Monday, March 21, 2011

Insurance Executive Compensation and Medical Ethics

The uproar in Massachusetts about the golden parachute given to the former Blue Cross Blue Shield CEO that I posted about two weeks ago refuses to go away, as evidenced by the first two paragraphs in a front page story in yesterday's Boston Globe:
The doctor was angry. Not long after Blue Cross Blue Shield of Massachusetts urged him and other health care providers to keep their costs down, the insurer this month disclosed it had agreed to an $11 million payout for its former chief executive. In a terse voicemail, the physician told Blue Cross: You have a credibility problem.

It was the kind of call Andrew Dreyfus expected. Hired as chief executive of Blue Cross last fall, Dreyfus has been championing affordability — prodding payers and providers to work together to rein in the price of medical care following years of double-digit insurance premium increases. Then came the uproar over millions of dollars collected by his predecessor, Cleve L. Killingsworth, and headlines about five-figure annual fees paid to board members. Suddenly, the talk about lowering health care costs rang hollow.
The doctor was right!

The issue isn't dollars and cents economics. By my back of the envelope calculation, if the top 50 executives at Massachusetts Blue Cross Blue Shield worked for free and received only a handshake on retiring, there would be no visible impact on the cost of insurance for members and employers.

What's at stake is the challenge of integrating the two fundamental values a health system must serve: fidelity to the needs of individual patients and stewardship of society's resources to allow access to health care for all.

When one group (clinicians) is charged with protecting fidelity, and another (insurers) is charged with protecting stewardship, human nature and group psychology inevitably leads to mutual suspicion. Clinicians can see insurers as "uncaring bean counters." Insurers can see clinicians as narcissists who feel entitled to spend other people's money in an unchecked manner. In the 1990s, these reactions ran amok, leading to the demise of managed care.

Tension between those who are directly responsible for patient care and those who are directly responsible for stewardship of collective funds isn't peculiar to the United States. I observed the same tension in England between clinicians and the National Health Service. The tension arises from a classical good v good conflict. It is good to care about patients and to seek to do everything possible for them (fidelity). And it is good to care about containing health care costs so that individuals and society have the wherewithal to address other important areas of life (stewardship). As important as health care is, individuals and societies have other interests as well!

For us to get a grip on health care costs, insurers - no matter whether they are private or public, for profit or not for profit - must be able to work collaboratively with clinicians. For this to happen, they have to be seen as understanding and caring about core clinical values. Appearance counts for a lot. An $11 million golden parachute to a departing CEO and high compensation for a board of directors will lead many clinicians and patients to see insurers as "uncaring bean counters" even if Albert Schweitzer or Mother Theresa is in charge of the organization!

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