Significant trends in managed care

Significant trends in managed care.

Carl Stuart

Stuart Medical series

Introduction.

Market forces do create shifts in the structure, organization and conduct of healthcare business. They have also enabled the purchasers of healthcare to demand competitive prices for the services they receive from their providers (Sundar, 2013). This has led to the development of novel strategies that have been used in purchasing healthcare; and this in turn had accelerated the rate of growth of managed care (Feldstein, 2011).

Managed health care is a collective designation that describes the various types of financing systems that are used to lower the healthcare cost for an MCO (managed care organization), while contemporarily improving the delivery of quality healthcare to the enrollees of that MCO. Managed care does impose controls, organization, accountability and quality measurements in healthcare delivery in order for the consumers to achieve their stated goal of access to quality and cost-effective healthcare (Kongstvedt, 2012). Thus, the strategies utilized in managed care have altered and transformed the overall organization of healthcare and its associated delivery systems (Feldstein, 2011).

Trends in managed care.

There are three significant trends in the managed healthcare market that have substantially influenced healthcare expenditures and MCOs evolution. These trends are: flexibility in managed care arrangements; emergence and expansion of provider groups owned by physicians; and the growth of for-profit MCOs (Kongstvedt, 2012). Each of these trends is discussed in detail below.

1.      Flexibility in managed care arrangements.

Flexibility in managed care arrangements has broadened the selection scope for healthcare consumers. For the employed population, this flexibility has enabled them to move away from the closed-networked plans of health maintenance organizations to the more flexible plans such as the preferred provider organization (PPO) and point of service (POS) plans. This observation is also supported by statistics which have shown that the enrollment rate for POS and PPO plans offered via employer-sponsored packages have increased by 11% and 5% respectively within a two-year period covering 1993-1995.  Studies have also showed that the overall enrollment into the restrictive staff-model health maintenance organizations (HMOs) managed care plans have significantly dropped since the inception of flexible managed care plans. This has been attributed to the fact that the liberal HMOs began diversifying their portfolio by offering alternative plans such as PPO and POS.  Such diversification enabled these HMOs to fulfill the evolving healthcare demands of their consumers thereby enabling the HMOs to maintain their competitiveness in the managed care market (Kongstvedt, 2012).

Open access plans have also gained popularity. This is due to the fact that in these plans, the patient is at liberty to seek for the services of a medical specialist without prior approval. These trends towards more flexible and loosely affiliated healthcare plans have allowed consumers to broaden their choice of providers (Kongstvedt, 2012).

Though these managed care plans are more expensive compared to the traditionally rigid HMOs, their increased uptake by the general population does indicate that the consumers are dissatisfied with the near monopoly that these traditional HMOs had on the choice and access to healthcare providers (Feldstein, 2011).

2.      Emergence and expansion of provider groups owned by physicians.

The economically adverse effects of the demands made by healthcare provider groups have necessitated the formation of physician-owned provider groups. These provider groups are more responsive to the needs and demands of the managed healthcare market. Moreover, the banding together of physicians, medical specialists and hospitals have enabled them to form a cohesive and more savvy negotiation team that can favorably negotiate with MCOs; or even create a managed care-like entity that can compete with MCOs in the market (Wolper, 2012).

Currently, the most prominent types of physician-owned provider organizations are the physician hospital organizations (PHO) and the physician practice management organizations (PPM). A PHO is a non-profit organization built upon the core value of community service. It is staffed by physicians who have direct contracts with hospitals, and these contracts enable them to provide patient care services. On the other hand, the PPM is a for-profit entity built upon the esteemed traditions of physician entrepreneurship. In the PPM, the physician-managers do develop the contract arrangements between various hospitals and their medical practices. A significant consequence of the growth and expansion of these physician-owned provider groups is that more MCOs have entered into non-exclusive contracts with them, and this has resulted in the attenuation of the bargaining power of these MCOs in relation to physician payments (Wolper, 2012).

3.      Growth of for-profit MCOs.

For-profit MCOs have had an impact on the healthcare delivery sector. Their exponential growth is exemplified by the fact that in 1981, they represented only 18% of all healthcare plans; while in 1995, they represented about 71% of all healthcare plans. These MCOs are predominant in the loosely integrated and/or affiliated managed care arrangements (Kongstvedt, 2012).

These MCOs must serve both patients and its shareholders; and as such its potential managed care benefits are eroded by the acute need to maximize profits (Feldstein, 2011). Traditional non-profit healthcare providers have provided healthcare benefits to the uninsured and special needs populations, while concurrently assessing the healthcare needs of the community; and in the process they established trust within the communities that they serve. However, analyses have shown that investor-owned MCOs are less likely to establish trust within the communities, and this has impacted negatively on the quality of healthcare they provide (Sundar, 2013).

Conclusion.

Managed care does impose controls, organization, accountability and quality measurements in healthcare delivery, and this led to the delivery of quality and cost-effective healthcare. The flexibility in managed care arrangements has led to the introduction of open access plans that have broadened the selection scope for healthcare consumers. Also, this flexibility has led to the growth of physician-owned provider organizations which are more responsive to the needs and demands of the managed healthcare market. Currently, the most prominent types of physician-owned provider organizations are the PHO and the PPM. For-profit MCOs have also had an impact on healthcare delivery.

References.

Feldstein, P. J. (2011). Health care economics (7th Ed). Stamford, CT: Cengage Learning.

Kongstvedt, P. R. (2012). Essentials of managed health care. Burlington, MA: Jones & Bartlett Publishers.

Sundar, I. (2013). Introduction to Medical Economics.  New York, NY: Serials Publications.

Wolper, L. F. (2012). Physician Practice Management. Burlington, MA: Jones & Bartlett Publishers.