The adoption of provider-based rural health clinics by rural hospitals: a study of market and institutional forces.
OBJECTIVE: To examine the response of rural hospitals to various market and organizational signals by determining the factors that influence whether or not they establish a provider-based rural health clinic (RHC) (a joint Medicare/Medicaid program). DATA SOURCES/STUDY SETTING: Several secondary sources for 1989-1995: the AHA Annual Survey, the PPS Minimum Data Set and a list of RHCs from HCFA, the Area Resource File, and professional associations. The analysis includes all general medical/surgical rural hospitals operating in the United States during the study period. STUDY DESIGN: A longitudinal design and pooled cross-sectional data were used, with the rural hospital as the unit of analysis. Key variables were examined as sets and include measures of competitive pressures (e.g., hospital market share), physician resources, nurse practitioner/physician assistant (NP/PA) practice regulation, hospital performance pressures (e.g., operating margin), innovativeness, and institutional pressure (i.e., the cumulative force of adoption). PRINCIPAL FINDINGS: Adoption of provider-based RHCs by rural hospitals appears to be motivated less as an adaptive response to observable economic or internal organizational signals than as a reaction to bandwagon pressures. CONCLUSIONS: Rural hospitals with limited resources may resort to imitating others because of uncertainty or a limited ability to fully evaluate strategic activities. This can result in actions or behaviors that are not consistent with policy objectives and the perceived need for policy changes. Such activity in turn could have a negative effect on some providers and some rural residents. (+info)
Pharmaceutical advertising revenue and physician organizations: how much is too much?
OBJECTIVE: To determine if revenue generated from pharmaceutical advertisements in medical journals creates potential financial conflicts of interest for nonprofit physician organizations that own those journals. DESIGN: Convenience sample of six professional medical societies and their respective journals. Calculation of pharmaceutical advertising revenue generated by these journals for their respective professional medical societies. METHODS: Random selection of each journal for one month per quarter in calendar year 1996 and tabulation per edition of the average number of pharmaceutical advertising pages for each journal. OUTCOME MEASURES: Published advertising rates were used to estimate pharmaceutical advertising revenue for calendar year 1996 and compared with each organization's gross revenue and membership dues and assessments, based on Internal Revenue Service documents for the last available fiscal year (1995). RESULTS: Estimated pharmaceutical advertising revenue ranged from $715,000 to $18,630,000. Five organizations raised more than 10% of their gross income (range 2% to 30%) from a single journal's pharmaceutical advertising. Four organizations raised as much or more from pharmaceutical advertising as from members (range 17% to 790%). CONCLUSIONS: Potential financial conflicts of interest arising from pharmaceutical advertisements in medical journals may be substantial. The impact on professional societies' financial independence and behavior is unknown. (+info)
Health plan competition in local markets.
OBJECTIVE: To examine the structure of local health insurance markets and the strategies health plans were using to respond to competitive pressures in local markets in 1996/1997. DATA SOURCES/STUDY SETTING: Community Tracking Study site visits conducted between May 1996 and April 1997 in 12 U.S. markets selected to be nationally representative. STUDY DESIGN: In each site, 36 to 60 interviews on local health system change were conducted with healthcare industry informants representing health plans, providers, and purchasers. DATA COLLECTION/EXTRACTION METHOD: Relevant data for this article were abstracted from standardized protocols administered to multiple respondents in each site. PRINCIPAL FINDINGS: Although the competitive threat from national plans was pervasive, local plans in most sites continued to retain strong, often dominant, positions in historically concentrated markets. In all sites, in response to purchaser pressures for stable premiums and provider choice, and the threat of entry and to plans were using three strategies to increase market share and market power: (1) consolidation/geographic expansion, (2) price competition, and (3) product line/segment diversification that focused on broad networks and open-access products. In most markets, in response to the demand for provider choice, the trend was away from ownership and exclusive arrangements with providers. CONCLUSIONS: Although local plans were moving to become full-service regional players, there was uncertainty about the abilities of all plans to sustain growth strategies at the expense of margins and organizational stability, and to effectively manage care with broad networks. (+info)
Oil and water? Lessons from Maryland's effort to protect safety net providers in moving to Medicaid managed care.
