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The health plan choices of retirees under managed competition.

OBJECTIVE: To investigate the effect of price on the health insurance decisions of Medicare-eligible retirees in a managed competition setting. DATA SOURCE: The study is based on four years of administrative data from the University of California (UC) Retiree Health Benefits Program, which closely resembles the managed competition model upon which several leading Medicare reform proposals are based. STUDY DESIGN: A change in UC's premium contribution policy between 1993 and 1994 created a unique natural experiment for investigating the effect of price on retirees' health insurance decisions. This study consists of two related analyses. First, I estimate the effect of changes in out-of-pocket premiums between 1993 and 1994 on the decision to switch plans during open enrollment. Second, using data from 1993 to 1996, I examine the extent to which rising premiums for fee-for-service Medigap coverage increased HMO enrollment among Medicare-eligible UC retirees. PRINCIPLE FINDINGS: Price is a significant factor affecting the health plan decisions of Medicare-eligible UC retirees. However, these retirees are substantially less price sensitive than active UC employees and the non-elderly in other similar programs. This result is likely attributable to higher nonpecuniary switching costs facing older individuals. CONCLUSIONS: Although it is not clear exactly how price sensitive enrollees must be in order to generate price competition among health plans, the behavioral differences between retirees and active employees suggest that caution should be taken in extrapolating from research on the non-elderly to the Medicare program.

Aged↗

Adopting and adapting managed competition: health care reform in Southern Europe.

A new paradigm appeared in Europe in the early 1990 s regarding the reform of health care systems. This paradigm has come to be known as the managed competition paradigm, among other terms. First introduced in Great Britain, it entails the separation of the financing/purchasing and providing functions, so that competition among providers is enhanced, while maintaining universal access and public financing, at least in principle. This article explores to what extent such paradigm has been emulated within the Greek, Italian, Portuguese and Spanish health care systems. Reform in the direction of managed competition may be ascertained in all four countries. However, each country has emphasized different aspects of the paradigm, and the degree and rhythm of implementation of reform has varied. The article considers the circumstances under which the new paradigm was born, and its main characteristics; analyzes actual reforms in Southern European countries; and provides a tentative explanation of the diffusion mechanisms. It concludes that the crucial factor explaining the different paths of policy adoption and adaptation is the character of the initial health care system.

Diffusion of Innovation↗

Managed competition: a health reform plan that "puts people first".

With its emphasis on consumer information; proper incentives for physicians, hospitals, and insurers; and fair tax treatment; managed competition deserves the attention it has received in the debate over how to reform the U.S. health system. It provides a better route to ensuring access and controlling costs than alternative proposals. President-elect Clinton should use the managed competition model as a blueprint for the health plan he has promised in the first 100 days in office.

Competitive Medical Plans↗

Preparing for practice in an era of managed competition.

Psychiatrists must take steps to prepare for health reform that includes managed competition. They should focus on managed mental health care in their reading, reevaluate fundamental beliefs and values to encompass an understanding of managed care, and try to view managed care organizations as allies. Psychiatrists should also use practice guidelines, participate in quality improvement activities and outcome studies, and improve their relationships with health care managers and administrators.

Delivery of Health Care↗

Anticipated changes in the doctor-patient relationship in the managed care and managed competition of the Health Security Act of 1993.

The doctor-patient relationship is the cornerstone of medical ethics, yet the relationship will change significantly under the Health Security Act of 1993. In a way, managed care and managed competition are a return to the old medical ethics: doing everything reasonable and probably beneficial for all, instead of going all out for each. Five central questions may help physicians and policy makers anticipate a paradigm shift in ethics. An analysis of these questions suggests that managed care and managed competition challenge physicians' roles as trustworthy patient advocates. Fortifying doctor-patient relationships in managed care would be prudent and wise and would help to achieve the ethical allocation of limited resources. By protecting patients' personal medical interests and empowering patients to do the same, doctors can attempt to safeguard trust. Both doctors and patients want to have strong, personal, values-oriented relationships. Whether such relationships are possible under the Health Security Act remains to be seen.

