понедельник, 12 марта 2012 г.

New damages regime

ALTERNATIVE WAYS TO SEEK REDRESS FOR PROBLEMS WITH SECURITIES TRADED IN THE SECONDARY MARKET

If proclaimed in force, Ontario Bill 198 will create Part XXIII. 1 to Ontario Securities Act and a new regime for establishing liability and quantifying damages where parties buy and sell publicly traded securities in the secondary market (i.e., securities not traded under a prospectus). Part XXIII. 1 focuses on civil liability for secondary market disclosure and prescribes the damages regime. Specifically, it addresses situations where a party has bought or sold securities and alleges it has sustained a loss caused by misrepresentations or failure to make timely disclosure on the part of the issuer or certain parties associated with the issuer. It does not replace the existing common law regime; it provides the aggrieved parties with an alternative avenue through which to seek redress.

Prior to the new Part XXIII. 1, the plaintiff had to prove reliance, damages were quantified in accordance with common law and there were no limits on the quantum of the damages. The plaintiff could claim damages in tort, which include compensation, restitution and punitive damages.

Representations or misrepresentations include a broad array of communications such as traditional announcements, financial statements, quarterly reports, fairness opinions, valuations, commentary of all kinds, as well as more current communication formats including e-mails and websites. A failure to communicate or make timely communication are also culpable.

Broadly stated, Part XXIII. 1 says the plaintiff is deemed to have relied on the representation in question or the lack thereof; prescribes the damages calculation and limits on the quantum of damages payable by the defendants.

These differences are summarized in the table on page 37.

Part XXIII.1 requires two different calculations in order to determine the plaintiff's damages:

* actual loss calculation - the difference between the price at which the securities were acquired and the price at which the securities were disposed of; and

* objective loss calculation - the difference between the price at which the securities were acquired and the trading price in the 10 trading days immediately after the misrepresentation was corrected or the required disclosure was made.

For example, if securities were acquired for $100 during the period of the misrepresentation or failure to make timely disclosure on the part of the issuer or certain parties associated with the issuer (the misrepresentation) and the average trading price of the securities in the 10 days trading after the misrepresentation was disclosed was $70, then the objective loss is $30. If the securities were disposed offer $70 within the 10 trading days after the misrepresentation was disclosed, the damages would be $30 as well. If the securities were disposed of prior to resolution of the related litigation, the damages would be the lesser of the actual loss and the objective loss. If the securities were sold, for example, at $80, the damages would be $20. If the securities were sold for $65, while the actual loss was $35, the damages would be restricted to $30. If, however, the securities were not disposed of prior to resolution of the related litigation, the damages would be $30 or the objective loss.

Similar logic applies if securities were disposed of during a period of misrepresentation. Clearly, a seller is entitled to compensation when the sale was made under the cloud of actual misrepresentation, inadequate or untimely disclosure.

The calculation of damages prescribed in Part XXIII.1 is based on the Alien Report. The report of the March 1997 committee of corporate disclosure considered a number of approaches to quantifying damages. It recommended damages be calculated on an out-of-pocket basis. Draft regulations, released May 1998, included a methodology for quantifying damages based on the plaintiff's actual loss.

Prior to reaching its conclusion, the report considered those measures used by US courts under section 10(b) of the Securities Exchange Act of 1934, and rule 10(b)5 of the securities and Exchange Commission, including:

An out-of-pocket measure - the difference between the contract price, or the price paid, and the real or actual value at the date of sale. Thus, if a plaintiff bought stock for $75 a share, and the stock was worth $50 a share at the time the misrepresentation was made, the out-of-pocket measure of damages is $25 a share.

A benefit-of-the-bargain measure focuses on the plaintiff's potential gain. Specifically, the measure calculates the difference between the price paid or received, and what could have been paid or received if the misrepresentation was true. Thus, if a plaintiff was told that stock was worth $75 a share and was only able to sell the stock for $40 a share once the misrepresentation was disclosed, the bencfit-of-thcbargain measure of damages is $35 a share. This is notwithstanding that the stock might have been worth $50 at the time of the misrepresentation.

A cover or conversion measure - allows the defrauded seller to recover the difference between the highest value a security achieves within a reasonable period after the plaintiff discovers, or should have discovered, the fraud and the value of the consideration at the time of the transaction. Thus, if the defrauded seller sold stock for $40 a share and the stock subsequently reached a value of $80 a share within a reasonable time period, the cover measure of damages is $40 a share. This measure is a variation on the benefit-ofthe-bargain measure. The cover measure takes the concept of worth to be the highest value a security achieves within a reasonable period after the plaintiff discovers the fraud.

The Chasms measure - allows the defrauded buyer to recover the difference between the lowest value a security achieves within a reasonable period after the plaintiff discovers, or should have discovered, the fraud and the value of the consideration at the time of the purchase. Thus, if the defrauded buyer bought stock for $50 a share, and the stock subsequently dropped to $18 a share within a reasonable time period, the Chasins measure of damages is $32 a share.

Consequential losses - in addition to the losses quantified above, the plaintiff may be entitled to recover other losses caused by the misrepresentation or failure to make timely disclosure. One example of a consequential loss might be a previously paid dividend.

The damages payable under Part XXIII.1 are potentially limited through: the application of the principle of causality; the apportionment of the damages to each defendant and prescribed limits on the damages payable by each defendant.

The principle of causality requires the loss be caused by the misrepresentation or failure to make the required disclosure. "The assessed damages shall not include any amount that the defendant proves is attributable to a change in the market price of securities that is unrelated to the misrepresentation or the failure to make timely disclosure." The defendant may need to stratify the changes in the share price in light of economic and company factors influencing market price to ensure the loss was caused by a misrepresentation or failure to make timely disclosure on the part of the issuer.

The sophistication required of the expert will not be in the formulaic application of the prescribed damages, but rather in the stratification of the changes in the share price in light of factors both internal and external to the company influencing the market price to ensure damages are restricted to that portion of the loss caused by the misrepresentation or failure to make timely disclosure. In addition, expert opinion may also be required where there is no published market for the security or it is to make timely disclosure. In addition, expert opinion may also be required where there is no public market for the security or it is very thinly traded and the published market price is not the appropriate proxy. In the latter case, fundamental valuation principles will be essential to establishing the appropriate benchmark.

Part XXIII. 1 requires the court to determine each defendant's portion of the aggregate damages assessed that corresponds to the defendant's responsibility for the damages. If the court determines that a defendant authorized, permitted or acquiesced in making the misrepresentation or the failure to make timely disclosure while knowing it to be a misrepresentation, or failure to make timely disclosure, the whole amount of the damages assessed may be recovered from that defendant.

Part XXIII. 1 establishes liability limits depending upon the plaintiff's role (i.e., responsible issuer, director or consultant) and based on a formula using the issuer's market capitalization or the consultant's compensation. Damages otherwise payable under the liability limits are reduced for damages assessed in other actions in respect of the misrepresentation or failure to make timely disclosure, and amounts paid in settlement of any such actions. The liability limits do not apply "if the plaintiff proves that the person or company authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure while knowing it to be a misrepresentation or failure to make timely disclosure."

Early in the dispute, counsel should consider preparing a number of what-if calculations of the amounts payable by the various defendants to the various plaintiffs, taking into account the formula for quantifying damages, possible apportioning of liability and limits on damages. This will assist in identifying the key factors that will increase or decrease the amounts payable and establishing the range of likely outcomes. If the dispute continues unresolved, counsel may require additional assistance to ensure damages have been correctly quantified.

The deemed reliance on the misrepresentation or failure to make timely disclosure will accelerate securities class actions and other securities litigations. Directors, officers, auditors and other experts will undoubtedly face greater risk. Further, the damage quantification regime is now formulaic but for the defendant's ability to reduce the computed amount for matters unrelated to the breach. The onus has clearly shifted to the defendant.

Perfect storm conditions may well be incubating in Canada if they have not already arrived under the combined influence of the Sarbanes-Oxley Act, related governance and securities regulations' enhancements and the new Part XXIII. 1 to the Ontario securities Act. In the long run, this is good news for investors, competent directors, professionals and class-action litigators and bad news for those not wanting to live in the increasingly transparent fishbowl of the public markets.

In October 2003, Stikeman Elliott LLP issued an informative analysis of the above and related changes to the Ontario securities Act entitled Litigation Unleashed perhaps this said it best.

Technical editor: Stephen Cole, FCBV, FCA, partner, Cole & Partners

[Sidebar]

Perfect storm conditions may be incubating in Canada if they haven't already arrived under the combined influence of SOX and related governance and securities enhancements

[Author Affiliation]

Peter Macaulay, MBA, CA-IFA, is a specialist in investigative and forensic accounting with P. Macaulay & Associates Inc. in Toronto

Cameron helps Marlins edge Astros 5-4

MIAMI (AP) — With his enthusiasm and veteran leadership, center fielder Mike Cameron has helped rejuvenate the Florida Marlins, who are undefeated since he joined the team.

On Sunday he contributed a hit, too.

Cameron belted a tying two-run homer for his first hit with the Marlins, and they went on to beat the woeful Houston Astros 5-4, completing a four-game sweep.

