Modern Healthcare Magazine
Special Report
May 15,2000 Issue

Elizabeth Thompson 
 

The title of a 1973 book by economist Ernst Schumacher captures the essence of what's working today as hospitals and health systems try to bring alternative medicine into the fold of conventional healthcare: Small Is Beautiful: Economics as if People Mattered.

A modest scale also can aid the success of complementary medicine programs. And leadership from the people who matter--most notably conventional medical doctors--is proving to be pivotal in gaining support, trust and patient referrals.

Not everyone should expect immediate profits from complementary and alternative medicine. But centers that can do more with less and are willing to grow slowly stand a fair chance of tapping into the hefty sums being generated by this infant segment of the healthcare industry. Consumers are expected to spend nearly $31 billion on alternative care in 2000, according to the LOHAS Report, a study conducted by Natural Business Communications, a Boulder, Colo.-based publisher of information for the natural health and natural products industry.

On the right track. Donald Novey, M.D., says he believes becoming part of the woodwork is the mark of true integration. Novey is a board-certified family practitioner and medical director of the hospital-based Center for Complementary Medicine in Park Ridge, Ill. 

"We wanted to approach the system in a way that blends right in. That has to happen in order to have real staying power," Novey says.

He didn't want a center to provide peripheral services. Instead, he sought to create a program that would be used and referred to appropriately, like any other specialty or hospital department.

Others who are examining various integration efforts nationwide confirm that Novey is on the right track.

"You need to begin to grow organically within the hospital or health system," says John Weeks, the Seattle-based editor of The Integrator, a newsletter about the business of complementary and alternative medicine published by IntegrativMedicine Communications of Boston. "Start small and add on. Patients were going to these clinics even when they were small and independent."

The bottom line. Linda Bedell Logan, president of Solutions in Integrative Medicine, a Saco, Maine-based consulting company, has helped open 35 integrated centers nationwide, most of them affiliated with hospitals.

"I ask hospitals, `Is your intent to increase your income or to change the way healthcare is delivered forever?' " Bedell Logan says. "If they say it is to pad their bottom line, I tell them they're not going to make it."

Complementary and alternative medicine includes a broad range of treatments such as chiropractic (perhaps the most well-accepted), acupuncture, massage therapy, homeopathy, nutrition and naturopathy. Most therapies within this realm, some of which are centuries old, take a more holistic approach to human wellness and preventive health than Western allopathic medicine, which focuses on treating diseases once they develop.

Complementary and alternative medicine's popularity is growing among consumers, with an estimated four in 10 Americans in 1997 having used at least one alternative therapy and having spent $21.2 billion, according to a study in the Nov. 11, 1998, issue of the Journal of the American Medical Association.

However, another study in the Aug. 18, 1999, issue of JAMA found significantly lower rates of visits to unconventional providers. That study further concluded that those using alternative therapies were likely to have made more visits to conventional physicians.

This brings to light one of several sticking points about complementary and alternative medicine integration. In addition to a lack of scientific proof that many alternative therapies actually work, there is little published evidence that, as some providers thought, they reduce overall healthcare system costs. The inference, according to the study, is that many patients seeking massage therapy or herbal remedies, for example, don't do so as a substitute for conventional medical treatment, but rather as an add-on, which may increase system costs. This can be taken as yet another argument for moving cautiously into the arena of integration.

Most integrative medicine centers are upfront about costs, which still are paid primarily out of pocket. HMOs and other health insurers, however, are beginning to provide more coverage of alternative treatments (See charts, this page and page 28). Some are even offering coverage benefits, though the vast majority of these merely offer access to discounted products or services.

Gaining attention. An increase in attention and funds being poured into complementary and alternative medicine at the federal level may finally push unconventional medicine fully into the mainstream. The National Institutes of Health is providing research money from its National Center for Complementary and Alternative Medicine for the scientific study of alternative treatments. The NCCAM was started in 1992 with just a $2 million budget. For fiscal 2001, President Clinton has requested a budget of more than $71 million, an increase of $3.3 million over the 2000 appropriation.

