Managed Care, Medical Ethics, and the Killing of Patients for Profit

Lawrence R. Huntoon, MD, PhD
Article Type: 
Medical Ethics and Managed Care
January/February 1998
Volume Number: 
Issue Number: 

In this modern era of moral relativism, where one can justify doing nearly anything to anyone, where does one turn for advice on ethics in medicine? Well, right here in the Medical Sentinel, of course, but what about those who have not yet discovered the AAPS?

The AMA recently published its 150th anniversary edition of the Code of Medical Ethics.(1) After reading the section on managed care, I have concluded that managed care as it currently exists is unethical by the AMA’s own standards. Despite the questionable ethics of managed care, we note the AMA has nonetheless published a number of “how to” books on managed care and capitation for physicians.(2)

Under Section 8.13(3), of the AMA’s Code of Medical Ethics, it states: “When physicians are employed or reimbursed by managed care plans that offer financial incentives to limit care [which is all of them], serious potential conflicts of interest are created between the physician’s personal financial interests and the needs of their patients. Efforts to contain health care costs should not place patient welfare [sic] at risk.” Yet, there are many HMO horror stories that show managed care does place patients’ welfare at risk and the recent JAMA study which showed that the elderly, poor and chronically ill patients treated under Medicare, declines in physical health were twice as common in HMOs as compared to fee-for-service medicine.(3) “Thus, financial incentives are permissible only if they promote the cost-effective delivery of health care and not the withholding of medically necessary care.”

The AMA, however, has published a number of articles by Dr. Gary Krieger that clearly show that there is nothing “cost-effective” about managed care at all.(4-6)

Under Section 8.132 of the AMA’s Code of Medical Ethics, it also states: “Physicians must assure disclosure of any financial inducements that may tend to limit the diagnostic and therapeutic alternatives that are offered to patients or that may tend to limit patients’ overall access to care.” But, when was the last time you heard a doctor tell a patient? “Hi, I’m doctor Bill; I participate in your HMO, and because your HMO ties bonus payments to utilization, I’m going to provide you with the cheapest and least amount of care that I can possibly get away with so that I can earn a living.”

The AMA’s code of ethics goes on to say “Physicians may satisfy this obligation by assuring that the managed care plan makes adequate disclosure to patients enrolled in the plan.” When was the last time you saw the truth printed in a glitzy managed care brochure — i.e., less care equals more profit?

It would seem, however, that if the plan didn’t tell patients of this perverted financial arrangement that under AMA guidelines the physician would still have an ethical obligation to disclose the financial inducements to restrict and deny care (Section 8.13(2)F).

And in the spirit of compromise, under Section 8.13(3)B, it states that “Limits should be placed on the magnitude of fee withholds, bonuses, and other financial incentives to limit care.” In other words, it’s apparently OK to be a little unethical. But, how does one define a “little unethical” in markets that are heavily infected by HMOs to the extent that the physician’s entire survival is tied to these warped financial incentives? Has it become unethical to wish to survive; or how does the ethical physician survive?

Irrespective of ethical concerns, of course, there is evidence that managed care restrictions and limitations don’t increase efficiency at all and frequently result in increased, not decreased, cost of care. In an article entitled “Are MCO Marketing Claims More Myth Than Fact,” we are told that:

Managed care organizations (MCOs), as a whole, do not always live up to their marketing claims that they provide more preventive services or services that are higher in quality, more efficient or cost-effective. Instead, some MCO policies — such as preauthorization or prior notification of services and redundant requirements for credentialing, referral, and encounter data collection — may increase the costs of providing care. Such requirements can create barriers to the efficient delivery of health care and, many internists worry, potentially could lead to denials of medically necessary care in some instances.(7)

Although many physicians are signing up with managed care, capitation and integrated delivery systems, in effect, conceding that HMOs provide an “acceptable” level of care despite strong financial inducements for the physician to severely restrict care, when you ask those same physicians if they want to receive their care through managed care, the answer is a resounding, “No!” But, what kind of message about physician ethics does this send when physician surveys tell us that the care being provided is judged by physicians to be “good enough” for our patients, but not quite good enough for ourselves and our families?(8,9) And, in light of these survey results, whatever happened to the physician’s obligation to tell the truth, the whole truth and nothing but the truth to the patient? When was the last time you saw a sign in the office waiting room of an HMO doctor that read, “I wouldn’t want the kind of care that I provide to you under managed care?”