Florida heads into the All-Star break with a season-best five-game winning streak, all since the 38-year-old Cameron arrived via a trade with the Boston Red Sox.

"He has been in this game for a long time," Florida catcher John Buck said. "It's pretty unanimous that we're all excited he's here."

Cameron batted only .149 in Boston and is 1 for 10 with the Marlins. But he grinned when asked if he has played a role in the winning streak.

"Maybe it's a little bit of karma — me being around so long and being enthusiastic with the guys and keeping them positive," Cameron said. "It feels like home."

The erratic Marlins are only five games below .500 (43-48) despite a streak last month of 19 losses in 20 games. The four-game sweep was the first for Florida since May 2010 against the Mets.

Manager Jack McKeon said he was sorry about the timing of the All-Star break.

"I hate to see it show up, but that's the way it goes," he said. "We're going good, and everybody is in a great mental state. The train is moving north."

Meanwhile, Houston reached a new low in a miserable season by being swept in a four-game series for the first time since May 2007 at Arizona.

All-Star Hunter Pence hit his 11th homer for the Astros, but they go into the break with a record of 30-62, worst in the majors.

"Enjoy your break, everybody," outfielder Michael Bourn said. "We know we haven't been playing well. We needed this break. It's come at the right time because we need to clear our heads."

Emilio Bonifacio, a catalyst in Florida's recent surge, had three hits and extended his career-best hitting streak to 12 games. He stole three bases and scored twice.

All-Star Gaby Sanchez drove in two runs. Chris Volstad (5-8) allowed three runs in six innings, and Leo Nunez pitched a perfect ninth for his 25th save in 28 chances.

Wandy Rodriguez (6-6) was nursing a two-run lead when Cameron homered in the fourth.

"This is what we know he can do — pop the ball out of the ballpark, tie the game up, stuff like that," McKeon said. "He's a real pro, a class act, and he's going to be a good influence on the young players."

Buck and Bonifacio kept the inning going with singles. Omar Infante's sacrifice fly put Florida ahead to stay, and Sanchez followed with a two-out RBI double.

Rodriguez departed after allowing five runs in 5 1-3 innings.

"That Mike Cameron home run took him out of his game a little bit," Astros catcher Carlos Corporan said.

The Marlins scratched out their first run in the third. Bonifacio led off with a single, stole second, took third on a wild pitch and came home when Sanchez grounded out.

Bonifacio has thrived in the leadoff spot since McKeon became manager June 20, and his average has climbed 26 points in the past two weeks to .285.

"He has played tremendous since I've been here," McKeon said. "He is turning himself into an outstanding leadoff hitter, and he has just been going crazy on the bases."

NOTES: Astros 2B Matt Downs had one hit while batting cleanup for the first time this season. ... Bonifacio improved his average against left-handers to .342. ... The Astros are 3-14 in Miami since the start of 2007. They're 4-16 when Corporan starts at catcher.

World Golf Glance

PGA TOUR OF AUSTRALIA

AUSTRALIAN OPEN

Site: Sydney.

Schedule: Thursday-Sunday.

Course: The Lakes Golf Club (6,879 yards, 6,290 meters, par 72).

Purse: $1.55 million. Winner's share: $278,475.

Last year: Australia's Geoff Ogilvy won at The Lakes, finishing with a 3-under 69 for a four-stroke victory.

Last week: Germany's Martin Kaymer rallied to win the World Golf Championships' HSBC Champions in China, birdieing nine of the last 12 holes for a 9-under 63 and a three-stroke victory over Sweden's Fredrik Jacobson. ... Australia's Matthew Guyatt won the New South Wales PGA Championship by a stroke, shooting 67-68-62.

Notes: Tiger Woods, preparing for the Presidents Cup next week at Royal Melbourne, is making his first start since tying for 30th in the Frys.com Open on Oct. 9 in California. He's winless since the Australian Masters in November 2009. ... U.S. Presidents Cup captain also is in the field along with team members Dustin Johnson, Matt Kuchar, Nick Watney, Bubba Watson, Hunter Mahan, David Toms and Bill Haas and assistant captain John Cook. The Australian contingent includes International captain Greg Norman and team members Ogilvy, Adam Scott, Jason Day, Aaron Baddeley and Robert Allenby. John Daly also is playing. ... Scott won in 2009 at New South Wales. ... Baddeley won as an amateur in 1999 at Royal Sydney and 2000 as a pro at Kingston Heath. ... The 18th hole is a 209-yard par 3. ... Gary Player won the national championship a record seven times, one more than Jack Nicklaus. ... Brad Faxon was the last American winner, taking the 1993 title at Metropolitan in Melbourne.

Online: http://www.australianopengolf.com.au

PGA Tour of Australia site: http://pgatour.com.au

___

EUROPEAN TOUR/ASIAN TOUR

SINGAPORE OPEN

Site: Singapore.

Schedule: Thursday-Sunday.

Course: Sentosa Golf Club, Serapong Course (7,357 yards, 6,727 meters, par 71) and Tanjong Course (6,625 yards, 6,058 meters, par 71).

Purse: $6 million. Winner's share: $990,520.

Last year: Australia's Adam Scott won the tournament for the third time, completing a 3-under 68 in a Monday finish for a three-stroke victory over Denmark's Anders Hansen. Scott also won in 2005 and 2006.

Last week: Germany's Martin Kaymer rallied to win the World Golf Championships' HSBC Champions in China, birdieing nine of the last 12 holes for a 9-under 63 and a three-stroke victory over Sweden's Fredrik Jacobson.

Notes: U.S. Presidents Cup players Phil Mickelson and Jim Furyk are in the field along with International team members Ernie Els, Retief Goosen and Y.E. Yang. The team event is next week at Royal Melbourne in Australia. ... Graeme McDowell and Padraig Harrington also are in the field along with Thomas Bjorn, Miguel Angel Jimenez, Louis Oosthuizen, Anthony Kim, Jeff Overton, Camilo Villegas and Jhonattan Vegas. ... Scott is skipping his title defense to play in the Australian Open. ... The final two rounds will be played on the Serapong Course. ... The European Tour has two events next week, the Alfred Dunhill Championship in South Africa and Johor Open in Malaysia.

European Tour site: http://www.europeantour.com

Asian Tour site: http://www.asiantour.com

___

US LPGA TOUR

LORENA OCHOA INVITATIONAL

Site: Guadalajara, Mexico.

Schedule: Thursday-Sunday.

Course: Guadalajara Country Club (6,626 yards, 6,059 meters, par 72).

Purse: $1 million. Winner's share: $200,000.

Last year: South Korea's In-Kyung Kim won her third US LPGA Tour title, closing with an 8-under 64 for a three-stroke stroke victory over Norway's Suzann Pettersen. Kim had a tournament-record 19-under total.

Last week: Japan's Momoko Ueda won the Mizuno Classic in Japan, beating China's Shanshan Feng with a birdie on the third extra hole.

Notes: Tournament host Ochoa, expecting her first child next month, won 27 US LPGA Tour titles. She retired last year. ... Top-ranked Yani Tseng is coming off victories in the US LPGA Tour's Taiwan Championship and Ladies European Tour's Suzhou Taihu Ladies in China. The Taiwanese star has seven US LPGA Tour wins this season, including major victories in the LPGA Championship and Women's British Open, and four other worldwide wins. ... Michelle Wie won the 2009 tournament for the first of her two US LPGA Tour victories. ... The season-ending CME Group Titleholders is next week at Grand Cypress in Orlando, Florida.

Online: http://www.lpga.com

___

OTHER TOURNAMENTS

MEN

JAPAN GOLF TOUR: Taiheiyo Masters, Thursday-Sunday, Taiheiyo Club, Gotemba Course, Shizuoka, Japan. Online: http://www.jgto.org

SUNSHINE TOUR: Gary Player Invitational, Friday-Sunday, Zimbali Country Club, Umhlali, South Africa. Online: http://www.sunshinetour.com

WOMEN

JAPAN LPGA TOUR: Ito-En Ladies Classic, Friday-Sunday, Great Island Club, Chiba, Japan. Online: http://www.lpga.or.jp

US women's coach wants Sweden job after 2012

STOCKHOLM (AP) — The U.S. women's soccer coach Pia Sundhage says she would like to start coaching her native Sweden when her U.S. contract expires in 2012.

Sundhage told Swedish news agency TT on Sunday she would gladly say "yes, thank you!" if she was asked to start coaching Sweden's women's team.

Sundhage has helped the U.S. women win gold in the Olympics in 2008, and silver in this year's World Cup. Next year, the U.S. will try to defend the Olympic gold in London, before her contract expires.

After that, Sundhage said she would like to return to Sweden because she has "been away from home for six years and that is too much Skype to keep up the contact with my friends."

Sweden coach Thomas Dennerby's contract also expires after the London Olympics.

среда, 7 марта 2012 г.

Complementary medicine: Viable models

SUMMARY * COMPLEMENTARY MEDICINE has had a quiet, consumer-based, grassroots evolution, generally spearheaded by individual champions. In this article, McGrady describes six models of complementary medicine and details specific practitioners who have implemented these models. Solo practitioners, physician-based practices, academic and research initiatives, wellness centers, provider networks, and hospital-based initiatives are discussed to display the diversity of options for complementary medicine. In addition, the author touches upon the legalities and credentialing of practitioners, as well as the financial considerations that health systems must face.

