Managed Care Penetration Research Articles

Managed care penetration, insurance status, and access to health care.

Access to health care, reflected by an ability to meet one's health needs, is influenced by individual characteristics and the environment. Although managed care activity influences healthcare prices and overall utilization, its relationship to access and its broader effects across different insurance categories has not been well studied. To examine the association between managed care activity and individuals' access to care, and to assess differences in this relationship by insurance status. Cross-sectional survey of households conducted in 1998. A sample of 15,613 adult Ohio residents. Self-reported difficulties in obtaining health care, medications, supplies, or medical equipment in the past year. A total of 1248 (8.0%) identified an access problem. In bivariate analyses, these problems were more common among continuously and intermittently uninsured individuals compared with those who were continuously insured during the previous 12 months (P<0.001) and also among those living in areas with more managed care (P=0.01). After accounting for other individual and environmental characteristics in hierarchical analyses, individuals residing in areas with more managed care had 28% higher odds of reporting problems obtaining care than those elsewhere (multivariate odds ratio, 1.28; 95% confidence interval, 1.04-1.58]; P=0.02). No significant interaction between managed care penetration and insurance status was observed. Greater managed care activity is associated with unfavorable patterns of healthcare access despite an individual's insurance status, suggesting more pervasive effects. Unintended effects should be carefully evaluated when formulating future programs that seek to address disparities in access to care.

Efficiency outcomes of market concentration and managed care

The paper examines how hospital cost efficiency has reacted to extensive horizontal integrations of hospitals and rapid growth of managed care in the US health care industry. Cost efficiency is estimated by using panel data approaches to relax the assumptions for the hospital effects imposed in earlier studies. The paper shows that higher managed care penetration over time is associated with greater hospital efficiency, and higher market concentration is positively associated with efficiency when markets are highly competitive or highly concentrated.

Managed care and access to substance abuse treatment services.

Using nationally representative data from 1995 and 2000, this study examined how managed care penetration and other organizational characteristics were related to accessibility to outpatient substance abuse treatment. At an organizational level, access was measured as the percentage of clients unable to pay for services; the percentage of clients receiving a reduced fee; and the percentage of clients with shortened treatment because of their inability to pay. Treatment units with both relatively low and relatively high managed care penetration were more likely to support access to care; these units provided care to higher percentages of clients unable to pay and were less likely to shorten treatment because of client inability to pay. Treatment units with midrange managed care penetration were least likely to support access to care. The complexity of managing in an environment of conflicting incentives may reduce the organization's ability to serve those with limited financial means.

Managed Care Devastating Medical Education

Managed Care Devastating Medical Education

Managed care and employer premiums.

This paper used 1993-1997 data from medium and large size employers to examine the effects of market wide managed care penetration on the premiums paid for employer sponsored health insurance. Regressions were run for weighted average single coverage premiums and for premiums on conventional, HMO, and PPO coverage. Four findings emerged from the analysis. First, increased managed care penetration had no statistically significant effect on weighted average employer premiums. Second, higher HMO penetration resulted in lower HMO premiums but higher conventional and PPO premiums. Third, higher PPO penetration had no statistically meaningful effects across plan types. Finally, the results depended critically on whether firms offered self-insured plans. Higher levels of HMO penetration led to smaller increases in conventional and PPO premiums for firms with self-insured plans, but also yielded smaller premium reductions from HMOs relative to those with purchased coverage.

Ties That Bind: Monopsony Tying and the TennCare Cram-Down

The TennCare cram-down provides an important case study of how a state with low managed care penetration implemented, on short notice, a mandatory managed care program not only for all its Medicaid beneficiaries but also for several hundred thousand uninsured or uninsurable state residents not otherwise eligible for medical services support under Medicaid. The TennCare cram-down provides a vehicle for analyzing how the antitrust law applies to a health insurance setting in which an insurance company requires that the providers in its mainstream private plans (and its contracted-for plan for public employees) participate in its public benefits network for public beneficiaries - albeit under different financial terms. The article concludes that, for antitrust purposes, the cram-down must be analyzed and justified under conventional antitrust doctrinal (pro-competitive) norms. The case study is important in its own right and is of even broader potential significance since states seeking the fiscal benefits of managed care in Medicaid are now authorized to adopt mandatory managed care as a universal requirement without the need of securing a federal waiver.