Competitive Medical Plans↗

Managed competition using both market-driven and regulatory strategies.

The market-driven managed competition concept has been successful in reducing increases in healthcare costs by controlling utilization and price, but has failed to date to produce an effective and efficient delivery of health services. The proposed health reform plan calls for universal access (excluding illegal aliens), a relatively broad range of clinically effective basic benefits, an option to purchase supplementary benefits, a ceiling placed on the nation's total health expenditures, local decisionmakers allocating available resources, existing insurers administering the plan and providing consumers with additional quality of care comparisons.

Cost Control↗

Community health clinics under managed competition: navigating uncharted waters.

In this article, we consider how major changes in the health care system, both real and proposed, may affect the future of community health clinics (CHCs) in the United States and their ability to continue to provide comprehensive care to underserved populations. We discuss the constraints and opportunities that CHCs face in a health care system that is rapidly moving away from fee-for-service medical care toward a model of managed competition. We describe the role that the National Association of Community Health Centers has played in advocating for CHCs in Congress and the role state primary care associations are playing in spear-heading the development of statewide CHC-sponsored health maintenance organizations. We also analyze CHC reactions to the changes in federal policies that were proposed in the major health care reform bills of the 103d Congress, as well as the prospects for CHCs under Medicaid managed care as it sweeps rapidly across the nation. As a case study, we examine California's policies that mandate that Medicaid recipients enroll in either a private managed care plan or a newly created public plan, which compete against each other within each county. CHCs are vulnerable during the transition to managed care and managed competition, and they have neither the resources nor the ability to integrate or compete successfully with private health maintenance organizations without safeguards, new sources of funding, technical assistance, improved infrastructure, and vigorous monitoring and oversight from federal and state governments, as well as the continued education, training, and policy advocacy provided by the National Association of Community Health Centers and state primary care associations.

California↗

Contracting for services and limits to managed competition.

The introduction of market forces into the NHS has led to an operational divorce between health care providers and those who need health-care. Central to this change has been the widespread use of contracts. As a management problem, contract negotiation must incorporate consideration of full cost recovery to establish prices for hospital services sold and to ensure that available information is employed in assessing external services purchased. Ignoring the important issue of information availability in identifying relevant costs, it is the difficulty in specifying the cost of an episode of treatment, for example, that has led to contracts being negotiated in block form. Argues that this may be the only contract that can be effectively established. An important consequence of this is that the complexity of hospital services and requirements will work against a wider implementation of piecemeal managed competition and will form a natural barrier to market forces in the NHS.

Competitive Medical Plans↗

Competing on price: the economics of managed competition.

PURPOSE: To describe the economics of teaching hospitals in an increasingly price-conscious managed care marketplace by determining the relationships between a teaching hospital's operations and cost per discharge. METHOD: A quantitative correlational regression analysis was undertaken of 1993 operational and financial data from the Health Care Financing Administration for a national sample of 100 major urban, non-federal teaching hospitals. The sample was systematically selected from membership in the Association of American Medical Colleges' Council of Teaching Hospitals. RESULTS: The analysis indicated that the new economics of managed competition requires teaching hospitals to focus on reducing costs through five main areas: decreasing poorly utilized beds, increasing the numbers of discharges, renovating facilities to modernize and streamline patient flow, utilizing fewer employees and thus boosting productivity, and improving the internal financing of operations and investments through working-capital management. CONCLUSION: Achieving efficiency in operations in each of the five main areas will help teaching hospitals to survive the turbulence of market evolution toward managed care.

Economic Competition↗

Caught in the "traps of managed competition"? Examples of Russian health care reforms from St. Petersburg and the Leningrad region.