A MAN IN his fifties had tendonitis in his elbow that was so painful he could no longer play the weekly game of golf he so loved. The golf pro suggested he try acupuncture, which was successful in alleviating the pain, and he continued with his golf game. A friend of his, in her forties, suffered the same condition, also to the extent that golfing was painful. He shared his success with acupuncture with her. However, despite the testimony of her trusted friend and even though she couldn't articulate why, she wouldn't try acupuncture. Her course of treatment, prescribed by an orthopedic surgeon, included steroid injections, physical therapy including TENS, heat packs, and weight training. Several months of this treatment program has not relieved her pain, and she is now considering surgery.

As the above true story illustrates, some people embrace complementary medicine and others hesitate to even try non-traditional practices. While we marvel at the technological accomplishments of modern American allopathic medicine, we must still answer why the U.S. healthcare system ranks 37th among 191 nations even though it is the costliest, according to the World Health Organization (Modern Healthcare 2000). As the leaders in the provision of healthcare, hospitals and physicians hold the responsibility to examine their role in providing the best yet most cost beneficial means of improving the health status of our citizens. New ideas are emerging about practices complementary to conventional allopathic medicine, which may yield better results when integrated in a collaborative approach to health and wellness. The first step in this process is to assess what is currently happening in the community and determine viable models and relationships that match consumer readiness.

MAN AS MACHINE

The use of complementary medicine modalities by the public has been widely published. Of significant importance to conventional practitioners, including allopathic physicians and hospitals, is why patients are keeping it a secret. The answer is probably more telling about the practitioners than the patients. The simple answer is that conventional medicine has no room for any approach outside of the realm of allopathic medicine. In part, this is based in the Hippocratic oath in which the physician pledges to "do no harm"; many allopathic physicians are uncertain about the efficacy and safety of complementary medicine practices and practitioners. They were not taught about complementary medicine in their medical training and believe that complementary medical practices have not yet been proven by the clinical trial methodologies upon which modern Western medicine was founded.

Modern medicine as we know it evolved during the late nineteenth century and was influenced by rational laws such as Newtonian physics and Cartesian philosophy that postulated that the human body was like a clock and could be reduced to the sum of its mechanistic parts. As such, disease could be reduced to something biochemical or structural and therefore could be eradicated through pharmacological agents and surgery. This scientific framework is reductionistic and views illness to be the result of outside invaders and traumas best treated in a distant and detached manner. Although this approach can be effective for conditions with single causes, it is not always as successful for complex conditions such as chronic pain, arthritis, allergies, asthma, cancer, hypertension, depression, and digestive disorders (Cohen 1998). The reductionistic "man as machine" approach does not take into account the holistic person-the emotions, the spirit, the mind, and the environment, and how they all interplay to create health and wellbeing. This limitation of allopathic medicine can be augmented by complementary medicine practices, and the integration of conventional and complementary medicine has the potential to yield the greatest individual health and wellness.

DEFINITION AND TERMINOLOGY

The National Center for Complementary and Alternative Medicine (NCCAM), a division of the National Institutes of Health, defines complementary and alternative medicine as "those treatments and healthcare practices not taught widely in medical schools, not generally used in hospitals, and not usually reimbursed by medical insurance companies" (NCCAM 2000). Figure i illustrates domains and examples of systems and treatments generally considered within the realm of complementary and alternative medicine by NCCAM.

NCCAM distinguishes "alternative" as those modalities used alone and "complementary" as those used in conjunction with conventional medicine. As such, this article will focus on complementary practices, as it is those that stand the greatest chance of being integrated with conventional medicine and therefore those that need the greatest attention by hospitals and physicians. Other concepts associated with complementary medicine are that it is holistic and considers the mental, emotional, and spiritual in addition to the physical aspects of medicine.

The term "integrative" is used to describe complementary and conventional medicine used in conjunction. While this term is gaining popularity, it can be confused with the vertical integration of hospitals, physicians, and insurance products. But perhaps these uses are not so disparate. Deborah Labb points out that complementary medicine may be a cornerstone in the success of integrated delivery systems in that it is a potentially effective disease management strategy and is, in part, what consumers are demanding (Labb 1999).

Other terms used are "natural medicine," which connotes the body's internal healing mechanisms, and "frontier medicine," which certainly describes the pioneering spirit of complementary medicine. Alternative medicine describes practices outside of the standard of the referenced culture. In China, Western medicine as we know it would be considered alternative to traditional Chinese medicine. The view of Western allopathic medicine as the only "true medicine" is a form of ethnocentrism.

MODELS

Complementary medicine has had a quiet, consumer-based, grassroots evolution generally spearheaded by individual champions. Varying models have emerged that represent the diversity in the field and are categorized as follows:

1. solo practitioners;

2. physician-based practices;

3. academic and research initiatives;

4. wellness centers;

5. provider networks; and

6. hospital-based initiatives.

The following examples can be generally categorized as ordinary situations in which people are doing extraordinary things. Some of the examples have been profiled in the literature, others are quietly pioneering the way for a new medicine that expands its view beyond the conventional.

Solo Practitioners

Solo practitioners dominate the field. Michael Norris, NCCAM certified in acupuncture and Chinese herbology and a practitioner of traditional Chinese medicine, is a classic example of the solo practitioner. He received a Master's of Chinese Medicine degree from the International Institute of Chinese Medicine in Santa Fe, New Mexico. After completing this four-year course of study, he returned to Knoxville, Tennessee, and opened his private practice, which he operates as the Deep River Wellness Center adjacent to his home. Prior to this course of study he was a licensed massage therapist and Reiki master.

Although he has only been practicing for one year, his schedule is busy and growing. Not only is he receiving referrals from area physicians, but has several physicians as patients. His business operations are simple and he currently has no need for office assistance. His services are not usually covered by insurance, so he operates on a cash basis. He recommends and sells herbs as well, based on his assessment of the patient using traditional Chinese medicine techniques.

Norris believes that his medicine is complementary to conventional medicine and both have their place and should be used in conjunction. His single frustration with conventional practitioners is the lack of mutual respect he sometimes experiences.

He believes that he has earned the right to respect through his extensive studies and the positive outcomes his patients' experience. His work is very challenging because some of his referrals are "train wrecks" that have not been helped by conventional medicine. Even at that, he reports that 75 percent of his patients get better. He has been asked to practice at a hospital-based wellness center but will probably remain in private practice because the offer has no added value for him.

Physician-Based Practices

The second most common model is the physician-based practice. Lawrence Cohen, M.D., a conventionally trained physician who founded the Center for Complementary Medicine in San Antonio, Texas, typifies this model. He believes in addressing the whole person and allows adequate time with each patient to fully explore all the factors contributing to health. Cohen uses traditional and nontraditional diagnostic tests and his holistic training and experience to develop a plan of treatment to address the underlying cause of the problem. Cohen works with one other physician and other independent practitioners including massage therapists, nutritionists, a clinical nurse specialist in women's health, chiropractors, and psychologists. He suggests that conventional physicians treat complementary medicine practitioners as they would any other specialist-they should educate themselves and form relationships.

Reid Blackwelder, M.D., program director of the Kingsport Family Practice Residency Program at East Tennessee State University, is an example of an allopathic physician who is integrating complementary healing systems such as prescribing botanical medicines with conventional medicines. He also refers patients to local practitioners of traditional Chinese medicine and Native American healers when warranted. He believes it is important to explore the patient's emotional and spiritual support system as part of a holistic approach. He returned to an academic setting to try to change medicine from within.

Blackwelder recruited Wendy Kohatsu, M.D., a graduate of the Medical College at the University of Arizona program established by renowned complementary medicine practitioner Andrew Weil, M.D. The purpose of Weil's program is to train physicians in the use of adjunctive complementary medicine. In 1997, 75 percent of U.S. medical schools reported offering coursework in complementary and alternative medicine practices (Carlston 1998).

Instead of solely working as a provider of complementary medicine, Kohatsu, an assistant professor of family medicine at East Tennessee State University, elected to affect greater change by training future generations of physicians. In part, she teaches patients and students through modeling. For example, she demonstrates relaxation techniques with patients and includes students in the process. Although Kohatsu is comfortable practicing both conventional and complementary medicine, she believes medicine in general is too disease oriented and does not focus enough on optimizing wellness to include nutrition, exercise, valuable relationships at work and home, and fiscal health. The core of her approach to medicine is the concept of mindfulness and being present. This focused attention is in part why patients seek complementary providers (Hofgard and Zipin 1999) Kohatsu reports that 80 percent of her patients seek her out because she practices complementary medicine.

American Whole Health (AWH) has created a model that it plans to replicate in metropolitan areas across the country. These physician-based centers originated in Chicago with founder David Edelberg, M.D., and have expanded to a total of nine centers including ones in suburban Washington, D.C., Denver, and Boston. AWH was funded through venture capital and recruited management talent from Marriott International, Inc., Walt Disney, Co., and SRI Gallup to lead its expansion into new markets.

The AWH centers include primary care physicians as coordinators and adjunct complementary services such as chiropractics, acupuncture, nutritional counseling, massage therapy, herbology, homeopathy, and clinical psychology. In addition to complementary services AWH stresses hospitality and a high-service, friendly orientation (American Whole Health 2000).

