Managed Care and the Future of Psychology

An in-depth interview with Dr. Nicholas Cummings, past-President of APA and now a successful player in the managed mental health care industry. Subjects range from the topic of Managed Care per se, to the future outlook for psychologists in light of recent trends towards the industrialization of healthcare, prescription privileges for psychologists, and changes in societal and corporate attitudes toward health services.

The following interview appeared in the November 1996 newsletter of the American Association of Applied and Preventive Psychology (AAAPP), The Scientist Practitioner.

A Conversation with Nicholas Cummings

Now We're Facing the Consequences

Nicholas Cummings is a former president of the American Psychological Association and has been one of the leaders of the movement to integrate psychology into behavioral health services offered within managed care settings. Cummings worked for many years at Kaiser-Permanante, one of the first health maintenance organizations in the country. He then took this knowledge into a highly successful private business, Biodyne, which can be seen now as an opening wedge in the movement towards managed care in mental health services. His Foundation, funded in part from the proceeds from the sale of Biodyne, recently awarded the first Psyche prize, the largest cash prize in psychology, to Rutgers psychologist Arnold Lazarus. The following interview was conducted at Dr. Cummings' home by outgoing AAAPP president Steven Hayes on October 3, 1996.

Hayes: You've been involved in managed care for a long time. There's a group of the practice base in psychology that thinks that what we're facing right now is a temporary glitch, that we're somehow going to go back to the glory days of fee for service psychology. I'm interested in what you think, looking ahead over the long term, about whether or not what we're seeing here is really a fundamental re-alignment of how mental health services are going to be delivered and paid for. Is this a temporary problem that psychologists are facing?

Cummings: Quite the contrary. I think you're seeing the industrialization of health care.

What we see now is not going to be what we see in ten or twenty years any more than what we see now in an automobile has any resemblance to Henry Ford's Model T. Once Henry Ford invented the assembly line we never went back to the horse and buggy. We've emerged from a cottage industry to an industrialized industry and once industrialization takes place there's no going back. One of the questions I'm constantly asked is, "Why are we industrializing?" That's not the question. The question is, "What took us a hundred years after manufacturing to industrialize and fifty years after retail?" Here you have something that takes twelve percent of the gross national product and it took a hundred years to industrialize. That is the real phenomenon. I think it speaks to the tremendous confidence that the American people had in the professionalism of the health care practitioner that it took that long.

Hayes: Fee for service mental health care was dominated by doctoral practitioners, it was dominated by small group practices, it was dominated by high fees. What do you think are the three or four biggest differences between the modern world we're heading into and where we have been in the 70's and 80's?

Cummings: Every industry, as supply increases, prices go down. The one exception was health care and the reason for that was that the professional controlled both the supply and the demand. So the more physicians we had, the more demand. If you got too many doctors and they had to divide smaller and smaller parcels of patients they would up the number and cost of procedures and the lab tests and everything that they were doing. So consequently, the demand never went down because we have a lot of doctors.

The government was waiting all those years for the day that the supply of doctors would solve the problem: "Boy, then we're going to see health care prices drop!" But what they didn't bank on and what every economist now knows, "When doctor controls both supply and demand, prices go up."

For example, research addressed this question: "What is the biggest predictor of how many patients per capita will be hospitalized in psychiatric facilities?" The answer was the number of psychiatrists in that community. It had nothing to do with need. And this permeated the whole fee for service system. Now we have removed the control from the professional so that the doctor neither controls supply nor demand. Now they desperately try to control supply. They want to figure how to cut down on the number of practitioners that are graduating and so forth, but that has limited impact and demand now is totally out of their hands. It's in the industrialized system that we've now evolved. Right now, we're in the Model T Ford stage, we are nowhere near the Lamborghinis and the Porsches that we're going to see years from now. It is a start. The remarkable thing is that even the beginning changes in this industry have tremendously slowed the accelerating inflation curve that was just going off the wall. In many instances they've actually reduced costs.

Hayes: Specifically within the behavioral health care, especially with fully capitated systems and staff model systems, use of the "lowest competent provider" is now the rule of the day. In that context are we past a place in which doctoral level psychologists are going to be the dominant deliverer of psychological services?

Cummings: Yes, we have. I hate to say that, but we have. What's really going to make this possible is the development of better protocols and guidelines that masters level technicians will be able to follow. My own research: we found years ago that the best protocol will cover somewhere between 30 and 35 percent of the population for which it is intended. The other 60, 65 percent needs clinical judgment. And that's where the doctoral level providers must be.

