BMJ No 7098 Volume 314
Education and debate Saturday 28 June 1997
Managed care
Implications of managed care for health systems, clinicians, and patients
Gillian Fairfield, David J Hunter, David Mechanic, Flemming RosleffThis is the second in a series of three articles aiming to raise understanding of the issues surrounding managed care
Summary
The rhetoric and realities of managed care are easily confused. The rapid growth of managed care in the United States has had many implications for patients, doctors, employers, state and federal programmes, the health insurance industry, major medical institutions, medical research, and vulnerable patient populations. It has restricted patients' choice of doctors and limited access to specialists, reduced the professional autonomy and earnings of doctors, shifted power from the non-profit to the for-profit sectors and from hospitals and doctors to private corporations. It has also raised issues about the future structuring and financing of medical education and research and about practice ethics. However, managed care has also accorded greater prominence to the assessment of patient satisfaction, profiling and monitoring of doctors' work, the use of clinical guidelines and quality assurance procedures and indicated the potential to improve the integration and outcome of care.
Implications of managed care for health systems
Managed care in the United States has grown because it allows employers and public health programmes to purchase services for its clients at lower cost than traditional insurance. The growth of a competitive market and increased purchasing expertise has allowed private and public purchasers to contain the growth in premium costs and in some instances to reduce them.(2) However, a major difficulty in controlling costs is establishing capitation rates that adjust appropriately for projected morbidity and utilisation of care by patient populations. Managed care plans that enrol healthier patients make large profits while those attracting a disproportionate number of high risk patients can incur large losses. This undermines the goal of having plans compete on price and quality rather than success in selecting low risk patients. Attempts to control selection by risk include open enrolment periods, marketing rules, supervising enrollee choice, and federal legislation restricting the exclusion of people with pre-existing conditions.
Managed care companies are able to reduce costs by negotiating aggressively with hospitals and provider groups on rates and use of expensive resources such as inpatient care. Several sources report decreased utilisation of health services and decreased lengths of inpatient stays by managed care organisations.(3-5) This may reduce the demand for hospital beds and decrease hospital revenues, with the result that hospitals downsize and even close. Similarly, organised managed care networks need fewer specialists; by using primary care gatekeepers (who may have financial incentives to manage patients themselves) they shift power from specialists to general practitioners. As hospital and outpatient clinics are required to function more efficiently and at less cost, it remains unclear who will reimburse the higher costs of medical and other professional training, research, and patient care associated with new experimental treatments that do not fall within the managed care definition of "necessary care."
| Implications of managed care for health systems | ||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Though the evidence suggests that outcomes with managed care in general are no worse than with traditional fee for service, and may in some aspects be better,(5) some studies suggest that health maintenance organisations may have worse outcomes in treating elderly and poor patients with chronic illness; this may result in calls for regulation.(6) The lead in independent scrutiny of the quality of care provided by managed care organisations in the United States has been taken by the National Committee for Quality Assurance, a not for profit organisation partly financed by health maintenance organisations.(7)
Regulation and continuing scrutiny of managed care are emerging in
three ways. Firstly, the United States congress and many state
legislatures are passing laws to limit some managed care practices,
such as mandatory early discharge (less than 24 hours) - for example,
for mothers after giving birth - or to prohibit "gag rules" that
restrict what doctors can tell their patients. Secondly, state
departments of health and state insurance departments are issuing
regulations on disclosure of financial incentives, mechanisms to settle
complaints, required independent review of contested denials of
service, and on matters such as whether non-medical reviewers of care
can deny provision of medical service. Thirdly, the federal Health Care
Financing Administration has also issued detailed managed care
regulations affecting enrollees in government funded Medicare and
Medicaid p Within a system of managed care, doctors may experience
decreased autonomy or lack of clinical freedom (box). Alternatively,
they may derive satisfaction from working with guidelines within
evidence based medicine and enjoy increased professionalism from
knowing that their practices are operating to high standards.