Estimating hospital market pricing: an equilibrium approach using spatial econometrics

This paper models hospital market pricing using price response curves estimated from California data, using spatial econometrics. This approach has not been exploited previously in the health economics literature. In our theoretical model, we show how the slope of the reaction function reflects hospital specialization, and how equilibrium prices are impacted by shifts in the reaction function. We posit that managed care penetration, hospital market structure, and/or efficiency effects—including the presence of excess capacity in the industry—determine the position and slope of the reaction function. We then examine empirically how these things impacted equilibrium prices.

Managed care education: what medical students are telling us.

To examine graduating medical students' perceptions of the adequacy of instruction in managed care and in 11 curricular content areas identified by experts as a necessary part of managed care education. This study sought to determine whether medical students perceived these content areas as relevant to managed care and to evaluate the extent to which students' perceptions of the adequacy of instruction varied as a function of managed care penetration in the locations of their respective medical schools. Data from the Association of American Medical Colleges' 1999 Medical School Graduation Questionnaire (GQ) were analyzed. Students' ratings of adequacy of instruction were summarized. Correlations between ratings of instruction in managed care and 11 related content areas were calculated, as well as correlations between managed care penetration in the locations of the students' schools and the proportion of students rating instruction as inadequate. A majority of 1999 medical school graduates (60%) rated instruction in managed care as inadequate; other content areas to which majorities of graduates gave inadequate ratings were practice management (72%), quality assurance (57%), medical care cost control (57%), and cost-effective medical practice (56%). Ratings in these four content areas were highly correlated with ratings of instruction in managed care. The correlation between managed care penetration and rating of instruction in managed care was statistically significant (r = -.37); correlations between managed care penetration and instruction in the other content areas were not. On the 1999 GQ, a majority of medical students responded that they felt they had not received adequate instruction in managed care. Further, the responses suggest that these medical students defined managed care in terms of managing costs, rather than managing health care, or developing population-based approaches to the delivery of health care.

Financial returns on specialty training for surgeons

Background. Because of recent changes in physician reimbursement and managed care penetration, we wanted to examine the financial returns that medical students might anticipate when considering different careers. Methods. We used standard financial techniques to calculate the return on educational investment for 5 surgical specialties (general surgery, otolaryngology, ophthalmology, orthopedic surgery, and urology) and primary care medicine between 1992 and 1998. Results. The annual yield on specialty training fell for all specialties examined, from an average of 15% to 3% for primary care specialties, and from an average of 36% to 19% for surgical specialties. The difference in the average future hourly income between a given specialty and general practice decreased for all surgical specialties (for general surgery, from $12.03 in 1992 to $9.89 in 1998; otolaryngology, from $21.37 to $5.56; ophthalmology, from $14.12 to $7.15; orthopedic surgery, from $21.16 to $18.91), except urology (from $13.81 in 1992 to $14.84 in 1998). Returns became negative for primary care medicine, dropping from $1.72 to −$1.21. Conclusion. Efforts to create a “level playing field” within medicine have resulted in decreased returns on educational investment across all specialties. Financial returns and the incentives they create should be carefully considered as part of health care reform. (Surgery 2002;132:795-802.)

