Purchasers and the impact of managed care on physicians

In much the same way that demands by managed care organizations are shaping the way physicians practice, health care purchasers impact how managed care organizations operate. Corporations purchase managed health care through their employee benefits programs, and understanding the language, objectives, and limitations of these purchasers is essential to grasping the forces influencing managed care organizations and the modern practice of medicine. The emergence of value-based purchasing as a strategic corporate approach to health benefits programs will dictate the forces on physicians, hospitals, and managed care organizations for years to come. These forces have already led to price reductions, health plan accreditation, employee-directed report cards, outcomes management, and organized systems of care, and they will determine the broad outlines of the emerging U.S. health care system.     

What's ahead on quality: the managed care perspective

Without question, the most important processes occurring in managed care that can be expected to affect quality are accreditation and the effort to obtain and compare uniform information on quality of care across health care organizations, in short, to create "report cards." For both processes, 1993 was an extremely productive year, and 1994 promises to be even more so. These two processes fit hand-in-glove--one is designed to determine that managed care organizations are equipped to serve the public and to implement better health care programs, while the other is designed to help them understand and improve their own performance. Although, in the short run, managed care organizations may view both these efforts as additional costs, in the long run, both should lead to a better industry and to better care for the public.     

How should managed care physicians be paid?

When paying a physician for medical or surgical services, most patients expect the traditional bill or charge for that encounter or visit. While most people also pay health insurance premiums, few patients expect to prepay for their health care. But that is the foundation of most managed health care systems-prepaid medicine. PPOs, IPAs, and HMOs are typically health care providers linked together to provide services to a set population for a specific prepaid fee or "capitation" payment. Other providers contract with these managed care insurers to receive a predetermined and often "discounted" professional fee for services. These managed care organizations have already gone through a number of stages in determining how physicians are to be compensated for their services, and further changes loom on the horizon.     

Building a framework to transform health care

Advances in information technology are helping clinicians to realize the promise of evidence-based medicine, which includes benchmarking, outcomes monitoring, predictive modeling, and clinical pathways. By integrating individual clinical expertise and the best available research, physicians can apply the disciplines and techniques of clinical research to their practice of medicine, one patient at a time. Evidence-based medicine also allows organizations to move forward with continuous clinical quality improvement programs. Standards, open systems, data warehouses, and evidence-based medicine help a health care delivery system obtain the technical infrastructure, decision-making processes, analytical skills, clinical databases, predictive models, and clinical pathways. With this information technology (1) physicians can practice evidence-based medicine and (2) the delivery system can profile clinicians' practice habits for managed care contracting and continuous clinical quality improvement.     

Veteran's health care: time for a change?

The Department of Veterans Affairs' mission is "to care for him who are shall have borne the battle for his widow and orphan." The Veterans Health Administration comprises 172 hospitals that are the hub of the health care delivery system. It is the largest provider of graduate medical education, and one of the major research organizations in the United States. The medical care budget exceeds $17 billion annually. Most of the persons cared for are not legally entitled to this health care based on service connected disability. The utilization of acute care hospital beds appears excessive when compared to that obtainable with managed care for Medicare or commercial insurance beneficiaries--the cost per member per month is three times higher. There may also be exploitation of the Veterans Administration hospitals by university medical schools. The Veterans Health Administration is a very expensive way to deliver care to entitled service connected veterans. Therefore, it is suggested that privatization be considered as an alternative vehicle for delivering health care.     

Capitation and informatics

When physicians, hospitals, and allied health professionals bill for services they render, their information processing requirements are relatively simple, at least compared to those of capitated organizations. When payers (insurers or employers) accept financial risk for the health care services of beneficiaries, they have usually invested in claims processing, membership tracking, and, under managed care, utilization review and provider profiling systems. But payers, for the most part, have not invested in electronic collection of clinical information about beneficiaries, nor have they tended to keep all claims they have processed in electronic form for study after accounts are settled and payments disbursed. In this article, we will explore why informatics is so important to capitated organizations and why payers that have traditionally taken financial risk for insuring the health care costs of populations are also learning about the importance of informatics.     

Practicing managed care in the academic medical center

The purpose of this article is to outline the contrasts between the traditional AMC and an organization oriented toward the delivery of population-based managed care. Academic medical centers differ from one another considerably in the extent to which they serve as quaternary care community resources, the degree to which they emphasize primary care in training and care delivery, and the amount of research undertaken. Nor is there a single organizational structure for managed care; successful managed care is practices in IPAs, multispecialty groups, PHOs, and staff-model HMOs. Nonetheless, the contrasts outlined here between AMCs and managed care organizations (MCOs) are valid in most cases.     

