Specialty Care in the Era of Managed Care: Cleveland Clinic versus University Hospitals of Cleveland (review)

Reducing the cost of health care by limiting the use of expensive specialists was supposed to have been one of the central benefits of managed care. This book is a meticulously researched and documented case study of one of the most important actual outcomes of managed care: intense rivalry and competition among specialty-care institutions struggling to maintain the flow of patients into their services.

Like leading specialty-care institutions around the country, the Cleveland Clinic and University Hospitals of Cleveland (UH) began aggressively buying up community hospitals and bringing primary-care physicians into their organizations. In Cleveland as elsewhere, the consolidation was dramatic: In 1980, thirty-six hospitals served the Cleveland area, most of them independent entities; by 2004, there were only twenty-three, most of them absorbed into the systems created by one of the two nonprofit specialty-care giants: the Clinic wholly owned nine hospitals, and University Hospitals owned eight plus having 50 percent ownership of four others.

The focus of this book is an instructive contrast between the governance of the Clinic and UH as they competed with each other for control of the Cleveland medical market. Though intense, this competition was never really close: while UH struggled to maintain its position as a top academic medical center, the Clinic prospered, growing dramatically in size and national reputation during the turbulent 1990s. John Kastor argues that the Clinic's advantage lay with a unique governance structure that set it apart from UH and most other academic medical centers.

Most academic medical centers have a history of competition for recognition and resources between the hospital and the medical schools with which they are associated, as they try to find a balance within their threefold mission of clinical care, teaching, and research. But the competition between UH and the Case Western Reserve University Medical School was more hostile than usual, and as managed care added financial pressures in the 1990s, the internal competition became self-destructive. The Clinic, by contrast, was remarkably cohesive and unified in purpose, with all of its physicians belonging to a single group practice. Although it operated large programs in postgraduate training and clinical research, its primary purpose has always been to deliver excellent clinical care. The Clinic's governance reflected this unity of purpose, and "the Clinic's unusual method of conducting its business through a board of physician governors and a single CEO accounted, as much as any single factor, for its stability and growth" (p. 226).

In the past few years, the two institutions have become more evenly matched, and relations more cooperative. New leadership at Case and UH seems to have resolved the internal conflicts; meanwhile, the Clinic has opened up a medical school of its own, affiliated with Case, and many observers wonder whether it too will begin to experience the kind of turmoil that has afflicted other academic medical centers.

Readers interested in questions about the broad effects of managed care will not find many answers in this book. Kastor does not examine whether the people of Cleveland have been well served by the consolidation of resources under these two big tents: the leaders whom he interviewed clearly believe they were—but the grassroots movements opposing some of the hospital closures, which he notes only in passing, suggest that they were not. Nor does he raise the question of whether managed care has delivered on its promise to control costs, though the fact that health-care spending is again growing at two or three times the rate of general inflation is strong evidence of failure. But, for readers interested in understanding the complex machinations that went on within the boardrooms and executive suites of leading specialty-care institutions during this period, Kastor's book is indispensable.