Long-term financial implications of specialty training for physicians

PurposeGiven the recent changes in physician reimbursement and managed care penetration, we examined the financial returns that might be anticipated when considering different medical careers. MethodsWe used survey data from the American Medical Association and standard financial techniques to calculate the return on educational investment (as the discounted, annual hours-adjusted, net present value of additional training) over a working lifetime for six different specialties (family practice, pediatrics, general internal medicine, gastroenterology, cardiology, and general surgery). ResultsFrom 1992 to 1998, the annual yield on specialty training (hours-adjusted internal rate of return) declined for all specialty groups, especially for primary care specialties. The difference in the average income between a given specialty and general practice decreased for general internal medicine, from $5400 (95% confidence interval [CI]: $5000 to $5800) in 1992 to $1180 (95% CI: $1160 to $1205) in 1998, and became negative for family practice (from $5200 [95% CI: $1000 to $9500] to −$2500 [95% CI: −$5800 to $800]) and pediatrics (from $4000 [95% CI: $1200 to $6800] to −$6300 [95% CI: −$9700 to −$2900]). Values for surgery decreased from $33,100 (95% CI: $29,400 to $36,400) in 1992 to $27,200 (95% CI: $21,700 to $32,100) in 1998, whereas there were increases for cardiology, from $35,100 (95% CI: $30,000 to $39,700) to $36,700 (95% CI: $26,500 to $45,700), and for gastroenterology, from $30,000 (95% CI: $21,800 to $37,200) to $34,700 (95% CI: $22,700 to $45,300). ConclusionOur analysis suggests that recent efforts to use financial incentives to make primary care fields more attractive have not been effective. Financial returns and the incentives they create should be carefully considered as part of health care reform.

Do competition and managed care improve quality?

In recent years, the US health care industry has experienced a rapid growth of managed care, formation of networks, and an integration of hospitals. This paper provides new insights about the quality consequences of this dynamic in US hospital markets. I empirically investigate the impact of managed care and hospital competition on quality using in-hospital complications as quality measures. I use random and fixed effects, and instrumental variable fixed effect models using hospital panel data from up to 16 states in the 1992-1997 period. The paper has two important findings: First, higher managed care penetration increases the quality, when inappropriate utilization, wound infections and adverse/iatrogenic complications are used as quality indicators. For other complication categories, coefficient estimates are statistically insignificant. These findings do not support the straightforward view that increases in managed care penetration are associated with decreases in quality. Second, both higher hospital market share and market concentration are associated with lower quality of care. Hospital mergers have undesirable quality consequences. Appropriate antitrust policies towards mergers should consider not only price and cost but also quality impacts.

Effect Of Drive-Through Delivery Laws On Postpartum Length Of Stay and Hospital Charges

Postpartum hospital length of stay fell rapidly during the 1980s and 1990s, perhaps due to increased managed care penetration. In response, 32 states enacted early postpartum discharge laws between 1995 and 1997, and a federal law took effect in 1998. We analyze how these laws changed length of stay and hospital charges, using a national discharge database. Difference-in-difference models show that the laws increased both length of stay and hospital charges. Furthermore, we find that effects vary by law details, that ERISA diluted the law effects, and that law effects partially spilled over to unregulated Medicaid births.

Is managed care leading to consolidation in health-care markets?

To determine the extent to which managed care has led to consolidation among hospitals and physicians. We use data from the American Hospital Association, American Medical Association, and government censuses. Two stage least squares regression analysis examines how cross-section variation in managed care penetration affects provider consolidation, while controlling for the endogeneity of managed-care penetration. Specifically, we examine inpatient hospital markets and physician practice size in large metropolitan areas. All data are from secondary sources, merged at the level of the Primary Metropolitan Statistical Area. We find that higher levels of local managed-care penetration are associated with substantial increases in consolidation in hospital and physician markets. In the average market (managed-care penetration equaled 34 percent in 1994), managed care was associated with an increase in the Herfindahl of .054 between 1981 and 1994, moving from .096 in 1981 to .154. This is equivalent to moving from 10.4 equal-size hospitals to 6.5 equal-sized hospitals. In the physician market place, we estimate that at the mean, managed care resulted in a 14 percentage point decrease of physicians in solo practice between 1986 and 1995. This implies a decrease in the percentage of doctors in solo practice from 38 percent in 1986 to 24 percent by 1995.

Urban homelessness and poverty during economic prosperity and welfare reform: changes in self-reported comorbidities, insurance, and sources for usual care, 1995-1997.

