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A long-term approach to health care reform demands an agenda that involves purchasers, payers and providers, as well as users. The overall goal of such an effort must be integrating ongoing cost reductions with continuous improvements in quality of care.
This paper examines the extent to which five states are becoming "prudent purchasers" in their oversight of Medicaid managed care. Our conclusions are mixed. These states are making more sustained efforts along these lines than most private purchasers are and have improved the amount and quality of the data they collect on the experiences of Medicaid clients when compared with the traditional fee-for-service program. They have been less successful in ensuring data quality that is adequate to support contracting decisions and in developing the analytical or political capacity to use data to "manage" the managed care system. Becoming a prudent purchaser appears to be a complex task for states that may prove difficult to achieve.
Healthcare financial managers should determine whether to take advantage of the discounts vendors offer for prompt payment of invoices. Prompt-payment discounts offered by vendors can result in substantial savings, but this benefit may be offset by the costs of acquiring the funds necessary for faster payment. The best results are achieved when the cost of funds is less than the discount savings that can be achieved, vendor discounts are available for a high percentage of the provider's purchase base, the provider is able to negotiate with vendors to increase discount levels, and the provider has an efficient system for processing invoices.
This article will consider key issues of extra contractual referral (ECR) management primarily from a purchaser's perspective. What ECRs are, why their management is a vital concern for the NHS and what actions are necessary to ensure priority setting is not distorted will be briefly addressed.
The purchasing role of health authorities has been in existence for two years and public health physicians are expected to play a central part within this role. While the first year was dedicated to maintaining a "steady state", differences are now appearing between authorities is the way in which purchasing is managed. Based on the views of senior managers and public health physicians working in purchasing authorities, considers how the purchasing process is developing and reports how public health medicine is perceived to be contributing to it. Identifies sub-regional resource allocation as a major factor influencing the purchasing process. Conflicting views were found on the purchasing role of public health medicine, in particular with respect to health needs assessment. As purchasing evolves it remains unclear whether pubic health medicine will come to fulfil a largely technical role, or a more wider one in which it acts as advocate for the population's health.
In a reformed health care delivery system, home care providers will find themselves working in and with purchasing cooperatives, joint ventures, and networks. In this environment, antitrust issues surround contracts and network formation and may place roadblocks in the way of providers' attempts at competitive positioning. What are those roadblocks?
BACKGROUND: The Massachusetts Medicaid agency, also known as the Division of Medical Assistance, has developed a quality-driven approach for managing its managed care suppliers. Such an approach has, as its foundation, principles of continuous quality improvement (CQI). Suppliers participate in an annual process whereby CQI goals are negotiated between the division and its suppliers. The division then works with suppliers to achieve such goals. A cornerstone of the division's approach is the notion that data can highlight an unlimited number of opportunities for improvement and that pursuit of such opportunities will ultimately result in meaningful improvements in the health status of recipients who are served by the division. COLLABORATIVE APPROACH: The agency's approach involves five key steps: 1) the development of contractual terms and purchasing specifications; 2) the identification of improvement priorities; 3) the negotiation of improvement goals; 4) efforts directed at meeting improvement goals and measurement of success; and 5) collaboration to achieve mutual objectives. BENEFITS AND CHALLENGES: Overall, suppliers report many benefits of collaborative participation in CQI activities with the division. Suppliers have enhanced their understanding of the importance of meeting the needs of the customer and have further accrued benefits resulting from discussions with managed care vendors throughout the site regarding benchmarking of efforts and CQI efforts. Conversely, suppliers are challenged by the need to balance and allocate resources to meet increasing demands, which are not always consistent, from various purchasers, including the division. The division has been challenged in the evolution of its contract management strategy by an uneven level of knowledge among managed care vendors regarding CQI; goal setting and measurement issues; the length of time and level of effort required to develop good relationships with suppliers; and the critical importance of comparable, valid, and timely submission of data. RESULTS: Over the last three years, the division has seen a dramatic increase in the responsiveness of managed care suppliers to meet its needs as a purchaser. Specifically, this has been expressed through supplier ability to meet mutually negotiated improvement goals. The division is also pleased that it is beginning to achieve some measurable improvements in outcomes of care.
This article examines the context within which coterminosity (the coincidence of geographical boundaries between two or more organisations) is currently being re-defined, given the development of purchasing in health and social care agencies in the British welfare system. It explores the current trends within purchasing and especially the notion of "locality" as a means of promoting "joint working" between purchasing agencies. In particular, the emergence of general practice as a focus of purchasing is explored with reference to its involvement in joint purchasing (or joint commissioning) and its interaction with the "locality". The article concludes that coterminosity has a contribution to purchasing organisations but increasingly at a local level such as the general practice or locality. This local manifestation of coterminosity may minimise the effects of fragmentation and encourage inter-agency collaboration.
Activity-based costing is coming, but is your organization ready? A few pioneering hospitals are already reaping the operational and economic benefits of activity-based costing in their materials management, and now the VHA purchasing alliance is offering this costing option to its 1,200 hospital members. The concept is simple, so why aren't there more takers? Here are the details on this pragmatic pricing approach that could save your facility plenty.
