The Challenge Facing Managed Care Organizations

The greatest challenge for managed business organizations (MCOs) in our current quantify is how to obtain lower priced medical fees. As we all know, American health sustainment should essentially be a nonprofit enterprise. However, the privatization of American health care holds that health care in general and hospitals in particular are 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. Congress tries to push more consumer-directed health plan options to avoid cash-strapped managed care organizations (MCOs) to boost their deductibles, raise amplitudes and even defy federal law by authorizing policy holders to buy prescription drugs from inexpensive vendors in Canada (Smith, 23 September 2004).Managed care organizations (MCOs) often apply the traditional fee-for-service models, which do no t provide adequate financial controls and utilization incentives for physicians and hospitals to contain the costs of providing healthcare. under(a) managed care, the needs of the patients are balanced with efforts to provide cost-effective care. Typically, MCOs enroll subscribers by promising to provide all necessary medical care in vary for a fixed monthly premium.The MCO also trains with hospitals, physicians, and other healthcare providers to dispense the necessary medical care to its enrollees at a discounted reimbursement rate. In exchange for pass judgment reduced fees, the caregivers gain access to the MCOs enrolees (Kirby, Sebastian & Hornberger, 1998).A problem with managed care is that employers who offer a health maintenance organization (HMO) to their employees often pay 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 controlling its costs. Enthoven (1993) suggested that this incentive straining can be corrected when employers design better alternatives for their employer contri barelyions.The employer could contribute a fixed-dollar amount for health insurance with the employee paying the full residue between plans. The great the portion of the marginal premium paid 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, then the employee pays only 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 ar meanderments are organized on a prepayment basis that get along in a wide variety of forms. An HMO could hire physicians on a salary, contract with a preexisting group practice of physicians, or contract with physicians who maintain a fee-for-service practice. According to Luft (1991), Because specific social, legal, histor ical, political, and economic aspects of the medical care environment have shaped delivery systems much(prenominal) as the HMO, it is not sound to expect that the typical HMO could be transplanted intact to another country (p. 173).The key to HMO cost savings is the organizations wide range of medical service, both inpatient and outpatient. In this way, the HMO can receive the cost savings implied by reduced hospital use. This may be troublesome to manage in systems where there are separate financing mechanisms for immemorial care physicians and inpatient care. As Luft (1991, p. 180) remarks. If there were no way to shift capital 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 turn up to offer a magnitude of opportunities where MCOs can assist patients, these are ambulatory care, psychical health and the alternative therapies. Firstly, ambu latory care-sensitive conditions reflect the quality 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 specialty ambulatory care is important for many a(prenominal) 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 star commonly used strategy to control specialty care use. Studies of the impact of gatekeeping on childrens receipt of specialty care have 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 increase specialty visits among a group of children with c hronic conditions. Although the focus 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 authorization 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 kind health services. Taylor et al. (2001) had indicated that direct and indirect 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 providers.Implications of differences and similarities between directors of managed care organizations and treatment providers are examined and discussed across five response categories (familiarity/training perceived effectiveness, likelihood of reimbursement/referral, daily use and expectation for afterlife 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 assess CAM therapy with patients. Alternative therapies charter professionals to rethink staff competency, patient assessment, and patient-focused care. Medical leaders must understand CAM trends and therapies to better integrate these concepts into health c are policy, standards of care, and ethical decisions (Parkman, 2001).Among ambulatory care and mental health care, alternative therapies, or CAM, offers the most favorable and cost-efficient strategy for MCOs. This is because the aging baby boom generation 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 address 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 totaled $27 billion. 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, HIV and AIDS, multiple sclerosis, and chronic musculoskeletal pain.Furthermore, the demand for CAM by the general public is increasing, in spite of 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 mercantile 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 potential will continue to be limited to the extent that employers fail to offer true financial advantages to consumers who choose the low-cost health 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 personal business, supplement, 24-48.Kirby, E.G., Sebastian, J.G. and Hornberger, K.D. (1998, Jan/Feb). 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