Little is known of how homeless and other urban poor populations have fared during the robust economy and within structural changes in health care delivery and entitlement programs of the 1990s. This is important in determining the need for population-specific services during a vigorous economy with low unemployment and increasing Medicaid managed-care penetration. This study compared health insurance status and availability of a source for usual medical care, psychiatric and substance abuse comorbidities, and perceived causes of homelessness in homeless adults surveyed in 1995 and 1997. Cross-sectional, community-based surveys were conducted in 1995 and 1997 at sites frequented by urban homeless adults residing in Pittsburgh, Pennsylvania. Self-reported medical, mental health, and substance abuse comorbidities, health insurance, and source for usual care were measured. Compared to the 388 individuals surveyed in 1995, the 267 homeless adults surveyed in 1997 had more medical comorbidity (56.6% vs. 30.2%, P <.001) and mental health comorbidity (44.9% vs. 36.9%, P =.04) and required more chronic medication (52.1% vs. 30.3%, P <.001). More respondents in 1997 than 1995 reported having no health insurance (41.4% vs. 29.4%, P <.001). While there was no difference in the overall proportion reporting a source for usual care (78.3% in 1997 vs. 80.2% in 1995, P =.55), fewer persons reported use of the emergency department and more persons reported using a shelterbased clinic for usual care in 1997 compared with 1995. These findings suggest more need for medical care among homeless and urban poor persons in 1997 compared with 1995 and support the continued need for outreach and support services despite a vigorous economy.

Dynamics of change in local physician supply: an ecological perspective

The purpose of this study is to employ an ecological framework to identify factors that have an impact on change in local physician supply within the USA. A particular specialty type of patient care physicians in a local market is defined as a physician population. Four physician populations are identified: generalists, medical specialists, surgical specialists, and hospital-based specialists. Based on population ecology theory, the proposed framework explains the growth of a particular physician population by four mechanisms: the intrinsic properties of this physician population; the local market's carrying capacity, which is determined by three environmental dimensions (munificence, concentration, diversity); competition within the same physician population; and interdependence between different physician populations. Data at the level of Metropolitan Statistical Areas (MSAs) were compiled from the US Area Resources File, the American Hospital Association Annual Surveys of Hospitals, the American Medical Association Census of Medical Groups, the InterStudy National HMO Census, and the US County Business Patterns. Changes in the number and percentage of physicians in a particular specialty population from 1985 to 1994 were regressed, respectively, on 1985–94 changes in the explanatory variables as well as their levels in 1985. The results indicate that the population ecology framework is useful in explaining dynamics of change in the local physician workforce. Variables measuring the three environmental dimensions were found to have significant, and in some cases, differential effects on change in the size of different specialty populations. For example, both hospital consolidation and managed care penetration showed significant positive effects on growth of the generalist population but suppressing effects on growth of the specialist population. The percentage of physicians in a particular specialty population in 1985 was negatively related to change in the size of that specialty population between 1985 and 1994, suggesting the existence of competition. Overall, the findings of this study facilitate a better understanding of the complexity of physician workforce supply.

Effect of managed care on preventable hospitalization rates in California.

Hospitalization rates for ambulatory care-sensitive (ACS) conditions have emerged as a potential indicator of health care access and quality. The effect of managed care on reducing these potentially preventable hospitalizations is unknown. To ascertain whether increases in managed care penetration were associated with changes in hospitalization rates for ACS conditions. Longitudinal analysis between 1990 and 1997 of all California hospitalizations for ACS conditions aggregated to 394 small areas. Association of change in ACS hospitalization rate with change in managed care penetration. In unadjusted analysis there was no association between the change in managed care penetration and the change in hospitalization rates for ACS conditions over time. However, in a multivariate model that controlled for changes in area demographics and hospitalization rates for marker conditions that were assumed to be stable over time, the change in managed care penetration was negatively associated with a small but statistically significant change in the ACS hospitalization rate. Each 10-point increase in percentage private managed care penetration was associated with a 3.1% decrease in the ACS hospitalization rate (95% CI, -5.4% to -0.8%) Overall, in California, an increase in the penetration of private managed care in a community was associated with a decrease in ACS admission rates. Additional research is needed to determine if the observed association is causal, the mechanism of the effect and whether it represents an improvement in patients' health outcomes.

