Healthcare pay: belts tighten--but who feels the squeeze?

A CEO of a renowned acute care facility echoes what many in the healthcare industry are experiencing: "At no time in my memory are we changing so much so fast ... with so little time in which to make changes." The once mighty fortress of the healthcare industry has been invaded by a Trojan horse: managed care. Consequently, managed care has become the primary impetus for industry change. Managed care penetration has increased dramatically over the past few years, and all indications point to its continued growth throughout the US. In 1995, 71% of employees covered under an employer-sponsored health plan received their care through a managed care arrangement (health maintenance organization, preferred provider organization, point of service plan) and only 29% were covered under a traditional indemnity plan. In contrast, 52% of employees had indemnity plans in 1992. Managed care is growing in the public sector as well. Government-sponsored programs such as Medicare and Medicaid increasingly rely on managed care to help control costs and utilization. Though Medicare managed care enrollment today represents only about 10% of the Medicare population, enrollment has more than doubled between 1990 and 1995. Almost every state has some form of Medicaid managed care program in place. Fifteen states have received waivers to mandate that recipients receive care through managed care arrangements, and an additional ten states await federal approval to do the same. Between the years 1993-95, the number of Medicaid beneficiaries enrolled in managed care plans increased 140% to a national enrollment of close to 12 million. In addition to factors in the healthcare field such as uncompensated care, increased outpatient services, excess bed capacity, and restrictions in government reimbursement, the shift to managed care has forced hospitals to find new ways to operate within the healthcare delivery system. In particular, because hospitals' human resource costs are a substantial portion of their budgets, compensation policies are an important component of managing the cost of day-to-day operations. The 1996 Coopers & Lybrand Compensation in the Healthcare Industry Survey summarizes the responses from 207 healthcare organizations, primarily hospitals, in terms of their efforts to survive this constantly changing environment. Respondents included acute care and specialty hospitals, community-based hospitals, academic medical centers, public, and private organizations. The survey addresses operational issues, compensation incentives, special pay, and other compensation-related programs. This article analyzes the results of the Coopers & Lybrand survey.     

Utilization, costs, and access to primary care in fee-for-service and managed care plans

This study compares access to primary care, utilization, and costs among enrollees in four forms of managed care and an indemnity plan. We use 1996 data from a commercial insurer. Most managed care enrollees had better access to primary care services than indemnity enrollees. This access was associated with a generally lower rate of preventable hospitalization. Per capita inpatient costs were notably lower in managed care plans than in the indemnity plan. We describe how health care managers can use readily available administrative data and straightforward statistical techniques to enhance routine monitoring for quality and costs. Policy makers can use this approach to identify health services trends, and to evaluate access to health services for individuals enrolled in various benefit plan types.     

Parity for mental health and substance abuse care under managed care

BACKGROUND: Parity in insurance coverage for mental health and substance abuse has been a key goal of mental health and substance abuse care advocates in the United States during most of the past 20 years. The push for parity began during the era of indemnity insurance and fee for service payment when benefit design was the main rationing device in health care. The central economic argument for enacting legislation aimed at regulating the insurance benefit was to address market failure stemming from adverse selection. The case against parity was based on inefficiency related to moral hazard. Empirical analyses provided evidence that ambulatory mental health services were considerably more responsive to the terms of insurance than were ambulatory medical services. AIMS: Our goal in this research is to reexamine the economics of parity in the light of recent changes in the delivery of health care in the United States. Specifically managed care has fundamentally altered the way in which health services are rationed. Benefit design is now only one mechanism among many that are used to allocate health care resources and control costs. We examine the implication of these changes for policies aimed at achieving parity in insurance coverage. METHOD: We develop a theoretical approach to characterizing rationing under managed care. We then analyze the traditional efficiency concerns in insurance, adverse selection and moral hazard in the context of policy aimed at regulating health and mental health benefits under private insurance. RESULTS: We show that since managed care controls costs and utilization in new ways parity in benefit design no longer implies equal access to and quality of mental health and substance abuse care. Because costs are controlled by management under managed care and not primarily by out of pocket prices paid by consumers, demand response recedes as an efficiency argument against parity. At the same time parity in benefit design may accomplish less with respect to providing a remedy to problems related to adverse selection.     

Switching Swiss enrollees from indemnity health insurance to managed care: the effect on health status and stisfaction with care.

