James C. Robinson, Ph.D.

While a HCFO grantee, James (Jamie) Robinson, Ph.D., has explored two of his key research interests: organization and consolidation in the health care system.

In his first HCFO study, conducted between 1998 and 2000, Robinson examined the evolution of physician organizations under managed care. His research focused on how and why physician practice management (PPM) organizations were forming, how they acquired and amalgamated smaller physician groups, and how they sought to pursue profitability under the dominant capitation financing structures of the era. Robinson conducted case studies, collecting quantitative data on PPM physician affiliations, patient enrollments, and financial performance, and qualitative data on corporate structure, strategy for mergers and acquisitions, physician compensation and methods of utilization review and quality management. His objective was to inform policymakers about PPMs and help them determine whether regulations were needed to address consumer protection, solvency, quality, and antitrust issues. Robinson's research documented the rapid growth and equally rapid decline of the PPM sector, as the underlying financial model of capitation and consolidation collapsed under pressure from the federal Balanced Budget Act, which undermined Medicare health maintenance organizations (HMOs) and the inability of prepaid physician organizations to manage the rising consumer demand for new therapies and technologies.

The findings from this study helped leaders in the policy, professional, and industry sectors to understand why the managed competition framework, so strongly embraced by many health care observers, had failed to gain traction and was yielding to a "consumer-driven" trend. The core of the managed competition vision was that physician organizations, once paid on a prospective basis and linked through ownership or strong contractual ties to HMOs, would generate gains in efficiency and quality adequate to bring the rate of cost inflation down to sustainable levels. Robinson's research highlighted the governance, finance, and organizational barriers facing prepaid group practices and the larger entities (including PPM firms and hospital systems) that sought to promote them. While some medical groups retain a leading clinical and business role in their local communities, much of American health care continues to be delivered through small and single-specialty practices which suffer from a lack of scale economies but also escape the incentive attenuation and internal influence politics of larger multi-specialty entities, especially those sponsored by PPM firms.

Contemporary policy and professional endeavors now focus on "making consumerism work" rather than looking to physician organization as the dynamic for a transformation in health care, Robinson argues. In particular, the Medicare Modernization Act seeks to promote care coordination for chronic illnesses through disease management programs for the fee-for-service enrollees, rather than to view care coordination as integral to the capitated HMO plans that participate in Medicare.

Robinson's current HCFO grant looks at the influence of capital finance on corporate strategy and consolidation in the insurance and hospital sectors. In this study, Robinson is examining the financial capital/consolidation relationship using quantitative data, case studies of leading firms, interviews of capital market participants, and an analysis of finance literature. His goal is to inform public policy relative to the development of regulations governing financial disclosure and governing the influence of financial capital on health care organization and consolidation. Robinson will also use findings from his study to shed light on the positive and negative consequences of nonprofit to for-profit conversions of health insurers and, in particular, the Blue Cross Blue Shield plans.

As part of this study, Robinson has brought together data on the concentration of enrollment within state insurance markets, highlighting for the first time the consolidation of most markets in the hands of three to five multi-product insurers and, in many cases, the dominance by two to three carriers. The Blue Cross Blue Shield plans hold a dominant position in most markets and the remaining enrollment is held largely by three national carriers and a handful of regional plans. This is the first time that enrollment data have been combined across product types (e.g., HMO and preferred provider organizations (PPOs)) and funding types (insured and self-insured). Robinson's main concern with this consolidation is not the potential for supra-competitive prices and profits-though he does document the extraordinary margins earned by the major plans-but rather the barriers to new entry and potential impediments to innovation. His series of four papers on the benefit, network, medical management, and pricing policies of the contemporary insurance industry, derived from case studies of major national and regional carriers, highlights the thinning of activities and retreat from engagement by much of the insurance industry from previous efforts to improve quality and moderate the cost of care in the delivery system.