Iglehart points out that by participating in managed care,
doctors are showing a willingness to adapt to situations in which their
actions may be curtailed and their accountability
increased.(8) However, this willingness may be a result of
the fact that work within managed care may be preferable to no work at
all.
One of the powerful mechanisms underpinning managed care is the use of
guidelines; either to pre-authorise care, manage ongoing treatment and
length of stay, or for managing complex, high cost cases. Though often
written and approved by doctors, these guidelines are usually
administered by managers or nurses, curtailing some of doctors'
freedoms - but doctors retain ultimate responsibility for patient care.
The implications for doctors depend on the quality of the guidelines
and how and by whom they are applied.
Incentives that encourage doctors to practice cost effectively
include risk sharing, performance related payment, and bonuses and
withholds.(9) Although use of hospital resources can be
reduced by payment incentives - sharing resource utilisation information
with clinicians, and formal utilisation strategies(10) -
financial incentives are key to explaining low utilisation
rates.(11) Financial incentives may undermine the
doctor-patient relationship as they may result in management plans
which are hidden from the patient. Conflict may arise if the doctor
does not disclose incentives not to treat or fully explain treatment
options. The ethical basis of many practices of managed care companies
has been questioned: for example, putting more than small amounts of
the providers' personal remuneration at risk should utilisation
targets be exceeded; enforcing gag rules that limit what doctors can
tell patients; and taking arbitrary decisions affecting patients and
doctors without adequate appeals mechanisms.(12)
Managed care has implications for doctors by virtue of the means by
which they are selected to become providers. Doctors not performing to
standard, however defined, may be deselected. Their success can be
judged on clinical criteria, commitment to the organisation, patient
satisfaction, office organisation, case management of high cost
patients, communication between primary and secondary care, length of
stay, and delivery of preventive services.
How, why and by whom should a doctor be considered inadequate? The
concern is that managed care companies use profiling to deselect the
high cost doctors rather than those providing poor quality care.
Standards, case mix variables, and appeals procedures therefore need to
be transparent, which has not always been the case in the United
States. Increased accountability, utilisation management, and physician
profiling all require better information systems, without which the
long term evaluation of outcomes would prove impossible.
Many procedures are being removed from doctors and placed in the hands
of other professionals, such as psychologists and optometrists, who
have become preferred providers. Doctors are required to work in a more
multidisciplinary manner and relinquish some control. Although this
demands a culture change there are many opportunities for
collaboration.
The feelings of United States clinicians towards managed care have
included anger, denial, depression, negotiation, and finally
acceptance. Doctors are often pulled between competing loyalties and
tend to resist cost control measures because they suspect the motives
of the managers. A poem taken from the internet (box) may represent an
extreme view, but what is important is that these sentiments are
expressed at all. If clinicians in the United States perceive managed
care negatively, initiatives in Britain may engender similar fears. How
managed care is presented to, and seeks to engage, clinicians in
Britain will be central to its success.
Patients too surrender some of their freedom under a managed care
system. They may be restricted in their choice of doctor or hospital,
and guidelines may dictate primary care rather than secondary care.
Decreased choice may be offset by better outcome and quality of care:
better integrated systems, improved quality monitoring, and greater
attention to their satisfaction. Studies of the Medicaid population
indicate that managed care may allow better access and some aspects of
satisfaction than do traditional fee for service plans,(13)
although consumer satisfaction is generally considered to be poorer in
managed care organisations. In Britain, how managed care will provide
for disabled patients, who require continuing care and experienced
professionals, and those with chronic disease, who require services
across care areas, is of concern. The extent of the shift of burdens
and costs outside the medical sector is unclear.
Potential improvements in the doctor-patient relationship include
increased choice of managed care plan and physician, availability of
information on physician competence and outcome, and a broader range of
medical teams which include non-doctors(14) - but there may
be less time for the doctor-patient interaction, fewer home visits,
deselection of physicians causing disruption to continuity of care, and
physician incentives causing conflict. As with the effects on
clinicians, the implications for patients depend on the validity of the
managed care processes, the training and skills of those involved in
the process of managing care, the quality of the communications, and
the constraints and incentives imposed on
physicians.
