Clinton tinkers with health system status quo; critics seek to pick apart managed competition.
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Health Policy↗
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The role of nursing in public policy reform.
Currently, individuals concerned about the cost and quality of health care, and the necessity of major system reform, are grappling with the concepts of managed competition, managed cooperation, sponsors, and health insurance purchasing cooperatives. Managed competition, broadly defined, is a purchasing strategy designed to obtain maximum value for consumers and employers as they acquire health care. Managed competition occurs at the level of integrated financial and delivery plans, not at the individual provider level. The goal of managed competition is to divide the providers in each community into competing economic units to motivate them to develop efficient delivery systems (Enthoven, 1993). Efficient health care delivery systems have not resulted from the fee-for-service and remote third-party reimbursement practices that currently dominate the health care system. However, more efficient delivery systems have emerged from managed care. Some of the best known models of managed care that have demonstrated cost effectiveness include Kaiser Permanente, Group Health Cooperative of Puget Sound, and Washington Group Health. The rapidly escalating consumption of US economic resources in the name of health care has led to the current pressure for health care reform. Although the public discussion about health care reform centers around the high cost of health care, we are, in truth, in the midst of both a crisis of medical care and an emergence of an era of health care for the nation's people.
Cost Control↗
Collaborative efforts enhance program development. Interview by Donald E.L. Johnson.
Alan Weinstein, a 26-year health care industry and hospital association veteran and president of Premier Hospitals Alliance Inc. since 1983, talks in his interview with HCSM's editor and publisher, Donald E.L. Johnson, about collaboration, managed competition, managed care and new and old Premier programs. In addition, he explains how the Westchester, Ill., alliance reviews its 70 programs and decides when to drop those that are not in great demand or have completed their life cycles. Premier is a cooperative owned by 50 major nonprofit teaching and research hospitals and systems located in 42 cities nationwide.
Interinstitutional Relations↗
Productivity management: facing competition.
Most managers faced with decisions which affect productivity react from one decision to another without a framework to improve productivity. This article provides such a framework for health care installations under a competitive environment. Defining product mix, the service delivery process, and specification of performance level standards are addressed.
Economic Competition↗
The Swiss health system: regulated competition without managed care.
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Consumer Behavior↗
'Mangled competition' and 'managed whatever'.
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Cost Control↗
Knowledge management is new competitive edge.
Managing knowledge is emerging as the latest business strategy to get ahead of the competition. In the process of developing knowledge management systems, executives are increasing their awareness and understanding of organizational dynamics, collaboration, corporate learning and knowledge management technology. But Donald E.L. Johnson writes that health care executives must buy into and understand collaboration and corporate learning before they tackle knowledge management.
Economic Competition↗
Purchasing coalitions and managed care.
This article analyzes the role of managed care plans in purchasing coalitions. It examines the California Public Employees Retirement System (CalPERS) and three employer coalitions in Central Florida, Colorado, and Memphis. These organizations appear to successfully demonstrate the advantages of many features of managed competition and managed care. They report significant cost savings, reductions in the use of unnecessary services, and improvements in quality. This article describes the types of managed care plans used by these coalitions and their arrangements with Medicare managed care.
California↗
Is there convergence between Britain and the United States in the organisation of health services?. Interview by Penny Newman.
Is the organisation of health care in Britain becoming similar to that in the United States? Since the introduction of the internal market radical change has gripped the NHS. In the United States, despite the failure to implement coherent health care reform, a health care revolution is under way, driven by cost containment. At the centre of these changes is managed competition. Alain Enthoven, Marriner S Eccles professor of public and private management at Stanford University, has been the principal proponent of managed competition in both countries. His writings inspired the NHS reforms in 1989 and President Clinton's advisers to adopt managed competition in 1994, though ultimately he became opposed to the Clinton plan. In this interview with Penny Newman he redefines managed competition, explores the similarities and differences that have arisen between Britain and the United States, and describes recent trends in the United States, many of which are being mirrored in Britain. He illustrates a degree of convergence between the two countries. This was unthinkable 10 years ago when comparing the fee for service system in the United States with the NHS.
Competitive Medical Plans↗
Health care paper chase, 1993: the cost to the nation, the states, and the District of Columbia.
The U.S. health care payment system is an elaborate and increasingly wasteful paper chase. This article presents new state-by-state estimates of health care administrative costs in the United States, and savings that could be realized with single-payer reform. In 1993, health care bureaucracy will consume 24.7 cents of every health care dollar, a total of $232.3 billion. Administration's share of health spending is up from 23.9 percent in 1987, and from 21.9 percent in 1983. Reducing the cost of administration to Canadian levels by adopting a single-payer health care system would cut U.S. health care bureaucracy by more than half (50.7 percent), saving at least $117.7 billion in 1993. The savings achievable with a single-payer system could fund universal access for the uninsured and improve benefits for the tens of millions of Americans who currently have only partial coverage, without any increase in overall health spending. Reform measures such as electronic billing, insurance industry consolidation, and increased competition (including "managed competition") would save little or nothing on administration. Only a single-payer reform that incorporates the "macro-management" approach to cost control, as in Canada, can achieve significant administrative savings.
Cost Savings↗
Do competition and managed care improve quality?
