The ‘managed care’ idea: implications for health service systems in Australia The growth of corporatism in health‐care in the US, and the consequences arising from US models of health‐care delivery systems provide an enormously valuable point of comparison with health systems of other developed economies, such as Australia. If lessons are to be learnt from the US, then an analysis of the structure and performance of the US health‐care system provides important background for understanding and (...) assessing contemporary policy changes to administrative and organizational designs and techniques for patient care in Australia. (shrink)

To achieve its goals of managing andrestricting access to psychiatric care, managedcare organizations rely on an instrument, theoutpatient treatment report, that carriessignificant implications about how they viewpsychiatric patients and psychiatric care. Inaddition to involving ethical transgressionssuch as violation of patient confidentiality,denial of access to care, spurious use ofconcepts like quality of care, and harassmentof practitioners, the managed care approachalso depends on an overly technical,instrumental interpretation of human beings andpsychiatric treatment. It is this grounding ofmanaged (...) care in technical reason that I willexplore in this study. I begin with a reviewof a typical outpatient treatment report andshow how, with its dependence on the DSM-IV,on behavioral symptoms and patient`functioning'', on the biomedical model ofpsychiatric illness, and on gross quantitativemeasures, the report results in a crude,skeletonized view of the human being as acongeries of behavioral symptoms and functions. I then develop the managed care construal ofhuman existence further by showing itsgrounding in technical reason, exploring thelatter in its modern embodiment and deriving itand its opposite, practical reason, fromAristotle''s distinction between technical andpractical reason, techne and phronesis. Inthis analysis of the role of technical reasonin managed care, I point out that managed caredid not have to develop its rationale de novobut could rather lift its arguments, e.g. thebiomedical model, from contemporary psychiatryand simply apply them in a restrictive manner. Finally, I conclude this study by arguing forpsychiatry''s status as a discipline ofpractical knowledge. (shrink)

: Managed care per se is a morally neutral concept; however, as practiced today, it raises serious ethical issues at the clinical, managerial, and social levels. This essay focuses on the ethical issues that arise at the bedside, looking first at the ethical conflicts faced by the physician who is charged with responsibility for care of the patient and then turning to the way in which managed care exacts costs that are measured not in dollars (...) but in compromises in the caring dimensions of the patient-physician relationship. (shrink)

This article reviews the relationship between managed care and public health. Managed care, with its seemingly infinite structural and organizational variation, dominates the modern American health-care system for the non-elderly U.S. population. Through its emphasis on standarhzed practice norms and performance measurement, coupled with industrial purchasing techniques, prepayment, risk downstreaming, and incentives-based compensation, managed care has the potential to exert considerable influence over the manner in which the health-care system is organized and (...) functions. Given the degree to which the attainment of the basic public health goal of protecting the public against population health threats for which there are known and effective medical interventions depends on the successful interaction between public health policy and the medical care system, the importance of a viable working relationship between public health and managed care is difficult to overstate.The potential for conflict between public health and medical care is nothing new; indeed, delineating the boundaries of public health to shape and influence medical practice has occupied the energies of policymakers and the medical industry for well over a century. (shrink)

This article reviews the relationship between managed care and public health. Managed care, with its seemingly infinite structural and organizational variation, dominates the modern American health-care system for the non-elderly U.S. population. Through its emphasis on standarhzed practice norms and performance measurement, coupled with industrial purchasing techniques, prepayment, risk downstreaming, and incentives-based compensation, managed care has the potential to exert considerable influence over the manner in which the health-care system is organized and (...) functions. Given the degree to which the attainment of the basic public health goal of protecting the public against population health threats for which there are known and effective medical interventions depends on the successful interaction between public health policy and the medical care system, the importance of a viable working relationship between public health and managed care is difficult to overstate.The potential for conflict between public health and medical care is nothing new; indeed, delineating the boundaries of public health to shape and influence medical practice has occupied the energies of policymakers and the medical industry for well over a century. (shrink)

Does managed care represent the death knell for the ethical provision of medical care? Much of the current literature suggests as much. In this essay I argue that the types of ethical conflicts brought on by managed care are, in fact, similar to those long faced by physicians and by other professionals. Managed care presents new, but not fundamentally different, factors to be considered in medical decision making. I also suggest ways of better (...) understanding and resolving these conflicts, in part by distinguishing among conflicts of interest, of bias and of obligation. (shrink)

