The new anatomy of health care - includes related articles and glossary of medical terms - Panel Discussion

Chief Executive, The, Jan, 1996 by J.P. Donlon, Barbara Benson

So managed care remains largely a promise of making a difference from a clinical perspective.

Arnold B. Pollard (CE): Could the care delivery process be rearranged without moving to managed care?

Go: Changing the financial incentive is a necessary step to changing the care delivery process. Historically, there has been little or no accountability for costs and results: Health care was a benefit financed by government or employers, and neither the users nor the care deliverers had financial incentives to manage costs. Even now, patients themselves are not widely incentivized to manage the costs of their care. That is still to be done.

Mark H. Tabak (AIG Managed Care): I agree that the promise of managed care is still largely unfulfilled. My working definition of managed care is "the provision of care with a focus on outcomes." Those outcomes pertain to cost, access, and quality. While managed care has focused on cost, the real promise will be fulfilled when we address quality and access.

Josh S. Weston (Automated Data Processing): Let's identify which components of health care we're addressing. As CEOs, presumably, we're talking about the cost to employers.

On a bigger scale, we should consider some of the following: demand - from unlimited to controlled; service efficiency; integrity of the care providers - there are some outright liars out there; the appropriate markup on services; and accessibility to knowledge, because if people don't know the wise system, they're stuck with the dumb system. If the nation could make progress in just one or two of these areas, it would be quasi-nirvana.

Frank N. Liguori (Olsten Corp.): What's driving costs? First, there are simple demographics - life expectancy changes. Tied to that is the development of expensive advanced technologies. Health-care costs in just raw expenditures will increase because of demographics.

Another factor driving cost is waste: in infrastructure, utilization, and unnecessary procedures. Managed care has heightened awareness in those areas and has served as a catalyst to wring out waste.

Bernard J. Korman (MEDIQ): That's a good point: Demand for health care has been created by providers who have no economic incentive to eliminate waste. If you could marry providers and risk, you might control demand more efficiently.

Liguori: In home care, we are seeing more capitated deals from managed-care companies, and there is more risk-sharing by providers. But those providers have an incentive to offer less service: The less service they provide, the more money they make. Ironically, in past years, they made more money if they provided more service. That was part of the waste wrung out of the system.

Korman: Yes, but is there not a professional standard? A managed-care company's margin is based on the company's squeezing the system, not on its quality of service. If we could marry the provider and the risk, and add the appropriate professional standards, we could cut costs.

Wallace Barnes (Rohr): Managed care has been useful in inducing competition, and in driving choice by users with co-payments. But what will drive us to the next stage? We are missing sufficient data for users to make intelligent choices.