Clinton also formed the White House Commission on Complementary and Alternative Medicine Policy this year (March 13, p. 8), which will provide legislative and administrative guidance for alternative medicine-related education, training, access and delivery. Many in the integration arena hope that this body can make strides in standardizing the disparate payment and credentialing processes for alternative providers (See related story, p. 30).

The American Hospital Association also has made a foray into alternative medicine, partnering last year with 504-bed University Hospital and Medical Center, part of the State University of New York at Stony Brook (Sept. 27, 1999, p. 2). The focus of the partnership at the University Center for Complementary and Alternative Medicine is on education and the distribution of information about alternative therapies. The AHA plans to share with members the lessons learned at Stony Brook through publications and consultations of Health Forum, the for-profit publishing and education arm of the AHA.

As of 1998, 352 community hospitals, or 8.6% of all U.S. hospitals, offered complementary medical services, according to an AHA study, and those numbers are expected to increase in the coming years.

Inflated expectations. Weeks and Bedell Logan both say many providers have come to integration with an inflated expectation of getting hold of the cash pinpointed in the 1998 JAMA study. They built large, expensive facilities that "simply were not sustainable," Weeks says. Some centers have broken even, fewer have shown profits, and several have taken a bath in red ink. 

One of the pioneers in the integrative movement is David Edelberg, M.D., who in 1996 founded Chicago-based American WholeHealth, formerly American Holistic Centers. The company amassed more than $20 million in venture capital for its plan to create a network of as many as 100 branded integrative medicine centers by 2000. But with just 11 centers operating in 1999, American WholeHealth has begun closing clinics and working on selling others back to the practitioners. The model they used was too large, Edelberg says, with some centers taking up more than 10,000 square feet. 

What the company experienced was not unlike the disappointing results of the Wall Street-funded rise of physician practice management companies in the mid-1990s. Edelberg says the American WholeHealth corporate office realized that physicians might know a little more about how to run their businesses than they'd been given credit for.

"And it was just too costly, with insufficient profit to take care of venture capital needs," Edelberg says. 

The company plans to continue promoting its brand through affiliation with its clinics in transition. Meanwhile, the company is focusing on two other divisions, American WholeHealth Networks, which credentials alternative practitioners and links them to health plan contracts, and WholeHealthMD.com, an Internet venture that provides complementary and alternative medicine services and products to consumers and practitioners.

Even though he readily admits that large-scale, stand-alone projects are risky in the current market, Edelberg doesn't see hospital affiliation as the logical alternative.

"It always strikes me as a little odd that hospitals want to have (alternative-care facilities) because it is a singularly outpatient endeavor," Edelberg says. "I always recommend that they set it off-campus. Patients really don't like to go to a hospital for this type of care."

Bedell Logan reiterates that hospital officials who see integration as a cash cow should be reminded that "patients don't bring their wallets to hospitals." Patients typically turn to complementary and alternative medicine, she says, because they have chronic conditions that Western medicine has not been able to alleviate. Hospital-based alternative medicine programs need to recognize the long-term behavioral changes and effects on the body's system that are inherent in most alternative treatments. 

Laying the groundwork. Novey says he has been able to find that suitable niche for his center within the framework of a long-established, eight-hospital system. Part of the not-for-profit Advocate Health Care system based in Oak Brook, Ill., Novey's center takes up just 1,975 square feet in the basement of a small medical office building in the shadow of its parent facility, 555-bed Lutheran General Hospital in Park Ridge, Ill.

Novey opened the center in August 1998 with $34,000, half of which was spent on two state-of-the-art chiropractic tables. Now in the second year of its three-year start-up plan, Novey says the center broke even after 20 months of operation, close to its original projections. The center has an operating budget of $20,000 to $30,000 per month. Alternative practitioners work on a contract basis and are paid on a flat rate of 50% of collected bills.

Before opening, Novey spent a year laying the groundwork and building the internal relationships necessary for the center to gain credibility, acceptance and referrals. 

Weeks, who has closely evaluated 29 integrative clinics nationwide through The Integrator's benchmarking project, acknowledges the suitability of Novey's approach.