: The market success of managed health plans in the 1990s is bringing to medicine the easy availability of electronically stored information that is characteristic of the securities and consumer credit industries. Protection for medical confidentiality, however, has not kept pace with this information revolution. Employers, the managed care industry, and legal and ethics commentators frequently look to the concept of informed consent to justify particular uses of health information, but the elastic use of informed consent as (...) a way of responding to managed health plans' disclosure of information to third parties fails to address underlying questions involving substantive value choices. (shrink)

For-profit managed care organizations face decisions about cost sharing that can involve a tradeoff between the interests of investors and the interests of patients. No successful business can ignore the interests of its investors, but moral philosophy points to ethical reasons for managed care organizations to make patients’ health, rather than investors’ profit, their primary goal. One reason is the ethical obligation of all businesses to avoid wrongful exploitation of vulnerable customers. An insurance company’s cost-sharing policy (...) can exploit customers either by collecting an unfairly large amount of money from them or by unfairly deterring them from making claims for resources they medically need. Another reason stems from the fact that managed care organizations’ profits derive in part from the existence of artificial barriers to access to medicine, notably including patents. Putting a fence around a water well in the desert is legitimate only if doing so facilitates a financial arrangement that maximizes people’s access to water they need. Likewise, patents and other artificial barriers to access to medically necessary drugs are legitimate only if they are used to help finance access to medical resources people need. For these reasons, managed care organizations should make cost-sharing decisions that maximize the sustainable availability of effective drugs to patients who need them. (shrink)

: Arguments for efficiency in health care delivery have been used to support some level of withholding of information about available treatment options from patients in managed care systems. To the extent that such arguments prevail, they may necessitate changes in the established understanding of and commitment to informed consent and the disclosure of information to patients.

: In its response to pressures to rationalize health care resource allocation, the American health care system has embraced managed care without concurrent comprehensive health care reform, either in the form of the centralized tax-based systems found in Europe and Canada or that of the Clinton reform plan. What survives is managed care without managed competition, employer mandates, or universal access. Two problems inherent in the incentive structure of managed care (...) plans developed in the absence of comprehensive health care reform work against the public interest. First, sacrifices in terms of medical innovation and quality of care may not be offset by greater equity in the distribution of health care. Second, such managed care plans fail to address the need for long-term accountability. (shrink)

During the past decade, Medicaid has experienced extraordinary growth, in both number of beneficiaries and total expenditures. Between 1988 and 1993, the number of Medicaid beneficiaries grew from 22 million to 32 million. While the number of Medicaid beneficiaries increased by 45 percent, expenditures increased by 145 percent, from 51 billion to 125 billion. Expressed in terms of its percentage of state budgets, Medicaid doubled from 10 percent to 20 percent over the same time period, to the point that it (...) is currently the second largest budget item for most states.Faced with unsustainable rates of program budget growth and serious concerns about the level of access and the continuity of care afforded by the Medicaid program, states have turned to managed care. Almost every state has introduced some form of managed care for a subset of their Medicaid beneficiary population. Twenty-three states have gone farther, and implemented, proposed, or are developing section 1115 waivers to overhaul their Medicaid programs. These waivers allow states to develop and introduce nonstandard approaches to benefits, eligibility, service delivery, and financing for the Medicaid beneficiary population. (shrink)

During the past decade, Medicaid has experienced extraordinary growth, in both number of beneficiaries and total expenditures. Between 1988 and 1993, the number of Medicaid beneficiaries grew from 22 million to 32 million. While the number of Medicaid beneficiaries increased by 45 percent, expenditures increased by 145 percent, from 51 billion to 125 billion. Expressed in terms of its percentage of state budgets, Medicaid doubled from 10 percent to 20 percent over the same time period, to the point that it (...) is currently the second largest budget item for most states.Faced with unsustainable rates of program budget growth and serious concerns about the level of access and the continuity of care afforded by the Medicaid program, states have turned to managed care. Almost every state has introduced some form of managed care for a subset of their Medicaid beneficiary population. Twenty-three states have gone farther, and implemented, proposed, or are developing section 1115 waivers to overhaul their Medicaid programs. These waivers allow states to develop and introduce nonstandard approaches to benefits, eligibility, service delivery, and financing for the Medicaid beneficiary population. (shrink)