There are calls for organised consumer protection in the United
States,(15) and the Council on Ethical and Judicial Affairs
in the United States has recommended guidelines for managed
care(16): doctors must continue to put patients first, with
patient advocacy paramount. Information must be available to patients
regardless of guidelines. There must be a mechanism in place to ensure
arbitration and appeals by both patients and physicians. Alternative
treatments must be discussed, and no gag clauses should be allowed.
There should be standard limits on the amounts of fee incentives or
withholds for clinicians and full disclosure to patients of those
incentives.
Patients have the potential to drive managed care by being better
informed and empowered. Under a seamless care system with integrated
primary and secondary care, patients should receive more preventive
services and take more responsibility for their own health. Measures
need to be taken to ensure that it is not just the articulate middle
classes that are empowered - the interests of vulnerable groups must be
protected.
Not all of the American experience is applicable to the NHS.
Health care in the United States is a commodity to be bought and sold;
in Britain, health care is regarded as a fundamental human right.
Despite the challenges facing it, the NHS retains a population based,
communitarian ethic. At a macro level, the NHS is already a managed
care system with many of the requisite features in place
(box).(17)
Recent white papers(18-20) developing the vision for a
primary care led NHS offer the possibility of increasing both the
structural and functional aspects of managed care by extending
professional roles (thus increasing the range of potential preferred
providers), diversifying employment and contract options, encouraging
flexibility and sharing of premises, developing audit and evidence
based medicine, introducing flexibility in resource use, and by
encouraging information technology developments, including those in the
area of clinical decision making.
Developing primary care purchasing could see the founding of structures
similar to health maintenance organisations or preferred provider
organisations with which health authorities could contract. Trusts and
other health related bodies could employ salaried general
practitioners, creating the equivalent of staff model health
maintenance organisations.
The greatest potential lies at a micro level - namely, utilisation
management, physician profiling, and financial incentives. With
collaborative, seamless care as the goal of the NHS, key stakeholders
will need to consider how risk will be distributed. Financial
incentives and risks will need to be aligned to motivate all key
players, yet this may prove difficult if fragmentation and diversity
result in a conflict of policy objectives.
Increasing use of guidelines and utilisation management could provide a
lever for the practice of evidence based medicine, which may reduce
inappropriate treatment, improve quality, and decrease costs. Physician
profiling could inform clinicians as to their own performance. All of
these techniques will need to address two major barriers: information
needs and the commitment and cooperation of doctors. Clinicians are
still able to practise medicine as they see fit, and audit remains
largely informal and without sanctions. This is a far cry from the
United States, where managers are closely involved in clinical matters.
Doctors in Britain will need to be reassured that the aim of managed
care truly is to improve medicine and not direct it. If managed care
comes to mean accountancy rather than accountability, doctors will
resist.
Finally, a health warning: the further down the road to pluralism the
NHS goes, the more difficult it will be for any government to reverse
changes as there will be too many vested interests at stake to permit
reform - a difficulty the United States is well aware of.
Nuffield Institute for Health, Rutgers: The State University of New
Jersey at New Brunswick, Bure
Managed Care,
Correspondence to: Professor Hunter.
References
1 Fairfield G, Hunter D J, Mechanic D, Rosleff F. Managed
care: origins, principles and evolution. BMJ
1997;314:1823-6.
2 Zelman W A. The changing healthcare market place.
San Francisco: Jossey Bass. 1996.
3 Welch W P. Health care utilisation in HMOs: results from two
national samples. J Health Econ 1985;4:293-308.
4 Bradbury R C, Golec J H, Stearns F E. Comparing hospital length
of stay in independent practice association HMOs and traditional
insurance programs. Inquiry 1991;28:87-93.
5 Miller R H, Luft H S. Managed care plan performance since 1980.
JAMA 1994;271:1512-9.
