Managed health care cuts costs and raises quality

BMJ 1996; 313 doi: (Published 28 September 1996) Cite this as: BMJ 1996;313:772

Switching from fee for service to a managed care system has increased patients' access to health care, reduced costs, and seems to have raised the quality of care since it was introduced in Tennessee.

Transplant surgeon and United States Senator Bill Frist presented data on the scheme at a conference “Health care quality in a time of transition,” which was held in Washington last week and was organised by the health maintenance organisation Kaiser Permanente and the journal Health Affairs.

The state of Tennessee switched 800 000 recipients of Medicaid, the insurance system for the poor, to managed care over just two months in 1994. The state took these steps because a quarter of its $20bn (£13bn) budget went on Medicaid and the amount was growing by 17% a year. The managed care organisations were asked to provide acute and long term care for a capitated fee of $1200 for each recipient per year.

One consequence is that 95% of citizens of Tennessee now have access to health care compared with 84% in 1993. Senator Frist said that Tennessee is now the state with the highest level of access. In addition, it has saved $3-4bn since the introduction of managed health care.

The new plan, called Tenncare, began with 7000 doctors providing services. Some 2000 promptly left, but the plan now has more than 6500. But Senator Frist said the doctors are unhappy, complaining that they are paid too little and too slowly.

Before the new plan was introduced some 773 of every 1000 patients receiving Medicaid each year visited an emergency room, but the number has now fallen to 325. Senator Frist thinks that this means that the patients are receiving care in more appropriate settings.

Length of stay for the patients admitted to hospital has fallen from 6 to 4.6 days. As an example of access to expensive secondary health care, Senator Frist described how the number of patients receiving cardiac catheterisation has increased from 4.95 for every 1000 to 18.22; and patients receiving coronary artery bypass grafting have increased from 1.66 for every 1000 to 2.15.

Complete immunisation of children has increased from 11% to 54%, “well children visits” from 5 for every 1000 to 962, and mammography for women from 32 for every 1000 to 42. Days spent in the hospital by asthmatic patients has fallen from 3.8 each year to 2.1.

Although these measures suggest an improvement in quality, patients are not, however, satisfied. Almost half (45%) think that their care is now worse. This is for two main reasons, said Senator Frist: they resent having their choice of doctor limited and are having greater difficulty finding providers. (See also editorial on p 764.)—RICHARD SMITH, BMJ


Managed care has cut the length of stay for patients admitted to hospital

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