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Voluntary purchasing pools: a market model for improving access, quality, and cost in health care. American College of Physicians.

States and small businesses have been rapidly establishing voluntary health care purchasing pools during the past few years. Purchasing pools can decrease health care costs, improve access for some small businesses and individual persons, allow greater choice among health care plans, and provide continuity of care. Purchasing pools also help to even the balance of power in the health care marketplace, which has come increasingly under the control of huge proprietary managed care corporations. This position paper of the American College of Physicians discusses how a system of well-designed voluntary purchasing pools can help protect the integrity of health care in the emerging managed care marketplace.

Continuity of Patient Care↗

Taking control of supply spending.

Bringing common sense to bear on buying medical supplies requires standardizing purchases. Adding RNs to your materials management staff can ease physicians' concerns.

Cost Savings↗

The central laboratory: who needs it?

A central lab can provide substantial savings in personnel and procurement costs while promoting improvements in service. Activities integral to this process are coordinating purchasing, implementing common processes, identifying key facilities, and using a common management information system.

Centralized Hospital Services↗

Bold new purchasing program to save NJ system $25 million.

Bold new purchasing program will be big cost saver for health system. Saint Barnabas Health Care System in West Orange, NJ, is withdrawing from its GPOs and taking advantage of its economies of scale by purchasing pharmaceutical and medical/surgical supplies on its own. Here's how Saint Barnabas created its own GPO.

Cost Savings↗

Monitoring purchaser expenditure patterns.

This study outlines the development and application of a methodology that allows direct comparison of the elements that make up in-patient healthcare across the West Midlands Regional Health Authority. The methodology produces a model which monitors the mechanism of resource utilization within the Region and the factors that influence it. The model shows how the uptake of healthcare varies by treatment specialty, between each provider unit, and across all purchasing authorities in the Region. The methodology accounts in all instances for demography and where appropriate for socio-economic deprivation. The novelty of this study is the generation of provider unit specialty costs that reflect both recorded activity and expenditure in the locality. The results of the investigation are made available to the purchasers to assess the levels of the services they are buying.

Adult↗

Self-insurance and worksite alcohol programs: an econometric analysis.

OBJECTIVE: The worksite is an important point of access for alcohol treatment and prevention, but not all firms are likely to find offering alcohol programs profitable. This study attempts to identify at a conceptual and empirical level factors that are important determinants of the profitability of worksite alcohol programs. A central question considered in the empirical analysis is whether firms' decisions about worksite alcohol programs are related to how employee group health insurance is provided. METHOD: The data used are from the 1992 National Survey of Worksite Health Promotion Activities (N = 1,389-1,412). The econometric analysis focuses on measures of whether the surveyed firms offer Employee Assistance Programs (EAPs), individual counseling, group classes and resource materials regarding alcohol and other substance abuse. RESULTS: Holding other factors constant, the probability that a self-insured firm offers an EAP is estimated to be 59%, compared to 51% for a firm that purchases market group health insurance for its employees. Unionized worksites and larger worksites are also found to be more likely to offer worksite alcohol programs, compared to nonunionized smaller worksites. Worksites with younger work-forces are less likely than those with older employees to offer alcohol programs. CONCLUSIONS: The empirical results are consistent with the conceptual framework from labor economics, since self-insurance is expected to increase firms' demand for worksite alcohol programs while large worksite is expected to reduce the average program cost. The role of union status and workforce age suggests it is important to consider workers' preferences for the programs as fringe benefits. The results also suggest that the national trend towards self-insurance may be leading to more prevention and treatment of worker alcohol-related problems.

Alcoholism↗

Is health care a commodity: how will purchasing improve the National Health Service?

Through the reforms to the National Health Service in 1990 an internal market for public health care provision in the United Kingdom was introduced. As part of this new system of care, responsibility for purchasing of health care was separated from that for its provision. The new purchasing function, undertaken by district health authorities and fundholding general practices, has created the opportunity for improvements in health and higher standards of care to be achieved through new and explicit mechanisms. However, the purchasing function has not yet realized its full potential to achieve beneficial change, partly because traditional behaviours have not yet adapted to the new system of care and partly because specific aspects of the internal market are creating barriers and perverse incentives. This paper discusses these issues and identifies the important barriers which have still to be overcome if purchasing is to be the driving force for change in the new National Health Service.

Contract Services↗

Child and adolescent mental health services: purchasers' knowledge and plans.

All purchasers in the North East Thames Regional Health Authority were contacted by telephone and questioned systematically about their purchasing plans for child and adolescent mental health. Purchasers' knowledge of the services they were purchasing was very limited. They had made little or no attempt to set quality standards or to monitor them. It is concluded that information about these services is so limited that purchasers would be unable to make informed decisions concerning changes in service patterns.

Adolescent↗

Beyond cost: 'responsible purchasing' of managed care by employers.