Managed care has brought wide-ranging changes to the health care system. Some of these changes have been well publicized. Among them are the financial pressures that have resulted in numerous mergers of health care institutions, the restriction on the ability of patients to select their physician of choice, and the ever diminishing number of days that patients are permitted to stay in the hospital. Individual physicians, too, have been affected. For example, they are under pressure to (...) see more patients per unit time and to use fewer resources. Utilization review and payment methods may make them reluctant to undertake the full set of diagnostic tests and therapeutic interventions when they might otherwise have done so. (shrink)

Managed care has brought wide-ranging changes to the health care system. Some of these changes have been well publicized. Among them are the financial pressures that have resulted in numerous mergers of health care institutions, the restriction on the ability of patients to select their physician of choice, and the ever diminishing number of days that patients are permitted to stay in the hospital. Individual physicians, too, have been affected. For example, they are under pressure to (...) see more patients per unit time and to use fewer resources. Utilization review and payment methods may make them reluctant to undertake the full set of diagnostic tests and therapeutic interventions when they might otherwise have done so. (shrink)

Three major trends in American health policy are intersecting in a fascinating way. First, managed care has grown to become the most dominant form of health-care delivery, leading to reductions in health-care costs as insurers are able to influence health-care providers with financial incentives. Second, the present growth of managed care has slowed, almost to a standstill, largely on account of consumers questioning what effects these financial incentives are having on the care (...) of patients — questioning that has been expressed in particular through lawsuits against managed care companies.Third, we are experiencing a renewed interest in the existence of medical error and how it may be reduced as a result of the Institute of Medicine’s report, To Err Is Human: Building a Safer Health System. The most important aspect of this renaissance in error reduction has been its emphasis on health care as a system that can be made better through system-oriented change. The most frustrating aspect is that the IOM did not endorse change in malpractice liability, which consistently puts the impetus for reducing medical error on the individual provider rather than the system as a whole. (shrink)

Three major trends in American health policy are intersecting in a fascinating way. First, managed care has grown to become the most dominant form of health-care delivery, leading to reductions in health-care costs as insurers are able to influence health-care providers with financial incentives. Second, the present growth of managed care has slowed, almost to a standstill, largely on account of consumers questioning what effects these financial incentives are having on the care (...) of patients — questioning that has been expressed in particular through lawsuits against managed care companies.Third, we are experiencing a renewed interest in the existence of medical error and how it may be reduced as a result of the Institute of Medicine’s report, To Err Is Human: Building a Safer Health System. The most important aspect of this renaissance in error reduction has been its emphasis on health care as a system that can be made better through system-oriented change. The most frustrating aspect is that the IOM did not endorse change in malpractice liability, which consistently puts the impetus for reducing medical error on the individual provider rather than the system as a whole. (shrink)

Managed Care Organizations (MCOs) are frequently criticized for their marketing mistakes. Often that criticism is leveled against an implicit benchmark of an ideal competitive market or an ideal system of government provision. But any accurate assessment in the choice of health care organizations always requires a comparative measure of error rates. These are high in the provision of health care, given the inherent uncertainties in both the cost and effectiveness of treatment. But the continuous and rapid (...) evolution of private health care mechanisms is, in the absence of regulation, more likely to secure access and contain costs than any system of government regulation. State regulation is subject to the risk of capture and to the sluggish and acquisitive behavior of state run monopolies. The proposed fixes for the MCOs (rights to specialists, access to physicians outside the network, guaranteed emergency room access) are likely, when imposed from without, to cost more than they are worth. The long-term risk is that markets will fail under regulation, paving the way for greater losses from massive government control of the health care delivery system. (shrink)

