A Model of Health

In 2005, when Local 6 won its first union contract at the boutique Time Hotel on West 49th Street, Angel Aybar, then a 21-year-old room attendant responsible for checking, cleaning, and restocking minibars, not only got a raise from $10 to $16.50 an hour; he became a member of a uniquely effective health plan. The New York hotel workers’ plan provides comprehensive coverage at its own health centers, including full dental and optical care, with no deductibles or co-pays and a core philosophy that emphasizes primary care, wellness, and prevention. Aybar even credits the health plan for his marriage.

“My wife and I had been sweethearts since junior high,” Aybar says. “She was working, and they were taking over $100 a month out of her paycheck for her health insurance. I guess it’s not very romantic of me to say this, but it was the union health plan that pushed us over the edge to get married. She was getting chronic headaches. They kept telling her it was just stress. Her first visit to the union plan, they did an MRI and found a small tumor. They treated it, and she’s fine. Now we have a two-year-old son. I would do anything for this union, just because of the health care. It lets me sleep at night.”

The plan may well be the best in the nation at providing so much coverage while effectively constraining costs. All doctors are salaried, with general practitioners being paid slightly more than specialists, in order to reward primary care. The scale for GPs ranges from $85 to $115 an hour, or around $200,000 a year or more. The plan has no trouble enlisting good doctors, since the conditions of medical practice elsewhere have been deteriorating under relentless pressure from insurers to cut costs and justify their medical decisions. “I see about 35 patients a day, and nobody is breathing down my neck,” says Dr. Andrew Sinesi, a pediatrician who practices at the plan’s Queens health center. “I have all the time I need.”

In the office of Dr. Robert Greenspan, who has headed the plan for 12 years, hangs the official charter signed by New York Governor Thomas E. Dewey in 1949 authorizing Local 6 to operate the nation’s first medical practice run by a union. From a small clinic on Manhattan’s West Side, the plan has grown into five comprehensive health centers, serving approximately 88,000 hotel workers, their family members, and union retirees. Even those who’ve been laid off keep their health coverage. The plan boasts New York’s highest rate of patient satisfaction. In the most recent survey of patients, more than 93 percent said they would recommend the facility. The typical HMO in New York scores around 65 percent. “Our holy trinity,” Greenspan says, “is increase the quality of care, raise patient satisfaction, improve efficiency.”

The health center on 125th Street in Central Harlem is a $35 million state-of-the-art facility on five floors that opened in 2003 and now serves about 800 patients a day. The patient record-keeping system is 100 percent computerized. Digital radiography is standardized so that X-rays and scans are available to any office in the system. Lab reports show up in the doctor’s computer inbox within hours of being ordered or almost instantly in emergencies.

The Queens, Harlem, and Midtown centers use pharmacy robots. The prescription goes from the doctor’s computer to the pharmacy on the health center’s ground floor, where the robot fills it from bins of the 200 most commonly prescribed drugs. A computer screen then displays the name of the drug, a picture of the drug, and any red flags based on the patient’s medical record or other prescriptions. A human pharmacist reviews the screen, checks the pills in the bottle against the picture and the doctor’s order, caps it, and signs off on it. By the time the patient comes down from his appointment, the prescription is ready to be picked up.

The plan’s sole out-of-pocket charge is for drugs. While ordinary prescriptions require a modest co-pay of $5 or $15 for non-generics, the charge is eliminated for patients on long-term treatments, such as for high blood pressure. “Bob [Greenspan] experimented with free drugs for patients who are chronically ill,” says union president Peter Ward. “He found that this dramatically reduced visits to the ER; there were fewer catastrophic events. So now, we waive all co-pays for patients on long-term drug therapy.”

Before joining the union plan, Tsultrim Sangmo, a room attendant at the Time Hotel, had out-of-pocket charges of close to $100 a week. “My husband has diabetes,” she says. “We had a Blue Cross Blue Shield PPO. It was $20 to come in for the test and another $20 to come back and get the results, and the medication was more expenses.”

