MANAGED CARE December 1997. ©1997 Stezzi Communications

Some say it's too bad the managed care industry can't get together on a single accrediting and quality-rating agency for health plans. But the Joint Commission's president says it may actually be a blessing.

When it comes to assessing the performance of HMOs, the Joint Commission on Accreditation of Healthcare Organizations is the new kid on the block. But it doesn't take many minutes of conversation with President Dennis O'Leary, M.D., to sense a kind of institutional restlessness with this role. After all, the Joint Commission has been accrediting hospitals since 1951, long before the National Committee for Quality Assurance was a glint in anyone's eye. And if today, as Thomas Jefferson University's David Nash, M.D., M.B.A., puts it, "there is a national power struggle going on" between the two accrediting organizations, the JCAHO brings more experience to bear than its underdog status in the HMO market would suggest.

O'Leary gives an effective voice to that experience. A board-certified internist and hematologist and an experienced health care administrator, he has been in the public spotlight before, at a moment of national suspense. He talked about that moment — and a number of other matters — in a recent conversation with Editor Timothy Kelley.

MANAGED CARE: Why is there such a profusion of different organizations evaluating quality in health plans? There's your Joint Commission on Accreditation of Healthcare Organizations, the National Committee for Quality Assurance, the Foundation for Accountability (FACCT), and now there's a presidential commission. Do we really need all these?

DENNIS O'LEARY: These groups have roles that are not all the same. The president's advisory commission, for instance, is focused on consumer quality issues. They are broad-ranging, but the commission will develop a series of recommendations and then go away, leaving those recommendations to be considered by the Congress and other policy makers. They may be accepted or not. I think it's probably a pretty safe bet that at least some of those recommendations will end up in law. In a sense, that complements the kinds of things that the Joint Commission and NCQA do, because we are organizations that execute public expectations — both in terms of a set of standards that relate to quality and with regard to the use of outcomes and other performance measures. Our job is to make sure health plans, provider-sponsored organizations and a variety of other entities are meeting public expectations.

MC: But why have NCQA and the Joint Commission both working on HMOs?

O'LEARY: Well, I think you could argue the desirability of having a sole utility, or you could argue for what seems to have worked pretty well in America over the years, and that is to have competition as a stimulus to good performance on the part of those who are providing the services. The fact is, our organization has seven accreditation programs. We have pretty brisk competition in almost all of those areas and, without question, the areas where we do our best job are where we have strong competition. Where we have not had strong competition, we haven't done as well.

MC: Such as?

O'LEARY: Well, I think we ran into some problems with our hospital program a few years ago. That was our dominant program, but we really don't have a major competitor in that arena, and many people said, "Well, you just have a captive market. You can perform well or badly and it won't matter, because organizations need your accreditation." We knew we were running into problems with the hospital program, and we put a plan of action in place that has been very successful.

MC: There has been talk of a government agency like the Securities and Exchange Commission that would regulate HMOs and health plans and have some teeth. It would, in a way, supplant both you and the NCQA. What do you think of that prospect?

O'LEARY: No one should think that that's a brand-new idea. I keep hearing statements about regulation of managed care organizations as if regulation in health care were brand new. Actually, it's been around for at least the second half of this century. It was put in place when the Medicare Act was passed, when the basis for determining whether hospitals would be eligible for Medicare certification and payment was put on the table. And it was decided then that the federal government would establish the gold standard. But it would, in fact, rely upon private-sector accrediting bodies that met its requirements for certification purposes. And there was basic language in the Medicare statute that said that hospitals accredited by the Joint Commission or by the American Osteopathic Association would be "deemed" to meet the conditions of Medicare participation. That general "deeming" provision exists within the statute and permits the secretary of health and human services to act out other "deemed status" relationships, and that's happened over time. The federal government relies on us for evaluating home health agencies, clinical laboratories and, most recently, ambulatory surgery centers.

MC: To what do you attribute the recent call by three HMOs and two consumer groups for increased government regulation of health plans?