Elements of a "managed market" for health services have been introduced into the Russian health care system, which under the Soviet regime was run as a comprehensive state-managed system. The authors examine the recent development of health service reforms in a case study of the city of St. Petersburg and the surrounding Leningrad region. Evidence from key informants and a local survey of service users shows how alternative models of the managed market are being introduced in different parts of the study area. A critical review of the market-oriented strategies for reform emerging in the case study suggests that such reforms carry risks associated with the "traps of managed competition." Future policy for health service systems in Russia must take these risks more fully into account.

Adolescent↗

Comparative institutional response to economic policy managed competition and governmentality.

This article provides a comparative conceptual framework for understanding why so many governments found economic policies based on managed competition attractive and yet dangerous to implement. The framework conceptualizes governments as a kind of organizational complex and thus governments as an international population of organizations, each embedded in a state that tries to harness and direct behaviour through what Foucault called "governmentality". This nascent concept is made more robust here and joined with Fligstein's historical research on the response of leading organizations when fundamental change threatens a population of organizations, by embracing a new conception of control that allows them to re-establish their control and pre-eminence. Fligstein studied corporations, but his model can be fruitfully extended to governments. Economic sociology has not to date been able to do much comparative research on institutional responses to economic policy; but this set of case studies and conceptual framework provide such an opportunity.

Developed Countries↗

Managed competition and California's health care economy.

There is evidence in California of a broad decline in health care costs to employment groups adopting managed care and managed competition--premium reductions up to 10 percent. National comparisons and utilization data generally confirm the beginning of lower costs. Large California medical groups and health systems have responded to pressure by finding ways to reduce costs and improve quality. While examples are encouraging, there is room for improvement. Two levels of competition have emerged and continue to evolve: carrier competition and delivery system competition. Each model has strengths and limitations, but the existing mix is driving down costs.

California↗

Managed competition in practice: 'value purchasing' by fourteen employers.

Many large U.S. companies have transformed their procurement of health benefits in the 1990s by combining the principles of managed competition with other business tactics to create a business-savvy hybrid of the private sector's own design, often referred to as "value purchasing." Until recently, few policymakers or health care observers believed that large firms would be a force in health system reform. Yet to implement value purchasing, the large companies in this study created new organizational forms, provided employees with financial incentives to select low-cost health plans, and used business tactics such as competitive bidding to negotiate more favorable rates and to improve quality among health plans. The financial results were impressive for the companies studied. In addition, the companies' demands on the health care delivery system are multiplying as the interface between business firms and health care organizations changes. These demands will only increase as the practices we found become more widespread.

Community Participation↗

Managed competition: the policy context.

In order to maintain universal access to medically effective care for all, costs must be contained at both the system-wide and micro levels. The managed competition model offers a framework within which increased efficiency could be pursued without sacrificing the goal of universal access and without impairing health outcomes and social cohesion. It would do this by removing structural impediments to rational decision-making and allocating to markets and governments the functions they perform best.

Australia↗

A model for regulating managed competition.

Adapting proven regulatory mechanisms from the Federal Reserve System and the Clean Air Act to a managed-competition-based health care system may provide a consistent nationwide framework for health care delivery and financing that takes into account the role of the states.

Commerce↗

Managed competition. An analysis of consumer concerns. Single-Payer Coalition for Health Security.

This analysis of managed competition was written by the Single-Payer Coalition for Health Security, a broad-based coalition of groups representing for the most part consumers of health care, including American Public Health Association; Church Women United; Citizen Action; Consumers Union; National Association of Social Workers; National Council of Senior Citizens; Neighbor to Neighbor; NETWORK: A National Catholic Social Justice Lobby; Oil, Chemical & Atomic Workers International Union; Older Women's League; Physicians for a National Health Program; Public Citizen; United Cerebral Palsy Associations; and United Church of Christ. What follows is a substantial excerpt from their working paper, issued in January 1993.

Competitive Medical Plans↗