MARKET FOCUS HMOs: The revival of HMOs - Public perception of HMOs has been anything but flattering. It’s time for managed care to make PR work for it. Michele Foster reports

That Health Maintenance Organizations (HMOs) have an image problem to overcome is a gross understatement.

That Health Maintenance Organizations (HMOs) have an image problem to overcome is a gross understatement.

That Health Maintenance Organizations (HMOs) have an image problem

to overcome is a gross understatement.

Legislators are threatening them with suffocating regulation; patients

mistrust them and believe their lives would be sacrificed for a profit;

and healthcare providers are rebelling against restrictive


While a battleground for the managed care industry, these perceived

challenges represent a veritable feast for the communications media,

which savor tragic stories of individuals who have suffered at the hands

of the bean counters known as HMOs.

One highly publicized case involved David Goodrich, who died in 1995

from a rare stomach cancer after his insurer refused to pay for

high-dose chemotherapy. In another case, Joseph Scalamandre lost his

wife to breast cancer in 1992, after also being denied coverage for

high-dose chemotherapy.

The dissemination of these horror stories is part of an ongoing effort

by activist groups to discredit HMOs.

A review linked to the web site of the Foundation for Taxpayer and

Consumer Rights warns, ’If a Health Maintenance Organization (HMO) is

your family’s medical provider, just hope you never face a medical

crisis ... like little Chad, who died after having a reaction to a

vaccination, and being denied treatment ... Real people (are) facing

medical nightmares of a kind made all too common by managed care.’

Indeed, the managed care industry has been a lightning rod for

complaints and attacks from legislators, physicians and patients.

However, once one peels away the surface layers, most of the players in

the debate seem to agree that conceptually, managed care is a good idea.

What is needed are some basic reforms, coupled with greater investments

in community and public relations to help bridge the wide, imagined gaps

between the insurers and their constituents. In fact, even groups that

have gone on record complaining about HMOs, concede that many of the

problems are grounded in perception rather than truth.

’The perception is that managed care is about denying care,’ says

Michael Abel, M.D., president of Brown and Toland, an independent

physicians association (IPA) in the Bay Area with about 2,100 members.

’But I don’t think this is true, nor are these the goals. The system is

driven a lot by perceptions rather than fact.’

The HMO trade association and others admit that one reason the quality

of care issue has not been resolved in the marketplace is that the

insurers may not have done enough to educate physicians and consumers

about how their health plans work, or what benefits they bring.

’The traditional tendency (with health plans) is usually to go under a

blanket and be in the defensive mode,’ says Karen Ignagni, president and

CEO of the American Association of Health Plans (AAHP), the national

association of more than 1,000 HMOs, Preferred Provider Organizations

(PPOs) and other groups.

’But now we are stepping forward and standing up for ourselves,’ Ignagni

says. ’Many organizations are so busy building health plans, they’re not

as outwardly focused, but we have an aggressive campaign involving the

media, advertising, polling and grass-roots organizing to set the record


Dr. Abel agrees that there has been a lack of communication from


’They fell short of communicating the scope of coverage and managing

patients’ expectations,’ he says. But in reality, the AAHP’s

communications effort is more focused on lobbying the government to

limit regulation than talking to consumers.

’The rhetoric on Capitol Hill is enough to make a Hollywood producer

blush,’ says Ignagni. ’The pro-patient protectionists have gone too far

- it’s more about protectionism than protection. The debate has

descended into the arena of: if you have a problem in healthcare, get a

lawyer. That’s the Achilles’ heel of this debate. The patient

protectionists have been bought by trial lawyers; the emperor has no

clothes here. It’s our job to expose this and hold people’s feet to the


But PR industry observers believe that managed healthcare is missing a

golden opportunity to upgrade its public standing. The HMOs’ need for a

powerful PR message is all the stronger when you consider the noise

created by its opponents. Managed care vies for attention alongside

campaigns launched by consumer advocacy groups like Families USA and the

Foundation for Taxpayer and Consumer Rights, IPAs, the Amercian Medical

Association (AMA) and other physician groups, and by unions such as the


Families USA and the Foundation for Taxpayer and Consumer Rights make

extensive use of HMO hardship stories to fight for federal regulation of

commercial health plans.

