Policy entrepreneurship in the Social Transformation of American Medicine: the rise of managed care and managed competition.
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As home care agencies change from cost-based reimbursement to the managed care risk paradigm, many lack experience with organizational resources and functions needed to successfully operate in the managed care environment. This survey assessed the level of "readiness" for managed care reported by 162 randomly selected home care agencies in three mid-western states. Managed care readiness was measured by a 32-item mailed questionnaire addressing clinical, financial, operational, and informational systems within each agency. Higher levels of readiness were significantly related to the perception of being ready, proprietary auspices, and moderate agency size in a multivariate regression model. Agencies with these characteristics appear to be well positioned as home care moves into the managed care environment.
The formation of integrated delivery networks will cause physicians and hospitals to rethink their marketing strategies. As providers align themselves into networks in conjunction with managed care plans, new approaches to marketing will be employed.
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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.
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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.
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Employment-based health insurance is failing. Costs are out of control. Employers have no effective strategy to deal with this. They must think strategically about fundamental change. This analysis explains how employers' purchasing policies contribute to rising costs and block growth of economical care. Single-source managed care is ineffective, and effective managed care cannot be a single source. Employers should create exchanges through which they can offer employees wide, responsible, individual, multiple choices among health care delivery systems and create serious competition based on value for money. Recently introduced technology can assist this process.
OBJECTIVE: To compare perinatal outcomes among the managed care organizations (MCOs) providing care to beneficiaries enrolled in TennCare, Tennessee's capitated Medicaid managed care program. DESIGN: Retrospective cohort analysis. SUBJECTS: Infants born in Tennessee during 1995 to women enrolled in TennCare. PRIMARY OUTCOME MEASURES: Prenatal care use, birth weight (BW), death in the first 60 days of life, and delivery of extremely low BW (<1000 g) infants in hospitals without level 3 neonatal intensive care units. RESULTS: During 1995, 34 402 infants were born to mothers enrolled in TennCare. The MCOs differed widely in the demographic characteristics of their enrollees. In addition, there were small differences in prenatal care utilization, but no differences in BW outcomes among the MCOs. In multivariate analysis, however, infants born to women enrolled in 1 MCO were 2.8 times more likely to die in the first 60 days of life than were infants born to women enrolled in the largest MCO (OR: 2.81; 95% CI: 1.31-6.03). Women enrolled in this same MCO seemed to have a higher proportion of extremely low BW (<1000 g) infants delivering in a hospital lacking a level 3 neonatal intensive care unit (38% vs 20% in the largest MCO). CONCLUSION: The differences among MCOs in early infant death and in the delivery of high-risk infants in hospitals lacking appropriate neonatal facilities suggest that monitoring of care delivery to vulnerable children should include assessment of appropriate use of specialized services.
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OBJECTIVE: This study evaluated the efficacy of a nurse-care management system designed to improve outcomes in patients with complicated diabetes. RESEARCH DESIGN AND METHODS: In this randomized controlled trial that took place at Kaiser Permanente Medical Center in Santa Clara, CA, 169 patients with longstanding diabetes, one or more major medical comorbid conditions, and HbA(lc) >10% received a special intervention (n = 84) or usual medical care (n = 85) for 1 year. Patients met with a nurse-care manager to establish individual outcome goals, attended group sessions once a week for up to 4 weeks, and received telephone calls to manage medications and self-care activities. HbA(lc), LDL, HDL, and total cholesterol, triglycerides, fasting glucose, systolic and diastolic blood pressure, BMI, and psychosocial factors were measured at baseline and 1 year later. Annualized physician visits were determined for the year before and during the study. RESULTS: At 1 year, the mean reductions in HbA(lc), total cholesterol, and LDL cholesterol were significantly greater for the intervention group compared with the usual care group. Significantly more patients in the intervention group met the goals for HbA(1c) (<7.5%) than patients in usual care (42.6 vs. 24.6%, P < 0.03, chi(2)). There were no significant differences in any of the psychosocial variables or in physician visits. CONCLUSIONS: A nurse-care management program can significantly improve some medical outcomes in patients with complicated diabetes without increasing physician visits.
While health maintenance organizations may offer the best way to manage costs, experts say that their own management leaves a lot of room for improvement. HMOs are beginning to win back control of their companies with incentives aimed at attracting and retaining the leadership they need to counter the industry's obstacles.
Managed-care programs with utilization reviews may be the best approach to cost cutting. But to really curb costs, providers, insurers, employers and employees must form partnerships to overcome the outrageous inflation in the U.S. health-care system.
In the July/August 1990 issue of FAHS Review, a feature article focused on the new strategies needed for managing hospitals in the '90s. Suffering from the combined punch of restricted utilization and reduced reimbursements, hospitals can't help but feel the financial crunch created by these predicaments. Strategies for economic survival have included trying to maximize revenues by either increasing volume or reducing unnecessary expenses. But increasing price through rate increases or cost-shifting has limited potential in today's medical market. Increasing volume via participation in managed care programs is a risky maneuver at best, based on the extent of the volume-discount trade-off. Limiting expenses traditionally has been accomplished by following sound business cost-containment techniques, maximizing FTEs and productivity, improving staffing patterns at all levels of the organization, and eliminating non-profitable services. But there is one additional item that should be taken into consideration--the need to reduce expenses by improving efficiency in medical operations.
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