In recent years, the US health care industry has experienced a rapid growth of managed care, formation of networks, and an integration of hospitals. This paper provides new insights about the quality consequences of this dynamic in US hospital markets. I empirically investigate the impact of managed care and hospital competition on quality using in-hospital complications as quality measures. I use random and fixed effects, and instrumental variable fixed effect models using hospital panel data from up to 16 states in the 1992-1997 period. The paper has two important findings: First, higher managed care penetration increases the quality, when inappropriate utilization, wound infections and adverse/iatrogenic complications are used as quality indicators. For other complication categories, coefficient estimates are statistically insignificant. These findings do not support the straightforward view that increases in managed care penetration are associated with decreases in quality. Second, both higher hospital market share and market concentration are associated with lower quality of care. Hospital mergers have undesirable quality consequences. Appropriate antitrust policies towards mergers should consider not only price and cost but also quality impacts.
Antitrust Laws↗
Health care reform: clarifying the concepts.
Despite agreement about problems with the health care system, there is disagreement about the remedy. Like most health care reform debates, this article focuses on financing methods rather than service delivery. Reform strategies are intentionally oversimplified into four categories: employer-based or "play or pay"; single-payer and modifications, such as expanding Medicaid or Medicare; market competition; and managed competition, which appears to be favored by the Clinton administration. Cost-control mechanisms and insurance reforms are applicable to all four financing methods. Reform is inevitable. The challenge for nurses is to understand reform issues and then influence policymakers to initiate reforms that make essential medical and preventive services universally available.
Competitive Medical Plans↗
Reforming the Israeli health care market.
Israel's experience in attempting to implement a health system reform based in large measure on managed competition should provide important data to other countries considering reliance on competitive mechanisms for third-party purchase of health care. In this paper, current proposals for reform of the Israeli market for third-party purchase of health care are examined in light of ideal market structures, particularly the theory of managed competition. The relationship between the theory, the notion of a 'purchaser-provider split' and the Israeli case are explored. The current Israeli health care market, which features enrollment of 96% of the population in competing sick funds, is presented. The changes necessary to base third-party purchase of health-care on managed competition are discussed. Special conditions of the Israeli health care system likely to influence implementation of a managed competition strategy are considered. Beyond a 'purchaser-provider' split, the proposals call for other restructurings, such as a split between finance and insurance functions, which the standard theory of managed competition does not take into account. The implications of these proposals for smooth functioning of the health care market must be weighed against political and ethical considerations unique to the Israeli environment.
Economic Competition↗
Reengineering a health care facility. Turning an organization on its head.
How can you foster change in your organization? Accomplishing major organizational change is difficult and extremely risky. However, change is necessary if health facilities are to survive in a competitive managed care world. Thrust into this environment, military health facilities are finding they must improve access and quality, while reducing costs. Keller Army Community Hospital at West Point was reengineered to meet this challenge. The results? A nontraditional hospital structure and management philosophy. Pipeline hierarchical chains of command and traditional professional boundaries have been modified. The strategy and transition process, as well as the obstacles to change, are explored in this article. Three years into a multi-year process, expected obstacles to change have been experienced, and success is predicted.
Hierarchy, Social↗
Implementing health care reform in Israel: organizational response to perceived incentives.
Devising new incentives was a main element of health care reform in Israel, which created a regulated market that embodies many principles of managed competition. This study examined sick fund directors' perceptions of the new incentives and their strategic responses to these incentives, enabling the testing of how managed competition works in practice. The methodology used was a multiple case study of Israel's four sick funds. Data were gathered through in-depth interviews with 160 senior officials, analysis of national health insurance legislation, and analysis of published and unpublished archival documents, newspaper articles, public statements of senior managers, and other published data on the sick funds' behavior. The study revealed discrepancies between planned and perceived incentives and highlighted the effect of the latter on strategy formulation. Analysis of sick fund strategies showed that their responses to managed competition incentives deviated from theoretical expectations, compromising some of the objectives of the reform. The study also shows that contextual features account for the specific model of managed competition that was implemented and for the specific strategies employed by the sick funds. The study concludes by highlighting the need to build a process that will enable policy makers to consider local contextual factors when planning and implementing reform, involving health care providers in designing incentives, continuously monitoring processes and outcomes in the reformed system, and allowing for flexibility in policy making.
Attitude of Health Personnel↗
Employer-provider partnerships in advanced managed care: human assets risk management.
Competitive forces have increased recognition of the strategic value of occupational and environmental medicine. Opportunities to enhance workforce health and productivity abound in the managed care environment.
Efficiency↗
Beyond competition.
Managed care organizations often cannot be easily differentiated on the basis of organizational characteristics. Even the provider networks that competing health plans use may be virtually identical in response to employee pressure for broad provider choice. In markets with many undifferentiated networks, current approaches to quality improvement may be more intrusive than helpful. Health plans should delegate quality improvement activities to constituent provider groups and need to explore collaborative approaches to quality improvement. Although many are uncomfortable with using financial incentives to influence professional behavior, the use of capitation to restrain costs is inevitable. Instead of arbitrarily limiting financial incentives, consumers should be protected in market-compatible ways. In particular, expansive disclosure requirements and risk adjustment of both premiums and capitation payments are recommended as approaches that will reward high-quality care.
California↗
Testing the HMO competitive strategy: an analysis of its impact on medical resources.
Competitive approaches to health care reform, including managed competition, are hypothesized to reduce health care expenditures and the resources devoted to medical care. Empirical evidence has been limited. The short- and long-run effects of an experiment closely resembling managed competition are analyzed. We examine effects on hospitals, technology diffusion, physicians, and health insurance premiums. The strategy reduces capital in hospitals, has minor effects on physicians and technology, and has only initial effects on average premiums.
Fees and Charges↗