O'LEARY: Well, number one, I applaud that. Managed care organizations have been the only entities that have not been the subject of a federal oversight framework. There's a reason for that: They have said that they are more responsible for managing the care that people are providing rather than providing the care; therefore, they should not be held accountable for quality. Obviously, that has changed. And some of the leadership groups like Kaiser and HIP and Group Health of Puget Sound — I'll try to phrase this gently — positioned themselves as being in favor of the inevitable. Because the president's commission is going to say much the same thing. [See Washington Initiatives, page 17.] I think you start to see real parallels between what that group of five organizations proposes and what is in the proposed Consumer Bill of Rights.

MC: The five organizations being those three HMOs and Families USA and the American Association of Retired Persons.

O'LEARY: Right.

MC: Would it also be fair to say that those three HMOs perhaps see some of their competitors not necessarily touching all the quality bases that they try to touch?

O'LEARY: Well, it depends on whom you talk to. This is a matter of positioning. These are three very good HMOs. But by doing what they did, they separate themselves from the pack. Now the fact that they've done that doesn't mean that there are not other HMOs that also perform very well and believe in the same things. I think some of the other HMOs and some of the trade associations that represent their interests were not particularly happy with this breaking away, because it advantaged those three organizations but disadvantaged everyone else, and that was not necessarily where the quality line broke. We are in a highly political environment where people are trying to position themselves optimally, and if we accept that reality, that's fine. But tomorrow, when all the shouting and dancing is over, we're going to have to be about our work of evaluating these organizations, and that will occur within a federal framework established not by these recent proclamations, but by the Balanced Budget Act of 1997 provisions that everyone seems to have forgotten about. They require the secretary to create a "deemed status" framework for accrediting bodies to work with the federal government in the oversight of all of the Medicare+Choice options, which include health plans, provider-sponsored organizations and everything else. That's going to happen.

MC: You describe it as a highly political environment where people are trying to position themselves. Could that characterization fairly be applied to the accreditation industry too, with you guys and the NCQA?

O'LEARY: Why, sure. I don't think any of us are evil, but we have tried to make clear, as has the NCQA, that we are quite capable of meeting this public mandate for effective evaluation of health plans and provider-spon-sored organizations.

MC: But if you're an HMO and you've got the Joint Commission coming to visit you one week and the NCQA the next week, isn't this an undue burden?

O'LEARY: I know people who portray it that way, but that has no reality. The way "deemed status" relationships work is that the federal government says, "Here are my requirements. You have to have standards to cover this content. Your survey process has to be carried out in certain ways. You must select and train your surveyors in certain ways. And if you, the accrediting body, meet these specifications, we will approve you as an organization that can carry out surveys and do accreditation on our behalf." The HMO, then, can choose among those that are approved, whether there are one or five or ten. It only needs one evaluation.

MC: But as a practical matter, where it's a fiercely competitive business in many markets and HMOs are boasting, for example, about the number of doctors who are board-certified — and many people question whether that is quite the quality determinant they make it out to be — aren't HMOs going to be sorely tempted to try to get every accreditation that's being offered?

O'LEARY: I hope cooler heads will prevail. Again, there are multiple instances already of "deemed status" relationships just in the private-sector market where organizations have the choice of accrediting bodies, and the fact is they pick one. I'm not going to tell you that everybody picks one. There are some people who, if you put a mountain in front of them, will climb it. As many mountains as there are there, they will climb them. But most people need one ticket punched; even in the hospital area, most of the osteopathic hospitals seek accreditation from the American Osteopathic Association and not from the Joint Commission.

MC: The Joint Commission's traditional turf has been hospitals. As you say, you're the only one that looks at most kinds of hospitals. But you got an early start with HMOs, and then left that field for a while and later returned to it. Is that correct?

O'LEARY: Correct.

MC: What was the reason for leaving, and what was the reason for returning?