Hayes: And then wouldn't a major part of the job of the doctoral level person be to turn that 65 percent into 60 and then 50 and then 40 and so on? It's not going to be just normal delivery services even with complex cases but it's treatment in order to do treatment development.

Cummings: You're absolutely right.

You don't have the automotive engineer down on the assembly line putting in rivets. The doctoral level psychologists will be developing the protocols, and testing the protocols. The goal will always be to raise that 30 percent of protocol responsive cases to 40, to 50, to 60, hopefully to 90. There's a level at which we might get alarmingly close to the cookbook stage.

That is far off and there will always be room for clinical judgment. But we have to make room for masters level providers. This is going to surprise you. Group practices owned by doctoral practitioners have more non-doctoral people than group practices owned by managed care companies. Once he or she is at risk, psychologists see the light and say, "Why should I be putting a Mercedes engine on a bicycle?" And so they gear the level of training to the task that has to be done.

Hayes: But psychology has spent the last twenty years going in the opposite direction. Organized psychology seemed to have the idea that we needed to get rid of the masters level people, crank up the supply of doctoral people, change the model away from scientist-practitioners, and add layer upon layer of specialization and practice restrictions. As a result, how many doctoral psychologists even have the training to fit into the world that is coming?
Do you think that we have prepared for our students to do what is now needed, either in the university-based programs or professional school programs?


No, no. We're training great psychologists for the 1980s! We're not prepared for the 90's or the year 2000 whatsoever.

Henry Seaman at the National Psychologist resurrected an editorial of mine in the APA Monitor that came out in 1974 where I pleaded with the APA to assign a rightful role to the doctoral level psychologists, a rightful role to the masters level psychologists, forget about the Psy.D. because the Psy.D. is nothing more than an excuse to have doctoral level practitioners. He or she would still be called doctor but it was clearly an accommodation of the APA's determination to keep psychotherapy exclusively at the doctoral level. If we had gone the route that I suggested in 1974 our problems would be solved now. We wouldn't have this glut of Ph.D. psychologists who want to do psychotherapy one-on-one and still have a practice. The masters level people would be in their rightful place, the Ph.D.'s would be in their rightful place and the APA wouldn't be in this terrible crisis.

Hayes: I wonder if we're not doing the same thing all over again with the idea that we should have more and more specialty training and limit practice within specialty domains. The National College for example, or the development of different accreditable specialties and competencies. Or prescription privileges, which would add another two or three years to what we are already doing in six or seven years. Meanwhile [some are] really trying to crush masters level people to the point that they are even eliminated in the states where they have any kind of psychological associate licensing. It seems like our major professional adjustments have been in the opposite direction of what you're talking about.

Cummings: Your question is really a very astute one. The APA is trying to salvage the bad decisions we made in the 60's and 70's.

Uwe Rheinhart, the Princeton health economist, says the age of specialization is over, that the LPN is going to be doing the work of the RN, the RN is going to be doing the work of the physician, the GP is going to be doing the work of the specialist, and the specialist is going to be driving taxicabs.

So what is the APA doing? It's creating more and more specialization! The prescription privilege thing can go either way. We might end up adding more years, which would be a ridiculous way to go, but on the other hand prescription privileges have been extended downward rather than upward. Nurses are prescribing, optometrists are prescribing, podiatrists are prescribing, and in many states pharmacists are now prescribing, so that this would be more of a reduction of specialization, I think. Unless the APA, in its inimitable style, makes this an incredible super specialty... which they're likely to do because they consistently go in the wrong direction, no question.

Hayes: Let's deal with prescription privileges because that's something that AAAPP has been involved in . We have [been] exerting leadership to slow down the movement towards it. And one of the things that has moved AAAPP to take a position is we fear that really what were trying to protect with the prescription privilege movement is the Mom and Pop level of health care. It isn't that we're going to now fit into the industrialized health care system as a cost-effective, value-added professional that can also prescribe. It seems to me that the fantasy is that were going to have our private practice offices being filled now by people who are coming in for fifteen minute med-checks at eighty or ninety dollars instead of having to fight for a managed care company to allow us to charge eighty dollars an hour when we feel like we should be charging a hundred and twenty for psychotherapy. There is a problem here but this response might, if we don't act carefully, take us in the opposite direction of showing that we can provide an economically justifiable benefit in the health care system based on what we actually know.

Cummings: If we take it in that direction it will be more of the same.