 “The difference isn’t just financial—it’s philosophical,” Greenspan says. “We want you to come in. We want unlimited access to primary care. It pays off over the long term. All of the co-pays and deductibles do the opposite of what is claimed. They don’t assure that scarce medical resources are used as efficiently as possible or deter excessive use. They are simply barriers to care. People say, ‘Maybe it will clear up by itself, so I won’t see the doctor,’ or ‘I’ll stretch out the medicine supply by taking less than the prescribed dose.’ All you are doing is inducing people not to be compliant with the medical program. Then you wonder why costs keep going up—it’s because people get sicker, and their eventual treatment is more expensive. We do just the opposite.”

 

***

The plan has extensive patient-education programs on wellness and nutrition. It sponsors health fairs every year, one each for men, women, children, and seniors. “Sometimes, it’s hard to get men to come in when the highlight of the visit is a prostate exam,” Greenspan says. “We market this to wives. ‘When was the last time your husband came in for a check-up?’ And we have a language bank. There are medical professionals at our centers who can speak 45 languages.” 

Since the 1970s, the plan has reported to a joint labor-management committee co-chaired by Ward and his management counterpart, Joseph Spinnato, the longtime president of the Hotel Association of New York City, who takes great pride in the plan. “I could not duplicate this on the private market for anything like what we pay,” he says. “When you measure it against what our member hotels pay to cover their nonunion employees and what they get, there is simply no comparison.” Stephen Steinbrecher, legal counsel to the Hotel Association, says what’s obvious: “The union has been very astute at marketing the plan as a benefit of membership.”

Last year, the hotel workers’ health plan cost $411.24 a month for an individual and $1,027.56 for an average family. By comparison, Healthfirst, the cheapest HMO in New York City, cost roughly three times as much—$1,116 a month for an individual and $3,316 for a family—while it excluded many services offered by the union such as dental and optical care and piled on deductibles and co-pays. Factoring in benefits not provided by other plans, the typical commercial insurance package costs about four times as much as the hotel workers’ plan.

Insurance costs generally are increasing at 9 percent to 10 percent a year, according to the Kaiser Foundation. By contrast, the costs of the hotel workers’ plan have been increasing at about 1 percent a year for the outpatient services that it provides directly and about 10 percent per year for inpatient services that are contracted with area hospitals. So the plan’s overall costs have been going up at about 3.5 percent a year. Under the union contract, the health plan gets a budget increase that parallels the annual workers’ raise, which just happens to be 3.5 percent. Thus, workers get their raise and the plan covers its costs; in some years, it banks a surplus, leaving enough money for capital improvements like the pharmacy robot and even for additional services. “We recently added fertility benefits,” Greenspan says.

 

How can this possibly be? Are Local 6 members, on average, healthier? No, they are slightly more at risk since many come from immigrant backgrounds where they did not get good care earlier in their lives, Ward says. Are doctors inferior? Not at all, says Greenspan, and the figures on patient-health outcomes bear him out. Does the plan cut corners on services? No, it’s the commercial plans that create incentives to deny care.

So why is the plan virtually unknown in the health-policy debate? For one thing, the union has emphasized publicizing the plan among New York hotel workers, and Greenspan has focused on improving care for members, not crusading for national reform.

Except for single-payer advocates, reformers have pursued cost-effective care within the context of an insurance-dominated system—something of a fool’s errand—whereas the hotel workers’ plan begins by dispensing with third-party insurers. To review all the ways that the hotel workers’ plan delivers better care more cost-effectively is to appreciate the vast inefficiency in the rest of America’s health system—and to see that cost-containment gurus are mostly looking in the wrong places for efficiencies. 

For starters, by dispensing with insurance-company middlemen, the plan eliminates a whole layer of costs. A doctor treats the patient according to his or her best medical judgment. There is no army of staffers dealing with patient billing, claims, and insurance reimbursement; no arguing with insurance--company case reviewers.

Second, doctors are all on salary. So there is no incentive to undertreat or overtreat.

Further, the plan’s core principle is unlimited access to primary care, with all of the prevention and early--detection benefits that approach brings. In most systems, specialists drive costs. “We don’t waste specialists on routine cases,” Greenspan says. “We do want specialists to see appropriate cases, which is both more cost effective and more professionally challenging to the physician.”

At the union health centers, if a primary-care doctor notices a suspicious-looking skin lesion, a dermatologist can be pulled in on the spot for what the staff calls a “drive-by consultation.” If follow-up with a specialist is needed, it will be scheduled. In a conventional insurance plan, the doctor makes a referral to a specialist, who usually requires one visit for the initial exam and another for any treatment, all of which adds cost.