"Those that are doing the best and will do best are the ones that become truly integrated into the payment system and delivery referral scheme," Weeks says. "It's appropriate that referrals from physicians be the economic driver in these system-based models."

Other health systems Weeks examined that are using alternative medicine as part of their patient care include Harvard Vanguard Medical Associates, Brookline, Mass.; Community Hospitals of Indianapolis; Catholic Healthcare West, San Francisco; the University of Pittsburgh Medical Center; and Kaiser Permanente Mid-Atlantic States Region. Based on self-reported data, Weeks concludes that some headway has been made in increasing alternative medicine coverage and referrals, but self-referrals and cash payments still rule the game.

Too large, too fast. Catholic Healthcare West is a system that learned about the complexities of integration the hard way. The integrative practice of Sam Benjamin, M.D., in Phoenix was one of 11 primary-care practices acquired in 1994 by a new CHW subsidiary called Mercy Integrative Health. Another local practice was folded into a unit called Arizona Centers for Health and Medicine, and a 10,000-square-foot clinic was built in 1996.

The ACHM was intended to serve as the model for a national venture, in which CHW would franchise alternative medicine centers throughout its system.

The plan ran into trouble, says Phyllis Biedess, former president and chief executive officer of the ACHM, because it took on conventional primary-care provider contracts, but there was no system in place for billing.

"We weren't ready because the funding mechanisms weren't ready to deal with (complementary and alternative medicine)," she says. "And they still aren't."

The clinic went through a series of leaders whose responsibilities were too many and too varied, according to an analysis of the project's demise in the February/March 1999 issue of The Integrator. In addition to payment, timing and scale issues, other challenges ranged from maintaining the basic integrative care of patients to continually selling the concept within the system and from setting marketing strategies to creating templates for integrative clinics at other health systems, Weeks wrote.

The centers were money-losers for CHW, and the system abandoned the franchise plan in 1998. Both clinics were closed as of April 1999.

In hindsight, Biedess says the effort might have made it if the centers had started out as part of a specialty program, such as pain management, instead of primary care.

"Still, I'd be the first to commend Catholic Healthcare West for going out on a limb and believing in the philosophy of mind-body medicine," Biedess says.

Physician support. Because hospitals traditionally have a stake in pleasing physicians, Weeks recommends forging alliances with other medical doctors and hospital departments to help alleviate potential internal turmoil.

And because physicians traditionally have been resistant to encroachment on their territory, especially from healing philosophies they may not fully understand or accept as scientifically valid, Novey went straight to the members of Advocate Medical Group in Oak Brook, Ill., a group of 260 doctors at that time affiliated with Lutheran General Hospital. He asked them in a formal needs-assessment survey what alternative services, if any, they wanted.

What he found was encouraging: Two-thirds of the doctors expressed interest in such a center, two-thirds said they would use the center to learn more themselves and one-third said they already were referring patients to alternative providers outside of the Advocate system.

The center opened without controversy, says Novey, who has since been sought for consultation by several hospitals interested in his approach. There was no confrontation because the physicians' concerns had already been addressed, he says. After taking the poll, Novey says he spent hours in one-on-one meetings with doctors and conferencing with groups within the hospital. 

Winning their respect and support for the center had less to do with alternative medicine than building good relationships and being accountable for what the Center for Complementary Medicine does, Novey says.

Kenneth Pelletier, M.D., director of the Complementary and Alternative Medicine Program at the Stanford University School of Medicine in Palo Alto, Calif., helped develop the university-affiliated Complementary Medicine Clinic two years ago. Like Novey, the Stanford clinic's founders worked in a fairly conservative way to build bridges within the existing medical community.

Starting with a formal business plan, the leadership selected scientifically based therapies and looked to faculty members who would either provide or oversee the service, Pelletier says. Each of the subspecialty clinics, such as the pain and oncology clinics, were consulted to make sure their services didn't overlap.