Academic and Research Initiatives

Academic and research initiatives in complementary medicine are being undertaken at the most prestigious of conventional American medical institutions. In October of 2000, Harvard Medical School and Stanford University School of Medicine, among others, sponsored a joint conference entitled "Complementary and Alternative Medicine: Practical Applications and Evaluations." Conference content included models and therapies, policies, coverage by insurers and managed care companies, legalities, liability and financial aspects, outcome measurement strategies, and prototypes of clinics and managed care plans offering complementary and alternative medicine.

While some academic centers are providing services, others are conduct ing rigorous investigations. Critical to the continued adoption of complementary medicine is proven outcome measurement. In an effort to document the validity of complementary medicine modalities, the NCCAM is currently providing funding to nine research institutions to evaluate the efficacy of alternative and complementary treatments in the following areas:

* addictions;

* aging and women's health;

* arthritis;

* cardiovascular diseases;

* cardiovascular disease and minority aging;

* chiropractics;

* craniofacial disorders;

* neurological disorders; and

* pediatrics.

The recipients of NCCAM funding include conventional academic institutions such as Columbia University, the University of Arizona, the University of Maryland, and the University of Michigan, as well as unconventional institutions such as the College of Maharishi Vedic Medicine. Funding for NCCAM has increased from $2 million in 1993 to $68.7 million in 2000.

Wellness Centers

A natural site for providing select complementary medicine services is a wellness center. The Mercy Health System in Cincinnati, Ohio, operates highly publicized centers at two sites. The centers were founded for the purpose of fulfilling the healing mission of the hospital. The Holistic Health Centers are housed within large wellness facilities, which are over 200,000 square feet. Services include acupuncture, biofeedback, massage, Reiki, nutrition, hypnotherapy, counseling, yoga, tai chi, and therapeutic touch. The vision of system leaders is to create healthier people who will need less acute healthcare. As CEO Julie Hanser stated, their goal is "for people to be as whole as they are able." Although she understands that this undertaking is mission driven, she expects the centers to pull their own weight financially (Warrick 1998).

Mark Nadel of Healthplex Associates served as a consultant for the company that developed the fitness center that houses the complementary medicine center. He sees an affinity for complementary medicine services within the context of a wellness center, but cautions that reimbursement and demand are still limited. Nadel recommends that hospitals clarify on the front end whether their motives are purely mission driven or if the project needs to provide a return on investment. He suggests that proper sizing of the venture is needed and recommends inclusion of a mix of mission-driven and profitable services to ensure viability of the project.

In another area of the country-- New Orleans, Louisiana-Pendleton Memorial Methodist Hospital initiated its complementary medicine services by offering hypnosis performed by the hospital chaplain. For years they have offered this service to the community and employees on a fee-for-service basis. In particular the service has been effective for smoking cessation. The hospital has also added massage therapy and is looking to expand services in conjunction with a freestanding wellness center. This facility is an example of how hospitals can add complementary medicine services in a phased, low-key way that avoids some of the resistance to opening a "center."

Provider Networks

The most far-reaching development of provider networks is in the state of Washington, which mandated coverage of complementary and alternative medicine practices by all state health plans in 1996. Coverage can be provided through a list of providers offering discounts on fees or through riders to core benefits similar to dental or vision care.

Nationally, the organization of networks of complementary medicine providers is well underway. An example of these types of networks is the American Whole Health Network. It has more than 5,800 providers nationally and includes acupuncturists, massage therapists, and naturopathic practitioners as well as chiropractors and physical and occupational therapists. Many other networks of providers exist, most poised to compete for managed care contracts as complementary medicine practices become covered benefits. A helpful source in accessing providers and networks is the Internet.

Hospital-Based Initiatives

Hospitals have many options for integrating complementary medicine into their portfolio of services, but how services are provided is as significant as what services are provided. The Yavapai Regional Medical Center (YRMC) in rural Prescott, Arizona, has been working for the past ten years on their Total Healing Environment (THE) initiative, and they are experiencing favorable outcomes as measured by job satisfaction, clinical quality, productivity, and cost compared to regional benchmark data. Their model focuses on internal and external physical and psychological-- social elements such as room color, views, smells, food, courtesy and helpfulness, and patients' belief systems and outlook. Central to this initiative is developing positive relationships within and outside the organization that emphasize respect, integrity, accountability, and commitment.

The YRMC story also discusses difficulties hospitals often experience when introducing complementary medicine into their program. For example, nursing staff received the support of administration to include touch therapy as part of the program, but medical staff resistance and discomfort among community religious leaders resulted in the decision to not offer this service within the hospital setting (Malloch 1999).

Planetree is a hospital-based program dedicated to the development and implementation of new models of healthcare. Currently Planetree lists 19 affiliate hospitals across the country. The core philosophy of the program is personalizing care, a patient focus, the empowerment of patients and families, holistic care encompassing conventional and complementary modalities that enhance healing as well as curing, and supporting healing partnerships among caregivers, patients, and families. Program elements also include aromatherapy, baking, and therapeutic touch (Planetree 2000).

Another avenue for healthcare systems to initiate the integration of complementary medicine is in individual existing core service lines such as heart treatment, cancer treatment, women's services, and pain management.

Heart Treatment

Among the most well-known programs is the Dr. Dean Ornish Program for Reversing Heart Disease. Ornish's program, operational at 12 hospitals, is founded upon relatively conventional approaches: nutrition, exercise, and stress management. But in addition, his program includes work on love, intimacy, and the concept of community. He states, "The fundamental problem is not that people have negative emotions but that they experience a sense of emptiness, avoid" (Moyers 1993). Reversing heart disease is at the crux of the biomedicine/technology-wellness conflict for hospitals. Accepting risk through capitated managed care contracts could have provided the financial incentive to work toward wellness, but acceptance of capitation by both hospitals and physicians is in fullspeed reverse (Futurescan 2000). However, the hospital cardiac rehabilitation program may be the perfect place to interject a holistic wellness approach because most patients are highly motivated at that point in time. Although many cardiac rehabilitation programs include education about nutrition and exercise, it would also be easy to include the communal aspect as well by providing opportunities for sharing and group participation.

Cancer Treatment

Cancer is another key entry point into complementary medicine for patients. Complementary approaches to cancer care can be categorized into three areas: treatment modalities, adjunct modalities for palliative care to enhance conventional treatment, and prevention of reoccurrence.

The Comprehensive Cancer Care II conference, held in the summer of 1999, brought together a wide range of practitioners conducting innovative research in complementary medicine with conventional practitioners. Sponsored by The University of Texas-- Houston Medical School, the Center for Mind-Body Medicine, and in collaboration with The National Cancer Institute (NCi) and NCCAM, the conference offered the best research on the most promising and safe complementary treatments. Specific treatment protocols included the use of nutritional and phytochemical substances advocated by Michael Schachter, M.D., the use of enzyme therapy (currently undergoing NCI clinical trials at Columbia University) advocated by Nicholas Gonzalez, M.D., and the use of shark cartilage as a therapeutic agent.

Jeremy Geffen, M.D., outlined an exemplary blend of complementary and conventional approaches to cancer care. His seven elements of the healing journey are

1. education and information;

2. psychosocial support;

3. the body as garden;

4. emotional healing;

5. the nature of the mind;

6. life assessment; and

7. the nature of the spirit.

Kristine Nelson, M.D., of the Cleveland Clinic discussed the role of complementary techniques for palliative care for pain associated with cancer. Mitchell Gaynor, M.D., of Cornell University outlined his use of complementary modalities in conjunction with conventional treatment including guided imagery, nutritional intervention, meditation, yoga, and massage. Other modalities used as complements to conventional care include hypnosis, acupuncture, herbal treatments, homeopathy, laying on of hands, and prayer.

Women's Services

Women's services are another venue for offering complementary medicine programs and services. As the baby boomers enter their menopausal years, the demand for conventional hormone replacement therapy is shifting to include a more natural approach as evidenced by the proliferation of advertisements for plant estrogens. A slick, free brochure from a pharmaceutical company available at your local Wal-Mart features Cybill Shepherd and the commentary "not only is this a great time in history to be a woman; it's a great time to be a menopausal woman" (Novagen 1999). The entry of top pharmaceutical companies into the natural products arena should be an indicator to hospitals and physicians that complementary medicine is here to stay and has strong consumer support.

Among the best models of complementary and conventional medicine in practice is the Women to Women clinic founded in 1985 by Christianne Northrop, M.D., in a small town in Maine. Consultants had informed the founders that the area could not support another OB/GYN practice, but they doubled their patient base in a year. The clinic practices blended medicine, has as its foundation the concept of healing as opposed to curing, and focuses on marshalling the body's own healing ability (Northrop 1994).

Pain Manaement

The management of pain is quintessentially representative of the divergent paths of conventional and complementary medicine. Many hospitals are launching pain programs championed by neurologists, anesthesiologists, neurosurgeons, and others. Conventional treatments include drugs, trigger-point injections, steroid injections, nerve blocks, morphine pumps, epiduroscopy, and surgery. In contrast, the Center for Complementary Medicine in San Antonio, Texas, recommends nutritional and herbal support, homeopathy, chiropractics, massage, acupuncture, biofeedback, and hypnosis for pain management.

