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Article
November 9, 1994

Painful vs Painless Cost Control

Author Affiliations

From the Department of Family and Community Medicine (Drs Bodenheimer and Grumbach) and the Institute for Health Policy Studies (Dr Grumbach), University of California—San Francisco.

JAMA. 1994;272(18):1458-1464. doi:10.1001/jama.1994.03520180082043
Abstract

Dr Joshua Worthy is chief of neurology at a large staff-model health maintenance organization (HMO) and serves as the physician representative to the HMO's executive committee. Other members of the executive committee include the hospital and HMO plan chief executive officers (CEOs), representatives of nursing and other staff, and members of the HMO's consumer board of directors. A national health plan has just been enacted that imposes mandatory cost controls. The HMO's budget for the coming year will be frozen at virtually the current-year level, allowing adjustment only for the rate of overall inflation of the US consumer price index—an increase of 1% to 2%. In past years, the annual growth in the HMO's budget has averaged 12% to 15%. The health plan CEO begins the committee meeting by groaning, "These cuts are draconian! To meet these new budget limits we'll have to cut staff and ration lifesaving procedures. Patients

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