Studies have highlighted the tensions that can arise between Medicaid managed care organizations and safety net providers. This article seeks to identify what other states can learn from Maryland's effort to include protections for safety net providers in its Medicaid managed care program--HealthChoice. Under HealthChoice, traditional provider systems can sponsor managed care organizations, historical providers are assured of having a role, patients can self-refer and have open access to certain public health providers, and capitation rates are risk adjusted through the use of adjusted clinical groups and claims data. The article is based on a week-long site visit to Maryland in fall 1998 that was one part of a seven-state study. Maryland's experience suggests that states have much to gain in the way of "good" public policy by considering the impact of their Medicaid managed care programs on the safety net, but states should not underestimate the challenges involved in balancing the need to protect the safety net with the need to contain costs and minimize the administrative burden on providers. No amount of protection can compensate for a poorly designed or implemented program. As the health care environment continues to change, so may the need for and the types of protections change. It also may be most difficult to guarantee adequate protections to those who need it most--among relatively financially insecure providers that have a limited management infrastructure and that depend heavily on Medicaid and the state for funds to care for the uninsured. (+info)
Provider organizations at risk: a profile of major risk-bearing intermediaries, 1999.
Provider organizations have evolved to function as intermediaries between managed care plans and individual providers. These organizations assume much financial risk and care management responsibilities. We profile the characteristics of these organizations in markets across the country. The data, taken from a 1999 telephone survey of sixty-four entities in twenty markets and from interviews conducted during site visits to four markets, highlight the youth of many of these organizations, the large financial risk and functional responsibilities they bear, and the mixed views they hold about the health plans they contract with in terms of their willingness to delegate the authority, support, and collaboration that accompany risk. Policymakers need to evaluate what this means for oversight of managed care. (+info)
Managed care and market power: physician organizations in four markets.
Physicians and other providers have responded to the spread of managed care by adapting structures and strategies to accommodate or resist the pressures exerted on them to reduce costs. In this paper we examine how physician organizations have evolved in four markets and whether their features represent attempts to improve efficiency or resist change. The strategies adopted by physicians in terms of alignment with other providers and development of independent medical management capabilities appear to be sensitive to opportunities to reap cost savings and the competitiveness of physician, hospital, and health plan markets. (+info)
Transmission of financial incentives to physicians by intermediary organizations in California.
Many U.S. physicians participate in provider-sponsored organizations that act as their intermediaries in contracting with managed care plans, particularly where capitation contracts are used. Examining a survey of 153 intermediary entities in California, we trace the cascade of financial incentives from health plans through physician organizations to primary care physicians. Although the physician organizations received the vast majority (84 percent) of their revenues through capitation contracts, most of the financial risk related to utilization and costs was retained at the group level. Capitation of primary care physicians was common in independent practice associations (IPAs), but payments typically were restricted to primary care services. Thirteen percent of medical groups and 19 percent of IPAs provided bonuses or withholds based on utilization or cost performance, which averaged 10 percent of base compensation. (+info)
The effect of capitation on switching primary care physicians.
OBJECTIVE: To examine the relationship between patient case-mix, utilization, primary care physician (PCP) payment method, and the probability that patients switch their PCPs. DATA SOURCES/STUDY SETTING: Administrative enrollment and claims/encounter data for 1994-1995 from four physician organizations. STUDY DESIGN: We developed a conceptual model of patient switching behavior, which we used to guide the specification of multivariate logistic analyses focusing on interactions between patient case-mix, utilization, and PCP reimbursement methods. DATA COLLECTION/EXTRACTION METHODS: Claims data were aggregated to the encounter level; a switch was defined as a change in PCP since the previous encounter. The PCPs were reimbursed on either a capitated or fee-for-service (FFS) basis. PRINCIPAL FINDINGS: Patients with stable chronic conditions (Ambulatory Diagnostic Groups [ADG] 10) and capitated PCPs were 36 percent more likely to switch PCPs than similar patients with FFS PCPs, controlling for patient age and sex and physician fixed effects. When the number of previous encounters was included in the model this relationship was no longer significant. Instead high utilizers with capitated PCPs were significantly more likely to switch PCPs than were similar patients with FFS PCPs. CONCLUSIONS: A patient's demographics and utilization are associated with the probability that the patient will switch PCPs. Capitated PCP payment was associated with higher rates of switching among high utilizers of health care resources. These findings raise concerns about the continuity and quality of care experienced by vulnerable patients in an era of changing financial incentives. (+info)