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PubMed1994

Integrated health care in California's managed care capital.

Sacramento, California's capital, represents the nation's most competitive managed care marketplace. The Sutter Health organization represents a significant force in this marketplace and surrounding regions of Northern California. Sutter has created an integrated regional health care network capable of delivering a full continuum of care through appropriate community-based facilities, a variety of physician relationships, and both owned and aligned managed care structures. The overall Sutter Health strategy that incorporates facilities, physician partnerships, and patient care financing is described. The article identifies six key lessons learned during this period of growth.

California↗
PubMed1994

The quality improvement strategy.

To prepare for managed competition, many hospitals now focus on service quality as a means to improve their competitive position. To aid in decisions about where best to direct limited resources, managers need physician feedback about how the hospital's services compare with its competitors' services (competitive advantage) and about the degree to which the hospital's services fall short of, meet, or exceed physicians' expectations (customer satisfaction). This article describes a strategy for acquiring information about competitive advantage and customer satisfaction and for using the information to identify optimal service improvement opportunities. It then presents a step-by-step application of the Quality Improvement Strategy (QIS) for a large urban hospital.

Arizona↗
PubMed2002

Performance of diagnosis-based risk adjustment measures in a population of sick Australians.

OBJECTIVE: Australia is beginning to explore 'managed competition' as an organising framework for the health care system. This requires setting fair capitation rates, i.e. rates that adjust for the risk profile of covered lives. This paper tests two US-developed risk adjustment approaches using Australian data. METHODS: Data from the 'co-ordinated care' dataset (which incorporates all service costs of 16,538 participants in a large health service research project conducted in 1996-99) were grouped into homogenous risk categories using risk adjustment 'grouper software'. The grouper products yielded three sets of homogenous categories: Diagnostic Groups and Diagnostic cost Groups. A two-stage analysis of predictive power was used: probability of any service use in the concurrent year, next year and the year after (logistic regression) and, for service users, a regression of logged cost of service use. The independent variables were diagnosis gender, a SES variable and the RESULTS: Age, gender and diagnosis-based risk adjustment measures explain around 40-45% of variation in costs of service use in the current year for untrimmed data (compared with around 15% for age and gender alone). Prediction of subsequent use is much poorer (around 20%). Using more information to assign people to risk categories generally improves prediction. CONCLUSIONS: Predictive power of diagnosis-base risk adjusters on this Australian dataset is similar to that found in IMPLICATIONS: Low predictive power carries policy risks of cream skimming rather than managing population health and care. Competitive funding models with risk adjustment on prior year experience could reduce system efficiency if implemented with current risk adjustment technology.

Adolescent↗
PubMedDate not supplied

Quantitative methods for quality improvement.

Measuring clinical and financial outcomes in health care is a science in the early stages of development and implementation. Many tools and techniques are derived from industry models of continuous quality improvement and epidemiology. Epidemiologic (enumerative) and statistical process control (analytic) methods are effective alternatives to traditional quality assurance methods of evaluating patient care that encompass clinical and financial outcomes. Their use has resulted in significant improvement of clinical outcomes and financial performance, and has increased physician involvement in the process. Although cost will be the driving force of health care reform for the next few years, demonstration of high-quality care by providers through outcomes measurement will differentiate long-term from short-term winners in an environment of managed competition. This fact will make the science of outcomes management increasingly more important.

Chicago↗
PubMed1994

The case for managed cooperation (not competition): South Dakota Mental Health Linkage Project.

Promotion of collaboration among rural health providers is a needed strategy to improve integration, accessibility, and quality of mental health care. To support this viewpoint, pertinent outcome data from the authors' South Dakota (SD) project is presented. The data indicated that the project was successful in improving coordination of mental health care in south-central South Dakota. The authors feel that rural mental health care reform should emphasize rural cooperation and not managed competition. They support the recommendation that any health care reform should include training funds for the health care providers from underserved rural areas.

Community Mental Health Centers↗
PubMed1994

Costs and price competition in California hospitals, 1980-1990.

