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Marketing for health-care organizations: an introduction to network management.

The introduction of regulated competition in health care in several Western countries confronts health care providing organizations with changing relationships, with their environment and a need for knowledge and skills to analyse and improve their market position. Marketing receives more and more attention, as recent developments in this field of study provide a specific perspective on the relationships between an organization and external and internal parties. In doing so, a basis is offered for network management. A problem is that the existing marketing literature is not entirely appropriate for the specific characteristics of health care. After a description of the developments in marketing and its most recent key concepts, the applicability of these concepts in health-care organizations is discussed. States that for the health-care sector, dominated by complex networks of interorganizational relationships, the strategic marketing vision on relationships can be very useful. At the same time however, the operationalization of these concepts requires special attention and a distinct role of the management of health-care organizations, because of the characteristics of such organizations and the specific type of their service delivery.

Community-Institutional Relations↗

Primary care referral management: a marketing strategy for hospitals.

With increasing competition among hospitals, primary care referral development and management programs offer an opportunity for hospitals to increase their admissions. Such programs require careful development, the commitment of the hospital staff to the strategy, an integration of hospital activities, and an understanding of medical practice management.

Hospital Administration↗

Using metaphor to clarify emerging roles in patient care management teams.

Difficult economic times, competition for scarce resources and changing organizational paradigms are driving health care institutions to re-examine the ways in which they provide care. They must continually strive to provide excellent patient care and ensure positive patient outcomes while responding to increasing fiscal constraint. At Toronto's Hospital for Sick Children, consistent with current trends, nurse managers are asked to take on broad spans of responsibility. The need to decentralize much of the decision making, problem identification and problem solving functions to the multidisciplinary team is a reality of those changes. This paper describes a process the dialysis staff undertook to better understand new organizational imperatives using an orchestra metaphor as a suggestive tool to help people clarify new roles and relationships in organizations that are evolving from a hierarchical model to a knowledge-based team approach to work. The intervention was successful for some people and not others. An analysis of the outcomes is provided from the nurse manager's perspective.

Hospital Restructuring↗

Efficient approach to health care industry material resource management: an empirical research.

The feasibility of JIT implementation in the health care industry was examined through in-depth case studies and survey research. Specifically, this research examined two different groups in the health care industry: health care institutions that have introduced JIT philosophy into their operations and those that have not. Based on this classification, the research reveals the different impacts that the introduction of JIT philosophy has had on the health care industry's inventory management, service quality, and competitiveness. According to the research result, the introduction of the JIT philosophy in the health care industry's material management system improved that system and reduced implementation problems even though the differences between the JH and the NJH were not high. However, this research found that great potentials exist for the successful implementation of JIT philosophy for material management even though most of the JIT in the health care industry is still in its early stages. Moreover, with the maturing of the stockless material management system, differences between the JH and the NJH groups will be even more significant.

Cost Control↗

Service collaboration and hospital cost performance: direct and moderating effects.

BACKGROUND: Growing reliance on service provision through systems and networks creates the need to better understand the nature of the relationship between service collaboration and hospital performance and the conditions that affect this relationship. OBJECTIVE: We examine 1) the effects of service provision through health systems and health networks on hospital cost performance and 2) the moderating effects of market conditions and service differentiation on the collaboration-cost relationship. RESEARCH DESIGN: We used moderated regression analysis to test the direct and moderating effects. Data on 1368 private hospitals came from the 1998 AHA Annual Survey, Medicare Cost Reports, and Solucient. MEASURES: Service collaboration was measured as the proportion of hospital services provided at the system level and at the network level. Market conditions were measured by the levels of managed care penetration and competition in the hospital's market. RESULTS: The proportion of hospital services provided at the system level had a negative relationship with hospital cost. The relationship was curvilinear for network use. Degree of managed care penetration moderated the relationship between network-based collaboration and hospital cost. CONCLUSION: The benefits of service collaboration through systems and networks, as measured by reduced cost, depend on degree of collaboration rather than mere membership. In loosely structured collaborations such as networks, costs reduce initially but increase later as the extent of collaboration increases. The effect of network-based collaboration is also tempered by managed care penetration. These effects are not seen in more tightly integrated forms such as systems.

