Managed care faces resistance overseas

HR Magazine, Oct, 1998 by Maureen Minehan

Human resource professionals with international responsibilities should anticipate the introduction of managed care systems into new markets overseas. U.S.-based HMOs such as Aetna International, United Healthcare, Kaiser Permanente International (KPI) and Cigna are making forays into Latin America, Asia and Central Europe. While consumers, medical professionals and others in those regions may resist implementing a managed care system, there will be strong debate over the pros and cons of doing so.

U.S. companies are not entering developing markets with plans to replicate the U.S. system. Instead, they are partnering with overseas entities to develop strategies that take local practices into consideration. In many Asian countries, for example, the movement to managed care is driven by demand for better quality medical care rather than by strong emphasis on cost containment, as in the United States.

* The case of KPI, which Kaiser established in 1990, illustrates the strategy many companies are adopting. Instead of supplying health care directly or operating health care facilities, KPI provides management and consulting services to locally based firms and governments involved in health care delivery. Their services generally fall into one of three areas: helping multinational corporations to establish a uniform standard of health care for their employees, aiding countries that are attempting to rein in health care costs, and counseling governments as they set up national systems emphasizing preventive health care. KPI's Asian-Pacific involvement reportedly includes Japan, China, Malaysia, Singapore and Australia.

* According to Business Latin America, a biweekly report on developments in the region, Aetna is acquiring 49 percent of Argentina's top managed care company. Through the investment, Aetna will have access to more than 250,000 affiliates throughout the country. In 1997, Cigna formed a joint venture with Brazil's Golden Cross. The Economist reports that while Cigna made only $200 million from its international managed care efforts in 1997, the company projects revenue growth of 20 percent per year in the future.

* The introduction o,f some form of managed care is affecting developed nations as well. In the United Kingdom, the National Health Service oversees 100 pilot projects involving purchase of medical supplies and services. And some areas of the country have adopted utilization reviews that analyze outcomes of medical treatments to determine cost effectiveness.

Widespread implementation of managed care systems overseas will not be easy. For example, the Malaysian Medical Association's web site links to a U.S-based site highlighting the "Managed Care Atrocity of the Month" and the "Managed Care Hall of Shame." And British newspaper editorials frequently oppose adoption of any elements of managed care.

HR professionals involved in international operations will need to monitor developments in managed care overseas. Efficient and affordable health care systems allow employees access to appropriate care and, where applicable, make providing employer-sponsored health benefits easier. SHRM's Issues Management program will continue to follow this issue.

For more information on this and other emerging issues, please visit the SHRM Issues Management web site at http://www.shrm.org/issues.>Maureen Minehan is issues manager for the Society for Human Resource Management. Her e-mail address is maureen@shrm.org.