The managed care world order. The revolution is here

What are the belief clashes caused by the shift from a fee-for-service medical setting to a managed care environment? Right now, most physicians are enculturated in the old world order that emphasizes physician autonomy, control, security, and specialness. Physicians feel squeezed--by third-party payers wanting to be involved in the decision-making process of care delivery and by a new focus on teams versus the captain of the ship role. When traditional expectations clash with a changing reality, most people feel stressed. Physicians are no exception. If physicians have clear and realistic expectations, they can better cope with the uncertainties they face. And, the only realistic expectation in the medical profession is increasing uncertainty. Here are 10 predictions of what is happening in the health care industry--a list of the belief clashes that are so unsettling to those practicing medicine.     

Managed care liability.

Debate is heating up concerning proposals that patients have the right to sue their managed care plans for damages from wrongful denial of benefits or delays in care. Some states have recently passed legislation to address this issue and it is expected to be an area of intense legislative debate during this year. As managed care entities increasingly enter the realm of medical decision-making, the additional burden of this responsibility is taking shape. Whether managed care plans should be treated like providers of care and be held accountable for decisions that impact patient outcomes, or be viewed only as insurers is a policy question of immense proportion.     

HMO marketing: the Cadillac and the Chevy.

The author's bias and goal is to create an effective group practice model. Managed care will play an important role in this model. This article is designed to examine the role of an HMO in this model and to provide a framework for examining the HMO-group practice relationship. The bottom line question : Are HMOs the most effective group practice vehicle for delivering managed care?     

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.     

Health care's power brokers in the 21st Century. Interview by Donna Vavala

Health care has undergone turbulent change in the 20th Century. In addition to dramatic pharmaceutical and technological advances, the entire health care delivery system has been significantly improved. Through all the turmoil, hospitals have been at the center of the health care universe. But, as the 21st Century approaches, that may change, too. What will become of hospitals, which for most of this century have played a commanding role? Will managed care organizations and group practices come out on top? And, once the new power broker takes over, what will be the impact on providers, insurers, and the government, and how will their relationships to each other change? Jeff Goldsmith, PhD, President of Health Futures, Inc., Bannockburn, Ill., and health care futurist, examines tomorrow's health care delivery system and makes some eye-opening predictions.     

Evaluating risk: global fees and episodic care

In 1999, two articles in The Physician Executive -- "Part I: Global Theory and the Nature of Risk (July-August)." and "Part II: Towards a Choice-Based Model of Managed Care (October-November)" -- outlined the flaws of orthodox managed care theory and highlighted the unique advantages of moving to a genuinely market-based model, which included the concept of direct contracting for integrated episodes of care. This follow-up focuses on comparing an episode contracting system to a traditional capitated program and outlines the features that make this approach much more attractive to physicians, payers, and most importantly patients.     

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.     

25 Health care trends. What's hot,what's not,and what does the future hold

As we usher in 2003, America's health care system remains in a chaotic state. Will managed care live or die? Will quality improvement efforts pay off? Are we ready for the next bioterrorism attack? Will the shortage of physician soon rival the shortage of nurses? To help gauge where health care stands today and what the future holds, The Physician Executive asked doctors who serve on ACPE's peer review panel to list the hottest health care trends in the U.S right now. Then, we took the list to three respected health care futurists -- Leland Kaiser, PhD, Jeff Goldsmith, PhD, and Russel Coile, MBA -- and asked them for their insights on the trends. Yes, Kaiser, Goldsmith and Coile are opinionated. Yes, they're controversial. But no matter whether you agree or disagree with their views, the three health care futurists' comments could spark discussions that will help shape U.S. health care this year and beyond. The trends are presented in no particular order.     

Demand rising for medicine's rarest birds

The prognosis from most quarters is that the U.S. health care delivery system is moving inexorably toward managed care. The final form that managed care takes under whatever health reform measure finally takes shape in Washington is still in doubt, but it is clear that care will be managed in the future. It also seems increasingly clear that the system evolving will require more primary care providers, and that they will occupy some very key decision-making roles in the clinical firmament. In this article, staff writer Donna Vavala brings together the thoughts and predictions of several health care leaders on this critical topic in medical management.     

