The Challenge Facing Managed Care Organizations

The greatest challenge for managed kick organizations (MCOs) in our current season is how to obtain lower priced medical fees. As we all know, Ameri support health cargon should essentially be a nonprofit enterprise. However, the privatization of American health business holds that health c be in general and infirmarys in cross argon increasingly operating on a for-profit basis. In fact, the for-profit hospital sector has accounted for a relatively constant share (about 15 percent) of hospital beds over the last twenty years (Morrisson, 1999).This is why recently the U.S. coitus tries to push more consumer-directed health plan options to avoid cash-strapped managed consider organizations (MCOs) to advance their deductibles, raise premiums and even defy federal law by authorizing constitution holders to buy prescription drugs from low-cost vendors in Canada (Smith, 23 September 2004).Managed care organizations (MCOs) often apply the traditional fee-for-service models, whi ch do non gene judge suitable financial controls and utilization incentives for physicians and hospitals to contain the costs of providing healthcare. Under managed care, the needs of the patients are balanced with efforts to provide cost-efficient care. Typically, MCOs enroll subscribers by promising to provide all needful medical care in exchange for a fixed monthly premium.The MCO also signals with hospitals, physicians, and other healthcare providers to dispense the necessary medical care to its enrollees at a discounted reimbursement rate. In exchange for evaluate reduced fees, the caregivers gain access to the MCOs enrolees (Kirby, Sebastian & Hornberger, 1998).A problem with managed care is that employers who hug drug a health maintenance organization (HMO) to their employees often pass on the premium as long as the HMO premium was not higher than the fee-for-service premium. This behavior by employers creates distorted incentives for the HMO in haughty its costs. E nthoven (1993) suggested that this incentive distortion can be corrected when employers design dampen preferences for their employer contributions.The employer could contribute a fixed-dollar amount for health insurance with the employee paying the integral difference between plans. The greater the portion of the marginal premium pay by the employees is, the stronger the incentive is to choose lower-cost plans. For example, if the employer pays 80 percent of the premium and the employee pays the remainder, so the employee pays moreover 20 percent of the difference between the low (lets presume here) HMO premium and the higher fee-for-service premium.HMOs and other managed care arrangements are organized on a prepayment basis that appear in a wide-eyed variety of forms. An HMO could hire physicians on a salary, contract with a preexisting mathematical assemblage practice of physicians, or contract with physicians who handle a fee-for-service practice. According to Luft (199 1), Because specific social, legal, historical, political, and economic aspects of the medical care surround brace shaped delivery clays such as the HMO, it is not apt to expect that the typical HMO could be transplanted intact to another bucolic (p. 173).The key to HMO cost savings is the organizations wide range of medical serve, both inpatient and outpatient. In this way, the HMO can receive the cost savings implied by reduced hospital use. This whitethorn be difficult to manage in systems where there are furcate financing mechanisms for primary care physicians and inpatient care. As Luft (1991, p. 180) remarks. If there were no way to shift funds from the hospital side to the physician side, it would be difficult to reward clinical decision makers for the development of more cost-effective practice styles.This is why three areas appear to offer a order of opportunities where MCOs can assist patients, these are ambulatory care, mental health and the ersatz therapies. Firs tly, ambulatory care-sensitive conditions reflect the flavour and availability of primary care services, since they are readily treatable without the need for hospitalization. There are differences in the hospitalization rate for ambulatory care sensitive conditions. Shenkman et al. (2005) had indicated that oddity ambulatory care is evidentiary for galore(postnominal) children with chronic conditions.However, access to such care may be constrained within managed care environments. The use of primary care providers (PCPs) as gatekeepers for managed care organizations (MCOs) is one commonly used strategy to control specialty care use. Studies of the impact of gatekeeping on childrens receipt of specialty care select resulted in mixed findings. Some studies found more specialty care use in gatekeeping MCOs, compared with non-gatekeeping MCOs.Other researchers found that the replacement of a gatekeeping system with an open-access model increased specialty visits among a group of children with chronic conditions. Although the counsel on gatekeeping in general yields some important information, MCOs use many other strategies concomitantly with their PCP gatekeepers, such as capitated payments, financial incentives, and prior permit procedures. The use of these concomitant strategies may meet the unique needs of children with chronic