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The role of market testing in the NHS.

The myth of market testing is that it leads to low prices and correspondingly low quality services. If so, why have trust managers extended the initiative from the three services that are compulsory to market test, to well over 80 services? Could it be that it offers a practical and proven way to determine the best way of meeting service needs? Is it a process clinicians should fear, or is it one where clinicians have a useful and positive role to play?

Contract Services↗

How managed care could coopt the public sector.

Since current public officials lack the courage and political will to significantly raise payroll taxes or constrain Social Security, Medicare, and Medicaid benefits, it can be expected that long-term deficit spending will continue, effecting a predictable series of events that have strong, negative ramifications for the American health care system. The author suggests modifications to how our nation's health system should be organized and financed in order to avert these dire predictions.

Cost Savings↗

Assessing the new public management: the case of the National Health Service.

AIM: This paper reviews the origins, core principles and impact of New Public Management (NPM) in the UK public services, with particular attention paid to the emergence of NPM in the National Health Service (NHS). BACKGROUND: NPM represents a distinct break from traditional forms of public sector administration. Whilst its origins are grounded in economic crisis and New Right ideology, NPM philosophies and practices have since found wider acceptance. ORIGINS OF INFORMATION: Selective review of key journal papers, books and policy documents. KEY ISSUES: NPM is characterized by: managers being 'free to manage'; public sector disaggregation; competition; concern for efficiency; concern for outcomes; concern for quality; individualism rather than collectivism; and identification of the public service user as 'customer', 'consumer' or 'citizen'. CONCLUSIONS: NPM has taken root in the NHS. Future reform of the health service is likely to modify some aspects of NPM, though many of the core themes of NPM in the NHS look likely to remain for the foreseeable future.

Decision Making, Organizational↗

The big wave. Wall St. loves managed-care mergers, but selling patients and providers on the deal isn't always a smooth ride.

Managed-care companies have caught a big merger wave, winning applause from Wall Street and some analysts who say the deals offer great financial potential. But others, including consumer groups and some providers, say the health plans could be surfing toward a spill. Critics question the tactics the companies are using and contend the firms are serving the short-term demands of the financial community but aren't helping their long-term business.

Economic Competition↗

Physician "supply-side" economics.

The medical group manager who fails to come face to face with competition and its future impact may be ignoring his fundamental administrative responsibility for strengthening his group for long-term growth and stability. The author has focused his attention on the broad effects of excess physician supply on internal group economics and external competitive economics, and quantitates their impact. Each manager will have to move from the broad to the specific in "bringing home" the points presented in this discussion. And, they must be "brought home," because they will soon be there whether you bring them or not!

Economic Competition↗

Profit pools: a fresh look at strategy.

In charting strategy, many managers focus on revenue growth, assuming that profits will follow. But that approach is dangerous: today's deep revenue pool may become tomorrow's dry hole. To create strategies that result in profitable growth, managers need to look beyond revenues to see the shape of their industry's profit pool. The authors define an industry's profit pool as the total profits earned at all points along the industry's value chain. Although the concept is simple, the structure of a profit pool is usually quite complex. The pool will be deeper in some segments of the value chain than in others, and depths will vary within an individual segment as well. Segment profitability may, for example, vary widely by customer group, product category, geographic market, and distribution channel. Moreover, the pattern of profit concentration in an industry will often be very different from the pattern of revenue concentration. The authors describe how successful companies have gained competitive advantage by developing sophisticated profit-pool strategies. They explain how U-Haul identified new sources of profit in the consumer-truck-rental industry; how Merck reached beyond its traditional value-chain role to protect its profits in the pharmaceuticals industry; how Dell rebounded from a misguided channel decision by refocusing on its traditional source of profit; and how Anheuser-Busch made a series of astute product, pricing, and operating decisions to dominate the beer industry's profit pool. The companies with the best understanding of their industry's profit pool, the authors argue, will be in the best position to thrive over the long term.

Capital Financing↗

A cardiovascular intensive care nursing staff response to managed care: a change in practice.

Managed care has brought competition to the health care workplace. This competitive atmosphere creates challenges to attain quality outcomes while minimizing costs. A large community hospital in the mid-Atlantic region, in a collaborative effort with all members of the health care team, undertook the challenge to revise the way care was delivered to the cardiac surgical patient. This article will report the changes the cardiovascular intensive care nursing staff had to undergo and the methods that were used to incorporate these changes.