Weeks asserts that once a center has gained physician support, clinic outreach can be better organized to accommodate the doctors' interests. Several hospitals and systems select lead physicians who are respected for their conventional therapies, he says, but may have less experience delivering alternative treatments. These doctors, like Novey, can function as "M.D. triage artists" to link patients with the most appropriate care, be it allopathic, alternative or some kind of complementary combination, Weeks says. 

Keith Sarich, president of KMS Associates, Valparaiso, Ind., agrees that the medical doctor is key. A complementary and alternative medicine consultant and recruiter, Sarich says, "We're finding that the demand is for M.D.s and osteopaths who have tangible skill sets in alternative care. They are in a great position of strength. They're the ones with the licensing criteria and scope of service to (coordinate) all this.''

American WholeHealth's Edelberg also believes that many complementary practitioners would prefer that their patients come as referrals from physicians.

"Doctors have a very erroneous idea that alternative practitioners want to take their patients away from them, but these providers know their limitations," Edelberg says. "The physician also has to understand that he doesn't know everything in the world. There are other healers out there who want to work with him without encroaching on his territory. They share the same goal of making the patient well."

As a representative of the complementary provider community in Portland, Ore., Adela Basayne, immediate past president of the Massage Therapy Association of America, echoes Edelberg's opinion. 

"Any massage therapist knows there are many symptoms that we can't treat," Basayne says. "So it's important to have a physician available if we're really going to serve the clients."

A two-way system. Jane Guiltinan, a practicing naturopathic physician and dean of clinical affairs at the Bastyr University Natural Health Clinic in Seattle, also co-founded the King County Natural Medicine Clinic, the first publicly funded integrated health clinic in the nation. Guiltinan concedes that openness and participation from conventional physicians are essential to integration, but she does take issue with the concept of strict physician leadership.

Conventional medical doctors have made tremendous contributions to making people well, she says, "but they can't and don't know everything about every healing system that is out there. (The integration movement) needs to have leadership from all categories of providers."

Jerome McAndrews, a chiropractor and spokesman for the American Chiropractic Association, points to an ethic of interprofessional referrals in which the provider referred to should always return the patient to the referring provider with a medical report of treatments rendered. McAndrews contends that only as alternative practitioners become part of that two-way system will complementary and alternative medicine become truly integrated.

Of course, any integrative center needs to attract patients if it is going to have a business to manage. With the intention of ensuring that the Lutheran center would satisfy alternative medicine "frequent fliers," Novey examined the demographics of Lutheran's community of patients. The common expectation is that alternative medicine consumers are young, affluent and well-educated; but the residents of Park Ridge, a middle-class Chicago suburb, were a little older, with some of the chronic health problems that accompany old age.

Mixing it up. Novey wanted to mix elements of three integrated clinic models to reach the largest patient segment possible. Those were a fitness center model, a primary-care model and a consultatory model. He settled on a combination that feels like a small doctor's office, with several soothing treatment rooms, some common space for the practitioners to meet and discuss patients, and a typical medical examining room. The geographic breadth the center draws from is almost three times larger than the hospital's, Novey says, and the diversity of diagnoses covers virtually every organ system.

"Many of the practitioners say they don't see some of these cases in private practice," Novey says. That's because not all of these patients, with their range of conditions, would normally go to an independent alternative provider. But they will go to the hospital-based center, Novey says. 

In addition to the appropriate licensing and credentialing, criteria for complementary practitioners at Novey's center include experience, a willingness to cooperate and an awareness of a practitioner's own limitations. Novey wanted a tight group, one willing to take a team approach to treatment similar to that of the rehabilitation model, so the patient would always feel comfortable and safe under the umbrella of a medical system. 

The crew started small, with two massage therapists, one chiropractor, one homeopath and one acupuncturist. It has grown to include five massage therapists, one physical therapist, two chiropractors, one homeopath, two acupuncturists (with another coming on board), two clinical psychologists and a nutritionist, plus the medical director.

Each provider is also willing to tell patients when they don't need a particular service, Novey says. If there is uncertainty about a diagnosis, it goes to the whole team for discussion.

"This is a courtesy service we offer the patients," Novey says. The staff's collaborative efforts, he says, are the "heart and soul" of the center.