HMO opposition is not limited to consumer groups. Physicians have

started to organize themselves, hoping to wield more bargaining power

with the insurers and their voice is one that is noticed and trusted by

the media and consumers. Last March, 15,000 doctors formed the National

Doctors Alliance, a group demanding speedier reimbursements, reduced

workloads, and less interference with patient care.

The new (AMA) is also trying to draw media attention to the failings of

HMOs. ’Right now, when a physician complains to an HMO, they say, ’Thank

you, doctor’ and hang up,’ says Thomas Reardon, M.D., president of the

AMA. ’We developed the National Negotiating Organization as a way to

force the other side to come to the table, as well as to protect

physicians from retaliation.’

According to Dr. Reardon, physicians can be kicked out of health plans

if they discuss treatment options with their patients that are not

included in their coverage, or if they refer out-of-plan.

Stories of physicians at virtual war with HMOs is exactly the kind of

publicity that the managed care industry could do without.

The AMA’s communications campaign includes grassroots campaigns and can

blast-fax 100,000 physicians as well as open dialogues with congressmen

and local state legislators; sponsors campaigns in newspapers on the

Patients Bill of Rights proposed legislation; and holds press


Operational hiccups

So HMOs have, in short, a gathering level of public and medical

resistance to their activities. How are they countering this with their

own messages?

The problem appears to be that HMOs are so keen to resolve operational

hiccups in their systems that they are neglecting to defend themselves

on a wider level.

Customer service improvements are high on the priority list. ’We can’t

just look at image,’ says Ignagni. ’It’s important to be consumer


HMOs are investing in better phone infrastructures and better training

for customer service reps, for example. They are also focusing on their

relationships with physicians: how physicians can work with them to

provide better care, and what the health plans can give them in terms of

data and quality of care evaluations.’

For example, Aetna US Healthcare launched a new electronic file claims

system for doctors in Florida last April. The ’E-Pay’ system is part of

a new trend by HMOs to use technology to address the complaints about

reimbursement delays. Typically, claims are faxed or mailed in but can

be delayed by typos and omissions.

Electronic filing should speed up payment.

But although improving the quality of customer service systems will

eventually raise doctors and patients’ perceptions of HMOs, in the short

term these groups only hear horror stories. This is because the HMOs, in

general, are not broadcasting their achievements.

Image jump-start

The case for jump-starting the public image of HMOs is clear. For

instance, says Brian Schilling, spokesperson for the National Committee

for Quality Assurance, a private, not-for-profit organization involved

in accrediting health plans, there is little data to support the idea

that fee-for-service plans do any better than managed care when it comes

to member satisfaction or quality of care.

Dr. Jim Marks, director of the National Center for Chronic Disease

Prevention and Health Promotion at the US Centers for Disease Control,

believes that the differences between the quality of care in managed

care versus fee-for-service is more perceptual than factual. ’With

managed care, patients feel they’ve paid for everything up front, so if

they don’t get something they think they want, they think it’s being

denied them. They get more upset about difficulties in getting

appointments or referrals than they would under fee-for-service, because

they feel they’ve already paid for it.

’The barriers to more satisfied patients and physicians have to do with

education, not just delays in appointments or payments,’ concludes


’Managed care’s main strategy should revolve around education,’ chimed

in Mark Bizzell, account supervisor in Golin/Harris’ healthcare


’They need to get out there, roll up their sleeves, and tell people how

things work. Most of the problems come from people who don’t know how

the system works. A recent Yankolovich survey found that people spend

more time programming their VCRs than reading their health plans!’

Things are starting to change. A Code of Conduct, developed by the AAHP

in December 1996, stipulates that health plans openly communicate how

they work for the benefit of patients; that they make it clear that they

are listening to the concerns of patients and physicians and are making

needed changes; and that they uphold high standards of


This is the kind of initiative that should lead to HMOs becoming less

shy about talking up their achievements. However, it seems that the

message is taking some time to filter through - only two HMOs would talk

in detail to PRWeek about their communications activities.