And, what about all of these new laws that were supposed to protect patients from aggressive and misleading HMO marketing techniques and “drive by medical care?” Well, with respect to “drive by deliveries,” the law only applies to new policies and other policies at the time of renewal. It doesn’t apply to policies already in effect, nor does it apply to third-party administrators of self-insured firms.(10) Likewise, with respect to aggressive and misleading marketing techniques used by HMOs, a survey conducted by the Community Service Society found that “aggressive and often misleading marketing by HMOs has resulted in Medicaid users misunderstanding how they work.”(11) In other words, HMOs are frequently operating in the “take the money and run” mode. The goal is to sign up as many captive Medicaid patients as possible for managed care, take the federal and state money, and tell the patient nothing or as little as possible about how they will actually receive their medical care. The HMO makes tons of money. The state allegedly saves tons of money. And, the patient is left with empty promises and a whole lot of scam. The survey found that “78 percent of the HMO enrollees failed to receive their membership cards, handbooks, and lists of providers.”(12)

And, last but not least, the discussion of physician-assisted suicide and its relationship to managed care continues. Much to the chagrin of the Hemlock Society and managed care CEOs, an increasing number of physicians are beginning to see the writing on the wall. The ultimate destination of managed care is the killing of select groups of patients for profit.

One doesn’t have to be a TV doctor-detective to recognize the ingredients for abuse if physician-assisted suicide ever comes to be accepted practice. Realize that physicians will become more vulnerable to manipulation as managed care gains strength and economic credentialing for many becomes a reality. A few terminally ill, high cost elderly with the ‘dwindles’ might make our ‘profile’ look bad. Finally, consider that many life insurance policies have benefits payable upon death and some families may sense the economic benefit to be gained by their loved one’s death sooner rather than later. Added together, these factors combine to make a recipe for disaster, with abuse not only likely but inevitable.(13)

Economic credentialing is, of course, already being used by HMOs to screen which physicians coming out of residency will make “good, compliant HMO physicians,” versus those who may oppose an HMO in the interest of providing optimal care to one’s patient.(14) HMOs also already use economic credentialing to deselect practicing physicians. Those physicians who have complex patients who require expensive care are at high risk for being deselected based on high cost profiles. Even if they aren’t deselected based on high cost profiles, they are routinely punished financially via reduction or elimination of end of year withholds and bonuses. Either way, the physician gets the “message.” As a group, elderly patients cost a lot of money. As HMOs increasingly ratchet down physician reimbursements, a strong financial incentive will be created to “eliminate” these patients who consume more costs than younger, healthier patients. Some will try to rationalize the killing of sick, elderly patients and others under managed care with “quality of life” pronouncements or “futility of care” guidelines, but the reality is that such rationalizations are no different than those used by the Nazis a half century ago to justify the killing of those who did not live up to the Nazi standard of good mental and physical health.



1. AMA Code of Medical Ethics. Council on Ethical and Judicial Affairs 1996-1997 Edition. American Medical Association (1997), Chicago, Il.

2. AMA Publications: A Guide to forming physician-directed managed care networks; Capitation: The physician’s guide; Managed Care Desk Reference 1996-1997 Edition; The Managed Health Care Handbook - 3rd Edition; Developing a Managed Care Business Plan; Managing Managed Care in The Medical Practice; Integration Strategies For The Medical Practice; Physician Capitation Strategies; Positioning Your Practice For The Managed Care Market.

3. Ware, J.E. et al. Differences in 4-year health outcomes for elderly and poor, chronically ill patients treated in HMO and fee-for-service systems. JAMA 1996;276(13), p.1039.

4. Krieger, G.F. What managed care can’t seem to manage is efficiency. AMNews 1996; 39 (27):20.

5. Krieger, G.F. Medicaid managed care: chaos reigns supreme. AMNews 1997;40(10):26-27.

6. Krieger, G.F. Adventures with the lab box: a modern medical fable. AMNews, Sept 16, 1996.

7. Are MCO marketing claims more myth than fact? IM Advantage1997;1(1):1.

8. ASIM survey: internists rate the plans in central Florida: what Florida internists said about five MCOs. IM Advantage 1997;1(1):1.

9. Erikson, J. Tucson doctors say HMOs hurt medical care: 55% wouldn’t enroll families in any here. Daily Star (Tucson, AZ), Jan 10, 1997.

10. Despite new law, maternity stays still often only 24 hours. AMNews 1997;40(3):6.

11. NY medicaid HMO enrollees need more info, survey says. AMNews 1997;40(3):27.

12. Ibid.

13. Malito, C.A. Physicians should resist trend to aid in patient suicide. AMNews 1997;40(3):24.

14. Mattix, H. Managed care and residency training. JAMA 1996;276(13):1092c.


Dr. Huntoon is a neurologist in Jamestown, New York, and a member of the Board of Directors of the AAPS. His address is 560 West Third Street, Jamestown, NY 14701.

Originally published in the Medical Sentinel 1998;3(1):32-33. Copyright © 1998 Association of American Physicians and Surgeons (AAPS).





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