OBJECTIVES. In 1992, most members of a Swiss indemnity health insurance plan were automatically transferred into a newly created managed care organization. This study examined whether this semivoluntary change affected enrollees' health status and satisfaction with care. METHODS. Three groups of enrollees were compared: 332 plan members who accepted the switch (managed care joiners); 186 plan members who opted to maintain indemnity coverage (non-joiners); and 296 persons continuosly enrolled in another indemnity plan (indemnity plan members). Health status, health related behaviors, and satisfaction with care received in the previous year were surveyed at baseline and 1 year later. RESULTS. Health status remained unchanged in all three groups. Smoking prevalence decreased among managed care joiners but remained constant in the other groups. Satisfaction with insurance coverage increased between baseline and follow-up in managed care joiners, but decreased in nonjoiners and indemnity plan members. The latter groups had higher satisfaction with health care, particularly with continuity of care. CONCLUSIONS. A semivoluntary switch from indemnity health insurance to managed care reduced satisfaction with health care but increased satisfaction with insurance coverage. There were no changes in self-perceived health status.     

Medicaid TEFRA option in Minnesota: implications for patient rights

This research studied a special-needs population under age 18 who had both private insurance and Medicaid coverage through the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) option. We found that children with managed care plans, particularly health maintenance organizations (HMOs), tended to incur higher total expenses to TEFRA than children with indemnity plans. Our findings also show that managed care in Minnesota tends to provide the same or marginally better coverage as indemnity plans do for core medical items but much less coverage for ancillary items such as home care, therapies, and durable medical equipment.     

Indemnity plans rate higher in worker satisfaction

Despite a cost disadvantage, employees enrolled in group indemnity plans are happier with their medical care than are their colleagues who are enrollees of health maintenance organizations, a new survey shows. However, as purchasers continue to confront annual double-digit increases in indemnity costs, the shift toward managed care is expected to continue.     

Trends in managed care and managed competition, 1993-1997

According to the recent literature, we are experiencing a managed care "revolution," and managed competition is increasingly being embraced by private- and public-sector policymakers. Using two large employer health insurance surveys, this paper presents new estimates that both confirm and add to our understanding of changes taking place in employment-based health plans. The dramatic shifts in enrollment from indemnity to managed care largely reflect employers' choices about the types of plans to offer. Employees are limited in the number and types of plans from which they can choose. When choice is available, it is generally not governed by managed competition principles.     

The effect of normative social forces on managed care organizations: implications for strategic management

Drawing on institutional theory, this study examines how adherence to a number of "institutional" and "technical" environmental forces can influence the business success of managed care organizations (MCOs). The standards studied include: (1) institutional forces: socially accepted procedures for delivering care (access to quality care, availability of information, and delivery of care in a personal manner); and (2) technical forces: industry standards for cost control and efficient use of financial and medical resources. The most significant finding is that successful MCOs must conform to both institutional and technical forces to be successful. MCOs that conform to either one or the other type of standard were no more successful than those that conformed to neither. These findings have several important implications for MCO strategy. First, to be successful, MCO executives must understand the external environment in which they operate. They must anticipate and respond to shifts in that environment. Second, this understanding of the external environment must place equal emphasis on societal demands (e.g., for accessible care and information) and on technical demands (e.g., for cost-efficient care). These findings may well reflect that once managed care penetration reaches relatively high levels, marketshare can no longer be gained through cost-efficiency alone; rather, enrollee satisfaction based on societal demands becomes a key factor in maintaining and gaining marketshare. Institutional theory provides' some strategies for accomplishing these goals. Cost-containment strategies include implementing policies for cutting costs in areas that do not affect the quality of care, such as using generic drugs and reducing administrative excesses and redundancies. At the same time, MCOs must implement strategies aimed at improving conformity to prevailing societal perceptions of appropriate care, including providing patients more freedom to choose their physicians and encouraging and rewarding care providers for being friendly and personable. An MCO should work to inform the public of the organization's efforts to provide high-quality, low-cost medical care in a friendly, convenient manner.     

Does managing behavioral health care services increase the cost of providing medical care?

This study examined the possibility that managing behavioral health care services achieves savings by cost shifting—by denying care or impeding access to care—and in that way encouraging patients to seek needed behavioral health care in the medical care system. In 1993, a large industrial company carved out employee behavioral health care from its unmanaged, indemnity medical care benefits and offered employees an enhanced benefit package through a managed behavioral health care company. This study compared the use and cost of behavioral health care and medical care services for two years before the carve-out and for three years afterward. The rate of behavioral health care usage remained the same or increased after the carve-out, while the cost of providing the care decreased. Controlling for trends that began before the inception of managed behavioral health, medical care costs decreased for those using behavioral health care services. No evidence supporting cost shifting was found.     

