Physician has vision of county health system

By Sally Rose, Banner Staff
Provincetown Banner, February 26, 2004

[Photo by Sally Rose of Dr. Brian O'Malley in his office in Provincetown]

Cape Cod as a real-life laboratory test case for a regional universal health care system -- could it happen? If one local physician has his way, it will.

Universal health care is an idea whose time has come, says Dr. Brian O'Malley of the Provincetown Medical Group. And, tired of talking about how the system doesn't work, he says he's ready to move ahead to the next step -- that is, to figure out what it would take to provide healthcare to all Cape residents, and what that would system look like. O'Malley, who serves on Cape Cod Healthcare's advisory board and participates in a variety of panels on healthcare, is working with Len Stewart, director of Barnstable County Human Services, and a few others to get a grant to create a study modeling a county-wide, single-payer healthcare system, as well as determine its feasibility.

O'Malley throws out some figures. In the U.S., about $4,600 is spent per person on healthcare. That figure covers not only the actual healthcare portion but also administrative costs, advertising, profit and more, he says. The next most expensive country is Switzerland, at less than $2,600. And it goes down from there. Every other industrialized country in the world provides healthcare to all its citizens, says O'Malley, and for far less money than is spent in the U.S.

In this state, the MassHealth system (which includes Medicaid and the Children's health Insurance Program) is strained, he says, and it will only get worse. Gov. Mitt Romney's recent budget calls for cutting MassHealth and provider rates even further. So hospitals and other providers will have less and less money to spend on their patients.

He points to the Cape End Manor, where he serves a medical director, as a further example. "The Manor is a community-owned not-for-profit. Nobody's padding their wallet running it. We do good care. ... We've had four deficiency-free surveys in a row -- that's unheard-of good. And yet we run at a deficit, why? Because the MassHealth system is so strained. ... What's wrong with this story?"

All of this points to the fact, he says, that the current system isn't working. A recent study by the Institute of Medicine estimates that 18,000 deaths a year in this country are attributable to lack of access to healthcare. O'Malley figures that translates to 18 deaths a year in Cape terms, given that the Cape's population is roughly one one-thousandth of the nation's.

"They're happening one at a time, in the hospital, in somebody's home, in a nursing home, on the street. Doesn't raise much view, but if there were any incident that annually killed 18 people on the Cape, you would see [great concern rising up]," he says, adding that the percentage of uninsured on the Cape is higher than the national and state average.

Eight percent of the state population is uninsured, on the Cape and islands it's 18 percent. A state free-care pool, paid into by hospitals and other healthcare providers, pays for the healthcare of uninsured citizens. But it doesn't begin to meet the needs, says O'Malley. In fact, it's expected to have a $280 million shortfall this year. And it's hospitals and clinics that tend to absorb the shortfall. Cape Cod Hospital gives away about $6 million a year for free care, says CCH spokesperson David Riley, and gets reimbursed for only 48 percent of that. And though relative to many other hospitals CCH is in good financial shape, it too, says O'Malley, is seeing its bottom line falling.

Outer Cape Health Services gives out roughly $912,000 a year in free care, or 15 percent of its $6 million budget, according to OCH's Karen Wulf.

"We're in an area where the need is high and the demonstrated impacts of lack of access to care are pretty substantial," says O'Malley.

After a healthcare panel in Dennis this fall, O'Malley, with Stewart's support, proposed the radical idea of setting up a county-wide healthcare system, essentially a nonprofit regional HMO in which every resident would be enrolled. And the system would be paid for through a county tax. The Cape has all the elements to make it work, he says: hospitals, nursing homes, clinics, VNA, rehabilitation centers, laboratories, practitioners. "It's fair to say we have a good system," he says. "We've got a lot of good practitioners, ... we could probably use a few more. But we also have people who are paying out a lot of insurance premiums. What's missing? We pay a lot of money out, we're delivering our own care, but we're not taking care of everybody, why is that? It kind of boils down to the fact that of all the insurance premiums we pay out, some pretty hefty percentage of it never finds its way back here."

"Fundamentally, what is health insurance?" says O'Malley rhetorically. "You pool money so that it's there to cover the big expenses when they hit. So, ... we would pool our money but we'd hold it, we'd invest it, we'd manage the investment, and the proceeds would come back to us, not to Aetna or Liberty Mutual, [and] they'd be used in the system."

That lost percentage is one of O'Malley's pet peeves -- high administrative costs. Most insurance institutions range from 15 to 33 percent for administration, including profit, advertising, drug advertising (passed on from pharmaceutical companies) and more. In 1999, according to a recent study called "Administrative Waste in U.S. Health Care" in the International Journal of Health Services, 31 percent of all health spending was devoted to administrative costs. In Canada, with its national health program, only 16.7 percent was dedicated to administration. Medicare does it for only 3 to 4 percent on administration.

O'Malley's excited about the potential of the idea. "Because everybody's in it, you really do start having the wherewithal to do true preventive health," he says. "Because we know the healthier we keep everybody, the lower the costs, the better this works out for everybody. Is that a fantasy concept? No, not at all. It works in the National Health Service in England."

In O'Malley's system, every Cape resident has the ability to walk in and get primary care. "So we no longer have the issue of people calling the ambulance just because they don't have a doctor. They wind up in the emergency room and that whole visit winds up eating up $1,000 when it should eat only $50. It means that everyone has coverage, that we now have a system that truly has a reason to do preventive care because the savings come back to us. Keeping people healthy literally means there's more money in the system to do more good things, [for example,] so we can buy another CAT scanner in a few years."

O'Malley envisions a nonprofit healthcare advisory board governing the system. But as far as the particulars for how it would all work -- how the tax revenue would be collected, how employers would participate, how to deal with out-of-system visitors or system members needing or wanting services off-Cape, how to create a progressive system for dealing with lower income persons, how the advisory board will structure their decisions -- he's looking to the modeling study to answer those questions.

He and Stewart are working on a grant application. And, he says their small group of universal healthcare pioneers already have commitments from both the county and Cape Cod Healthcare to partner in the study process.

Ultimately, says O'Malley, the savings should translate to businesses seeing better margins and employees seeing better salaries. And, it could be a boon for small businesses, municipalities and the Cape economy in general.