O'LEARY: I think the reason for leaving was a belief on the part of my board that there was not a market there. That is, that there were no meaningful incentives for health plans to seek accreditation, and that we had a lot of other programs going and that we should bow out. I hasten to say that was a terrible decision, because I think NCQA demonstrated that you could create a market — I mean in a very positive sense — by pointing out the need for oversight of managed care organizations and then actually carrying that out. The reality we faced five years later was that all of the organizations that we accredited individually were getting together into bigger things called networks and integrated delivery systems. At some point, they might become risk-bearing contractors called provider-sponsored organizations, and organizations that look to us wearing one hat one day would turn around and say, "Why doesn't the Joint Commission offer an accreditation process for complex organizations?" So our return, in a sense, was logical. We accredited all the pieces, so why not the whole? When this new program was created, we were really targeted primarily on provider-sponsored organizations, not health plans. But when the standards were released, health plans looked at the standards and said, "Hey, that's us. Will you accredit us?" And we said yes.

MC: I've heard from at least one person that you guys are a little bit facilities-oriented, looking at fire extinguishers, alarms in the toilet and things like that rather than the delivery of care itself. What do you say to a criticism like that?

O'LEARY: I say the critic needs to come out of the 1980s into the 1990s. That was a fair criticism in 1987, but our standards now are totally performance-based, across all major clinical care and management functions in organizations. It's not that we're not interested in issues like fire safety. We are, but we're much more focused on clinical care and organization management issues that revolve around credentialing, the management of information, the use of performance measures, quality improvement, continuity of care, patient education and patient rights. Every one of our standards today relates directly or indirectly to patient outcomes. If a standard doesn't meet that acid test, it's on the cutting room floor.

MC: Do you find that there's pressure to look at outcomes in more detail than you're ready to? I know FACCT was formed partly in order to get the ball rolling to actually look at outcomes of care. Yet capturing the data that are necessary to provide valid information to assess outcomes of care is a science that's just getting off the ground.

O'LEARY: The real issue is the need to achieve standardization of the measures that are there, and to find reliable sources within managed care organizations and elsewhere so we can collect the data. You're right; some measures we developed back in the late 1980s looked terrific, but there was no place you could go to gather the data. That problem hasn't gone away. Some of the things we would most like to measure are very hard to measure because we can't get reliable data on them.

MC: Suppose we could snap our fingers and have all the data we need, and people could look rationally and very rigorously at one health plan against another purely in terms of quality. Do you think people would make choices on that basis, or would they still be choosing on the basis of price or the sort of warm and fuzzy image that HMOs use in their advertising?

O'LEARY: That is obviously a terrific question, because I don't think anyone knows the answer to it. I sure don't. But I have been one who has urged caution in assuming that the data that all of us might be able to produce is what people are going to use to make decisions when they select health plans, hospitals or doctors. The information you want may be a function of what's wrong with you or what you're worried might become wrong with you. So that's problem one. Problem two is the simple fact that providing performance data does not inform people. People need to know what the data mean, and particularly what those data mean in the context of their needs. There is an unaddressed science involving the need to translate data into information. We've done a little bit of this stuff, and the analytic resources required to do it are very, very substantial. We may wake up fifteen years from now and not have addressed that prob-lem and be scratching our heads as to why people don't use all this wonderful data to inform their decisions. One of the hard questions on the table is — after we make this huge multimillion-dollar investment in performance measurement, and we are doing that, all of us are — will we be able to demonstrate a decade downstream that we're getting value for that investment? Because it's going to be paid for eventually by the American people, and if it is not producing information that is usable by the average consumer and if it is not resulting in well-defined improvements in quality, then we ought to be asking the question, hard as it may be to do, "Why are we doing this?"

MC: Let's broaden our focus a bit to what health care delivery looks like right now. Contrary to some early visions of managed competition, we have a whole bunch of different doctors out there affiliating with a whole bunch of different HMOs, usually not on an exclusive basis, which complicates the drive to achieve quality or to have influence on how care is delivered to your members. Right?

O'LEARY: Right.

MC: Is this a problem, and if so, what solution do you see?

O'LEARY: Well, people would like, I think, to tie everything up in nice, neat, little packages. But this is America, land of choice, a priority social value. And while we talk a lot about choice for consumers or enrollees or patients, the people who are providing care want choice, too. And if you're a doctor or a home health agency or a nursing home, and there are a few integrated delivery systems or networks in your area, particularly in an environment as fluid as this one is, you want to hedge your bets. Maybe this network is going to work well for you today, but tomorrow is another day. I think you create a real firestorm among physicians and "component provider sites," to use that term, when you begin to limit their choices.