Lean Six Sigma in health care and the challenge of implementation of Six Sigma methodologies at a Veterans Affairs Medical Center

Six Sigma and Lean Thinking are quality initiatives initially deployed in industry to improve operational efficiency leading to better quality and subsequent cost savings. The financial rationale for embarking on this quality journey is clear; applying it to today's health care remains challenging. The cost of medical care is increasing at an alarming rate; most of these cost increases are attributed to an aging population and technological advances; therefore, largely beyond control. Furthermore, health care cost increases are caused by unnecessary operational inefficiency associated with the direct medical service delivery process. This article describes the challenging journey of implementing Six Sigma methodology at a tertiary care medical center. Many lessons were learned; however, of utmost importance were team approach, "buy in" of the stakeholders, and the willingness of team members to change daily practice and to adapt new and innovative ways how health care can be delivered. Six Sigma incorporated as part of the "company's or hospital's culture" would be most desirable but the learning curve will be steep.     

Improving the quality of workers' compensation health care delivery: the Washington State Occupational Health Services Project

Researchers and health policy analysts in Washington State set out to determine the extent to which administrative process changes and delivery system interventions within workers' compensation affect quality and health outcomes for injured workers. This research included a pilot project to study the effects of providing occupationally focused health care through managed care arrangements on health outcomes, worker and employer satisfaction, and medical and disability costs. Based on the results, a new initiative was developed to incorporate several key delivery system components. The Washington State experience in developing a quality improvement initiative may have relevance for health care clinicians, administrators, policymakers, and researchers engaged in similar pursuits within the general medical care arena.     

北京市基层居家医疗护理服务供给现状分析

基层医疗卫生机构是提供居家医疗护理服务的重要主体。近年来,北京市基层居家医疗护理服务的供给能力有了较大提升,但仍存在政策支撑不足、基层医疗卫生机构建设仍待加强、居家医疗护理服务供给不充分不平衡等问题,应通过加强政策支持、完善行业标准或制度规范、加强基层医务人员队伍建设等,不断提升基层医疗卫生机构的居家医疗护理服务能力。     

The rise and fall of a Kaiser Permanente expansion region

Prepaid group practices (PGPs) multispecialty groups that vertically integrate the organization, financing, and delivery of health services to a specific population—were once viewed as the most cost‐effective and efficient model for achieving national health care reform (e.g., McNeil and Schlenker 1981 ; Saward and Greenlick 1981 ). Policy reformers who extolled the benefits of health maintenance organizations (HMOs) in the late 1970s and early 1980s emphasized in particular the cost and quality advantages of PGPs vis‐à‐vis solo and single‐specialty fee‐for‐service (FFS) providers. A comprehensive review of comparative empirical studies (HMOs versus FFS) since 1950 concluded that the total costs for HMO enrollees were 10 to 40 percent lower than those for comparable enrollees with conventional indemnity insurance ( Luft 1978 ). Although PGPs did not originate as a competitive response to fee‐for‐service indemnity health insurance, many proponents viewed them as a promising means of helping contain rising medical costs, encouraging a more rational allocation of health care resources, and improving the access to and delivery of quality services ( McNeil and Schlenker 1981 ).     

Mental health and substance abuse parity: a case study of Ohio's state employee program