Confronting the disruptive physician

Ignoring disruptive behavior is no longer an option in today's changing health care environment. Competition and managed care have caused more organizations to deal with the disruptive physician, rather than look the other way as many did in years past. But it's not an easy task, possibly the toughest of your management career. How should you confront a disruptive physician? By having clearly stated expectations for physician behavior and policies in place for dealing with problem physicians, organizations have a context from which to address the situation.     

Wanted--seasoned veterans. Diamonds in the rough need not apply

Health care organizations looking for physician executives prefer seasoned veterans--doctors who have already done the job. They want job-specific experience. Most organizations do not provide training grounds and orderly career ladders for aspiring physician executives. The Permanente Medical Groups, Family Health Plans, and some very large group practices are exceptions, but, for the most part, rising medical directors in these organizations stay with them. Most hospitals are not large enough to have associate or assistant medical directors or an environment that could provide a training ground for rising physician executives. On the other hand, hospitals, larger group practices, health insurance companies, and managed care organizations provide ample opportunities for nonphysician managers to train, gain experience, and climb the ladders. How can the novice physician executive break into the world of management and begin establishing management credentials? The author provides some key steps that can lead to success.     

Dealing with the demands of change

If evidence of the changes occurring in and confronting the health care field were needed, it was provided in abundance at the College's Perspectives in Medical Management meeting in Chicago in May. The presentations and the discussions among members buttressed the feeling that the health care field is proceeding through a period of transformation. The evolving system will be anchored on managed care, with special emphasis on the word "managed." The accoutrements of managed care--case management, demand management, utilization management, clinical guidelines and protocols, capitation budgeting, and the like--dominated discussion. The "business" of health care is proceeding apace. Maintaining a balance between the financial and quality elements of health care delivery has never been more important. And the definition of that balance will be determined at the local and regional levels. Federal initiatives are temporarily in abeyance. The challenge for physician executives is to assume leadership in moving their organizations, and thus the health care system, toward a new design that corrects present deficiencies and positions both to respond more effectively to the health care market. While it is not possible to cover all of the more than 60 speakers who addressed the meeting, this report, through presentation of the ideas of some key presenters, is aimed at measuring at least the boundaries of the challenges that lie ahead.     

Provider-sponsored networks. Physicians organize for direct contracting

The Provider Service Network (PSN) concept is part of a wider movement by physicians to restructure for managed care to improve bargaining leverage for America's more than 600,000 active medical practitioners. Direct contracting has a simple appeal--no intermediaries. Imagine managed care contracts without the costs or hassles of an HMO or third-party intermediary. The PSN is a new form of managed care organization, but without the middleman. Savvy, self-insured employers, business coalitions, and government health programs are the potential "buyers." Doctors and hospitals are the "sellers," organizing provider networks on a regional and statewide basis. Up for grabs are over 225 million consumers whose health benefits are currently managed by insurance plans, HMOs, and third parties. This new marketplace of direct contracting may sound to doctors like the Garden of Eden, but there is plenty of opposition. PSNs will not become a national trend without a fight.     

Awards recognizing quality in health care

A variety of awards have been recognizing business, public, and educational sectors for their quality efforts. As of 1995, 10 states include the health care sector in their programs. The national Malcolm Baldrige Award now accepts volunteer applications from the health care sector as a prelude to their inclusion in 1996 in the regular award program. An evaluation model is common to the several award programs that describes how quality is enabled, the systems that make it work, and the desired goals in seven categories. Each category has criteria that allow the flexibility desired by individual programs. The important features are the self-examination required of the organization in preparing the application and the feedback reports to all applicants that note the strengths of applicant and the areas for improvement by the applicant. Health care organizations are encouraged to participate in these award programs as part of their individual improvements efforts.     

In-house recruiters: on the inside looking out

Few smaller hospitals or managed care companies have in-house physician recruiting departments. Their low hiring volume simply doesn't support such an operation. But most health systems and large managed care organizations say they literally couldn't afford to be without an internal system for the recruitment of physician executives and other health care professionals. They also claim they can find a better candidate faster than their counterparts on the outside. A number of them explain why.     

Complementary and alternative medicine. Integrative medicine: business risks and opportunities.

Much of the buzz over integrative medicine is well deserved. The opportunities seem to outweigh the risks, but superior management skills are needed to guide these programs through adolescence into clinical and business maturity. By carefully considering the staffing, team building, compensation methods, marketing, and program evaluation and development issues explored in this article, health care and physician executives should be able to steer between the rocks on their way to integrative medicine decisions that are right for their organizations. Many claim that integrative medicine has the potential to reshape health care delivery in a more patient-centered direction. While this may be true, such programs must prove themselves from financial and clinical operational perspectives in order to achieve this potential. Luminary clinical skills are not enough to guarantee the survival of such programs--a strong clinical base of expertise in alternative therapies is a key success factor. As with any health care venture, there are no substitutes for clinical excellence or sound management.     

