Health Perspectives Vol. III No. 1 January-February 1976 (Pub. 7/76)


The CCAHS had already addressed hospital governance, costs and reimbursement rates by major private and public insurers. This publication tied these some of the issues previously raised to inform consumers/ patients and payers of the importance of UR as a cost and quality control.

Utilization review (UR) and quality assurance (QA) were relatively new terms describing what was viewed as appropriate methods to evaluate the need and quality of medical care primarily in hospitals. UR and QA with or without specific designations existed for over twenty years; the most infamous situation addressed by reviews and evaluations related to the bankruptcy of the United Mine Workers Welfare Fund in the 1950s.

That Fund went from a $500 million surplus to almost nothing in a few years. The consultants who performed retrospective reviews of paid claims found that the medical professional on learning of the available reserves started a campaign to reduce the surplus population through medical sterilization of all covered women starting at age 13. The argument used by the profession was it was quality medicine which would prevent unwanted pregnancies and reduce cancer and other disease rates. This pogrom of uteri was done by the unnecessary operations on women to remove their reproductive capabilities. To have a hysterectomy was projected as a social status symbol to the women; even to the children of age 13. In a few years the surplus in the Fund was depleted due to the expense of unnecessary hospital admissions, medical and surgical services and prescription drugs. Based on today’s awareness of the complications and adverse affects of medical intervention under the best of circumstances, there had to be a drain on the Fund to diagnose and treat nosocomial and iatrogenic illness, disease and injury. This publication addressed these problems which now are considered cutting edge data.

Hospitals then and now still consume a disproportionate share of the total expenses spent for medical services in the USA; by some counts running between 35% and 50% of all medical care dollars spent. So the focus was placed on UR by those insurers responsible for paying medical and hospital claims. UR has several components which became the basis of newer terms: disease and/or case management, second surgical opinions, pre-admission certification, concurrent review and discharge planning.

At the point of the publication, managing services and not preventing illness, injury and disease that required admission and readmission to hospitals was not a factor in the public’s mind, in any legislation or reimbursement methods. Controlling the expenses after the fact then as it is now is still considered the viable alternative to doing nothing or entering the realm of prevention. The publication also focused on methods of reimbursement as an alternative to UR. The argument put forward was simple: prepayment changed the script. Prepayment put pressure on providers not to admit. The final incentive was turned around so that excessive or unnecessary admissions would reduce profits as income was already set and the expenses were under control of the doctor. More admissions only meant under prepayment that the doctor would do more work and receive no additional income.

The publication also covered a conundrum that was similar to some economic and quantum mechanics law. The conclusions did not correlate to expectations or experience. This conundrum was a small section and not completely described. The expectation that shorter stays would reduce hospital costs just makes sense. But shorter stays in fact could only increase costs. A length of stay of seven days for instance might cost $700. A length of stay of five days should therefore be $500. But by reducing the lengths of stay so that the average decreases the per day costs actually increase. The reasons are complex and although total days should also decrease and hence total costs, the opposite actually occurred as hospitals made effort to keep their occupancy rates constant or higher. Shorter stay forces the diagnostic and treatment in fewer days. The more costly days of care usually are the first few. By lopping off the less intensive and more recuperative last days, the average cost per day zooms.

There is no doubt that UR and all its variations and supplements did force reductions in the number of beds, hospital consolidation and closings and shorter lengths of days, the costs were in fact pact into fewer days and shifted to alternative methods of care.

This issue described regulatory laws and methods to ensure their success of UR cost control efforts. Successes and failures are scrutinized or least summarized with the regrettable conclusion that UR was not fulfilling its mandate and goals. Internal provider UR served the provider. External government defined UR was resisted. The concluding section describes the middle road solution Professional Services Review Organizations (PSROs). These new federally required PSROs soon to be accepted had to moderate their efforts and soon delegated the UR programs right back to the hospitals. A later variation to replace the questionable PSROs was the Independent Professional Review Organizations (IPROs). But that came later and could not be addressed. But what was included in this publication were many hints of what would follow over the years, some of which are now included in the Affordable Health Care Act.

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