Cardiovascular Diseases↗

The brave new world of managed care.

Canadian hospitals that think they can charge higher-than-normal rates to foreign visitors are learning a lesson as US-style managed care moves north of the border. Dr. Robert MacMillan, president and medical director of Florida-based Insurance Claims Management Systems and past president of the Ontario Medical Association, says that south of the border US-style managed care has already hauled in the reins on wild expectations about high payments, and it is expected to do the same for Canadian hospitals that charge private insurers "as much as the traffic will bear." He says it is no longer uncommon for a large Toronto hospital to charge a foreign patient $3000 a day for care that can now be purchased in a US hospital for one-third that price.

Canada↗

Decline of U.S. medical student career choice of psychiatry and what to do about it.

OBJECTIVE: In 1994, only 3.2% of U.S. medical school graduates chose psychiatry, the lowest proportion since 1929. Success in recruiting such graduates is necessary to maintain adequate numbers of psychiatrists. The authors' goal was to gain an understanding of the determinants of specialty selection to ensure adequate recruitment. METHOD: They reviewed all recruitment-related English-language publications since 1959: 173 papers, 17 reports, and 10 books. RESULTS: They found that recruitment has been cyclical, with success from 1940 to 1969 and from 1985 to 1988, decline from 1970 to 1984 and from 1989 to 1994, and a possible small upswing in 1995. The 1940-1969 success began with 1) public recognition of a dramatic shortage of psychiatrists to serve in the military and treat casualties and 2) the fervor of the community mental health movement, which promised to prevent mental illness; massive resources were provided for psychiatry during this period. The declines were associated with 1) the failure of the community mental health movement to fulfill its promise, 2) psychiatry's becoming more biologically oriented and medically conventional, and 3) the effects of managed care and increased competition for patients. The psychiatry departments that have high recruitment rates are in public-supported schools, particularly in the South, or give considerable priority and resources for medical student psychiatric education. CONCLUSIONS: A study of the psychiatric workforce is needed to ascertain whether there is a surplus or a shortage of psychiatrists. Regardless, to ensure adequate recruitment, medical institutions and departments of psychiatry must commit resources for student education in psychiatry.

Attitude↗

Made in U.S.A.: a renaissance in quality.

In the opinion of some journalists and business leaders, Japan's preeminence in product quality is a direct consequence of lectures delivered 40 years ago in Tokyo by two Americans--W. Edwards Deming and Joseph M. Juran. According to Dr. Juran, this view is pure chauvinist nonsense. Despite the shoddiness of Japanese consumer goods before the war, the Japanese did have a quality tradition in the superb workmanship of certain ancient crafts and in the design and manufacture of their military hardware, which, at the outset of the war, was highly competitive with our own. It was just that the Japanese had never devoted engineering expertise, capital, or management attention to the quality of exportable consumer goods. The shock of losing the war changed that mind-set. When Dr. Juran first lectured in Japan in 1954, his audience consisted of 140 CEOs. He had given the very same lectures dozens of times in the United States, but never to top management. American CEOs concentrated their attention on financial reports. Quality was a discipline that they delegated to engineers and special quality departments. In Japan, senior executives took personal charge of managing for quality; trained their managers, engineers, and employees in quality methods; developed quality measurements; pursued quality change at a revolutionary pace; and kept at it year after year until, by the mid-1970s, Japan had passed the United States in quality manufacturing. The unsung heroes of the Japanese quality revolution were Japanese managers, not American experts. Now Dr. Juran sees the beginnings of a quality revolution in the United States as global competition drives managers to focus on their nondelegable responsibilities in quality management.

Administrative Personnel↗

Commentary on the federal role in clinical prevention research.

