in the eastern half of the United States with total annual health care expenditures of more than $250 million. He also oversees GTE's corporatewide pharmacy benefit program that is administered by Merck-Medco Managed Care.
Astuto is vice chairman of the Georgia Healthcare Leadership Council, an Atlanta organization of major health plans and employers seeking to improve the quality and efficiency of health care in the state. A Pittsburgh native, Astuto is a graduate of Penn State University and Point Park College. He spoke recently with Senior Contributing Editor Patrick Mullen.
MANAGED CARE: What principles inform what GTE is trying to do when it buys health benefits?
JAMES ASTUTO: We have a simple saying that we tell our plans: We're looking to do no harm to our beneficiaries, and we want to spend our money wisely. We want to maximize these resources, because they aren't endless.
MC: To what degree does spending money wisely include promoting preventive care?
ASTUTO: We're beyond prevention now. We're going in with interventions to stop dangerous practices. We just did an intervention in our senior group about the GI drug Propulsid. Technically, it's been recalled, but it's still on the market. We had about 400 elderly people who were at high risk of death by taking that drug. So we got some people who are experienced in geriatric medicine and we intervened. We're going to get 90 percent of them off that drug. The next challenge we're going to tackle is polypharmacy, which also concerns senior citizens. We've got many people who are taking more than nine prescriptions per quarter, 40 scripts per year. We're going to analyze those drugs and look at the beneficiaries' medical records, medical history, and claims. There are indications that these people are at risk for problems, so we're trying to reduce polypharmacy where it's inappropriate.
MC: What's the biggest change in the health benefits landscape that you've seen in the 20 years you've been doing this?
ASTUTO: There's been consolidation. Not all the plans are around that used to be around. That's probably a good thing. But in other areas, not much has really changed. Twenty years ago, I sat in a meeting with physicians who said that all we had to do is pay them more and things would be all right. I'm still hearing that same message. We've got people who come in here all the time and say all we need to do is pay them more and they'll be more productive, and things will be better. Nobody ever shows up with data that quantifies how it's going to get better if we pay them more. I often say, "In God we trust, the rest of you bring your data." Another thing that hasn't changed in 20 years is that health care is still a local phenomenon. You can't manage it from afar. We have a market-by-market strategy. That's what has made us successful. We have never just signed up with Cigna, Aetna, United, or anybody else and said, "Do this everywhere for us because we know you're wonderful." You may be good in Tampa, but I don't know if you're any good in Atlanta or New York City. Plans must stand on their merits market by market.
MC: Are there any plans you're working with that are at least making progress in giving you the information you need?
ASTUTO: We would be very confident in saying that prepaid group models are absolutely the best plans. They can do the job and they can show it to us. Group models will always excel over IPAs. That was the purpose of HEDIS, to start quantifying which plans were the best.
MC: How useful is HEDIS?
ASTUTO: We use it extensively, but I'm wondering how many plans use it. They're more into keeping score. I've never seen basic business processes really applied to health care. I don't understand this. We [at GTE] are constantly trying to measure how good things are. We define the problem, develop a solution, measure where we are, then are aggressive in innovation to make it even better. And we're not afraid to make a mistake, as long as we learn from it.
MC: Why hasn't that kind of thinking taken hold in health care?
ASTUTO: It's clear as a bell to me. This is the biggest business in America. It's over a trillion dollars and in the next couple of years, it's going to go to $2 trillion. If you get into the real business process of measurement, management, and improvement, some of this business is going to be significantly reduced. Look at the Institute of Medicine report on medical errors. If you just eliminate some of the preventable errors, there could be $80 billion to $100 billion in savings. Who's going to give the money up? People are interested in making more, not less. We're talking about reducing medical costs by $100 billion. The industry is not interested. We're willing to pay more for performance. Today, whether you're the worst doctor in town or the best doctor in town, health plans pay the same. That doesn't work. I don't know of any business that does that. The CEO of the biggest outfit producing the best results doesn't get paid the same as a guy running Joe's Garage. But in health care, they want to pay it that way.