Critics of health care reform proposals that incorporate managed competition contend that it has never been broadly implemented. However, insurance plans that combine insurance with the provision of care have been widely implemented and have been tested most extensively in California. This DataWatch explores California's experience with health maintenance organizations (HMOs) and preferred provider organizations (PPOs), the introduction of which was followed by overall reductions in hospital costs. These reductions were larger in competitive markets. If implemented on a national scale, such selective contracting could be expected to reduce the growth of hospital costs even more rapidly than occurred in California.

California↗
PubMed1993

The impact of health-care reform on the cancer patient.

Reform of the United States' health-care system as we know it will require a reevaluation of the methods used in health-care delivery. Many changes are emerging in the health-care marketplace, and there is a prevailing trend toward universal coverage through managed care/competition. Global cost-control measures will become more prevalent, as we have seen already in the Clinton Administration's plan to become the sole and price-controlling customer for all childhood vaccines. Health-care delivery is evolving toward local care networks involving managed competition, a system in which patient groups will trade volume for price. Legal barriers presently include antitrust laws, which restrict collaboration among health providers, fraud and abuse laws, and tax considerations. Licensure and regulatory issues also may have an impact on reforms. The benefits most likely will include guaranteed health care, reduced health-care costs, and a better, more efficient quality of medical care. With these changes, however, there will be less freedom of choice in health care and a greater burden on certain sectors of the economy.

Antitrust Laws↗
PubMedDate not supplied

Who really wants price competition in Medicare managed care?

There is much policy talk about making Medicare more competitive, like private markets. But when reform proposals near implementation, local opponents of competition are often able to stop reform experiments. This paper reports on one recent example, the Competitive Pricing Advisory Committee, created by the 1997 Balanced Budget Act (BBA) to bring competitive bidding to Medicare + Choice plans. After design and site-selection choices were announced, members representing local interests were able to delay and perhaps kill competitive bidding before it could start, once again. A public report of this story may save future market-based Medicare reforms from a similar fate.

Budgets↗
PubMed1998

The organizational structure of medical group practices in a managed care environment.

This article analyzes the organizational structures of 155 medical group practices providing services in the highly competitive managed care environment in the upper midwest. The structure of the group practices and the methods of physicians' payment are analyzed in terms of the proportion of revenue obtained from financial risk-sharing managed care payment systems and the length of time involved with those systems.

Blue Cross Blue Shield Insurance Plans↗
PubMed1998

Consolidation of medical groups into physician practice management organizations.

CONTEXT: Medical groups are growing and merging to improve efficiency and bargaining leverage in the competitive managed care environment. An increasing number are affiliating with physician practice management (PPM) firms that offer capital financing, expertise in utilization management, and global capitation contracts with health insurance entities. These physician organizations provide an alternative to affiliation with a hospital system and to individual physician contracting with health plans. OBJECTIVE: To describe the growth, structure, and strategy of PPM organizations that coordinate medical groups in multiple markets and contract with health maintenance organizations (HMOs). DESIGN: Case studies, including interviews with administrative and clinical leaders, review of company documents, and analysis of documents from investment bankers, the Securities and Exchange Commission, and industry observers. SETTING: Medical groups and independent practice associations (IPAs) in California and New Jersey affiliated with MedPartners, FPA Medical Management, and UniMed. OUTCOME MEASURES: Growth in number of primary care and specialty care physicians employed by and contracting with affiliated medical groups; growth in patient enrollment from commercial, Medicare, and Medicaid HMOs; growth in capitation and noncapitation revenues; structure and governance of affiliated management service organizations and professional corporations; and contracting strategies with HMOs. RESULTS: Between 1994 and 1996, medical groups and IPAs affiliated with 3 PPMs grew from 3787 to 25763 physicians; 65% of employed physicians provide primary care, while the majority of contracting physicians provide specialty care. Patient enrollment in HMOs grew from 285503 to 3028881. Annual capitation revenues grew from $190 million to $2.1 billion. Medical groups affiliated with PPMs are capitated for most professional, hospital, and ancillary clinical services and are increasingly delegated responsibility by HMOs for utilization management and quality assurance. COMMENT: Physician practice management organizations and their affiliated medical groups face the challenge of continuing rapid growth, sustaining stock values, and improving practice efficiencies while maintaining the loyalty of physicians and patients.

California↗
PubMedDate not supplied

Federal official discusses reform. Interview by Debra Mamorsky.