Cooperative Behavior↗

Managing orthopedics and neurosciences costs through standard treatment protocols.

High-cost, high-volume specialty programs such as orthopedics and neurosciences find themselves in a position of evaluating the costs and in some cases the appropriateness of medical practices in response to payer scrutiny and provider selection processes. Orthopedics and neurosciences programs are at a stage of development analogous to that of cardiovascular care several years ago. Many of the same trends have come into play, such as payer "carve-outs" for orthopedic services, payer selection of centers of excellence based on cost and quality, reduction of Medicare reimbursement, greater use of high-cost technology, the decline of profitability due to "older, sicker, and tougher" patients, and the recent emergence of national orthopedic specialty networks oriented to national contracts for care. In an era in which payers demand value on both sides of the cost-plus-quality equation, programs are challenged to maximize the return on a patient population rife with "no-win" situations. In the orthopedic service line these include a high proportion of Medicare patients and chronic conditions such as workers' compensation medical back cases or repetitive motion injuries, which can be elusive to diagnose and expensive to treat. Many hospitals continue to lose money on joint replacement surgeries, the largest-volume orthopedic inpatient service, primarily because of the high Medicare population and the cost of implants. Neuroservices, while still relatively well reimbursed, face a rising proportion of Medicare payments as patients live longer and develop chronic, degenerative conditions. Inpatient days are decreasing due to payer pressures to limit hospital stays and to shift inpatient care to outpatient services. Some hospitals "have lost interest in (the orthopedic) service line during the last five years because of recent trends in orthopedic-related inpatient volume and payment." But by managing costs strategically, both the neurosciences and orthopedics service lines can provide substantial revenue as well as the opportunity to achieve a "center of excellence" competitive position in a managed care environment. This Special Report outlines the process and advantages of managing costs and quality of care strategically, that is, in a manner which helps these programs meet internal cost and clinical goals while responding to market situations. The hospital, physicians, and patients all benefit as costs are reduced, quality is enhanced, and the service line's competitive position is strengthened.

Cost Control↗

Utilization management and healthcare reform.

The reform movement in healthcare is occurring in response to financial pressures on American business. The trend toward managed care with competition-based discounting and capitation contracts is likely to continue even if Congress does not enact healthcare reform legislation. Efficient management of resources with acceptable outcomes and customer satisfaction is becoming increasingly crucial. As cost-shifting options are reduced, accurate knowledge and management of resource consumption costs become critical to enable hospitals to assume the financial risks associated with competing in any future capitation area. Hospitals must consider altering their approach to utilization management and business as usual to survive these changes.

Cost Control↗

Can information on cost improve clinicians' behavior? Lessons from health care trials and management theory.

Facing intense price competition and societal pressures, health care provider organizations have focused increasingly on the cost-effectiveness of medical services. In instances when there is insufficient evidence that a more expensive treatment course generates improved outcomes, the lower cost option is often encouraged. Yet, with resource utilization still determined principally by individual physicians, large practice variations often persist. This paper reviews the literature and explores the impact of sharing cost information on physicians' practice patterns utilizing management theory concepts. More research should be conducted to determine long-term benefits of educational interventions, physicians' fundamental views on the relationship between cost and quality and its effect on their responsiveness to cost information, and the role of leadership in changing clinical behavior.

Cost Control↗

Mapping. Using specialized software as a competitive tool.

Cost pressures of managed care, consolidation of health care organizations and the need to effectively spend marketing dollars are strengthening demand for geographic information systems. Providers, payers and others are using the software to convert a wide variety of information into easy-to-understand maps and reports.

Catchment Area, Health↗

Trust in managed care organizations.