MC: Does this tell you that essentially managed care has failed? Wasn't the idea supposed to be to cut costs and improve quality?
ASTUTO: It was supposed to be managed care and it became managed costs. The other thing is that I think managed care companies blurred their product lines. PPOs look a lot like HMOs in the big national models. The big IPAs are managing costs more than care. They're keeping score. They say they've improved their HEDIS scores, but we ask them, "Have you improved people's health?"
MC: So the next step for HEDIS is to embrace outcomes and provide those numbers?
ASTUTO: Right. There are some simple measures there, but nobody's been willing to take a look at them. We talk about diabetes like it's just been discovered in the last two or three years. I thought it's been around for a long time. I want to see [more than just] how many diabetics got their eyes examined. How many diabetics in a plan went blind because they didn't get an exam? Why can't we start measuring the level of blindness? How many of them lost their feet? How many died from renal failure? With better care, these things are all preventable. Those are the types of things we're striving to achieve. We've put in mammography screening. The goal wasn't to get more women to have their breasts examined. It was to save lives. If we haven't diminished the rate of breast cancer in women, then it's a waste of time. The plans asked what our goal was. I said I thought the answer was pretty simple. Our goal is to eliminate breast cancer as a cause of death. About 40,000 women a year died from it. I'm looking at zero as my number. We'll never get there, but there's no harm in trying. If we're still at 40,000, then guess what? We've wasted a lot of time and money. We can do a lot better. In business, we're always looking to do better.
MC: New drug therapies that replace procedures keep coming to market, and the supply of physicians exceeds demand. Doesn't that give employers more leverage to tie physicians' pay more closely to their performance?
ASTUTO: Absolutely. A lot of big employers are on that track. They're saying, "Look, we're tired of paying for procedures or hours worked. We will pay for results."
MC: What's your take on the argument that advanced practice nurses and nurse practitioners can do a lot of what primary care doctors do?
ASTUTO: We run a couple of primary care centers in Tampa exclusively for our employees, and we use physician assistants and nurse practitioners. They do a lot of the up-front work for the docs. Physicians have got to stop looking at this as infringement on their territory, and instead look at technology and these extenders as tools that are going to help them be more efficient. Still, it's true that there's just not going to be room for all the physicians in the future. Not too many years ago, there were workers welding cars together at General Motors and Ford. You can't find a person welding cars together today. The UAW lost membership. That's reality. I'm sorry. We used to have operators saying, "What number can I get for you?" It's all gone. This business about not embracing technology really infuriates most big employers. Except for billing, these guys haven't reached 1980 in how they manage their practices. They haven't embraced technology as a tool to help enhance care. We're perplexed by that. The rest of the world is embracing technology to increase productivity, and these physicians are saying "Oh, no, no, no." It all comes down to job protection. They think that technology is going to replace them. It may do that. Still, you should be able to go into an office and register electronically. I'm here today, and here's my new phone number. Yeah, this is my birth date, my height and weight. Why am I here today?" Maybe you go to a pick list. "I think I have the flu" or whatever. The nurse should weigh you, take your blood pressure, and put all that into the system. By the time you get into the examining room and the physician comes to see you, the machine should say, "Dr. Jones, I think he has the flu. There's nothing to do today." The doc looks him over, and agrees or doesn't. Say the patient has a bacterial infection. "Let's give him amoxycillin or something like that." So you order that, and the system says, "Well no, you can't do that. He's allergic to penicillin." So you prescribe a different drug, and send the order down to the pharmacy and it will be filled when he gets there. It's in the formulary and the health plan's going to pay for it, and it's going to be $5, big deal. The way things are done today is out of date. This would be like the banking industry still manually keeping your savings on a passbook. We wouldn't tolerate that. I can go worldwide and get money out of my checking account. You get sick, and nobody knows what's wrong with you. It's ridiculous.
MC: Your general tone sounds like you're tremendously frustrated and pretty angry. Is that a fair assessment?
ASTUTO: I'm frustrated that the delivery system hasn't stepped up to the plate, admitted that there are problems, and asked how do we work together to make it better? They're all in denial, as if it's not their problem.