Pain management is an appropriate product line to launch complementary services because patients are sometimes frustrated with the lack of success of conventional therapies and receptive to trying something different. A study comparing the Feldenkrais method with conventional pain management undertaken by the Santa Barbara Regional Health Authority demonstrated a 40 percent savings in cost of care among Medicaid patients requiring pain management when they used the Feldenkrais method (Bearman and Shafarman 1999). Another study demonstrated reduced need for medications among patients with diabetic neuropathy after a course of acupuncture treatments. Acupuncture was found to be safe and effective, although its mechanism of action is not understood in Western medicine physiology (Abuaisha, Costanzi, and Boulton 1998).

Structural Options

Hospitals have several structural options to begin integration of complementary medicine, including:

* integration of services into existing product lines or acute care settings;

* establishing a complementary medicine mall comprised of independent practitioners located in space managed by the hospital;

* establishing a hospital-based or hospital-owned complementary medicine center, either freestanding, within the hospital, or as part of a wellness center; and

* establishing an informal relationship with a network of complementary medicine providers that can serve as feeder and referral sources and eventually become part of the hospital managed care integrated delivery system.

LEGALITIES AND CREDENTIALING

An excellent source for understanding the regulatory issues surrounding complementary and alternative medicine is Complementary and Alternative Medicine: Legal Boundaries and Regulatory Perspectives by Michael H. Cohen (1998). His book serves as a checklist of the legal and regulatory issues and includes:

* legal definitions of the practice of medicine;

* unauthorized professional practice;

* scope of practice limitations;

* legislatively authorized boundaries of practice;

* malpractice and vicarious liability;

* access to treatments; and

discipline and sanctions.

Overall, complementary medicine, as with all healthcare, is regulated by individual states and the police powers established for public safety. What is permissible from state to state can vary widely. For example, some states mandate that only licensed physicians can perform acupuncture; others do not. The recent, increased activity in state regulation of complementary medicine services reflects the growing interest and demand for such services.

Many health systems contemplating complementary medicine initiatives are concerned about their exposure and risk. Because the field encompasses so many modalities, conventional administrators are uncomfortable about engaging their organization in unfamiliar activities. However, many complementary medicine practices have nationally recognized certification processes. Alicia Kitts, Director of Network Development/Sales at Baptist Hospital in Knoxville, Tennessee, is in the process of adapting their medical staff credentialing standards and criteria for complementary medicine practitioners in anticipation of services under consideration at her institution. She believes that complementary medicine practitioners can readily fit into criteria that meet both hospital and NCQA standards.

Elizabeth Brown, M.D., the national medical director for Blue Cross Blue Shield Association, developed the following requirements for credentialing complementary medicine providers (Brown 1998):

* sufficient work experience;

* proof of malpractice experience;

* sufficient office hours (availability);

* adequate service facility;

* participation in quality improvement; and

* compliance with NCQA credentialing standards.

FINANCIAL CONSIDERATIONS

A key issue in the challenge of integrating complementary medicine and conventional healthcare is financing the initial investment. Healthcare institutions are presently financially strapped. As a strategist, it is frustrating in retrospect to consider the lack of return on investment and added value of the horizontal and vertical integration strategies, which depleted hospital capital this past decade. This lack of financial return on acquired physician practices, HMo and PHo development or purchase, and the formation of alliances, in combination with continued reduction in reimbursement, resulted in hospitals having reduced capital to fund new ventures.

The financial considerations of complementary medicine are similar to other primary care provider services. Depending on the model, capital requirements can be minimal. However, financial returns are also small, and it will not compete with other high-tech services lines such as cardiology. For the short term, complementary medicine will probably continue as a cash business. Eventually some services will be covered by insurance and managed care products, but the number of such services will always be limited.

CONCLUSION

A famous study regarding use of a new hybrid corn demonstrates how people adopt new ideas and practices. Despite the tremendously increased production of the new corn, evident by first-hand observation of neighboring fields, farmers adopted use of the new corn at various rates. The adoption rate of the farmers formed a bell curve, with the innovators and early adopters on the forefront and a large cohort forming the middle of the curve. Some farmers never changed, despite the compelling evidence. The adoption of complementary medicine services by both patients and conventional practitioners will follow a similar pattern.

Healthcare organizations are at the crossroads of their future. One fork will move in the direction of the "focused factory" (Herzlinger, 2000). The other fork encompasses a broader view in which the organizations continue to provide the leadership for building healthier communities. In light of the reimbursement environment, sound arguments can be made that hospitals should abdicate the broader vision. The same challenges exist for physicians. If both physicians and hospitals elect not to participate in the emergence of a new medicine, they should at least not stand as a barrier.

[Sidebar]

Recommendations for Getting Started

1. Educating yourself. Helpful seminars, books, and literature exist on this topic.

[Sidebar]

2. Find a champion. This is new territory; it is best to involve managers, physicians, and board members who embrace complementary medicine or are at least open minded.

3. Begin forming relationships now. In many markets the availability of quality, qualified, successful practitioners is limited. Find out who is out there and determine even small ways to forge a relationship.

4. Start small. Test the waters with a few small initiatives that do not require a big investment.

5. Do not be afraid. Some stakeholders will be uncomfortable about complementary medicine. Reframe what you are doing if necessary. For example, do not be surprised if you find a board member or physician who believes yoga is a religion and objects to providing this service. Call it relaxation exercise.

6. Use outside help. Consultants are available who are knowledgeable about both complementary medicine and sound business planning. They can also take the heat for politically sensitive or controversial issues.

[Reference]

REFERENCES

[Reference]

Abuaisha, B. B., J. B. Costanzi, and A. J. Boulton. 1998. "Acupuncture for the Treatment of Chronic Painful Peripheral Diabetic Neuropathy: A Long-Term Study." Diabetic Research in Clinical Practice 39 (2): 115-21.

[Reference]

American Whole Health. 2000. [Online article.]. www.americanwholehealth.com/.

Barrocas, A. 1997. "Complementary and Alternative Medicine: Friend, Foe, or own?" Journal of the American Dietetic Association 97 (12): 1373-76.

Bearman, D., and S. Shafarman. 1999. "The Feldenkrais Method in the Treatment of Chronic Pain: A Study of Efficacy and Cost Effectiveness." American Journal of Pain Management 9 (I): 22-27.

[Reference]

Boscarino, J., and J. Chang. 2000. "Nontraditional Services Provided by Nonprofit and For-Profit Hospitals: Implications for Community Health." Journal of Healthcare Management 45 (2): 119-35.

[Reference]

Brown, E. 1998. "Complementary and Alternative Medicine: The Daunting Challenge." The Physician Executive 29 6): 16-21.

[Reference]

Carlston, M. 1998. "The Revolution in Medical Education: Complementary Medicine Joins the Curriculum." Healthcare Forum (Nov/Dec): 25-31.

Cohen, M. 1998. Complementary and Alternative Medicine-Legal Boundaries and Regulatory Perspectives. Baltimore MD: The Johns Hopkins University Press.

Consumer Reports. 2000. "The Mainstreaming of Alternative Medicine." Consumer Reports 65 N: 17-25.

[Reference]

Dossey, L. 1999. "Healing and Modern Physics: Exploring Consciousness and the Small-Is-Beautiful Assumption." Alternative Therapies 5 (4): 12-17, 102-108.

Futurescan 2000: A Millenium Forecast of Healthcare Trends 2000-2004. Chicago: Society for Healthcare Strategy and Market Development and Superior Consultant Company, Inc.

Herzlinger, R. 2000. "Market-Driven, Focused Healthcare: The Role of Managers." Frontiers of Health Services Management 16 (3): 3-12.

[Reference]

Hofgard, M., and M. Zipin. 1999. "Complementary and Alternative Medicine. A Business Opportunity?" MGM Journal [Online article.] www. nccam.nih.gov/.

[Reference]

Klaber, T. 1999. "Politics of Medicine: The Struggle for Freedom of Choice." Alternative Medicine (3I): 86-87.

Labb, D. i999. "Integrated Healthcare Delivery: How Are We Shaping Up?" Healthcare Executive 14 (4): 8-12.

Malloch, K. 1999. "A Total Healing Environment: The Yavapai Regional Medical Center Story." Journal of Healthcare Management 44 (6): 495-512.

Modem Healthcare. 2000. "U.S. Healthcare System Rated Costliest but Far from Best."

[Reference]

[Online article. Retrieval date 6/22/00.] www.modernhealthcare.com/.

Moyers, B. 1993. Healing and the Mind. New York: Doubleday.

NACCAM Advisory Council Meeting Minutes. 2000. Meeting January 24-25, 2000 [Online article.] wwwnccam.nih.gov /nccam/an/advisory/naccaml2000 /jan/8.htm.

[Reference]

National Centers for Complementary and Alternative Medicine. 2000. "Major Domains of Complementary and Alternative Medicine." [Online article.] www.nccam.nih.gov/nccam/fcp/classify.

Northrup, C. 1994. Women's Bodies, Women's Wisdom. New York: Bantom Books. Novagen. 1999. Menopause Meets the Boomers [Brochure].