Partnerships in health care: creating a strong value chain

The health care climate is one of stormy relations between various entities. Employers, managed care organizations, hospitals, and physicians battle over premiums, inpatient rates, fee schedules, and percent of premium dollars. Patients are angry at health plans over problems with access, choice, and quality of care. Employers dicker with managed care organizations over prices, benefits, and access. Hospitals struggle to maintain operations, as occupancy rates decline and the shift to ambulatory care continues. Physicians strive to assure their patients get quality care while they try to maintain stable incomes. Businesses, faced with similar challenges in the competitive marketplace, have formed partnerships for mutual benefit. Successful partnerships are based upon trust and the concept of "win-win." Communication, ongoing evaluation, long-term relations, and shared values are also essential. In Japan, the keiretsu contains the elements of a bonafide partnership. Examples in U.S. businesses abound. In health care, partnerships will improve quality and access. When health care purchasers and providers link together, these partnerships create a new value chain that has patients as the focal point.     

Is leadership born or made?

Is leadership born or made? By profiling three colleagues who made the transition from clinician to top-flight executive in a health care organization, the author provides case studies from which to discuss leadership issues. An evolutionary pattern has developed with respect to physicians changing careers: The first model was the medical director, followed by the vice president for medical affairs, and finally the move to managing the health care system, group practice, or managed care organization. Are physician executives fundamentally different from clinicians in terms of leadership characteristics? What are the essential qualities needed to lead health care organizations? These questions are explored in-depth.     

Legal implications of managed care arrangements

Prior to the 1980s, managed care was virtually nonexistent as a force in health care. Presently, 64 percent of employees in America are covered by managed care plans, including health maintenance organizations (20 percent) and preferred provider organizations (44 percent). In contrast, only 29 percent of employees were enrolled in managed care plans in 1988 and only 47 percent in 1991. To date, the primary reason for this incredible growth in managed care has been economic-market pressure to reduce health care costs. For the foreseeable future, political pressures are likely to fuel this growth, as managed care is at the center of President Clinton's national health care plan. Although there are numerous legal issues surrounding managed care, this article focuses primarily on antitrust implications when forming managed care entities. In addition, the corporate practice of medicine doctrine, certain tax issues, and the fraud and abuse laws are discussed.     

Credentialing in managed care

Through the use of managed care techniques in recent years, the insurance industry has tried to bring the runaway costs of medical care under control. The result of this control effort is system access limitations, compared to the full choice indemnity plans of the past. This limited system access has now clearly moved HMOs and other managed care organizations into the category of "potentially liable health care entities," based on patient steerage, economic disincentives, and limited choices of the plan's participating providers and facilities. Just as hospitals have had to exercise rigorous care in the credentialing of members of their medical staffs, managed care organizations will have to ensure that the providers they use meet acceptable standards of competence.     

Organizational Behavior Management in Large Residential Organizations

ABSTRACT

This paper suggests larger residential organizations have a unique contribution to offer people with developmental disabilities who require managed environments or research solutions to their living needs. It claims no organization should be managed to be “institutional” regardless of its size, but that size alone is not the sole determinant of self-motivated service delivery. A move toward adoption of short-term goals geared to the immediate benefit of people with developmental disabilities and away from more traditional yearly developmental goals is cited as the key to keeping residential organizations focused on the consumers of their service. However, in order to utilize the unique advantages of larger organizations, these organizations will need to solve the problems created by having large groups of people living in close proximity and managed by multiple managers. A brief review of six general steps to organizational management is offered as the outline for effective management. An emphasis is placed on a need for immediate supervisors to have upper level administrator support to carry out these six managerial steps and to receive continuous feedback from consumers and staff on the acceptability of this service. In addition, because of their large size, history of abuses, and/or lack of consumer self-advocacy, larger residential organizations appear to have a special responsibility to show how they emphasize the concerns of their consumers over the institutional concerns of organizational survival.     

Physician leadership. How do physician executives view themselves?

Most physician executives today have acquired substantial management training and experience, and many have worked with and relied on the expertise of mentors for their career guidance and development. Physician executives are actually becoming executives who happen to be physicians. They view themselves first as leaders, then as physicians, and finally as managers. That is a remarkable transformation in perception. To chronicle this process, Witt/Kieffer, Ford, Hadelman & Lloyd conducted a national survey this spring among senior physician executives in both payer and provider organizations. The data provide a "snapshot" of their role, and may also suggest some future scenarios for the industry. The primary reasons for choosing to pursue a management role noted by most participants include a desire to be part of the health care solution and an interest in management and leadership challenges.