MC: Are primary care docs as likely to feel that way as specialists?
ASTUTO: Not really. It's the specialists. For primary care docs, the important thing, as Kenny Rogers used to sing, is to know when to hold them and know when to fold them. They need to know when to treat patients and know when to refer them.
MC: Does the gatekeeper model make sense?
ASTUTO: We don't like that phrase. Primary care doctors should be patient care managers, care coordinators. If you think somebody has an allergy and he needs to see an allergist, let's get him to one. If he has warts and moles and lesions or things on his arms that look a little dangerous, get him to a dermatologist. Know what you don't know.
MC: When the gatekeeper term was in vogue, did it go too far in the other direction, toward having the primary care doctor handle everything?
ASTUTO: Absolutely. I think they got in over their heads.
MC: Has that turned around?
ASTUTO: I don't think so yet. We're trying to turn it around. United Healthcare is trying to make that happen. The other problem is specialists who get hold of patients and never let them go. There has to be more care coordination between the two. The PCPs have to know when to pass patients on, and specialists have to send them back when they're finished. Don't put primary care physicians in a position where you're making them the jack of all trades and master of none.
MC: Were you surprised by the IOM report on medical errors?
ASTUTO: No, we knew that for years. I think it's understated. I heard a quote from the CEO at Bethlehem Steel. I guess he sat on the board of a hospital system that said that in five years they'll correct 50 percent of their errors. He was shocked at that. He said, "I sell steel to General Motors and Ford and Chrysler. If I call them up and say, 'Yeah, I've got a lot of defects, but give me five years and I'll cut them in half,' I won't be here in five years." It would be like us at GTE saying, "We know your phone only gets a dial tone 50 percent of the time, but we're going to get that to 75 percent in five years. Give us a chance." Nobody would tolerate it. I don't understand why we continue to tolerate this in health care when we wouldn't tolerate in any other business. And health care is a business. Health plans are businesses, whether they're for profit or not for profit. It's not social work. Come on, Albert Schweitzer's dead. Everybody has to make a living. We're not opposed to that. We just want to make sure that there's value.
MC: You said that group models are the plans that are doing the best work. Are people willing to join them?
ASTUTO: We've had a lot of success getting them in. We work hard to measure them. We look at NCQA accreditation, HEDIS scores, satisfaction surveys, how they manage care, and the care they provide. We give incentives to people to go there, in the form of richer benefits and lower contributions. We put our money where our mouth is.
MC: If you were running a managed care plan, what products would you offer?
ASTUTO: It would be what I would call a pure HMO, highly managed with a select network. It would include best-of-breed doctors and hospitals, not the entire local phone book. I would price that accordingly, with comprehensive benefits. I'd offer a PPO at the other end of the spectrum, with a network that includes everybody and at a higher price.
MC: What's your opinion of point-of-service plans?
ASTUTO: We offer Kaiser's point-of-service plan, but out-of-network utilization is less than 1 percent. Point of service is fine, as long as it's built off a tightly managed HMO.
MC: If you had to redesign the system, would employers still be playing the central role that they backed into during World War II?
ASTUTO: That's a hard question, because we're there, and I don't know if we're ever going to leave. I just don't see that happening. Our company spends $600 million a year on health care right now. For our employees to buy the same thing on the market, I've got to go give them another $200 million on top of that to offset the tax consequences. I don't think anybody in this organization is willing to spend $800 million instead of $600 million to get what we have today.
MC: You've said that if you can't get voluntary cooperation to get rid of paper prescriptions, you might try to get some legislation to outlaw them. Are there any other kinds of state or federal health care reforms that would be useful?
ASTUTO: No, I haven't seen any that work. Medicare is a federal program that's tried to get involved in health care. It's almost 40 years old and hasn't worked yet. You can legislate benefits and coverage, but you can't mandate quality. A handful of big employers are involved, but purchasers need to get more involved than they are [in terms of promoting] quality. The problem is that we got into this business of demanding cost reductions, and health plans responded. Now we need to be out there pushing the need for quality and safety.
MC: What would be the right role for government to play in all of this?
