Back to the drawing board: new directions in health plans' care management strategies.
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The backlash against managed care has pressured health plans to reexamine their approaches to controlling utilization and managing their members' health care needs, but how much has really changed? Interviews with health plans and others in twelve nationally representative markets suggest that the changes are significant. New and refined disease management programs are improving the care experience of participants with certain prevalent chronic illnesses, while utilization management changes are reducing the administrative burden for providers. Still, disease management programs will need to greatly expand in scope and scale if plans are to succeed in addressing the complex health care needs of aging populations and those with chronic diseases. (+info)
Competition among hospitals for HMO business: effect of price and nonprice attributes.
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OBJECTIVE: To investigate patterns of competition among hospitals for the business of health maintenance organizations (HMOs). The study focused on the relative importance of hospital price and nonprice attributes in the competition for HMO business. DATA SOURCES/STUDY SETTING: The study capitalized on hospital cost reports from Florida that are unique in their inclusion of financial data regarding HMO business activity. The time frame was 1992 to 1997. STUDY DESIGN: The study was designed as an observational investigation of acute care hospitals. PRINCIPAL FINDINGS: Results indicated that a hospital's share of HMO business was related to both its price and nonprice attributes. However, the importance of both price and nonprice attributes diminished as the number of HMOs in a market increased. Hospitals that were market share leaders in terms of HMO business (i.e., 30 percent or more market share) were superior, on average, to their competitors on both price and nonprice attributes. CONCLUSIONS: Study results indicate that competition among hospitals for HMO business involves a complex set of price and nonprice attributes. The HMOs do not appear to focus on price alone. Hospitals likely to be the most attractive to HMOs are those that can differentiate themselves on the basis of nonprice attributes while being competitive on price as well. (+info)
Population characteristics of markets of safety-net and non-safety-net hospitals.
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RESEARCH OBJECTIVES: To compare and contrast the markets of urban safety-net (USN) hospitals with the markets of other urban hospitals. STUDY DESIGN: To develop profiles of the actual inpatient markets of hospitals, we linked 1994 patient-level information from hospital discharge abstracts from nine states with 1990 data at the ZIP code level from the US Census Bureau. Each hospital's market was characterized by its racial and ethnic composition, median household income, poverty rate, and educational attainment. Measures of hospital competition were also calculated for each hospital. The analysis compared the market profiles of USN hospitals to those of other urban hospitals. We also compared the level of hospital competition and financial status of USN and other urban hospitals. PRINCIPAL FINDINGS: The markets of USN hospitals had higher proportions of racial and ethnic minorities and non-English-speaking residents. Adults residing in markets of USN hospitals were less educated. Families living in markets of USN hospitals had lower incomes and were more likely to be living at or below the federal poverty level. USN hospitals and other urban hospitals faced similar levels of competition and had similar margins. However, USN hospitals were more dependent on Medicare disproportionate share payments and on state and local government subsidies to remain solvent. CONCLUSION: USN hospitals disproportionately serve vulnerable minority and low-income communities that otherwise face financial and cultural barriers to health care. USN hospitals are dependent on the public subsidies they receive from federal, state, and local governments. Public policies and market pressures that affect the viability of USN hospitals place the access to care by vulnerable populations at risk. Public policy that jeopardizes public subsidies places in peril the financial health of these institutions. As Medicare and Medicaid managed care grow, USN hospitals may lose these patient revenues and public subsidies based on their Medicaid and Medicare patient volumes. The loss of these funds would hinder the ability of USN hospitals to finance uncompensated care for uninsured and underinsured patients. (+info)
The end of an era: what became of the "managed care revolution" in 2001?
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OBJECTIVE: To describe how the organization and dynamics of health systems changed between 1999 and 2001, in the context of expectations from the mid-1990s when managed care was in ascendance, and assess the implications for consumers and policymakers. DATA SOURCES/STUDY SETTING: Data are from the Community Tracking Study site visits to 12 communities that were randomly selected to be nationally representative of metropolitan areas with 200,000 people or more. The Community Tracking Study is an ongoing effort that began in 1996 and is fielded every two years. STUDY DESIGN: Semistructured interviews were conducted with 50-90 stakeholders and observers of the local health care market in each of the 12 communities every two years. Respondents include leaders of local hospitals, health plans, and physician organizations and representatives of major employers, state and local governments, and consumer groups. First round interviews were conducted in 1996-1997 and subsequent rounds of interviews were conducted in 1998-1999 and 2000-2001. A total of 1,690 interviews were conducted between 1996 and 2001. DATA ANALYSIS METHODS: Interview information was stored and coded in qualitative data analysis software. Data were analyzed to identify patterns and themes within and across study sites and conclusions were verified by triangulating responses from different respondent types, examining outliers, searching for disconfirming evidence, and testing rival explanations. PRINCIPAL FINDINGS: Since the mid-1990s, managed care has developed differently than expected in local health care markets nationally. Three key developments shaped health care markets between 1999 and 2001: (1) unprecedented, sustained economic growth that resulted in extremely tight labor markets and made employers highly responsive to employee demands for even fewer restrictions on access to care; (2) health plans increasingly moved away from core strategies in the "managed care toolbox"; and (3) providers gained leverage relative to managed care plans and reverted to more traditional strategies of competing for patients based on services and amenities. CONCLUSIONS: Changes in local health care markets have contributed to rising costs and created new access problems for consumers. Moreover, the trajectory of change promises to make the goals of cost-control and quality improvement more difficult to achieve in the future. (+info)
Changes in hospital competitive strategy: a new medical arms race?