The administrator of the Health Care Financing Administration discusses managed competition, the cost concerns of small and large employers under such a program, and what benefits managers must do in response to health care reform.

Centers for Medicare and Medicaid Services, U.S.↗
PubMedDate not supplied

Health reform for small population areas.

There has been criticism of the managed competition model in terms of its impact on rural areas. It is suggested that the approach simply won't work for providers in rural areas and that an adjustment will be necessary. The author, acknowledging the flaw, proposes changes that will make competition work better for all providers. This column is jointly edited by Kevin M. Fickenscher, MD, and David A. Kindig, MD, PhD, chair and member, respectively, of the College's Forum on National Health Policy. Dr. Fickenscher is participating in various advisory capacities on health care in the Clinton Administration, and Dr. Kindig is Senior Advisor to HHS Secretary Donna Shalala.

Competitive Medical Plans↗
PubMedDate not supplied

Can managed care and competition control Medicare costs?

Medicare+Choice (M+C) was conceived to bring managed care and competitive forces to bear on Medicare. Ultimately, M+C could not thrive under the conditions of the marketplace and the Balanced Budget Act of 1997. Here I review what went wrong and the lessons from the experience, concluding that M+C is a tool, not a strategy. While managed care in a multiple-choice environment may have the potential to generate limited savings, promoting managed care and competition alone will not preempt the need for a debate on Medicare's obligations and how to finance them.

Aged↗
PubMedDate not supplied

Finding a lasting cure for U.S. health care.

In "Making Competition in Health Care Work" (July-August 1994), Elizabeth Olmsted Teisberg, Michael E. Porter, and Gregory B. Brown ask a question that has been absent from the national debate on health care reform: How can the United States achieve sustained cost reductions while at the same time maintaining quality of care? The authors argue that innovation driven by rigorous competition is the key to successful reform. A lasting cure for health care in the United States should include four basic elements: corrected incentives to spur productive competition, universal insurance to secure economic efficiency, relevant information to ensure meaningful choice, and innovation to guarantee dynamic improvement. In this issue's Perspectives section, eleven experts examine the current state of the health care system and offer their views on the shape that reform should take. Some excerpts: "On the road to innovation, let us not forget to develop the tools that allow physicians, payers, and patients to make better decisions." I. Steven Udvarhelyi; "Health care is not a product or service that can be standardized, packaged, marketed, or adequately judged by consumers according to quality and price." Arnold S. Relman; "Just as antitrust laws are the wise restraints that make competition free in other sectors of the economy, so the right kind of managed competition can work well in health care." Edward M. Kennedy "Biomedical research should be considered primarily an investment in the national economic well-being with additional humanitarian benefits." Elizabeth Marincola.

Cost Control↗
PubMed1996

The new academic health center hybrids: part business, part academic.

Academic health centers have flourished since the 1960s and even managed to survive the shift toward prospective payment. But in their current quest to expand the number of managed care patients and compete with the private sector, they often must price services below cost and reduce the number of faculty members and other personnel. Unless their prices are competitive, managed care companies will not do business with them. AHCs that cannot compete find they are overbedded, underused, and in turmoil. This article explores what successful AHCs are doing to stay healthy in the managed care era.

Academic Medical Centers↗
PubMed1992

Changing the image.

A quality environment is an important feature in health care provision. Good design need not cost a fortune--the winner of this Health Services Management competition will have up to 10,000 pounds-worth of design and project management expertise for free!

Awards and Prizes↗
PubMed1993

VIP interview: Alain C. Enthoven, Ph.D.

Alain C. Enthoven, Ph.D., is the Mariner S. Eccles Professor of Public and Private Management in the Graduate School of Business at Stanford University. He hold degrees in Economics from Stanford University, Oxford University (where he was a Rhodes scholar), and the Massachusetts Institute of Technology. Professor Enthoven has been an articulate advocate for restructuring the health care system. His far-reaching proposals on "consumer choice health plans" and "managed competition" in the 1930s established an intellectual framework for much of the current debate on national health policy. As a leader of the Jackson Hole Group, he favors internal market reform and employer tax incentives as the most effective means to control unnecessary medical costs.

Competitive Medical Plans↗