I've predicted that fifty percent of doctoral level psychologists will not be in practice by the year 2005. If psychologists get prescription privileges we might lose twenty five percent of them and the other twenty-five percent will come out of psychiatry. The managed care company is going to say to psychiatry, "Why should we pay your higher fees when you can get a psychologist to do it?" Just like they tell us in psychotherapy now, "Why should I pay your fees when I can get a masters level person to work cheaper?"

So I'm afraid that most people who are looking for prescription privileges are looking for a way to somehow save private practices.

Hayes: Fairly quickly within managed care doesn't it seem clear that our competition would not be psychiatry but RNPs? And do we really want to compete with a doctorate plus additional training with RNs?

Cummings: If we use prescription privileges as a very small part of our practice, as an adjunct to psychotherapy, we wouldn't have that problem. It's when the tail wags the dog that we could be in trouble. There was a movement that I headed around 1970 in the APA to look at the prescription issue. The committee came out with a report saying that if psychology did indeed get prescription privileges it would stop doing as much research and innovation in psychotherapy. And immediately I saw that this was right and I reversed my position. Psychology became the preeminent psychotherapy profession because not having the access to prescriptions and having the ability to do research, we have come up with psychotherapies nobody even dreamed of twenty-five years ago. We will probably lose that. Once you have the prescription pad it is such an easy way out just to reach across you desk and pull the damn thing out.

Hayes: There are a number of people who think that psychotherapy can't cost justify itself in the health care system because its always going to be cheaper just to write a prescription. Even within psychology you can see a real loss of faith. Are we on the losing side of a cost-benefit debate that will lead us into irrelevancy?

Cummings: I don't think so. You know, when I was CEO of the company that had 14.5 million subscribers and we were seeing thousands and thousands and thousand patients from coast to coast most of the people we saw in psychotherapy had already had medication fail. They went for the quick-fix first. They finally come into psychotherapy to get some relief for their symptoms and their pain. So I don't think medication will ever put us out of business. Absolutely not. But it behooves us to make our treatment procedures more and more cost effective. We can no longer afford long term therapy for the sake of the doctor. There are patients that should get longer term therapy about fifteen percent. But this is because these people should get longer term care, not because the therapist needs it.

Hayes: It seems as though we have built, in our university studies and also in our practice base, a model that ignores all kinds of behavioral health problems simply because they don't fit a particular syndrome or classification, or there isn't a sixteen session protocol that can be delivered once a week fifty minutes. An example that is dear to your heart is primary care. And yet it seems as though we just walked away from this issue and have abandoned it to others. It is as if it is not psychology is there is not a separate office and a separate waiting room.

Cummings: Psychotherapists of the future will only be doing one-on-one psychotherapy with about twenty-five percent of the patients. And the rest will be group therapy and maybe fifty percent will be psycho-educational models. The Hawaii study, for example, showed with chronic conditions such as asthma and emphysema and diabetes and so forth, that psychotherapy raised costs, but a five session psycho-educational model reduced costs tremendously. People who have chronic conditions, people who have pain, people who have anxieties and phobias they can' t understand love to be educated about their own condition.

Hayes: What kind of implications does that have for organizing our training programs? What are the barriers that we have to face inside the discipline to move into the primary care setting and to very, very short term interventions for problems that are not even considered to be "psychiatric" syndromes?

Cummings: I've seen tremendous, if not a dismal ignorance. Most training departments in psychology have no idea what's happening out in that world. My hunch is that it probably is going to get better as these program are broken from the bottom up. When students find out they don't have jobs, they don't have incomes, they don't have a livelihood when they graduate and the word filters down then new graduates coming in are going to demand changes just like the new breed of medical students changed the medical schools a decade ago. And of course managed care changed medicine only a decade before there was a behavioral health so now it is our turn. I think it's going to come from the students. Unfortunately University faculty live on their own momentum they keep doing whatever they've always been doing.

Hayes: How do you see the health care system reorganizing itself as an industry as a business?

Cummings: We will have universal care. The question is "How will it be done?" And managed care may make it economically possible. Managed care is the centerpiece for all health plans that look toward universal health care in the United States. Government medicine has not worked. It introduced a new kind of rationing that nobody anticipated. Europe is looking at what we're doing and now they are trying to privatize it. They're going to keep the single payer system. England has gone ahead with what they call fund holding. Sixty percent of the physicians will be fundholders by April 1997. They get a pot of money for taking care of a population. In the United States, managed care has done an incredible job of bringing down costs. They really have. It's creating a whole host of other problems that we're now in the process of solving. One thing I think you're going to see over the next five, six, seven years is regulation. Government is going to enter the field through regulation. You never have an industry that goes from ground zero to seventy percent of the market in ten years that doesn't end up getting regulated. It happened to the railroads and it happened to the telephone.