The Clinton administration's revised rules regulating but not prohibiting the common practice in managed care of linking physician compensation with cost cutting and control of services demonstrates the complexity of ethical issues in managed care. As originally proposed, the federal guidelines on payment for Medicare and Medicaid services would have precluded any interrelationship between payment to physicians and delivery of services. Such a restriction would have gutted the primary mechanism in managed care plans to (...) curb the unacceptably high cost of healthcare delivery: making physicians directly responsible for cost control by placing them at direct financial risk. At first blush such a linkage seems to involve an obvious and irreconcilable conflict of interest. How can a physician be responsible for the well-being of a patient while at the same time aware that a proportion of his or her income is linked to the provision of cost-conscious care? (shrink)

For over a decade, managed care has profoundly altered how healthcare is delivered in the United States. There have been concerns that the patient-physician relationship may be undermined by various aspects of managed care, such as restrictions on physician choice, productivity requirements that limit the time physicians may spend with patients, and the use of compensation formulas that reward physicians for healthcare dollars not spent. We have previously published data on the effects of managed (...) class='Hi'>care on the physician-patient relationship from the physician's perspective. In 1999, we collected data on the impact of managed care arrangements on the physician-patient relationship from the patient's perspective. This article discusses our collective findings. (shrink)

The dramatic appearance of managed care organizations (MCOs) on the U.S. health scene has generated tremendous anxiety among health care providers and patients. These fears are based on the belief that managed care techniques pose greater risks of under treatment than do fee-for-service modes of payment. In addition, many physicians and patients resent the limits placed on clinical autonomy by the MCO model and the stresses that it places on the traditional physician-patient relationship. These misgivings (...) have been exacerbated by the mostly negative response to MCOs in the media and academia. Legislatures have responded to these claims and public fears with a wave of regulatory initiatives. Some of these regulations are attempts to protect patients. Others, however, are motivated primarily by antipathy toward the concept of managed care itself. This essay is an attempt to develop a social ethic of regulation and argues that the sole reason that private enterprise may be justifiably limited is when it presents a risk of harm to others or society. While some regulation and proposed regulation of MCOs meet this standard, much legislation represents an unjustified attempt to limit or handicap otherwise legal behavior merely because a segment of the population and medical profession find it aesthetically unpleasing and oppose its approach to the delivery of health services. (shrink)

: Two basic criticisms of managed care are that it erodes patient trust in physicians and subjects physicians to incentives and pressures that compromise the physician's fiduciary obligation to the patient. In this article, I first distinguish between status trust and merit trust, and then argue (1) that the value of status trust in physicians is probably over-rated and certainly underdocumented; (2) that erosion of status trust may not be detrimental if accompanied by an increase in well-founded merit (...) trust; and (3) that under conditions of managed care the physician's commitment to traditional medical ethics cannot serve as an adequate basis for merit trust. Next, drawing on an analogy between managed care organizations and polities, I argue that (4) the most appropriate basis for merit trust in managed care is a conception of organizational legitimacy that includes procedural justice, empowerment of constructive criticism within the organization, and organizational accommodation of the noninstrumental commitment to patient well-being that is distinctive of medical professionalism. I then explore the conditions necessary for robust competition for merit trust among managed care organizations and indicate the kinds of public policies needed to facilitate such competition. Finally, I show how the account of organization-based merit trust can accommodate the special fiduciary obligation of medical professionals, without indulging in the delusion that it is the physician's fiduciary obligation always to provide all care that is expected to be of any net benefit to the patient. (shrink)

In a new and important book entitled TheManagedCareBluesandHowtoCureThem, a lifetime consumer advocate and a surgeon who witnessed the excesses and unaccountable errors of his colleagues under fee for service explain with deft hands the promise of managed care, its problems, and solutions to them. Walter Zelman and Robert Berenson show empathy for the consumer backlash, provider resentment, and the patients' rights movement that has spawned a thousand bills to prevent possibly unethical actions. Yet they believe these efforts to (...) regulate managed care are misdirected and will prevent it from realizing its potential. (shrink)