Strategic issues requiring public accountability: food for thought

Although the exact outline of U.S. health reform has become fuzzy because of political events, it seems clear that major changes in the manner in which health care is delivered and financed are under way. The initiative for the most part has been assumed by state government and by the health care field itself, as managed care becomes ever more entrenched and the health care system becomes ever more integrated. An expected outcome of these changes will be demands for greater public accountability on the part of health care providers and organizations. In this article, the author discusses some of the issues--professional compensation, documenting community service, ensuring public input into planning efforts, economic credentialing and quality of care, and managing ethics under managed competition--that will have to be addressed at the local level as these shifts take place.     

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.     

Antitrust concerns in managed care provider negotiations. United States v. A. Lanoy Alston, DMD, P.C., et al

Contract negotiations between managed care organizations and providers are potential legal traps, loaded with antitrust implications. A recent court action involving dentists is instructive on the issues for all providers.     

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.     

Leadership for the next millennium: the physician executive

We continue to muddle through using tourniquets and bandaids on a health care system that is in dire straits. And the future is even less promising. There will be millions without basic health care, let alone basic health care coverage. Rural and inner-city hospitals will close, with progressive public apathy, as we focus on the marvels of expensive technologies that serve only the few. Costs will continue to rise at double digit rates, and our nation's employers will fall further behind in the global marketplace. Preventive care will be uncommonly provided and only more rarely reimbursed, while a couple more children die of measles in Mississippi. It's not a pretty picture, and it simply doesn't have to come to pass. "What we really need is leadership," the public cries. That leadership can and should come from medicine through physician executives.     

Clinical reengineering. A benchmark strategy

The health care provider marketplace continues to undergo dramatic changes with the advent of hospital mergers, acquisitions, and physician and hospital alliances. In this era of managed care, cost containment is still vital to a hospital's success, but many stakeholders--patients, employers, and physicians--are determined that quality of care also remain paramount. How can hospitals reduce their expenses and maintain a quality focus? The answer lies in a successful clinical reengineering initiative. One progressive model of clinical reengineering is presented, as well as examples of initiatives at three health care institutions. Initial results of clinical redesign programs have been dramatic and encouraging, with documented evidence of simultaneous cost savings and improved patient care.     

Herding stats: the quality measurement dilemma

All over the country, millions of research dollars are being spent to devise an effective way of measuring quality that could be standardized in health care, and hospitals and managed care companies are experimenting with a variety of quality tools, trying to document what they now can only perceive as improvement. Experts are divided on what works best, but all applaud and embrace the efforts. In this special report, several of them discuss their views on what works, and what doesn't work, in the exploding field of health care quality measurement.     

The need for a new model of care: revisiting the archetype

Managed care organizations are refusing to accept the traditional academic health center's uncoordinated teaching model for their patients. They know that successful capitation can only be achieved when care is viewed from a population perspective, managed along a continuum, and coordinated at every point. Of the many changes that must occur, the care delivery paradigm, is a major area that needs to be redesigned.     

Health care fraud and abuse. What physician executives need to know

Fraud and abuse, which can occur in all industries, also exist in the health care industry. This problem is compounded by the reality that "American medicine, although undergoing evolution, now faces changes of a magnitude that has never before been encountered." These changes are creating new realities for physician executives and also new challenges. As there are changes in business practices, there will be changes in how fraud occurs in health care. Physician executives need to be sensitive to the possibility of fraud and abuse as an unwanted component in medical losses in managed care systems.     

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.     

Managed care information needs: a summary perspective

The key to survival in managed care is management of financial risk. You need to know what is in your contract and what you are obligated to do for which population during which period. Information systems can be an enormous help in managing managed care contracts and the financial risks they entail, but poorly selected and configured information systems will do little good for the organization that licenses them. The most important activity of a physician executive who is moving his or her organization into managed care contracting is to lead the process to define the functional requirements for information the organization will need to manage managed care contracts successfully.