But the industry isn’t a total PR blackspot. UnitedHealth Group, the

US’s third largest HMO, has started distributing copies of its surveys

about the performance of doctors working under its scheme to newspapers,

giving the organization more of an image of openness.

In Florida, Blue Cross Blue Shield has started faxing out a weekly

’success story’ to the local media and to legislators, in an effort to

counter all the horror stories. The HMO allows the media unfettered

access to the patient, and Blue Cross has received a wealth of positive

publicity as a result, even reaching the national media.

Pacificare of California, the state’s second-largest health plan, has

been getting good results with a community outreach and public relations

campaign that emphasizes open, honest communications and involves

third-party consumer groups. It, too, releases details of its internal

performance surveys to newspapers, and has also pioneered Town Hall open

sessions where Pacificare management field questions from Medicare

members with media present.

PR pays off

’Our PR campaign is definitely paying off,’ says Tyler Mason, director

of public affairs at Pacificare. ’For example, Calpers and Raytheon have

designated us as their health plan of choice because of our consumer

commitment and Quality Index, among other things.’ Pacificare’s strategy

proves the value of PR over advertising for this task, and is supported

by leading observers.

The Coalition of Affordable and Quality Healthcare, which involves some

of the larger health plans, is spending dollars 10 million to dollars 11

million on advertising (estimates from other sources vary on CAQH’s

investment in advertising, some putting the number closer to dollars 5

million or less), according to Chris Foster of Burson-Marsteller’s

healthcare practice.

’Maybe a half a percent of the budget is going to some sort of PR.

Health plans are fighting their battles with advertising, and are not

using enough PR,’ he says.

Foster believes this strategy is ironic considering that what managed

care is facing boils down to a perceptual problem. ’HMOs are actually

doing a good job, but they’re being tossed around on the legislative

front. Consumer satisfaction is actually pretty good. It’s the small

percentage of disgruntled folks that are driving the debate.’

So, why don’t health plans invest more in public relations? ’HMOs are

looking for a quick-fix,’ says Foster. ’They can’t see the long-term

benefits of PR.’ They may need to discover those benefits soon, to build

up some credit in the image bank before another tragic Goodrich case

hits the headlines.


J. Peter Segall

EVP, deputy GM and managing director of healthcare for Edelman,

Washington We tell health plans to separate out the attitudes, with

quality on one hand, and customer service on the other. Quality is

measured in technical, definable ways. Is patients’ health better in

managed care than outside of it? Managed care as an industry has a

persuasive story in this area. Preventative care is better now than it

ever was under fee-for-service; treatment protocols are better than

before; there is better follow-up with patients and better health

management overall. These things can be measured, and managed care needs

to tell the quality story, both directly to the consumers and through

their provider network - they should involve the physicians in

communicating this message.

On the customer-service side, insurers need to understand that they are

a service provider and need to sincerely audit the customer service side

of their business. Insurers need to thoroughly take apart the way they

approach and treat their customers.

Chris Foster

Manager, healthcare practice for Burson-Marsteller, Washington The first

mistake that managed care is making is in being unified only on the

legislative front, and not spending enough money on public


They need to balance the legislative fight with campaigns targeting

other key constituents: the patients and physicians.

The second mistake is that HMOs focus on rational arguments: healthier

populations, better prenatal care, greater access to healthcare, cost

containment, and so forth. This, however, is an emotional debate, and

managed care’s message needs to be: the care will be there for me when I

need it. Right now, no one trusts insurers because there is no face on

managed care. It’s perceived as this big, nasty monster that won’t let

you go to the emergency room and keeps grandma from getting the drugs

she needs. They need to fight this perception with an emotional


John Smith

VP of health technology,

Brodeur Porter Novelli, Boston

HMOs’ main image problem is that they’re not being patient or

physician-friendly. We recommend they use information technology to make

claims processing, reimbursements, and claims adjudication more

efficient. IT is a tool the insurers can use to improve the business

side of managed care - they’ve traditionally been behind other

industries on the technology curve. Technology can be a powerful tool to

improve their communications and caregiving.

Also, the industry needs to open up more and be more forthright with the

public about how they work.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in