The impact of managed care on nurses’ workplace learning and teaching This paper examines the impact of managed care on the informal learning process for nurses in a major US‐based health organisation. Through the analysis of focus group data we report the nurses’ view of the effect recent changes have had on the nurse/patient/care relationship. Managed care, our research indicates, has transformed the learning milieus for nurses with two effects. First, nurses have seen (...) their need for informal learning increase while the time and context for that learning has diminished. Second, the process of teaching patients and families has also been adversely affected even as managed care creates the need for more patient education. We report the analysis of the data collected at group interviews involving nurses working in both hospital and community settings of a leading US‐based HMO. All interviews took place during September of 1997 at various sites in California. This study is part of a larger Social Science Research Council of Canada funded investigation into managed care in the US and Canada. (shrink)

On September 25, 2002, California Governor Gray Davis approved the Health Care Providers’ Bill of Rights. The legislation, which went into effect January 1, 2003, outlaws several practices by insurers that physicians complained represented an imbalance of power. Insurers are now unable to compel doctors to take more patients than they feel they can handle, and managed care companies cannot unilaterally change the terms of their contracts with doctors without notice. Governor Davis praised the legislation, stating, “in (...) order to provide patients with world-class care, we must ensure that our doctors have world-class rights.”California has one of the highest levels of health maintenance organization penetration in the nation, at 52 percent. Seventy-eight percent of HMO patients are enrolled in five HMOs. As a result of these practice conditions, doctors reportedly often felt pressured to comply when HMOs “ordered [them] to take on additional patients,” “changed contracts without warning,” and were “lax in payments.”. (shrink)

On September 25, 2002, California Governor Gray Davis approved the Health Care Providers’ Bill of Rights. The legislation, which went into effect January 1, 2003, outlaws several practices by insurers that physicians complained represented an imbalance of power. Insurers are now unable to compel doctors to take more patients than they feel they can handle, and managed care companies cannot unilaterally change the terms of their contracts with doctors without notice. Governor Davis praised the legislation, stating, “in (...) order to provide patients with world-class care, we must ensure that our doctors have world-class rights.”California has one of the highest levels of health maintenance organization penetration in the nation, at 52 percent. Seventy-eight percent of HMO patients are enrolled in five HMOs. As a result of these practice conditions, doctors reportedly often felt pressured to comply when HMOs “ordered [them] to take on additional patients,” “changed contracts without warning,” and were “lax in payments.”. (shrink)

Automobile insurance companies are joining the move to managed care in the hopes of reducing health-care expenditures arising out of automobile accidents. Industry interest is strong enough that large managed care organizations, such as Concentra Managed Care, Inc., and HNC Insurance Solutions, are beginning to offer their existing network of providers to persons seeking medical care for automobile accident injuries and their evaluation software to insurers.While insurance companies have successfully pressed four state (...) legislatures and one commissioner of insurance for authorization to offer consumers a managed care option in automobile insurance policies, these efforts have not gone unchallenged. Vocal opponents, primarily lawyer and chiropractic organizations, question whether persons injured in accidents will receive care when needed, what the quality of care received will be, and whether any savings will be passed on to consumers. (shrink)

Automobile insurance companies are joining the move to managed care in the hopes of reducing health-care expenditures arising out of automobile accidents. Industry interest is strong enough that large managed care organizations, such as Concentra Managed Care, Inc., and HNC Insurance Solutions, are beginning to offer their existing network of providers to persons seeking medical care for automobile accident injuries and their evaluation software to insurers.While insurance companies have successfully pressed four state (...) legislatures and one commissioner of insurance for authorization to offer consumers a managed care option in automobile insurance policies, these efforts have not gone unchallenged. Vocal opponents, primarily lawyer and chiropractic organizations, question whether persons injured in accidents will receive care when needed, what the quality of care received will be, and whether any savings will be passed on to consumers. (shrink)

Over the past several years, healthcare has been profoundly altered by the growth of managed care. Because managed care integrates the financing and delivery of healthcare services, it dramatically alters the roles and relationships among providers, payers, and patients. While analysis of this change has focused on whether and how managed care can control costs, an increasingly important concern among healthcare providers and recipients is the impact of managed care on the physicianpatient (...) relationship, but little data have been collected and analyzed. We designed a survey for distribution to Wisconsin physicians to analyze the prevalence and types of managed care arrangements in the state, and the impact of these arrangements on physicians and their relationships with patients. (shrink)

By and large, neither bioethicists nor economists have offered a satisfactory account of how managed care organizations should ration health care. Both disciplines would like to guarantee adequate care to all without defining adequacy. But it cannot be done. The more we rely on market forces to distribute health care, the more we need a national standard of care.