Two basic criticisms of managed care are that it erodes patient trust in physicians and subjects physicians to incentives and pressures that compromise the physician's fiduciary obligation to the patient. In this article, I first distinguish between status trust and merit trust, and then argue (1) that the value of status trust in physicians is probably over-rated and certainly underdocumented; (2) that erosion of status trust may not be detrimental if accompanied by an increase in well-founded merit trust; and (3) that under conditions of managed care the physician's commitment to traditional medical ethics cannot serve as an adequate basis for merit trust. Next, drawing on an analogy between managed care organzations and politics, I argue that (4) the most appropriate basis for merit trust in managed care is a conception of organizational legitimacy that includes procedural justice, empowerment of constructive criticism within the organization, and organizational accommodation of the noninstrumental commitment to patient well-being that is distinctive of medical professionalism. I then explore the conditions necessary for robust competition for merit trust among managed care organizations and indicate the kinds of public policies needed to facilitate such competition. Finally, I show how the account of organization-based merit trust can accommodate the special fiduciary obligation of medical professionals, without indulging in the delusion that it is the physician's fiduciary obligation always to provide all care that is expected to be of any net benefit to the patient.

Cost-Benefit Analysis↗

Predators and prey: a new ecology of competition.

Much has been written about networks, strategic alliances, and virtual organizations. Yet these currently popular frameworks provide little systematic assistance when it comes to out-innovating the competition. That's because most managers still view the problem in the old way: companies go head-to-head in an industry, battling for market share. James Moore sets up a new metaphor for competition drawn from the study of biology and social systems. He suggests that a company be viewed not as a member of a single industry but as a part of a business ecosystem that crosses a variety of industries. In a business ecosystem, companies "co-evolve" around a new innovation, working cooperatively and competitively to support new products and satisfy customer needs. Apple Computer, for example, leads an ecosystem that covers personal computers, consumer electronics, information, and communications. In any larger business environment, several ecosystems may vie for survival and dominance, such as the IBM and Apple ecosystems in personal computers or Wal-Mart and K mart in discount retailing. In fact, it's largely competition among business ecosystems, not individual companies, that's fueling today's industrial transformation. Managers can't afford to ignore the birth of new ecosystems or the competition among those that already exist. Whether that means investing in the right new technology, signing on suppliers to expand a growing business, developing crucial elements of value to maintain leadership, or incorporating new innovations to fend off obsolescence, executives must understand the evolutionary stages all business ecosystems go through and, more important, how to direct those changes.

Ecology↗

A new measure of the impact of managed care on healthcare markets.

BACKGROUND: Most studies of managed care impact have used health maintenance organization (HMO) penetration or index of competition as the marker of managed care impact. However, little empirical evidence has been found to support the validity of these or other measures in current use. In addition, as managed care evolves to forms other than HMOs and managed care penetration in large metropolitan areas approaches 100% of commercially insured patients, the utility of the most commonly used measure, HMO penetration, will decrease still further. OBJECTIVES: To provide a preliminary analysis of the use of premiums as a measure of market impact of managed care. STUDY DESIGN: Retrospective analysis (quartile, correlation, multiple-variable linear regression) of publicly available datasets. METHODS: Labor market-adjusted HMO premiums from 3 publicly available sources, for the 56 largest metropolitan areas in the United States, were compared with penetration and index of competition as predictors of the dependent market variable, hospital bed-days per 1000 population. RESULTS: Health maintenance organization premiums in the Federal Employees Health Benefits Program emerged as the best predictor of HMO market impact. Average HMO premiums reported in the Interstudy database and for the Medicare+Choice program also outperformed penetration or index of competition in relating to several commonly available markers of competition such as bed-days per 1000. CONCLUSIONS: Premiums charged by HMOs are a useful measure of the impact of managed care on healthcare markets in large metropolitan areas.

Economic Competition↗

The challenge of documenting managed care cost savings and performance.

It is not too late for managed care to turn this situation around because the debate over health care reform and managing change is ongoing. It remains to be seen whether managed care companies will support independent third parties (i.e., researchers) in analyzing proprietary data and making value judgments about their effectiveness. There is a perception among managed care organizations that potentially negative findings could damage them in the marketplace. Nonetheless, smart organizations use negative findings as new opportunity targets for service improvement and product refinement. To what extent will managed care companies voluntarily release accurate data on performance factors in order for researchers to conduct cross-company analyses? Perhaps competitive markets such as managed care are not consistent with voluntary data sharing. On the other hand, mandatory reporting will not ensure data accuracy either. It is up to the managed care industry itself to develop a cooperative approach to data collection, analysis, and dissemination.

Cost Savings↗