[Reference]

Planetree Online. 2000. [Online article.] www.planetree.org/welcome.html.

Redwood, D. 1995. Andrew Weil, M.D.Natural Health, Natural Medicine." [Online article.] ww.healthy.net/library/interviews /redwood/weil2.htm.

The University of Texas-Houston Medical School, The Center for Mind-Body Medicine. 1999. Comprehensive Cancer II - Integrating Complementary and Alternative Therapies [Brochure]. Arlington, VA., June 11-13.

[Reference]

Warrick, C. 1998. "Health Care with Spirit." The Post June 4: BI.

Weil, P., and R. Bogue. 1999. "Motivating Community Health Improvement: Leading Practices You Can Use." Healthcare Executive 14 (6): 18-24.

[Author Affiliation]

ELIZABETH S. MCGRADY, FACHE

[Author Affiliation]

ELIZABETH S. MCGRADY, FACHE, IS EXECUTIVE VICE PRESIDENT AND HEALTHCARE CONSULTANT FOR THE PRI GROUP IN KNOXVILLE, TENNESSEE.

Complementary medicine: Viable models

SUMMARY * COMPLEMENTARY MEDICINE has had a quiet, consumer-based, grassroots evolution, generally spearheaded by individual champions. In this article, McGrady describes six models of complementary medicine and details specific practitioners who have implemented these models. Solo practitioners, physician-based practices, academic and research initiatives, wellness centers, provider networks, and hospital-based initiatives are discussed to display the diversity of options for complementary medicine. In addition, the author touches upon the legalities and credentialing of practitioners, as well as the financial considerations that health systems must face.

A MAN IN his fifties had tendonitis in his elbow that was so painful he could no longer play the weekly game of golf he so loved. The golf pro suggested he try acupuncture, which was successful in alleviating the pain, and he continued with his golf game. A friend of his, in her forties, suffered the same condition, also to the extent that golfing was painful. He shared his success with acupuncture with her. However, despite the testimony of her trusted friend and even though she couldn't articulate why, she wouldn't try acupuncture. Her course of treatment, prescribed by an orthopedic surgeon, included steroid injections, physical therapy including TENS, heat packs, and weight training. Several months of this treatment program has not relieved her pain, and she is now considering surgery.

As the above true story illustrates, some people embrace complementary medicine and others hesitate to even try non-traditional practices. While we marvel at the technological accomplishments of modern American allopathic medicine, we must still answer why the U.S. healthcare system ranks 37th among 191 nations even though it is the costliest, according to the World Health Organization (Modern Healthcare 2000). As the leaders in the provision of healthcare, hospitals and physicians hold the responsibility to examine their role in providing the best yet most cost beneficial means of improving the health status of our citizens. New ideas are emerging about practices complementary to conventional allopathic medicine, which may yield better results when integrated in a collaborative approach to health and wellness. The first step in this process is to assess what is currently happening in the community and determine viable models and relationships that match consumer readiness.

MAN AS MACHINE

The use of complementary medicine modalities by the public has been widely published. Of significant importance to conventional practitioners, including allopathic physicians and hospitals, is why patients are keeping it a secret. The answer is probably more telling about the practitioners than the patients. The simple answer is that conventional medicine has no room for any approach outside of the realm of allopathic medicine. In part, this is based in the Hippocratic oath in which the physician pledges to "do no harm"; many allopathic physicians are uncertain about the efficacy and safety of complementary medicine practices and practitioners. They were not taught about complementary medicine in their medical training and believe that complementary medical practices have not yet been proven by the clinical trial methodologies upon which modern Western medicine was founded.

Modern medicine as we know it evolved during the late nineteenth century and was influenced by rational laws such as Newtonian physics and Cartesian philosophy that postulated that the human body was like a clock and could be reduced to the sum of its mechanistic parts. As such, disease could be reduced to something biochemical or structural and therefore could be eradicated through pharmacological agents and surgery. This scientific framework is reductionistic and views illness to be the result of outside invaders and traumas best treated in a distant and detached manner. Although this approach can be effective for conditions with single causes, it is not always as successful for complex conditions such as chronic pain, arthritis, allergies, asthma, cancer, hypertension, depression, and digestive disorders (Cohen 1998). The reductionistic "man as machine" approach does not take into account the holistic person-the emotions, the spirit, the mind, and the environment, and how they all interplay to create health and wellbeing. This limitation of allopathic medicine can be augmented by complementary medicine practices, and the integration of conventional and complementary medicine has the potential to yield the greatest individual health and wellness.

DEFINITION AND TERMINOLOGY

The National Center for Complementary and Alternative Medicine (NCCAM), a division of the National Institutes of Health, defines complementary and alternative medicine as "those treatments and healthcare practices not taught widely in medical schools, not generally used in hospitals, and not usually reimbursed by medical insurance companies" (NCCAM 2000). Figure i illustrates domains and examples of systems and treatments generally considered within the realm of complementary and alternative medicine by NCCAM.

NCCAM distinguishes "alternative" as those modalities used alone and "complementary" as those used in conjunction with conventional medicine. As such, this article will focus on complementary practices, as it is those that stand the greatest chance of being integrated with conventional medicine and therefore those that need the greatest attention by hospitals and physicians. Other concepts associated with complementary medicine are that it is holistic and considers the mental, emotional, and spiritual in addition to the physical aspects of medicine.

The term "integrative" is used to describe complementary and conventional medicine used in conjunction. While this term is gaining popularity, it can be confused with the vertical integration of hospitals, physicians, and insurance products. But perhaps these uses are not so disparate. Deborah Labb points out that complementary medicine may be a cornerstone in the success of integrated delivery systems in that it is a potentially effective disease management strategy and is, in part, what consumers are demanding (Labb 1999).

Other terms used are "natural medicine," which connotes the body's internal healing mechanisms, and "frontier medicine," which certainly describes the pioneering spirit of complementary medicine. Alternative medicine describes practices outside of the standard of the referenced culture. In China, Western medicine as we know it would be considered alternative to traditional Chinese medicine. The view of Western allopathic medicine as the only "true medicine" is a form of ethnocentrism.

MODELS

Complementary medicine has had a quiet, consumer-based, grassroots evolution generally spearheaded by individual champions. Varying models have emerged that represent the diversity in the field and are categorized as follows:

1. solo practitioners;

2. physician-based practices;

3. academic and research initiatives;

4. wellness centers;

5. provider networks; and

6. hospital-based initiatives.

The following examples can be generally categorized as ordinary situations in which people are doing extraordinary things. Some of the examples have been profiled in the literature, others are quietly pioneering the way for a new medicine that expands its view beyond the conventional.

Solo Practitioners

Solo practitioners dominate the field. Michael Norris, NCCAM certified in acupuncture and Chinese herbology and a practitioner of traditional Chinese medicine, is a classic example of the solo practitioner. He received a Master's of Chinese Medicine degree from the International Institute of Chinese Medicine in Santa Fe, New Mexico. After completing this four-year course of study, he returned to Knoxville, Tennessee, and opened his private practice, which he operates as the Deep River Wellness Center adjacent to his home. Prior to this course of study he was a licensed massage therapist and Reiki master.

Although he has only been practicing for one year, his schedule is busy and growing. Not only is he receiving referrals from area physicians, but has several physicians as patients. His business operations are simple and he currently has no need for office assistance. His services are not usually covered by insurance, so he operates on a cash basis. He recommends and sells herbs as well, based on his assessment of the patient using traditional Chinese medicine techniques.

Norris believes that his medicine is complementary to conventional medicine and both have their place and should be used in conjunction. His single frustration with conventional practitioners is the lack of mutual respect he sometimes experiences.

He believes that he has earned the right to respect through his extensive studies and the positive outcomes his patients' experience. His work is very challenging because some of his referrals are "train wrecks" that have not been helped by conventional medicine. Even at that, he reports that 75 percent of his patients get better. He has been asked to practice at a hospital-based wellness center but will probably remain in private practice because the offer has no added value for him.

Physician-Based Practices

The second most common model is the physician-based practice. Lawrence Cohen, M.D., a conventionally trained physician who founded the Center for Complementary Medicine in San Antonio, Texas, typifies this model. He believes in addressing the whole person and allows adequate time with each patient to fully explore all the factors contributing to health. Cohen uses traditional and nontraditional diagnostic tests and his holistic training and experience to develop a plan of treatment to address the underlying cause of the problem. Cohen works with one other physician and other independent practitioners including massage therapists, nutritionists, a clinical nurse specialist in women's health, chiropractors, and psychologists. He suggests that conventional physicians treat complementary medicine practitioners as they would any other specialist-they should educate themselves and form relationships.

Reid Blackwelder, M.D., program director of the Kingsport Family Practice Residency Program at East Tennessee State University, is an example of an allopathic physician who is integrating complementary healing systems such as prescribing botanical medicines with conventional medicines. He also refers patients to local practitioners of traditional Chinese medicine and Native American healers when warranted. He believes it is important to explore the patient's emotional and spiritual support system as part of a holistic approach. He returned to an academic setting to try to change medicine from within.

Blackwelder recruited Wendy Kohatsu, M.D., a graduate of the Medical College at the University of Arizona program established by renowned complementary medicine practitioner Andrew Weil, M.D. The purpose of Weil's program is to train physicians in the use of adjunctive complementary medicine. In 1997, 75 percent of U.S. medical schools reported offering coursework in complementary and alternative medicine practices (Carlston 1998).