An international study of hospital readmissions and related utilization in Europe and the USA

This study concerns a comparative analysis of hospital readmission rates and related utilization in six areas, including three European countries (Finland, Scotland and the Netherlands) and three states in the USA (New York, California, Washington State). It includes a data analysis on six major causes of hospitalization across these areas. Its main focus is on two questions. (1) Do hospital readmission rates vary among the causes of hospitalization and the study populations? (2) Are hospital inpatient lengths of stay inversely related to readmissions rates? The study demonstrated that diagnoses such as chronic obstructive pulmonary disease (COPD) and congestive heart failure (CHF) were the major causes of hospital readmission rates. The data showed that (initial) hospital stays were generally longer for patients who were readmitted than for those who were not. As a result, short stays were not associated with a higher risk of readmission, meaning that hospital readmissions were not produced by premature hospital discharges in the study population. Furthermore, the spatial variation in readmission rates within 7 versus 8–30 days showed to be identical. Finally, it was found that countries or states with relatively shorter stays showed higher readmission rates and vice versa. Since patients with readmissions in all of the areas had on average longer initial stays, this finding at country level does illustrate that there seems to be a country specific trade off between length of stay and rate of readmission. An explanation should be sought in differences in health care arrangements per area, including factors that determine length of stay levels and readmission rates in individual countries (e.g. managed care penetration, after care by GP's or home care).

Why do rural primary care physicians sell their practices?

This study evaluates why rural primary care physicians sell their practices. A random sample of rural primary care practices in California, Utah, Ohio, Texas, and Virginia were surveyed to investigate changes in ownership of the practices during the period 1995-1998. These five states were selected because they represent areas with different experiences with physician-hospital integration and varied rates of managed care penetration. A series of logistic regressions were conducted to examine the factors that led independent physicians to sell their practices to either nonlocal buyers, local hospitals, or local physicians. Findings suggest that sales to nonlocal buyers represent the majority of practice ownership changes. The motivations for ceding control to nonlocal buyers center on managed care concerns, recruitment concerns, and administrative burdens. Sellers were also concerned about their level of net income prior to being acquired. However, the preacquisition financial concerns of sellers were not significantly stronger than the financial concerns of practices that remained independent. The environmental conditions that motivate rural physicians to sell their practices are not expected to improve. Therefore, additional sales of rural primary care practices to nonlocal buyers are expected. Further research is necessary to determine whether this shift in control will lead to changes in the quality or accessibility of care.

How do doctors behave when some (but not all) of their patients are in managed care?

Most physicians today treat a variety of patients within their practices where a variety of insurance arrangements co-exist. In this paper, we propose several theoretical explanations for physician treatment patterns when the patient population is heterogeneous at the practice level. Data from the 1993–1996 National Ambulatory Medical Care Survey (NAMCS) are used to test how practice level managed care penetration affects treatment intensity. Practice composition has strong effects on treatment. Visit duration appears to be constant across patients within a practice, while medications prescribed appear to be converging as managed care penetration increases.

Impact of HMO penetration and other environmental factors on hospital X-inefficiency.

This study examined the impact of health maintenance organization (HMO) market penetration and other internal and external environmental factors on hospital X-inefficiency in a national sample (N = 1,966) of urban U.S. hospitals in 1997. Stochastic frontier analysis, a frontier regression technique, was used to measure X-inefficiency and estimate parameters of the correlates of X-inefficiency. Log-likelihood restriction tests were used to test a variety of assumptions about the empirical model that guided its selection. Average estimated X-inefficiency in study hospitals was 12.96 percent. Increases in managed care penetration, dependence on Medicare and Medicaid, membership in a multihospital system, and location in areas where competitive pressures and the pool of uncompensated care are greater were associated with less X-inefficiency. Not-for-profit ownership was associated with increased X-inefficiency.