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
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
So HMOs have, in short, a gathering level of public and medical
resistance to their activities. How are they countering this with their
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.
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
’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.
WHAT THE EXPERTS THINK
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.
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
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.