MC: Alan Hillman of the University of Pennsylvania suggests that HMOs should get together on practice guidelines so that the quest for the optimal way to treat a certain disease is no longer a competitive distinction among health plans. Do you think that is desirable? And if desirable, do you think it's practicable?

O'LEARY: I think it's desirable. I'm not sure it's practicable. Some of us have been calling for standardization of practice guidelines for most of the past decade. The problem is that you can't find anybody who is willing to step forward as the arbiter who's going to say, "This is the guideline for reconstructive surgery," or coronary artery bypass or what-have-you.

MC: Just this August, the Joint Commission announced its program for accrediting managed behavioral health care organizations. Does behavioral health care present a special problem in terms of how we define the medical necessity for care and measure the efficacy of that care?

O'LEARY: I think it is a challenging area. We have been evaluating behavioral health organizations since the late 1960s, and we did take a crack at developing finite performance measures, particularly for depression patients, in the early part of this decade. It is very hard to just get agreement on what the most reasonable measures are — I won't use the term "best" — or to get any two people to agree on the same measure. I think FACCT has probably taken that a little further than any of the rest of us. It is the soft end of the science of performance measurement, no question about that. Now, don't take from that that we have thrown up our hands. We need to have as precise measurement in behavioral health care as we can. It is as important there as it is anywhere else.

MC: Do you think patients have been as well served by managed care in behavioral health care as they have in physical health care?

O'LEARY: I'd have to say honestly, absent any more quantitative measures, that it's hard to answer that question. I think we've all heard anecdotes. There have been a lot of concerns about the extent of coverage offered through managed care plans, and there is a lot of feeling that surrounds the care of patients who are really often not able to fend for themselves. I think one of the real problems for managed care, and it is true for fee-for-service care as well, is that most people on the firing line are not as knowledgeable about the intricacies of successful management of people with these illnesses as they should be — and that leads to a variety of problems in allocating resources and selecting referrals when these are appropriate. There are some very good studies to suggest that if you put a few more resources into the management of these patients, there are huge dollar savings in other areas. For instance, they don't end up in the hospital with physical illness, which can be a very expensive proposition. So if I had to put a priority somewhere, I would put a priority on educating managed care plans about the optimal management of these patients. And I'd say the jury is still out on whether they're doing a good job.

MC: Do I recall correctly that it was you who gave the press reports from George Washington University Hospital on the condition of President Reagan after he had been shot in 1981?

O'LEARY: You are correct.

MC: What was that experience like, with the eyes of the world upon you in connection with such a weighty event?

O'LEARY: The weight of the event does not enter your consciousness until about six months later. It's very fast-moving. There's a lot happening, and at the moment it is a job that needs to be done, and you go do it the best way you can. My style is talking straight, telling the truth and not embellishing. I may have understated the quality of the care that he got, but I also felt that this was someone who had a bullet wound that was confined to the chest, that is to his lungs, and you are supposed to save almost everybody who has that kind of injury. And we did. But if we hadn't, it would have been pretty embarrassing.

MC: It was inches away from being far more serious, wasn't it?

O'LEARY: That's right. It was very close to his heart. But as I told the reporters, close is close.

MC: Was there a key moment in your career that pointed you toward being concerned with health care on a national scale?

O'LEARY: I wouldn't say there was a very specific moment, but I came to a realization fairly early in my career. I was an assistant professor at George Washington University Medical Center and I was taking care of patients and feeling that I was not having a lot of impact on the care for the country. I moved into management and administration at a time in my career when almost none of my colleagues had dreamed of doing that, because I felt that if you made the system better, you could have a lot of impact for a lot of patients. I did that in 1973 after being at George Washington not more than about two years, and I left as dean for clinical affairs and moved into this job, which seemed a logical extension of my belief that if you can successfully manage the system, you can do a lot of good for people.

MC: Thank you, Dr. O'Leary.

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