Analysis in bioethics has relied primarily on the identification and application of general principles and on the examination of particular paradigmatic cases. Principalism and casuistry depend on an assumption of generalizability; that is, that learning and insights gained from an understanding of the principles or the case may be effectively applied to other similar situations. For the most part, the particular characteristics of the institutional setting have not played a central role in these approaches. It would appear, then, that what (...) has been learned in the context of one health care setting is transferable, with some few adjustments, to another. The institutional context does make both a practical and a substantive difference, however, and shifting ethical analyses from one context to another has sometimes proven difficult. This has been so, for example, in the context of nursing home care. (shrink)

Analysis in bioethics has relied primarily on the identification and application of general principles and on the examination of particular paradigmatic cases. Principalism and casuistry depend on an assumption of generalizability; that is, that learning and insights gained from an understanding of the principles or the case may be effectively applied to other similar situations. For the most part, the particular characteristics of the institutional setting have not played a central role in these approaches. It would appear, then, that what (...) has been learned in the context of one health care setting is transferable, with some few adjustments, to another.The institutional context does make both a practical and a substantive difference, however, and shifting ethical analyses from one context to another has sometimes proven difficult. This has been so, for example, in the context of nursing home care. (shrink)

In Singh v. Blue Cross/Blue Shield of Massachusetts, Inc., the U.S. Court of Appeals for the First Circuit held that defendant Blue Cross/Blue Shield's peer review practices satisfied the immunity standard for professional review actions according to the Health Care Quality Improvement Act, and the First Circuit affirmed the U.S. District Court for the District of Massachusetts's grant of summary judgment in favor of the defendant.After Blue Cross/Blue Shield merged with Bay State Health Care, Blue Cross began to (...) offer “Bay State Health Care” to former Bay State subscribers. Blue Cross denied the plaintiff, Dr. Kunwar Singh, participation in the Bay State Healthcare Network due to poor utilization review. Singh sought reconsideration, and Blue Cross agreed to audit his practices before making a final decision. (shrink)

In Singh v. Blue Cross/Blue Shield of Massachusetts, Inc., the U.S. Court of Appeals for the First Circuit held that defendant Blue Cross/Blue Shield's peer review practices satisfied the immunity standard for professional review actions according to the Health Care Quality Improvement Act, and the First Circuit affirmed the U.S. District Court for the District of Massachusetts's grant of summary judgment in favor of the defendant.After Blue Cross/Blue Shield merged with Bay State Health Care, Blue Cross began to (...) offer “Bay State Health Care” to former Bay State subscribers. Blue Cross denied the plaintiff, Dr. Kunwar Singh, participation in the Bay State Healthcare Network due to poor utilization review. Singh sought reconsideration, and Blue Cross agreed to audit his practices before making a final decision. (shrink)

How can health plans make fair determinations about when “experimental” (and costly) treatments such as high dose chemotherapy with autologous bone marrow transplantation should be covered despite lack of clear clinical consensus about their benefits? Different models for managing “last chance” therapies evolving in some health plans offer promising examples of how issues of fairness and legitimacy in decisionmaking can be addressed.

The arguments against managed care can be divided into two general clusters. One cluster concerns the way managed care undermines the ethical ideals of medical professionalism. Since those ideals largely focus on the physician-patient relation, the first cluster comes under the rubric of micro-ethics; namely, the ethics of individual-individual relations. The second cluster of criticisms focuses on macro-ethical issues, primarily on issues of justice and policy. By reviewing these arguments, it becomes clear that managed (...) class='Hi'>care does not easily fit within traditional modes of ethical analysis. It poses a radical challenge to current medical and socio-political norms, and even resists the distinction between micro- and macro-ethical domains, a distinction that reflects the private/public distinction. Managed care organizations call for a third way, an inter-ethic for middle level organizations. The essays in this Journal provide a first step in this radical reassessment, laying the foundation for an organizational ethic that is responsive to the realities and promise of managed care. (shrink)