The particular role of finance in insurance and delivery is explored by Robinson in case studies of Blue Cross conversions, where "access to capital" is often highlighted by would-be for-profit plans, and in an ongoing study of a major nonprofit hospital system. With respect to the Blue plans, Robinson suggests that the remaining nonprofit firms have more than enough capital to finance their investment needs and that conversion is not a survival strategy in the short or long term. He argues, however, that a conversion that transfers the full value of an erstwhile nonprofit insurer to a charitable foundation or state treasury can generate more social benefit than is generated by those nonprofits who pursue product and market strategies indistinguishable from their investor-owned counterparts. If there is to be a conversion, it makes sense to sell the social asset when insurer valuations are at their peak rather than wait for a cyclical downswing, erosion of profits, and conversion of a financially troubled nonprofit at firesale prices. The aborted conversion of the Blue plans in Maryland and neighboring jurisdictions demonstrated, in Robinson's view, that simply blocking a conversion while leaving a conversion-oriented management in charge of a nonprofit insurer can produce the worst of worlds: de facto for-profit insurance without the endowment of a charitable foundation through conversion.

Robinson's research portfolio covers an array of subjects, including health insurance, physician and hospital organization, health care finance, and biotechnology. "For several decades," says Robinson, "health policy has been motivated by the implicit assumption that financial savings from reducing administrative waste and inappropriate medical procedures could finance insurance expansions, quality improvements, technology investments, and the other good things in life without requiring serious debate over priorities, rationing, and new dollars. This optimistic spirit is gone. The insurance industry, and behind it the public and private purchasers of care, are restructuring their activities to place the rights and responsibilities for priority-setting into the hands of individual consumers, whether the consumers are ready or not. The continued growth in expenditures derives largely from new drugs, devices, and medical procedures that extend longevity, reduce uncertainty, and improve the quality of life. In the contemporary policy and political environment, the age-old questions of who should get what first, who should get what second, and who should get what never will increasingly be decided through individual choices in the market for coverage and care rather than through collective choices in the legislative and regulatory arena."

Robinson's interest in health care markets and the policies that structure them spans the range from analysis to participation. As a member of the board of directors of the Integrated HealthCare Association (IHA), a policy and strategy organization that brings together leading physician groups, hospital systems, insurance plans, technology firms, and purchaser and consumer entities, Robinson has helped launch the nation's leading pay-for-performance initiative. The IHA payment model, which has been adopted by all the leading HMOs in California (aside from Kaiser Permanente) and studied closely elsewhere, retains some of the efficiency-enhancing incentives of capitation while reducing the transfer of financial risk and shifting the emphasis to rewarding patient satisfaction, process measures of quality, and investments in information technology. Robinson is currently taking the lead in a new IHA initiative on how to improve the management and reimbursement of high-cost and, if appropriately used, highly effective biotechnology products.

Robinson is professor of health economics and policy at the School of Public Health, University of California, Berkeley. He is the author of The Corporate Practice of Medicine: Competition and Innovation in Health Care. Robinson received his B.A. from the University of California, Santa Cruz, and his Ph.D. in economics from the University of California, Berkeley.

Grantee Publications

Robinson, J.C. "Entrepreneurial Challenges to Integrated Health Care." Policy Challenges in Modern Health Care. Edited by D. Mechanic, L. Rogut, D. Colby, and J. Knickman. New Brunswick, NJ : Rutgers University Press, 2005 (in press).

Robinson, J.C. " Consolidation and Transformation of Competition in Health Care," Health Affairs, Vol. 23, No. 6, November/December 2004.

Robinson, J.C. " For-Profit Non-Conversion and Regulatory Firestorm At CareFirst BlueCross BlueShield," Health Affairs, Vol. 23, No. 4, July/August 2004, pp. 68-83.

Robinson, J.C. and J.M. Yegian. "Medical Management after Managed Care," Health Affairs, Web Exclusive, May 19, 2004, W269-W280.

Robinson, J.C. "Reinvention of Health Insurance in the Consumer Era," JAMA, Vol. 291, No. 15, April 2004, pp. 1880 - 6.

Robinson, J.C. "From Managed Care to Consumer Health Insurance: The Fall and Rise of Aetna," Health Affairs, Vol. 23, No. 2, March/April 2004, pp. 43 - 55.

Robinson, J.C. "The Curious Conversion of Empire Blue Cross," Health Affairs, Vol. 22, No. 4, July/August 2003, pp. 100 - 18.

Robinson, J.C. "Hospital Tiers in Health Insurance: Balancing Consumer Choice with Financial Incentives," Health Affairs, Web Exclusive, March 19, 2003, W135-S146.