6 Ware J E, Bayliss M S, Rogers W H, Kosinski M, Tarlov A R.
Differences in 4-year health outcomes for elderly and poor chronically
ill patients treated in HMO and fee-for-service systems.
JAMA 1996;276:1039-47.
7 Iglehart J K. The National Committee for Quality Assurance.
N Engl J Med 1996;335:995-9.
8 Iglehart J K. Physicians and the growth of managed care. Health
policy report. N Engl J Med 1994;331:1167-71.
9 Gold M, Hurley R, Lake T, Ensor T, Berenson R. A national
survey of the arrangements managed care plans make with physicians.
N Engl J Med 1995;333:1678-83.
10 Corad D, Wickizer T, Maynard C. Managing care incentives and
information: an exploratory look inside the black box of hospital
efficiency. Health Services Research 1996;3:235-59.
11 Hellinger F. The impact of financial incentives on physician
behaviour in managed care plans: a review of the evidence. Med
Care Res Rev 1996;53:294-314.
12 Mechanic D, Schlesinger M. The impact of managed care on
patients' trust in medical care and their physicians.
JAMA 1996;276:1693-7.
13 Sisk J E, Gorman S A, Reisinger A L, Gleid S A, DuMouchel W H, Hynes
M M. Evaluation of Medicaid managed care; satisfaction access and use.
JAMA 1996;276:50-5.
14 Emanuel E J, Dubler N. Preserving the physician patient
relationship in the era of managed care. JAMA
1995;273:323-9.
15 Rodwin M A. Consumer protection and managed care: the need for
organised consumers. Health Affairs 1996;15:110-23.
16 American Medical Association Council on Ethical and Judicial
Affairs. Ethical issues in managed care. JAMA
1995;273:330-5.
17 Hatcher P. Demystifying managed care. Health Services
Management Newsletter 1995;3:1-3.
18 Secretaries of State for Health, Scotland, and Wales.
Primary care: delivering the future. London: Stationery
Office, 1996. (Cm 3512.)
19 Secretaries of State for Health, Scotland, and Wales.
Choice and opportunity. Primary care: the
future. London: Stationery Office, 1996. (Cm 3390.)
20 Secretary of State for Health. The National Health
Service: a service with ambitions. London: Stationery Office,
1996.
Implications for clinicians
Implications of managed care for doctors
Positive:
Increased professionalism Collaboration Better information
Negative:
Reduced clinical freedom Reduced status Increased supervision Conflicts of interest Altered doctor-patient relationship
"I used to be a doctor"
I used to be a doctor
now I am a Health Care Provider
I used to practise medicine
now I function under a managed care system
I used to have patients
now I have a consumer list
I used to diagnose
now I am approved for one consultation
I used to treat
now I wait for authorisation to provide care
. . . .
I used to have a successful people practice
now I have a paper failure
I used to spend time listening to my patients
now I spend time justifying myself to the authorities
I used to have feelings
now I have an attitude
Now I don't know what I am
(Found on the internet)Implications for patients
Implications of managed care for patients
Positive:
Better outcomes Better informed Clearer expectations Patient driven guidelines Increased satisfaction
Negative:
Restriction of treatment or doctor Increased responsibility not wanted Altered doctor patient relationship Less satisfaction The NHS as a managed care organisation
Features of the NHS as a managed care organisation
Structural features:
Limited consumer choice of general practitioner Primary care gatekeeper Selective contracting by purchasers Financial incentives for general practitioners (capitation and bonuses
for reaching targets, etc)
Functional features:
Quality management (audit, accreditation) Utilisation management (guidelines, shared care protocols)
University
of Leeds,
Leeds LS2 9PL
Gillian Fairfield,
senior registrar in public health
medicine
David J Hunter,
director
New Brunswick,
NJ 08903,
USA
David
Mechanic,
René Dubos, university professor of
behavioural sciences
Box 5419,
SE-402 29 Gothenburg,
Sweden
Flemming Rosleff,
chief executive
Home | Current issue | Past issues |
Classified ads | Career Focus | Feedback
Collections |
About this site | About the BMJ | BMA | Medline