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"Studies of the relationship between managed care penetration in the health care market and expenditures for Medicare fee-for-service enrollees have demonstrated the existence of these types of spill over effects" (Bundorf et al., 2004).
Managed care organizations generate these types of spillover effects by increasing competition in the health care market, altering the arrangement of the health care delivery system, and altering physician practice patterns. Studies have found that higher levels of managed care infiltration are linked with lower rates of hospital cost inflation and lower physician fees are consistent with competitive effects. "Other studies demonstrate the impact of managed care on delivery system structure including hospital capacity, hospital admission patterns, the size and composition of the physician workforce and the adoption and use of medical equipment and technologies. More recent evidence has linked market-level managed care activity to the process, but not the outcomes of care" (Bundorf et al., 2004).
There are many advantages to receiving care in the managed care setting. The underlying quality of the conventional fee-for-service, individually-based practitioner circumstance has been questioned for some time. Having an organization that feels both professional and legal liability for the quality of care it provides may present greater protection for consumers. As people become more aware of the importance of systems factors in determining the outcomes of care, the function of structured decision-making and oversight will become better appreciated. Some of the promises offered by managed care include:
- MCOs should be more willing to think in terms of events of care rather than simple occurrences. They should be more anxious to treat problems assertively early if such treatment can evade costly subsequent care. Similarly, they should be more likely to provide medical follow-up care to avoid re-hospitalization. In the area of geriatric care, they should be ready to underwrite the costs of suitably targeted geriatric assessments because such actions have been shown to save money in the long run.
- MCOs can afford to set up information systems that can track patients over time and can provide information to primary care practitioners (PCPs) about patients at risk. They can utilize additional personnel to work at keeping patients healthy, or at least facilitate their compliance with healing routines. MCOs can develop programs that present patients better information about how to care for themselves, in terms of both improving individual health habits to decrease risks and monitoring their own health and treatment.
-Managed care offers a way to synchronize care. A central administration and common working systems decreases fragmentation. A common record system improves the flow of communication about a patient.
- Managed care has the occasion to be more imaginative in developing ways to meet its service responsibilities. Less costly forms of care can be utilized where they are shown to be as successful. Non-physicians can carry out tasks usually assigned to physicians, and the sequence of delegation can carry on. Subacute care can be substitute for hospital care. In the area of Long-Term Care, new forms of care, such as assisted living, can be utilized in lieu of nursing homes.
- Care management can take on a more aggressive approach. Growing evidence suggests that aggressive watching of high risk patients can decrease the successive use of expensive hospital care. For instance, randomized trends of nurse follow up of post-hospital patients have shown good consequences from these efforts. The decrease in hospital days has not been as obvious among older patients and the volume of the effect on re-hospitalizations was lesser for elderly surgical patients than for medical ones.
- Managed care can be beneficial for patients by simplify the process of care for them, and reducing billing procedures and out-of-pocket costs. "Managed care provides more flexibility in the use of funding, reducing the constraints which can require people to be institutionalized because institutional placement is funded, whereas home care in the community may not be funded. The incentives for low-cost solutions may work in favor of promoting some of the kinds of post-hospital care and LTC (to the extent LTC is part of managed care) that consumers most appreciate. MCOs typically are offered flexibility to provide services in creative ways" (the Basics of Managed Care, n.d.).
Managed care plans have succeeded in their key mission to reduce the growth rate of health care costs. Research has strongly suggested that managed care plans have been successful in inducing price competition and forcing costs down. It is too early to celebrate, however as the cost containment success that has been documented depends on effective competition at each level. If market competition fails and the system becomes increasingly inefficient, then a government takeover may become inevitable. There clearly are parties in both the health care system and the political process who would not find that outcome to be the least bit distasteful (Zwanziger & Melnick, 1996).
Case management has frequently been adopted as a means to decrease or constrain health care service use and expenses for a given enrolled population. It is significant, however, to distinguish that there are dissimilar models of case management, each with differing dynamics and intended to attain different goals. The fundamental dynamics suggest that they can be generally categorized into one of three types: interrogative, patient advocacy and consolidated. The interrogative model stresses concentrated oversight at the interface of the clinical and fiduciary perspectives. In this model, even though the suitability of patient care may prevail in determining a treatment plan, the price of care is recognized as a justifiable argument in the decision-making process (Long, 2001).
The patient advocacy model stresses the synchronization of services on the continuum of care from the patient's perspective. This model suggests that all of the patient's situations are acknowledged as legitimate arguments in the decision-making process. That is to say, the treatment plan is determined not only by the medical needs of the patient, but also by the financial, psychological and social conditions of the patient. It is vital to note that the classification of case management models in this manner is not proposed as support for the growing propensity in the managed care arena to view cost and quality as philosophically opposed ideas. On the contrary, it has been suggested that expenses play a vital role in the quality of care. "Quality can be measured to the extent to which the care provided maximizes the benefits to health while minimizing the risk, as follows: Quality=Benefits-(Risk+Cost). By this definition, both patient advocacy and interrogative case management models can be further characterized as addressing the quality of care, because if cost and risk remain constant and benefits increase, quality is improved. Similarly, if benefits and risk remain constant and costs decrease, quality is improved. Thus, the interrogative model of case management addresses quality through the cost variable, and the patient advocacy model addresses quality through the benefit variable" (Long, 2001).
A third model is not seen as a separate and different model but rather a mixture of both the interrogative and patient advocacy models. In the consolidated model, the decision-making process might be thought of as agreement building among the providers that make up the team. It is rational to suggest that each member of the multidisciplinary team is partial to their own internal implied controls and the overt controls imposed by the managed care organization. The consequential treatment plan might then be considered the consequence of the prevailing agreement of the team. "That is to say, the group's decision could reflect a position of any point along the continuum of a strong interrogative approach to a strong patient advocacy approach" (Long, 2001).
In today's cost mindful health care environment case management must prove its financial value as well as its impact on clinical outcomes. A cost benefit analysis is a tool that can be used to critic the financial value of case management activities. Cost benefit analysis is a technique for measuring the net benefit of an intervention in which costs and benefits are both expressed in the same monetary terms, allowing comparison of dissimilar interventions or decision choices. Using this model, the financial return of a case management program is equal to benefits minus costs (Spath, n.d.). In order to have a successful financial return the benefits should be higher than the costs.
Costs are typically recognized as direct costs or those that are directly associated or required to produce a service or under the direct control of the case management department and indirect costs which are those beyond the department's direct control. Costs also may be considered as fixed or those that do not vary depending on volume or activity generally thought of as overhead and variable or those that change with volume and activity. With increased volume, fixed costs may also increase, if capacity is exceeded and more capital expenditure is required for space or equipment (Spath, n.d.).
Costs connected with case management may be divided into pre-implementation costs such as planning and analysis, implementation costs such as project…[continue]
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