Hospital purchasing alliances' niche used to be buying products in bulk and passing on the savings to their members. Since multihospital networks often have enough economic clout to cut their own deals, alliances need to be more than go-betweens.
Florida's health insurance reforms for small employers can be viewed as two distinct initiatives: insurance reform and the community health purchasing alliances (CHPAs). While small employer insurance reform legislation appears to have expanded access to coverage, the administrative structure of the CHPA still has a long way to go to capture the confidence of the marketplace.
On July 1, 1990, the legislation requiring wearing of an approved bicycle (safety) helmet by all pedal cyclists, unless exempted, came into effect in Victoria, Australia. The paper describes the more important activities which paved the way for this initiative and presents some preliminary information about the effect of the legislation on wearing rates and head injuries. Since 1980 there has been promotion of helmet use through bicycle education in schools, mass media publicity, support by professional organizations and community groups, bulk purchase schemes, and government rebates for helmet purchases. The Australian Standard for bicycle safety helmets has also been changed to meet community demands for lighter helmets with more provision for ventilation. There has been a steady increase in voluntary helmet use in Melbourne from 1983 to March 1990, as follows: 5% to 70% in primary school children; 2% to 20% in secondary students; and 27% to 40% in adults. In the period after the legislation, with relatively little enforcement, these three groups have shown substantial increases in helmet use rates, rising to 70-90% in most cases. Preliminary data show that the numbers of bicyclists with a head injury have dropped in the period since the legislation came into effect. The possible contributions to this reduction, of less bicycle use and lower risk of head injury in an accident, are discussed.
In many circles, managed care and capitation have become synonymous; unfortunately, the assumptions informing capitation are based on a flawed unidimensional model of risk. PEHP of Utah has rejected the unidimensional model and has therefore embraced a multidimensional model of risk that suggests that global fees are the optimal purchasing modality. A globally priced episode of care forms a natural unit of analysis that enhances purchasing clarity, allows providers to more efficiently focus on the Marginal Rate of Technical Substitution, and conforms to the multidimensional reality of risk. Most importantly, global fees simultaneously maximize patient choice and provider cost consciousness.
The potential of purchasers to influence the quality and safety of care has captured the attention of health sector leaders worldwide. Quality based purchasing explicitly seeks to hold providers accountable for the quality and safety of care. Three strategies are available to purchasers: (1) selective contracting based on quality; (2) payment differentials based on quality; and (3) sponsorship of comparative provider report cards. Examples are given to illustrate each of the three strategies. Governments, employers, social insurance funds, community based insurance organizations, health plans, donors, and other buyers of health services are encouraged to explore and debate these purchaser strategies within the context of an overarching national or local quality framework. Public and private funders of operations research are encouraged to support and disseminate evaluations of purchaser efforts to improve quality. This paper is designed to highlight and frame purchasers' strategies explicitly crafted to enhance the quality and safety of care. The ultimate aim is to encourage thoughtful discussion about whether or not one or more purchaser strategy might support a particular country's goals to improve care. Experiences from both developed and developing countries are included to facilitate the exchange of ideas and provide the broadest of perspectives.
President Clinton's Health Security Act relies on government regulation, not market forces, to control costs. The act creates an entitlement to comprehensive benefits and places the federal budget at risk for total health care costs in order to achieve universal coverage; it creates a system of new state purchasing monopsonies; and it attempts to control costs with price controls on health plan premiums, set and administered by a National Health Board that would be part of the executive branch, not insulated from political considerations. We believe there is a better way.
The formation of an information technology consortium has proven to be a way for several rural hospitals in Northern Minnesota to purchase and successfully install the right technology solutions for their facilities. The concept described is very similar to that used by the Independent Grocer Alliance (IGA), which allows local independent grocers to buy products at prices comparable to these obtained by larger chain stores.
This paper reports the results of a postal questionnaire survey of Directors of Public Health in all health authorities in the United Kingdom (as at March 1994). Our aim was to examine variations in the purchasing of coronary artery bypass grafting, percutaneous transluminal coronary angioplasty and coronary angiography. Information on planned service developments in cardiology was also sought. The response rate was 62%. The mean rate of CABG was 374 per million total population (range 162-710); PTCA 183 (range: 18-648); and coronary angiography 1,010 (range 581-2,334). The mean ratio of invasive treatment to angiography was 1:2 Variations in provision were not related to mortality from coronary heart disease or the availability of a local provider. Those districts purchasing higher levels of CABG tended to purchase higher levels of PTCA (Spearman's r = 0.52). Observed variations in purchasing of invasive treatments and investigation for coronary heart disease do not relate to population "need' as defined by mortality rates from CHD. The greatest variations are seen in the purchasing of PTCA, an intervention whose place in the management of CHD is as yet not fully defined. Consensus guidelines on the appropriate use of these interventions and on population needs are required.
Medicaid and other publicly funded health coverage programs face special challenges in managed care purchasing. This article discusses two of those challenges based on the state of Minnesota's experience: how to develop, evaluate, and communicate access to care; and how to manage the transfer of enrollee eligibility and health status information.