Instead of solely working as a provider of complementary medicine, Kohatsu, an assistant professor of family medicine at East Tennessee State University, elected to affect greater change by training future generations of physicians. In part, she teaches patients and students through modeling. For example, she demonstrates relaxation techniques with patients and includes students in the process. Although Kohatsu is comfortable practicing both conventional and complementary medicine, she believes medicine in general is too disease oriented and does not focus enough on optimizing wellness to include nutrition, exercise, valuable relationships at work and home, and fiscal health. The core of her approach to medicine is the concept of mindfulness and being present. This focused attention is in part why patients seek complementary providers (Hofgard and Zipin 1999) Kohatsu reports that 80 percent of her patients seek her out because she practices complementary medicine.

American Whole Health (AWH) has created a model that it plans to replicate in metropolitan areas across the country. These physician-based centers originated in Chicago with founder David Edelberg, M.D., and have expanded to a total of nine centers including ones in suburban Washington, D.C., Denver, and Boston. AWH was funded through venture capital and recruited management talent from Marriott International, Inc., Walt Disney, Co., and SRI Gallup to lead its expansion into new markets.

The AWH centers include primary care physicians as coordinators and adjunct complementary services such as chiropractics, acupuncture, nutritional counseling, massage therapy, herbology, homeopathy, and clinical psychology. In addition to complementary services AWH stresses hospitality and a high-service, friendly orientation (American Whole Health 2000).

Academic and Research Initiatives

Academic and research initiatives in complementary medicine are being undertaken at the most prestigious of conventional American medical institutions. In October of 2000, Harvard Medical School and Stanford University School of Medicine, among others, sponsored a joint conference entitled "Complementary and Alternative Medicine: Practical Applications and Evaluations." Conference content included models and therapies, policies, coverage by insurers and managed care companies, legalities, liability and financial aspects, outcome measurement strategies, and prototypes of clinics and managed care plans offering complementary and alternative medicine.

While some academic centers are providing services, others are conduct ing rigorous investigations. Critical to the continued adoption of complementary medicine is proven outcome measurement. In an effort to document the validity of complementary medicine modalities, the NCCAM is currently providing funding to nine research institutions to evaluate the efficacy of alternative and complementary treatments in the following areas:

* addictions;

* aging and women's health;

* arthritis;

* cardiovascular diseases;

* cardiovascular disease and minority aging;

* chiropractics;

* craniofacial disorders;

* neurological disorders; and

* pediatrics.

The recipients of NCCAM funding include conventional academic institutions such as Columbia University, the University of Arizona, the University of Maryland, and the University of Michigan, as well as unconventional institutions such as the College of Maharishi Vedic Medicine. Funding for NCCAM has increased from $2 million in 1993 to $68.7 million in 2000.

Wellness Centers

A natural site for providing select complementary medicine services is a wellness center. The Mercy Health System in Cincinnati, Ohio, operates highly publicized centers at two sites. The centers were founded for the purpose of fulfilling the healing mission of the hospital. The Holistic Health Centers are housed within large wellness facilities, which are over 200,000 square feet. Services include acupuncture, biofeedback, massage, Reiki, nutrition, hypnotherapy, counseling, yoga, tai chi, and therapeutic touch. The vision of system leaders is to create healthier people who will need less acute healthcare. As CEO Julie Hanser stated, their goal is "for people to be as whole as they are able." Although she understands that this undertaking is mission driven, she expects the centers to pull their own weight financially (Warrick 1998).

Mark Nadel of Healthplex Associates served as a consultant for the company that developed the fitness center that houses the complementary medicine center. He sees an affinity for complementary medicine services within the context of a wellness center, but cautions that reimbursement and demand are still limited. Nadel recommends that hospitals clarify on the front end whether their motives are purely mission driven or if the project needs to provide a return on investment. He suggests that proper sizing of the venture is needed and recommends inclusion of a mix of mission-driven and profitable services to ensure viability of the project.

In another area of the country-- New Orleans, Louisiana-Pendleton Memorial Methodist Hospital initiated its complementary medicine services by offering hypnosis performed by the hospital chaplain. For years they have offered this service to the community and employees on a fee-for-service basis. In particular the service has been effective for smoking cessation. The hospital has also added massage therapy and is looking to expand services in conjunction with a freestanding wellness center. This facility is an example of how hospitals can add complementary medicine services in a phased, low-key way that avoids some of the resistance to opening a "center."

Provider Networks

The most far-reaching development of provider networks is in the state of Washington, which mandated coverage of complementary and alternative medicine practices by all state health plans in 1996. Coverage can be provided through a list of providers offering discounts on fees or through riders to core benefits similar to dental or vision care.

Nationally, the organization of networks of complementary medicine providers is well underway. An example of these types of networks is the American Whole Health Network. It has more than 5,800 providers nationally and includes acupuncturists, massage therapists, and naturopathic practitioners as well as chiropractors and physical and occupational therapists. Many other networks of providers exist, most poised to compete for managed care contracts as complementary medicine practices become covered benefits. A helpful source in accessing providers and networks is the Internet.

Hospital-Based Initiatives

Hospitals have many options for integrating complementary medicine into their portfolio of services, but how services are provided is as significant as what services are provided. The Yavapai Regional Medical Center (YRMC) in rural Prescott, Arizona, has been working for the past ten years on their Total Healing Environment (THE) initiative, and they are experiencing favorable outcomes as measured by job satisfaction, clinical quality, productivity, and cost compared to regional benchmark data. Their model focuses on internal and external physical and psychological-- social elements such as room color, views, smells, food, courtesy and helpfulness, and patients' belief systems and outlook. Central to this initiative is developing positive relationships within and outside the organization that emphasize respect, integrity, accountability, and commitment.

The YRMC story also discusses difficulties hospitals often experience when introducing complementary medicine into their program. For example, nursing staff received the support of administration to include touch therapy as part of the program, but medical staff resistance and discomfort among community religious leaders resulted in the decision to not offer this service within the hospital setting (Malloch 1999).

Planetree is a hospital-based program dedicated to the development and implementation of new models of healthcare. Currently Planetree lists 19 affiliate hospitals across the country. The core philosophy of the program is personalizing care, a patient focus, the empowerment of patients and families, holistic care encompassing conventional and complementary modalities that enhance healing as well as curing, and supporting healing partnerships among caregivers, patients, and families. Program elements also include aromatherapy, baking, and therapeutic touch (Planetree 2000).

Another avenue for healthcare systems to initiate the integration of complementary medicine is in individual existing core service lines such as heart treatment, cancer treatment, women's services, and pain management.

Heart Treatment

Among the most well-known programs is the Dr. Dean Ornish Program for Reversing Heart Disease. Ornish's program, operational at 12 hospitals, is founded upon relatively conventional approaches: nutrition, exercise, and stress management. But in addition, his program includes work on love, intimacy, and the concept of community. He states, "The fundamental problem is not that people have negative emotions but that they experience a sense of emptiness, avoid" (Moyers 1993). Reversing heart disease is at the crux of the biomedicine/technology-wellness conflict for hospitals. Accepting risk through capitated managed care contracts could have provided the financial incentive to work toward wellness, but acceptance of capitation by both hospitals and physicians is in fullspeed reverse (Futurescan 2000). However, the hospital cardiac rehabilitation program may be the perfect place to interject a holistic wellness approach because most patients are highly motivated at that point in time. Although many cardiac rehabilitation programs include education about nutrition and exercise, it would also be easy to include the communal aspect as well by providing opportunities for sharing and group participation.

Cancer Treatment

Cancer is another key entry point into complementary medicine for patients. Complementary approaches to cancer care can be categorized into three areas: treatment modalities, adjunct modalities for palliative care to enhance conventional treatment, and prevention of reoccurrence.

The Comprehensive Cancer Care II conference, held in the summer of 1999, brought together a wide range of practitioners conducting innovative research in complementary medicine with conventional practitioners. Sponsored by The University of Texas-- Houston Medical School, the Center for Mind-Body Medicine, and in collaboration with The National Cancer Institute (NCi) and NCCAM, the conference offered the best research on the most promising and safe complementary treatments. Specific treatment protocols included the use of nutritional and phytochemical substances advocated by Michael Schachter, M.D., the use of enzyme therapy (currently undergoing NCI clinical trials at Columbia University) advocated by Nicholas Gonzalez, M.D., and the use of shark cartilage as a therapeutic agent.

Jeremy Geffen, M.D., outlined an exemplary blend of complementary and conventional approaches to cancer care. His seven elements of the healing journey are

1. education and information;

2. psychosocial support;

3. the body as garden;

4. emotional healing;

5. the nature of the mind;

6. life assessment; and

7. the nature of the spirit.

Kristine Nelson, M.D., of the Cleveland Clinic discussed the role of complementary techniques for palliative care for pain associated with cancer. Mitchell Gaynor, M.D., of Cornell University outlined his use of complementary modalities in conjunction with conventional treatment including guided imagery, nutritional intervention, meditation, yoga, and massage. Other modalities used as complements to conventional care include hypnosis, acupuncture, herbal treatments, homeopathy, laying on of hands, and prayer.