Effective clinical prevention practice is the objective of the long journey from laboratory and epidemiologic studies to clinical understanding, interventions, and prevention practice with individual patients. The ability to ask ever more fundamental questions about the molecular basis of disease, as is rapidly being developed by NIH's Human Genome Project, promises to make this journey even longer and more complicated, but eventually to make screening and intervention for preventable disease even more amenable to clinical intervention. As we expect in the future, much of what we currently do in clinical prevention practice had its genesis in earlier federal support for basic and clinical research. We comment on the content and major points of the papers on the federal role in prevention research. These papers, in addition to describing the past accomplishment, current state, and future opportunities for prevention research, raise questions about the ultimate application of the enormous and successful national investment in prevention research. A fault line exists among the increasing knowledge of prevention practice, the rapid changes in the way services are delivered, and demonstration of the effectiveness of prevention procedures applied for the good of the whole population. The federal agencies most concerned with the application of prevention knowledge are those most limited in their research budgets: the Agency for Health Care Policy and Research (AHCPR) and the Centers for Disease Control and Prevention (CDC). The National Institutes of Health (NIH), with the greatest research dollars for investment, also has the broadest mandate for investment in research. Meeting all the demands to fund high-quality research is challenging; however, NIH may have review procedures that disadvantage clinical researchers and, among these, applied prevention researchers. The restructuring of the health care system by managed care promises opportunity for more effectiveness research. However, the same competition that fosters the development of managed care may limit the extent of prevention experimentation and the dissemination of results. Current national concerns for the weakening of support for clinical research are in part due to the reduced availability of patient care revenue to support clinical research brought about by managed care. The academic and practice communities that share concern for prevention research should recognize the increasing gap between basic and applied prevention knowledge. Those committed to the clinical application of this knowledge should encourage increased federal research support to assure that what we think we know is indeed so, that what is efficacious is available to all in the society that so generously supports research.

Financing, Government↗

Financial capital and intellectual capital in physician practice management.

Medical groups need financial resources yet most retain no earnings and have no reserves. Physician practice management (PPM) companies have recognized the need for investment and the scarcity of indigenous capital in the physician sector and are rushing to fill the void. Resources are being contributed by venture capitalists, bond underwriters, private investors, pharmaceutical manufacturers, health plans, hospital systems, and public equity markets. The potential contribution of PPM firms is to nurture the intellectual capital of leading physician organizations and diffuse it throughout the health care system. The risk is that short-term financial imperatives will impede necessary long-term investments.

Capital Financing↗

Activity-based costing for integrated delivery systems.

The paradigm shift toward managed care is fueling new cost-finding demands. More sophisticated methods are emerging to meet these demands. Foremost among the new methods is activity-based costing (ABC). ABC is designed to eliminate cross-subsidies between products or services. Because costs are traced by activities across departments and cost centers, costs can also be traced by activities across integrated delivery systems (IDSs). The methodology makes ABC very applicable to combinations of providers including chains, affiliated groups, and IDS participants.

Cost Allocation↗

Casemix payment in the real world of running a hospital.

The Victorian casemix funding initiative has achieved initial success in implementing massive budget cuts while increasing hospital throughput and reducing waiting lists. For hospitals to survive, the relationship between casemix and resource use must be managed and this can only be achieved by the involvement of clinicians. With effective information systems and accommodating clinicians, games to maximise casemix, and hence revenue, will undoubtedly emerge. Side effects may include reduced access to "unprofitable" services, increasing pressure on "unprofitable" clinicians and the wooing of "profitable" ones, increasing difficulty in delivering continuity of care and the politicisation of the diagnosis-related groups pricing system. In the end, State governments will be left with a complex control system without resolving the fundamental dilemma inherent in being both the provider of hospital care and the payer.

Continuity of Patient Care↗

Charity care: do not-for-profits influence for-profits?

This study further examines whether not-for-profit hospitals exert pressure on for-profit hospitals to provide charity care and whether for-profit hospitals react differently than not-for-profit hospitals to managed care pressures and hospital competition in providing charity care. A two equation model is estimated using 1996 data from California hospitals. The results indicate that in mixed ownership markets, for-profit hospitals provide significantly less charity care as not-for-profit hospitals in the market provide more. Unexpectedly, study for-profit hospitals were not more influenced by price competition than other hospitals with respect to charity care. Having a unique role in providing charity care may justify continuing tax exemption for not-for-profit hospitals and enhance interest in payment and other policies with regard to conversions to ensure that not-for-profit hospitals continue to be represented in market areas.

California↗

Total joint project: acute care to home care.

The advent of managed care, decreased reimbursement, and competition among providers has forced acute care institutions to examine care delivery. Clinical paths provide a method that manages patient care toward positive outcomes within a cost-effective environment. A collaborative project for total joint patients beginning with the office visit and continuing through the entire episode of care is described.

Arthroplasty, Replacement↗