BACKGROUND: In the United States, insurance benefits for treating alcohol, drug abuse and mental health (ADM) problems have been much more limited than medical care benefits. To change that situation, more than 30 states were considering legislation that requires equal benefits for ADM and medical care ("parity") in the past year. Uncertainty about the cost consequences of such proposed legislation remains a major stumbling block. There has been no information about the actual experience of implementing parity benefits under managed care or the effects on access to care and utilization. AIMS OF THE STUDY: Document the experience of the State of Ohio with adopting full parity for ADM care for its state employee program under managed care. Ohio provides an unusually long time series with seven years of managed behavioral health benefits, which allows us to study inflationary trends in a plan with unlimited ADM benefits. METHODS: Primarily a case study, we describe the implementation of the program and track utilization, and costs of ADM care from 1989 to 1997. We use a variety of administrative and claims data and reports provided by United Behavioral Health and the state of Ohio. The analysis of the utilization and cost effect of parity and managed care is pre-post, with a multiyear follow-up period. RESULTS: The switch from unmanaged indemnity care to managed carve-out care was followed by a 75% drop in inpatient days and a 40% drop in outpatient visits per 1000 members, despite the simultaneous increase in benefits. The subsequent years saw a continuous decline in inpatient days and an increased use of intermediate services, such as residential care and intensive outpatient care. The number of outpatient visits stabilized in the range of 500-550 visits per 1000. There was no indication that costs started to increase during the study period; instead, costs continued to decline. A somewhat different picture emerges when comparing utilization under HMOs with utilization under a carve-out with expanded benefits. In that case, the expansion of benefits led to a significant jump in outpatient utilization and intermediate services, while there was a small decrease in inpatient days. Insurance payments in 1996/1997 were almost identical to the estimated costs under HMOs in 1993. CONCLUSIONS: In contrast to the emerging inflation anxiety regarding overall health care costs, managed care can provide long-run cost containment for ADM care even when patient copayments are reduced and coverage limits are lifted. This may differentiate ADM care from medical care and reasons for this difference include the state of management techniques (more advanced for ADM care), complexity of treatments (much higher technology utilization in medical care) and demographic factors (medical, but not behavioral health, costs increase as the population ages). IMPLICATIONS FOR HEALTH POLICY: The experience of the state of Ohio demonstrates that parity level benefits for ADM care are affordable under managed care. It suggests that the concerns about costs that have stymied ADM policy proposals are unfounded, as long as one is willing to accept managed care. IMPLICATIONS FOR RESEARCH: The continuing decline in costs raises concerns that levels of care may become insufficient. While concerns about costs being too high dominate the policy hurdle for parity legislation at this moment, the next step in research is to address quality of care or health outcomes, areas about which even less is known than about costs.     

Evaluation of the technology of health care delivery under new economics

The development and improvement of technology in health care delivery and its utilization in applied public health is a prerequisite for improving the quality of curative and diagnostic process, rational use of material and technical resources and medical personnel of curative and preventive establishments under new economic methods of public health management. The volume standards of health care delivery comprising the standard, optimum sets of measures for patients including the list of diagnostic and treatment procedures can be considered as the main instrument and the major criteria in evaluating the completeness and quality of health care delivery at hospital stage and at different regional levels.     

Health care alliances and alternative dispute resolution: managing trust and conflict

The U.S. health care industry has entered an unprecedented era of alliance activity. These alliances involve medical groups and hospitals, as well as many of the newer health care entities such as managed care organizations and integrated delivery systems. The increase in organizational collaboration has resulted in an increase in organizational conflict. Alternative dispute resolution (ADR) techniques can serve as a valuable tool for mitigating this type of conflict. The role of ADR is to refocus partners' attentions away from an adversarial posture and toward a complementary existence. This will permit the partners to realize the intended outcomes of the collaboration.     

Privatizing public mental health and substance abuse services: issues, opportunities, and challenges

Much like the medical care system, delivery systems for mental health and substance abuse services are being transformed rapidly by managed care. Public sector systems are now facing challenges to transfer service delivery responsibilities to private managed behavioral health care organizations as a way of containing treatment costs and realizing operational efficiencies. These privatization efforts entail a range of quality management issues that are specific to mental health and substance abuse problems, treatments, and clients.     

Influences of a future corporate health system on medical education

Corporate attention to problems in health care delivery has grown over the last decade. As this focus by the "purchasers" of medical care increases business and industry influence on health policy decisions, significant changes may come about in the delivery system, and eventually in medical education. Whether the evolving corporate design for health care best serves consumer interests is less clear than how the medical profession and medical educators will fare in the next twenty years.     

Managed care: a critical review.

Widely perceived and accepted as the simplest way to control escalating health care costs, managed care is the way health care is now, and will continue to be, delivered in the foreseeable future. Growing numbers of Medicaid beneficiaries are required to participate in managed health care and Medicare beneficiaries are strongly encouraged to do so. In essence, America's poor and elderly are serving as the vanguard for health care reform. This article describes the evolution of managed care in the United States, then examines the implications of the transfer of financial risk to health care providers; the impact of managed care on existing inequalities in access to health care and services; the quality of managed care compared with fee-for-service arrangements; and the delivery of mental health services under managed care. We suggest that the role of the social work profession in managed care should be to mitigate the costs borne by clients, and offer specific suggestions for advocates in this arena.