Women's Services

Women's services are another venue for offering complementary medicine programs and services. As the baby boomers enter their menopausal years, the demand for conventional hormone replacement therapy is shifting to include a more natural approach as evidenced by the proliferation of advertisements for plant estrogens. A slick, free brochure from a pharmaceutical company available at your local Wal-Mart features Cybill Shepherd and the commentary "not only is this a great time in history to be a woman; it's a great time to be a menopausal woman" (Novagen 1999). The entry of top pharmaceutical companies into the natural products arena should be an indicator to hospitals and physicians that complementary medicine is here to stay and has strong consumer support.

Among the best models of complementary and conventional medicine in practice is the Women to Women clinic founded in 1985 by Christianne Northrop, M.D., in a small town in Maine. Consultants had informed the founders that the area could not support another OB/GYN practice, but they doubled their patient base in a year. The clinic practices blended medicine, has as its foundation the concept of healing as opposed to curing, and focuses on marshalling the body's own healing ability (Northrop 1994).

Pain Manaement

The management of pain is quintessentially representative of the divergent paths of conventional and complementary medicine. Many hospitals are launching pain programs championed by neurologists, anesthesiologists, neurosurgeons, and others. Conventional treatments include drugs, trigger-point injections, steroid injections, nerve blocks, morphine pumps, epiduroscopy, and surgery. In contrast, the Center for Complementary Medicine in San Antonio, Texas, recommends nutritional and herbal support, homeopathy, chiropractics, massage, acupuncture, biofeedback, and hypnosis for pain management.

Pain management is an appropriate product line to launch complementary services because patients are sometimes frustrated with the lack of success of conventional therapies and receptive to trying something different. A study comparing the Feldenkrais method with conventional pain management undertaken by the Santa Barbara Regional Health Authority demonstrated a 40 percent savings in cost of care among Medicaid patients requiring pain management when they used the Feldenkrais method (Bearman and Shafarman 1999). Another study demonstrated reduced need for medications among patients with diabetic neuropathy after a course of acupuncture treatments. Acupuncture was found to be safe and effective, although its mechanism of action is not understood in Western medicine physiology (Abuaisha, Costanzi, and Boulton 1998).

Structural Options

Hospitals have several structural options to begin integration of complementary medicine, including:

* integration of services into existing product lines or acute care settings;

* establishing a complementary medicine mall comprised of independent practitioners located in space managed by the hospital;

* establishing a hospital-based or hospital-owned complementary medicine center, either freestanding, within the hospital, or as part of a wellness center; and

* establishing an informal relationship with a network of complementary medicine providers that can serve as feeder and referral sources and eventually become part of the hospital managed care integrated delivery system.

LEGALITIES AND CREDENTIALING

An excellent source for understanding the regulatory issues surrounding complementary and alternative medicine is Complementary and Alternative Medicine: Legal Boundaries and Regulatory Perspectives by Michael H. Cohen (1998). His book serves as a checklist of the legal and regulatory issues and includes:

* legal definitions of the practice of medicine;

* unauthorized professional practice;

* scope of practice limitations;

* legislatively authorized boundaries of practice;

* malpractice and vicarious liability;

* access to treatments; and

discipline and sanctions.

Overall, complementary medicine, as with all healthcare, is regulated by individual states and the police powers established for public safety. What is permissible from state to state can vary widely. For example, some states mandate that only licensed physicians can perform acupuncture; others do not. The recent, increased activity in state regulation of complementary medicine services reflects the growing interest and demand for such services.

Many health systems contemplating complementary medicine initiatives are concerned about their exposure and risk. Because the field encompasses so many modalities, conventional administrators are uncomfortable about engaging their organization in unfamiliar activities. However, many complementary medicine practices have nationally recognized certification processes. Alicia Kitts, Director of Network Development/Sales at Baptist Hospital in Knoxville, Tennessee, is in the process of adapting their medical staff credentialing standards and criteria for complementary medicine practitioners in anticipation of services under consideration at her institution. She believes that complementary medicine practitioners can readily fit into criteria that meet both hospital and NCQA standards.

Elizabeth Brown, M.D., the national medical director for Blue Cross Blue Shield Association, developed the following requirements for credentialing complementary medicine providers (Brown 1998):

* sufficient work experience;

* proof of malpractice experience;

* sufficient office hours (availability);

* adequate service facility;

* participation in quality improvement; and

* compliance with NCQA credentialing standards.

FINANCIAL CONSIDERATIONS

A key issue in the challenge of integrating complementary medicine and conventional healthcare is financing the initial investment. Healthcare institutions are presently financially strapped. As a strategist, it is frustrating in retrospect to consider the lack of return on investment and added value of the horizontal and vertical integration strategies, which depleted hospital capital this past decade. This lack of financial return on acquired physician practices, HMo and PHo development or purchase, and the formation of alliances, in combination with continued reduction in reimbursement, resulted in hospitals having reduced capital to fund new ventures.

The financial considerations of complementary medicine are similar to other primary care provider services. Depending on the model, capital requirements can be minimal. However, financial returns are also small, and it will not compete with other high-tech services lines such as cardiology. For the short term, complementary medicine will probably continue as a cash business. Eventually some services will be covered by insurance and managed care products, but the number of such services will always be limited.

CONCLUSION

A famous study regarding use of a new hybrid corn demonstrates how people adopt new ideas and practices. Despite the tremendously increased production of the new corn, evident by first-hand observation of neighboring fields, farmers adopted use of the new corn at various rates. The adoption rate of the farmers formed a bell curve, with the innovators and early adopters on the forefront and a large cohort forming the middle of the curve. Some farmers never changed, despite the compelling evidence. The adoption of complementary medicine services by both patients and conventional practitioners will follow a similar pattern.

Healthcare organizations are at the crossroads of their future. One fork will move in the direction of the "focused factory" (Herzlinger, 2000). The other fork encompasses a broader view in which the organizations continue to provide the leadership for building healthier communities. In light of the reimbursement environment, sound arguments can be made that hospitals should abdicate the broader vision. The same challenges exist for physicians. If both physicians and hospitals elect not to participate in the emergence of a new medicine, they should at least not stand as a barrier.

[Sidebar]

Recommendations for Getting Started

1. Educating yourself. Helpful seminars, books, and literature exist on this topic.

[Sidebar]

2. Find a champion. This is new territory; it is best to involve managers, physicians, and board members who embrace complementary medicine or are at least open minded.

3. Begin forming relationships now. In many markets the availability of quality, qualified, successful practitioners is limited. Find out who is out there and determine even small ways to forge a relationship.

4. Start small. Test the waters with a few small initiatives that do not require a big investment.

5. Do not be afraid. Some stakeholders will be uncomfortable about complementary medicine. Reframe what you are doing if necessary. For example, do not be surprised if you find a board member or physician who believes yoga is a religion and objects to providing this service. Call it relaxation exercise.

6. Use outside help. Consultants are available who are knowledgeable about both complementary medicine and sound business planning. They can also take the heat for politically sensitive or controversial issues.

[Reference]

REFERENCES

[Reference]

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[Reference]

American Whole Health. 2000. [Online article.]. www.americanwholehealth.com/.

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Bearman, D., and S. Shafarman. 1999. "The Feldenkrais Method in the Treatment of Chronic Pain: A Study of Efficacy and Cost Effectiveness." American Journal of Pain Management 9 (I): 22-27.

[Reference]

Boscarino, J., and J. Chang. 2000. "Nontraditional Services Provided by Nonprofit and For-Profit Hospitals: Implications for Community Health." Journal of Healthcare Management 45 (2): 119-35.

[Reference]

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[Reference]

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Consumer Reports. 2000. "The Mainstreaming of Alternative Medicine." Consumer Reports 65 N: 17-25.

[Reference]

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[Reference]

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[Reference]

National Centers for Complementary and Alternative Medicine. 2000. "Major Domains of Complementary and Alternative Medicine." [Online article.] www.nccam.nih.gov/nccam/fcp/classify.

Northrup, C. 1994. Women's Bodies, Women's Wisdom. New York: Bantom Books. Novagen. 1999. Menopause Meets the Boomers [Brochure].

[Reference]

Planetree Online. 2000. [Online article.] www.planetree.org/welcome.html.

Redwood, D. 1995. Andrew Weil, M.D.Natural Health, Natural Medicine." [Online article.] ww.healthy.net/library/interviews /redwood/weil2.htm.

The University of Texas-Houston Medical School, The Center for Mind-Body Medicine. 1999. Comprehensive Cancer II - Integrating Complementary and Alternative Therapies [Brochure]. Arlington, VA., June 11-13.

[Reference]

Warrick, C. 1998. "Health Care with Spirit." The Post June 4: BI.

Weil, P., and R. Bogue. 1999. "Motivating Community Health Improvement: Leading Practices You Can Use." Healthcare Executive 14 (6): 18-24.

[Author Affiliation]

ELIZABETH S. MCGRADY, FACHE

[Author Affiliation]

ELIZABETH S. MCGRADY, FACHE, IS EXECUTIVE VICE PRESIDENT AND HEALTHCARE CONSULTANT FOR THE PRI GROUP IN KNOXVILLE, TENNESSEE.