Hayes: AAAPP has fostered an initiative to really look at how we can link the behavioral sciences to the health care industry in the form of practice guidelines, treatment protocols and things of that kind where the best available scientific evidence is linked standards of care instead of simply cost reduction in the form of session limits and other first generation cost reduction efforts. Where do you think thats going? This sort of general issue of clinical pathways, treatment protocols, practice deadlines and so forth?

Cummings: I helped midwife the American Managed Behavior Healthcare Association. I had hoped it would fulfill that function; that it would pool knowledge, it would encourage knowledge, it would form knowledge and the whole industry would benefit. What has happened is that the industry has become incredibly competitive. It has become so competitive that margins are getting down to tissue paper thin levels. And when companies start losing money or nearly losing money then they try to find a way to differentiate each other. They want to say "See, we're better than X, Y, Z." During this period where the margins are so thin, everybody is terrified of sharing knowledge. Everybody acts as if he or she has a black box. Nobody has a black box. They're all doing the same damn thing but they've gone so far as to say, "I won't share my application form for practitioners to go on the network because I have the best application form in the industry." And when you look at it, it isn't the best form. But everybody has gone to the customer and said, "We have all of these things that nobody else has." So we're going through that period where everybodys playing the cards close to the vest. When we get over that, then I think we're going to start pooling knowledge and doing a better job of linking practice to that.

Hayes: One of the things AAAPP is trying to do is to try to get people in the room and begin to take down some of the proprietary boundaries. We have a conference in November to begin to do that. How are we going to go from this very proprietary stage to one in which is a more open linkage between the best available knowledge and the standards of care that are built into delivery systems?

Cummings: I have a tremendous faith in the entrepreneurial system. Eventually the marketplace will decide whos the best but we have to get through this stupid period where about 75% of the companies in existence today are going to die. It's that simple. There are too many companies doing the same thing, trying to differentiate themselves. Right now this competition is fueling tremendous potential knowledge that one of these days is going to break loose and we're all going to become the recipients. I remember in 1950 when we learned to freeze food and housewives quit canning in jars and there were hundreds of frozen food companies on the market. And I remember a professor I was taking economics from said, "In two years there are going to be five frozen food companies." And he was right. And the ones that survive it are going to be the best ones. They're going to know how to do it; the best and the cheapest. We're in that stage now. When you get over this period the industry's going to fund this kind of thing just like the automotive industry funds a tremendous amount of research that benefits all of the companies. They all chip in, they all pool knowledge. Essentially the only thing the automotive companies hide from each other is the body of what next year's model is going to look like. The internal combustion engine, braking systems: all that knowledge is available to all of them. Nobody has anything that the others don't have and it's done by the automotive research institutes. I think eventually we'll have that. That's what I tried to do when I formed the Biodyne Institute. "X" portion of the dollars that American Biodyne generated would go to research, and we would publish it and it would be available to everybody. The Biodyne Institute did the Hawaii project. The data from the Hawaii project became the appendix to every RFP for every managed care company that was applying for a Medicaid contract.

Hayes: Is there any way to prevent the transition that is happening in health care through guild activity?


You don't ever stop industrialization by self interest. You may slow it down, you may derail it for a while but once industrialization starts it rolls right over that. And I can tell you, I talk to employers, they have written off our professional guilds.

They consider them moribund, they consider them selfish. There was a time years ago when the American Medical Association were the bad guys and the American Psychological Association were the good guys. Now we're the bad guys. The American Psychiatric Association, and the American Psychological Association: we're the bad guys. Employers tell me those organizations are going to go down the tubes.

Hayes: Design a psychology training program to fill the need you see coming.

Cummings: [laughter] Well, I failed at this once when I helped found the professional school movement. I always felt that the people that are the most aware of the research that needs to be done are the people that are in the trenches. I wanted to bring practitioners and researchers together under one roof where it had always been academically dominated. And unfortunately the opposite effect took place and it became professionally dominated. I found out that runaway professionals are no better than ivory tower academicians. The professional school movement has dragged their feet probably more than anybody when it comes to managed care. A few are now finally getting on board but most of them are still turning out students that want a shingle, a couch, and a Mercedes in the driveway.