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OBJECTIVE: To describe changes in hospitals' competitive strategies, specifically the relative emphasis placed on strategies for competing along price and nonprice (i.e., service, amenities, perceived quality) dimensions, and the reasons for any observed shifts. METHODS: This study uses data gathered through the Community Tracking Study site visits, a longitudinal study of a nationally representative sample of 12 U.S. communities. Research teams visited each of these communities every two years since 1996 and conducted between 50 to 90 semistructured interviews. Additional information on hospital competition and strategy was gathered from secondary data. PRINCIPAL FINDINGS: We found that hospitals' strategic emphasis changed significantly between 1996-1997 and 2000-2001. In the mid-1990s, hospitals primarily competed on price through "wholesale" strategies (i.e., providing services attractive to managed care plans). By 2000-2001, nonprice competition was becoming increasingly important and hospitals were reviving "retail" strategies (i.e., providing services attractive to individual physicians and the patients they serve). Three major factors explain this shift in hospital strategy: less than anticipated selective contracting and capitated payment; the freeing up of hospital resources previously devoted to horizontal and vertical integration strategies; and, the emergence and growth of new competitors. CONCLUSION: Renewed emphasis on nonprice competition and retail strategies, and the service mimicking and one-upmanship that result, suggest that a new medical arms race is emerging. However, there are important differences between the medical arms race today and the one that occurred in the 1970s and early 1980s: the hospital market is more concentrated and price competition remains relatively important. The development of a new medical arms race has significant research and policy implications. (+info)
The effect of health plan characteristics on Medicare+ Choice enrollment.
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OBJECTIVE: To provide national estimates of the effect of out-of-pocket premiums and benefits on Medicare beneficiaries' choice among managed care health plans. DATA SOURCES/STUDY SETTING: The data represent the population of all Medicare+ Choice (M+C) plans offered to Medicare beneficiaries in the United States in 1999. STUDY DESIGN: The dependent variable is the log of the ratio of the market share of the jth health plan to the lowest cost plan in the beneficiary's county of residence. The explanatory variables are measures of premiums and benefits in the jth health plan relative to the premiums and benefits in the lowest cost plan. DATA COLLECTION METHODS: The data are from the 1999 Medicare Compare database, and M+C enrollment data from the Centers for Medicare and Medicaid Services (CMS). PRINCIPAL FINDINGS: A $10 increase in an M+C plan's out-of-pocket premium, relative to its competitors, is associated with a decrease of four percentage points in the jth plan's market share (i.e., from 25 to 21 percent), holding the premiums of competing plans constant. CONCLUSIONS: Although our price elasticity estimates are low, the market share losses associated with small changes in a health plan's premium, relative to its competitors, may be sufficient to discipline premiums in a competitive market. Bidding behavior by plans in the Medicare Competitive Pricing Demonstration supports this conclusion. (+info)
Why competition law matters to health care quality.
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Competition law (encompassing both antitrust and consumer protection) is the forgotten stepchild of health care quality. This paper introduces readers to competition law and policy, describes its institutional features and analytic framework, surveys the ways in which competition law has influenced quality-based competition, and outlines some areas in need of further development. Competition law protects the competitive process--not individual competitors. It guides the structural features of the health care system and the conduct of providers as they navigate it. Competition law does not privilege quality over other competitive goals but honors consumers' preferences with respect to trade-offs among quality, price, and other attributes of goods and services. (+info)
Of magic wands and kaleidoscopes: fixing problems in the individual market.
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Policy analysts sometimes imagine that problems in the individual market can be fixed by waving a magic wand that makes the individual market function more like the group market. However, prior studies reveal that purchasing cooperatives fail to achieve substantial economies of scale; market reforms that reduce the impact of medical underwriting are difficult to implement in the individual market; and it may not be as easy as imagined to induce people to purchase over the Internet or from new or smaller companies that are at higher risk for exiting the market. The best solution is to limit the use of subsidies to certain purchasing options, such as with purchasing cooperatives that abide by rating, issuance, and renewability rules. What is not acceptable is to hand people subsidies and send them to the unstructured and relatively unregulated individual market, nor will it work to give people unhindered choice between two basically different market segments. (+info)