 

***

As Donna Lennon, the registered nurse who directs patient-care delivery, explains, the typical patient of the union health center stays with the plan 14 years. For commercial plans, the average is less than two years. “We have a lot more continuity, and doctors know their patients better,” she says. That also means that doctors can carry a slightly larger caseload, because less time is spent getting up to speed on a constantly revolving group of patients.

The union, which knows something about negotiating, engages in hard bargaining with all of its vendors, from drug manufacturers to hospitals, and is relentless about eliminating middlemen. Most conventional health plans use “pharmacy benefit managers” who negotiate with drug companies on the plan’s behalf and, of course, take a cut for themselves. The union negotiates directly. It also dispenses with cadres of consultants, from human-resource departments to utilization reviewers and behavioral-health companies, all of which add costs under the guise of shaving costs.

In New York, some medical specialists in high demand have market power to raise prices. “Have you heard the term, RAPER?” Greenspan asks. “It stands for Radiologists, Anesthesiologists, Pathologists, and ER doctors.” Most New York hospitals now contract out these services to specialists’ groups who charge whatever the market will bear. In recent bargaining with one of its hospitals over a proposed rate increase, the hotel workers were told that the increase partly reflected higher charges billed by anesthesiologists. Green-span requested the hospital to push back. Not our problem, the hospital contended; we don’t control these costs. “We told them, OK, next week our members stop using your hospital,” Greenspan says. The costs came down.

Are there any negatives? Some might say that one negative is that members must use the plan’s primary-care doctors and specialists. They can’t pay extra and go “out of network” unless they choose to bear all the cost. For well-to-do people with unlimited private resources, the ability to track down the best specialist in the world is an important optional feature of a health plan. But the union’s 93 percent satisfaction rate suggests that this is not an issue if the quality of care is high to begin with. In America’s health system, unreliable care and demands for illusory “freedom of choice” feed on each other.

There is a lot of nonsense in health-policy debates about the costs of unnecessary care and the benefits of promoting “Chevrolet” policies rather than “Cadillac” policies. But on closer inspection, many of the supposed Chevys have high deductibles and co-pays or cover “catastrophic” events only and stint on prevention. They produce illusory savings by discouraging necessary care or shifting costs to patients. The hotel workers’ plan, by contrast, is an efficient Lexus at the price of a Honda Civic.

The hotel workers’ health plan does have some close cousins. The first wave of prepaid group health plans in the late 1930s and early 1940s used salaried doctors. Some of their nonprofit successors, such as Kaiser, share many of the New York plan’s efficiencies. A few other unions still run their own clinics, though none are as comprehensive as the hotel workers’. America’s highest-quality freestanding health centers such as the Cleveland Clinic and the Mayo Clinic also use salaried doctors.

Although a single-payer system has been the prime goal of reformers, Dr. Arnold Relman, the former editor of The New England Journal of Medicine, has long argued that the system of delivery is at least as important as the system of payment. “In a staff-model nonprofit system,” he says, “the overhead costs are minimized, and the plan and the doctors are on the same side. They both want to provide good quality care. In a conventional system, insurers and physicians are adversaries.”

The hotel workers’ health model should be at the center of the national health-policy debate, since it squares the circle of restraining costs while improving rather than cutting care. The obstacles to this brand of reform are, of course, political. All of the middlemen that the union health plan excludes, beginning with the insurance industry, have immense political power. That’s why the Obama administration opted to work with, rather than against, insurers in the Affordable Care Act. One provision of the act does recognize and promote salaried nonprofit group plans, but then buries them under regulations to determine which qualify for official recognition and subsidy.

At some point, the public must realize that the choice is drastic reform or drastic cuts. More than any other in America, the hotel workers’ plan points the way to an efficient and humane system of health care.

Comments

Unfortunately, single payer system was rejected in the PP ACA

What an excellent,efficient and humane system! Of course, we can't do it nationwide because in our stupendous American ignorance we are dedicated to a profit contriving and citizen hustling, health subservience plan. Mostly, we are indentured servants to our financial system with no terminal date but death.

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.