Hayes: As a discipline and as a profession, what's your prediction? Are we going to succeed or shoot ourselves in the foot?

Cummings: I think as a profession as we know it today we're going to shoot ourselves in the foot. APA is a problem. We might be able to solve that it if we retire every private practitioner over fifty and then APA would no longer have to be held accountable to these atavistic Neanderthals who are the power structure within the APA. I think psychology as we know it and its institutions are not going to survive. What follows it, whether it's an AAAPP or APS or what, I don't know. More and more people on the cutting edge of the profession are leaving APA. It used to be the scientists, now it's also the cutting edge practitioners. Who knows? I'd hate to see it, you know. If I live another fifty years I don't think I will want to call myself a past president of an organization that will no longer exist.

Hayes: I think a lot of practitioners think that managed care is about "will I pay you and how much" as opposed to "what will you do with this person and what is the outcome?" The second generation of managed care is different. I don't think people realize that's coming.

Cummings: It is coming. It's already started, especially in staff models. I've seen staff models go both ways. Most of the staff models that went belly up were because the staffs, instead of being on the cutting edge being excited having these clinical based conferences and doing research and refining their protocols, became like the post office. "I'm salaried, the less I have to do the better." But the protocols and innovations are coming. The Kaiser family tried to foster this: they had a huge array of small grants in the ten to fifty thousand dollar range. They rewarded the practitioners that came up with good ideas. Most of the work that I did at Kaiser was on this kind of funding. Kaiser in those days was on the cutting edge.

Hayes: What effect do you think changes in managed care will have on prevention in behavioral health areas?

Cummings: As far as behavioral health we are getting in to real protocols that address targeted conditions. These protocols usually have three aspects: 1) treatment, 2) management of the condition and 3) prevention. These vary a fair amount with the particular conditions that are being addresed. Some have more management than treatment; some have more treatment than management; some have more prevention than treatment and so on. It varies. Let's take some examples. Say you have a group treatment protocol for persons with borderline personality disorder. It probably has more management and treatment than prevention. On the other hand, take a parenting protocol. It will have more prevention than treatment. So I think we are approaching prevention from a somewhat different standpoint, but it is very important in managed care. The model of prevention for half a century was the public health model. That does not lend itself that well to where we are coming from, but prevention is still very important.

Hayes: Is psychology a victim of its success? Is that what is making the transition so hard?

Cummings: The big cash in for psychology came when medicine and surgery were tethered to DRGs and the hospitals, the medical and surgical beds were empty. The hospitals said, gee, if we transport all those beds into psychiatric beds that might work. Suddenly psychologists were flourishing. I met psychologists that were making four hundred thousand dollars a year hospitalizing people. All of a sudden it was a cash cow for psychotherapists, a real cash cow. Whereas medical and surgical colleagues were starting to hurt. I said at the time, "We're going to hurt like they do eventually." Nobody believed me. You know what killed General Motors was not only that the Honda Civic was at the right place at the right time; it was one dollar a gallon gasoline. As long as gasoline was 25 cents Americans all wanted these huge V8's that got eight miles to a gallon that roared and rumbled for us.

Hayes: Well, that's kind of like fee for service. We all got to roll around with 25 cent gasoline and psychotherapy Cadillacs.

Cummings: Absolutely. Can I give you a quote from Rogers Wright? You probably know Rogers.

Hayes: Oh yeah. Sure do. I've been on the other side of the fence several times with him.

Cummings: I confronted him a few months ago and asked him why a man as bright as he is missed every boat for ten years. And he thought a minute and he said, "Well, I was where all my colleagues were." And I said, "Where's that?" And he said, "When you're practicing in the land of milk and honey, and some guy comes in and spins you around and says, The cow's eventually going to run dry, well, he's just not going to be listened to." And I said, "Rogers, that is probably one of the three honest things I've heard you say in the forty years I've followed you." Yes, you're absolutely right. The private practitioners had no incentive to lower costs and change their ways to more effective forms of practice. Now we're facing the consequences. Now we're facing the consequences. How about some more coffee?

Hayes: Don't mind if I do.

That is the end of the interview.

Cummings, N. (1996). Now we're facing the consequences. The Scientist Practitioner, 6 (1),

Reprinted with Permission.
For further information contact:
Steve Hayes
Department of Psychology
University of Nevada Reno, NV 89557-0062

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