Paul Ellwood and the Genesis of Managed Health Care

Managed health care was born in Minnesota in 1969 when pediatric neurologist, Paul M. Ellwood left the practice of medicine to initiate national health reform. During his tenure as executive director of the American Rehabilitation Foundation and the Sister Kenny Institute in Minneapolis he recognized that the United States Government was becoming more and more involved in the planning and funding of health care as demonstrated by its introduction of “Medicare.” He, and his associates regarded Medicare as the advent of a disturbing trend towards socialized medicine. Because of this he intended to introduce the “health maintenance organization” (HMO) as a better alternative to a socialized system. Elwood’s goal was to initiate a new direction in health care which would not only provide quality service to the public, but would also contain escalating health care costs by preventing disease and also maintain good health in the population.

This experiment in health care was first introduced in Minnesota as the organization “Group Health.” As the “true colors” of this experiment in denying care became evident, the treating Minnesota physicians began to simply ignore denials of patient care and went ahead with what was in the best interest of their patients (rather than the best interest of Group Health).
MayoBrothers

The reasons behind Group Health’s initial survival are interesting to speculate. An important pioneering medical influence in Minnesota has clearly been the influence of the Mayo brothers (Charles to the left and William to the right). William J. Mayo, M.D. believed in, and promoted, the Hippocratic credo: “the patient comes first.” Because of the well-established “Minnesota Ethic” in patient care this HMO “trial balloon” looked a great deal better to the casual observer than it really was. The initial skewed “good grades” from Minnesota provided national HMO watchers with a false sense of success. The present status of the HMO movement in Minnesota today is well summarized by Paul Saunders, M.D., Chief Executive of the Minnesota Medical Association “We are a little surprised that they [managed care] just now are acknowledging the amount of consumer distress and distrust out there.” Sadly, HMOs did not become what Ellwood and associates originally intended. Regrettably, for the public, the well-intended HMO model became a “cash cow” for overly greedy business interests whose primary goal has been to suck billions of dollars out of the health care system in order to fill their corporate pockets. The HMO practice of withholding and/or denying care thus became the stuff of legend.The HMO practices of charging their clients “retail” while themselves paying “wholesale” is a tale well known to many state’s attorney generals and uninsured patients who have been hit with full retail costs. These and other abuses have initiated a grassroots public demand to restore real (not the politicized) “patient rights” and to influence the United States Congress to pass legislation to attempt to right the many wrongs being suffered by disillusioned and harmed patients. How many incapacitated individuals have received letters such as this from their HMO as a justification for denying prescribed treatment?

HMO behavior intending to insinuate themselves into being the absolute arbiters of their client’s health care destiny is now abundantly clear. In fact they have (despite their denials), been actively engaged in the practice of medicine. In this endeavor they continue to be aided and abetted by the United States Government which continues to provide the managed care industry with a truly astonishing and unique legal immunity against being held responsible for their often contemptible behavior. The basis by which this aberration has been allowed and maintained are the ERISA statutes.It would appear that Dr. Paul Ellwood, and his subsequent InterStudy organization, did not expect that the control of their HMOs would be by business executives and corporate shareholders committed only to their own fiduciary motives rather than medical professionals committed to a higher ethic. In 1997 Dr. Ellwood admitted, in an interview, that his vision had failed to be fulfilled. His candid observation was also shared by the Minnesota medical community. In 1999, it was reported by physicians that 87% of their patients had experienced some denial of coverage over the previous 2 years and a study released in 2000 by Kaiser Health Plan and Consumers Reports indicated that 50% of Americans surveyed had a problem with their health insurance during the previous 12 months (Landro L: National Group Goes To Battle for Patients Fighting Their Insurers, Wall St. Jour., July 7, 2000).The United States Congress continues to wrestle with patient’s rights legislation and alternatives to managed care and socialized medicine. President George W. Bush has proposed a vision of a stronger, more patient oriented health care system. A similar thought has been advanced by a group of health reformers at a meeting of the Jackson Hole Group. Remarkably, Dr. Ellwood is back again heading a new charge. This time he is proposing a voluntary system of electronic medical records that would be transportable over the Internet (owned by the individual patients). By making this information available to health care providers it is Dr. Ellwood’s thought that the advent of new technologies would not only provide patients with better information on treatment modalities but could also serve as a means of providing comparative data on physician performance. Dr. Ellwood is now also proposing the creation of a new Institution for Medical Technology (Landro L:Health Care Reformers Regroup in Jackson Hole, Wall St. Jour., Oct. 2, 2002).Well, Dr. Ellwood is certainly due to hit “a mother lode” given his many years of prospecting. Burton Report is clearly an advocate of placing the patient in the driver’s seat but, we wonder how the federal government could possibly keep it’s hands off a “private” collection of patient medical records.Also arrayed against this innovation is the power and financial assets of a, now huge, managed care industry monster created by the very same Dr.Ellwood. Is this another example of déja vue all over again?