We explore the extent of "responsible purchasing" by employers--the degree to which employers collect and use nonfinancial information in selecting and managing employee health plans. Most firms believe that they have some responsibility for assessing the quality of the health plans they offer. Some pay attention to plan characteristics such as the ability to provide adequate access to providers and services and scores on enrollee satisfaction surveys. A more limited but still notable number of firms take specific actions based on responsible purchasing information. Because of countervailing pressures, however, it is not clear whether or not the firms most involved in responsible purchasing are signaling a developing trend.

Attitude to Health↗

Business coalition initiatives related to behavioral healthcare purchasing and quality improvement.

Across America there are over 90 employer health coalitions, and their ranks are growing. Their members can be businesses located in a city, a region or a state, while a few encompass employers located in multistate regions. Coalitions may include only private-sector employers, or private- and public-sector employers; some are coalitions between employer purchasers and providers. Following a brief historical overview, this article summarizes the behavioral healthcare initiatives that are currently under way in six business coalitions.

Cost Savings↗

Purchasing alliances: still in the picture.

In 1993, purchasing alliances were a hotbed of legislative activity. Today, 13 states have enacted laws establishing them. Here's a brief update of how these alliances are working.

Group Purchasing↗

Large employers' selection criteria in purchasing behavioral health benefits.

To determine the criteria other than cost large employers use in selecting and monitoring behavioral health benefits, this study interviewed 31 of 44 (70.4%) randomly selected corporations employing at least 5,000 workers. While more than 60% of employers considered administrative efficiency and provider access to be very influential in their selection of behavioral health benefits, only 12.9% (95% confidence interval 0.7%-25.1%) considered clinical outcomes. Employers who considered clinical outcomes in their purchasing decision reported significantly greater satisfaction with the quality and cost of their behavioral health benefits. Following selection, 38.7% of corporations used employee complaints to monitor quality problems in their behavioral health benefits; 3.2% used clinical outcomes. If society expects employers to purchase behavioral health care on the basis of quality as well as cost, more employers need better indicators of quality.

Adult↗

Potential effects of managed competition in rural areas.

This article assesses the extent to which managed competition could be successful in rural areas. Using 1990 Medicare hospital patient origin data, over 8 million rural residents were found to live in areas potentially without provider choice. Almost all of these areas were served by providers who compete for other segments of their market. Restricting use of out-of-State providers would severely limit opportunities for choice. These findings suggest that most residents of rural States would receive cost benefits from a managed competition system if purchasing alliances are carefully defined, but consideration should be given to boundary issues when forming alliances.

Catchment Area, Health↗

The emergence of employer-led health care purchasing organizations: a new market for providers.

A new form of purchaser--the employer-led, community-based health care purchasing organization--is appearing in the health care marketplace. This article uses the author's experience with coalitions to describe the basic anatomy of private health care purchasing organizations, and suggests several strategies for marketing to this new buyer. The article also presents a market share/presence formula developed to test coalition viability.

Data Collection↗

A purchaser experience of managing new expensive drugs: interferon beta.

Interferon beta is a new and expensive drug for treating multiple sclerosis. One published trial has shown that it reduces the exacerbation rate in patients who have relapsing-remitting disease without important disability. This paper describes the development of a strategy for purchasing the drug in one region of England before its licensing. Purchasers felt unable to decline funding for this marginally effective drug and thereby undertake explicit rationing. To ensure prescribing was within the guidelines, a vast communication network had to be sustained with managers, general practitioners, neurologists, the Multiple Sclerosis Society, and professional advisers in all the purchasing authorities. The workload involved was considerable. The dilemma of rationing in a public service with a high political profile is demonstrated.

Attitude of Health Personnel↗

Purchasing Medicare prescription drug benefits: a new proposal.

Medicare policymakers are considering using private-sector firms to offer and manage a prescription drug benefit. In such arrangements Medicare and its potential contractors will need to consider four major areas of risk: selection risk, cost management risk, risks of government as a business partner, and risks that new Medicare benefits will change competitive advantages. This paper considers these risk factors and suggests a model for Medicare prescription drug coverage. By adapting private-sector purchasing practices and using competitive markets, Medicare could offer prescription drug benefits--at affordable premiums for beneficiaries--without resorting to national price controls for pharmaceutical products.

Cost-Benefit Analysis↗

Florida Community Health Purchasing Alliances.

Until recently, many small businesses in Florida were unable to provide any type of health coverage to their employees because of high insurance rates. With the development of the Community Health Purchasing Alliance, the rates have decreased, enabling employers to offer health insurance to their workers. Often, employees can choose from a variety of health plans in terms of coverage and price.

Florida↗

Managed care in the Twin Cities: what can we learn?

Minneapolis/St. Paul, because of its history of health maintenance organization development and active employer participation in the health care arena, is often cited as a community in which managed competition has been tested to some degree. This paper reviews the historical development of the Twin Cities health care market and summarizes findings from past studies of this market. It also describes the recent consolidation of providers in the Twin Cities, as well as the activities of large purchasing coalitions. Finally, it assesses the elements of the Twin Cities experience that seem most relevant to managed competition-based health care reform proposals.

Group Purchasing↗