ASTUTO: Step back and get out of the way. The government hears of something that went wrong five years ago, and by the time it passes legislation to deal with it, the problem's been solved. They're reacting to the proverbial flea on the dog's tail. We have consumer-choice legislation here in Georgia so people can go anywhere they want and still be in a managed care plan. In Georgia, only a quarter of the overall population is in HMOs or managed care. Most people are very satisfied with what they have, and they elected to be there. So why are we legislating?
MC: Once the merger with Bell Atlantic closes, how does that change things for you?
ASTUTO: We become an even bigger buyer. I'm estimating, because I don't know their costs, but it probably puts us at a billion and a half to $2 billion worth of purchasing. We'll get down to one benefits plan, and it will be best of breed.
MC: Do you try to get involved in changing people's unhealthy behavior, such as smoking or obesity?
ASTUTO: We have some incentive programs. The only thing we have right now is for our salaried employees. They have a flex cafeteria plan. We make them pay a little bit more for smoking. They get fewer credits to spend than those who don't smoke. We do a lot of things on web sites. We're always looking at new ways to help employees modify their behavior.
MC: Do you get much resistance from people who say what they do on their own time is none of the company's business?
ASTUTO: It's all voluntary. Somewhere down the road, we want to get into rewarding good health. Maybe in the future those who really want to work on managing their health will have a different benefit package from those who don't. It's like those who want to be in an HMO versus those who want to be in a PPO. Let's take a diabetic who is saying, "I want to manage it." She watches what she eats, exercises, and takes her medications properly. She may not get to the ultimate goal, but just her participation in managing her health would give her a reward.
MC: What are you doing with the Internet?
ASTUTO: All our annual enrollments are web-based now. We're trying to tie more information to the web, so people can use that as an access point, to find out more about providers, more about their health. We want that to be the launching point for them.
MC: Do you see much of a role more on the clinical side for people being able to better manage their own care using the net? Or is that getting into dangerous territory because so much bad information is out there?
ASTUTO: There's a lot of bad information. As long as we could be assured that the information is legit, then I think that's fine.
MC: Are you hearing much these days about people going to their doctors demanding a drug they've seen advertised?
ASTUTO: Plans tell us that direct-to-consumer advertising is having a big impact on drug consumption. Our view is that there are still tremendous sales forces out there pushing drugs on doctors. A JAMA article in January talked about irrational prescribing behavior due to sales promotion. Drug companies spent $21 billion on research last year and I think over $11 billion on promotion. This creates a consumer group willing to take the drug, and creates a prescribing group willing to prescribe the drug. From the drug industry perspective, you can't ask for a better situation.
MC: How do you deal with that as a purchaser?
ASTUTO: We look for health plans and pharmacy benefit managers to ensure that drug utilization is appropriate. Some of these drugs are very good for certain subsections of the population. But the whole population shouldn't be on them.
MC: Should direct-to-consumer advertising be forbidden?
ASTUTO: We advertise. We tell you to buy our phones. They're allowed to promote their products. People complain about drug companies doing their jobs. They're not the guilty parties. Their job is to sell drugs. Our job is not to buy drugs we don't need, no matter how good the price.
MC: Should employers pay for lifestyle drugs like Viagra or Propecia ?
ASTUTO: Our plan only pays for treatment of illness or injury. That's not an illness. You need Propecia to grow your hair? That's OK. Just get it on your own nickel. We're at the point of saying that it may also be on your own nickel if you want pizzas and tacos every night and upset your stomach.
MC: In the time you've been in the health benefits business, managed care went from being the great hope of the future to the great enemy of the people. Do you get the sense that the antimanaged care wave has crested?
ASTUTO: Oh yeah. We're going back the other way. The big companies I'm talking to say we need more management to ensure good quality and improve safety. We need more oversight, because providers don't seem to know what they don't know. It all starts with the delivery system. Most large employers don't see managed care as a problem. Quality of care is the problem. That was in the IOM report. Managed care is part of the solution. We need to keep working on quality. If we can make care better and better, there will be fewer and fewer problems. If people are getting great care, there's going to be no complaining.
MC: Thank you.
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