conditions, including their need for specialty physician care.On the other hand, managed care had been significant contributor on delivery systems for mental health services. Taylor et al. (2001) had indicated that direct and substantiating persuasion to provide more cost-effective treatments has been one consequence. The cost-saving qualities and the effectiveness of group interventions have produced clear expectations for an increased use of therapy groups. In the research of Taylor et al. (2001), they compared perceptions and uses of group treatments on a national sample of managed care organizations and mental health prov iders.Implications of differences and similarities between directors of managed care organizations and treatment providers are examined and discussed across five chemical reaction categories (familiarity/training perceived effectiveness, likelihood of reimbursement/referral, daily use and expectation for forthcoming use). Taylor et al (2001) favored the approach where MCOs calibrate treatment referral/reimbursement decisions. Recently published comparison outcome studies and meta-analyses can and should empirically guide the present treatment delivering systems.Lastly, many managed care organizations have already begun to integrate complementary and alternative medical therapies (CAM) with conventional medical providers. Medical practitioners are obligated to quantify CAM therapy with patients. Alternative therapies require professionals to rethink staff competency, patient assessment, and patient-focused care. Medical leading must understand CAM trends and therapies to better integrate these concepts into health care policy, standards of care, and estimable decisions (Parkman, 2001).Among ambulatory care and mental health care, alternative therapies, or CAM, offers the some favorable and cost-efficient strategy for MCOs. This is because the aging baby boom propagation is beginning to experience chronic but non-life threatening conditions, such as joint pain, headaches and menopause-related complaints and they are willing to explore options other than prescription drugs. For health plans, the attraction of offering alternative care products lies in retaining and attracting new members, diversifying their services from competitors in a congested managed care market and in attempts to citation current or proposed state mandates (West, 1997).In 1997 alone, expenses for professional services were $21.2 billion, a 45% increase over the earlier 1990 data. Expenses for professional services, herbals, vitamins, diet products, books, and classes be $27 billio n. Five surveys conducted since 1990 have reported frequent use of CAM, ranging from 30% to 73% by patients suffering from conditions such as cardiovascular disease, cancer, arthritis, human immunodeficiency virus and AIDS, multiple sclerosis, and chronic musculoskeletal pain.Furthermore, the demand for CAM by the general frequent is increasing, despite the fact that its use is largely paid by consumers without coverage by third-party payers. In 1997, Americans spent an estimated $13 billion for visits to CAM providers and an additional $2 billion for commercial diet supplements and over-the-counter megavitamins (Pelletier & Astin, 2002).Managed care should not only focus on cost savings, but they should also look into diversifying their services. MCOs have generally contributed to the decline in the U.S. health cost growth rate. Their strength will continue to be limited to the extent that employers fail to offer true financial advantages to consumers who choose the low-cost hea lth plans. Thus, more reforms in the policies should be reviewed and revised so that more people could benefit from the quality health care everyone deserves.ReferencesEnthoven, A.C. (1993). The History and Principles of Managed Competition. wellness Affairs, supplement, 24-48.Kirby, E.G., Sebastian, J.G. and Hornberger, K.D. (1998, Jan/Feb). The Effect of Normative neighborly forces on Managed Care Organizations Implications for Strategic management/Practitioner Response. Journal of healthcare Management. 43(1)81-106.Luft, H. (1991). Translating the U.S. HMO Experience to Other Health System. Health Affairs 10172-186.Morrison, I. (1999). Health Care in the New Millennium. NY John Wiley & Sons, Inc.Parkman, C. (2001, February). Alternative Therapies are Here to Stay. Nursing Management, 32(2) 36-40.Pelletier, K.R. and Astin, J.A. (2002, Jan/Feb). Integration and Reimbursement of Complementary and Alternative Medicine by Managed Care and Insurance Providers 2000 Update and Cohort Analysis. Alternative Therapies in Health and Medicine, 8(1) 38-44.Shenkman, E., Tian, L. and Schatz, D. (2005, June). Managed Care Organization Characteristics and Outpatient Specialty Care Use Among Children With Chronic Illness. Pediatrics, 115(6) 1547-1555.Smith, C. (2004, Spetember 23). Senate control board Examines Health Care Choices, Insurance Costs. Knight Ridder Tribune.Taylor, N.T., Burlingame, G.M., Kristensen, K.B., Fuhriman, A. et al. (2001, April). A Survey of mental Health Care Providers and Managed Care Organization Attitudes Toward, Familiarity With, and Use of Group Interventions. world-wide Journal of Group Psychotherapy, 51(2) 243-264.West, D. (1997, November 10). MCOs Integrating Alternative Care. National Underwriter, 101(45) 58.