Managed care era puts 'bottom line' demands on infection control

ICPs battling bugs and budget-cutters in changing environment

Whether viewed as an insidious threat or singular opportunity, managed care is rapidly becoming a reality for many infection control professionals.

A burgeoning alternative to the traditional fee-for-service financing of health care, managed care plans include both health maintenance organizations (HMOs) and preferred provider organizations (PPOs). According to the American Association of Health Plans (AAHP) in Washington, DC, which represents some 1,000 health groups around the country, approximately 100 million people in the United States are enrolled in some type of managed care health plan.

"In 1995, more than 70% of employees in this country were enrolled in managed care plans of one type or another," says AAHP spokesman Don White. "Clearly, this is where the future is going to be. I think at this point, most hospitals -- certainly in metropolitan areas -- will be contracting with managed care plans."

In a move that reflects the growing importance of the trend, the Centers for Disease Control and Prevention in Atlanta recently appointed a managed care coordinator to keep abreast of the field and forge key partnerships in the area of prevention. Predicting a continued rapid expansion of managed care, the CDC recently issued a report profiling the industry.1 (See related story, p. 42.)

CDC pushes to make infection prevention a critical measure

"Managed care will continue to grow rapidly as a source of care for Americans insured by Medicaid, Medicare, and employers," the CDC report states. "In a highly competitive health-care market, performance measurement will be important to assure that the managed care organization's need to contain costs does not displace quality of care as a priority."

While seeking increased collaboration in the public health arena, the CDC also is working to increase managed care's interest in nosocomial infections and antibiotic resistance issues, says Jeffrey Harris, MD, MPH, managed care coordinator at the CDC.

"Managed care certainly has an incentive to have nosocomial infections decreased," he says. "If they think about it, they will also realize that they have an incentive to slow the increase in antimicrobial resistance."

As part of the effort, the CDC proposes adding such infection control issues to the managed care "report card" called the Health Plan Employer Data and Information Set (HEDIS), which is used by some 300 health plans for accreditation and quality assurance.

"We are proposing that they consider something on nosocomial infections and something on antimicrobial resistance," Harris says. "If you put it into the report cards that plans are being measured on, it gives them a stronger incentive."

The CDC also is interested in using managed care infectious disease laboratory data systems for notifiable disease surveillance. Another possibility is staff exchanges that may eventually include the assignment of epidemiologists to HMOs, Harris says.

"It's going to become clearer over time as the relationships between the various hospitals and managed care companies sort out, but I think managed care is going to want to take hospital infections and other care-associated [events] pretty seriously," he says. "I could even see them at some point hiring their own infection control people to manage these relationships with home care companies and hospitals."

Likewise, the AAHP's White expects managed care plans contracting with hospitals to increasingly look to nosocomial infection rates and mortality rates as quality measures. Under that scenario, high-profile infection control programs could actually be an incentive for managed care contractual arrangements favorable to hospitals that survive the expected closings and mergers in the continuing shakeout of the health care sector.

"When choices are made, sometimes even a small difference in institutions can be the difference between contracting with one institution as opposed to another, and infection control may actually tip the scales in that kind of environment," White says. "Managed care companies will be looking to hospitals that have good infection control programs in place. Good infection control activities are going to go to the bottom line. It's just that simple. Hospitals that do not have a good handle on infection control are going to end up being higher-cost institutions ultimately."

Dramatic change signals opportunity

The impact of the evolving health care economy on individual ICPs and their department budgets will depend largely on an ability to demonstrate the efficacy of their programs, says Patrick Joseph, MD, CEO of California Infection Control Consultants in San Ramon, which provides hospital epidemiology and infection control services for nine area hospitals heavily involved in managed care.

"Because this is such a dramatic change -- the greatest change that we have seen in health care in 25 years -- there are people who are frightened and perhaps envision the worst possible outcome," he says. "In actuality, I believe that the managed care movement that we see today is the greatest opportunity for infection control professionals since there was a requirement for ICPs in every hospital."

A common perception is that managed care invariably translates to health care delivered at the lowest possible costs, but the concept in its best sense is really about "better quality at the same or lower costs," Joseph says. Though the efficacy of prevention can be hard to measure, Joseph notes that the epidemiologic skills of ICPs actually lend themselves to attacking unnecessary expense, eliminating rituals, and demonstrating cost savings without sacrificing quality. (See ICP cost strategies, p. 45.)

"The ICP is an educated person who is used to measuring baseline information, invoking a change, and remeasuring," Joseph says. "No matter what format a hospital selects to do that, the underlying principle remains the same. In my experience in California hospitals, no one has the background and experience like the ICP to serve the health care environment with this need."

On the other hand, ICPs who fail to demonstrate their value to hospital administration may find themselves looking at a shrinking department budget, he says.

"If all an ICP chooses to do is the routine day-to-day activities without documentation of quality improvement and cost savings, then a budget reduction should be expected," he says. "That's the environment. The managed care environment is, if you don't show me your value, then we will reduce your budget."

A subtle rise in infections?

Indeed, some observers predict such budget cuts may hit infection control departments regardless of initial efforts to demonstrate program efficacy. Robert Haley, MD, the epidemiologist who directed the landmark Study on the Efficacy of Nosocomial Infection Control (SENIC) project at the CDC, predicts infection control programs will suffer nationally under managed care -- at least in the short term.2 Though Haley's research has documented the cost savings of effective infection control programs, he says cutbacks can be expected until a "learning curve" is overcome by the powers that be in managed care companies.3

"They are going to start out by dismantling infection control programs, cutting expenditures, downgrading them, and subordinating them to other parts of nursing staff or the hospital," says Haley, director of epidemiology at the University of Texas Health Science Center in Dallas. "As a result, we are going to have a subtle increase in infection rates throughout the country. If hospitals de-emphasize their infection control programs and stop support for them, that is a dangerous precedent that will mirror what appears to be a popular American business practice -- maximizing short-term profits at the expense of catastrophic long-term problems. There will just be fewer people, less manpower in the hospital concentrating on the control of infections. And thus, infection will become more common."

An immediate impact is already being felt by teaching hospitals, which traditionally have had a partially subsidized educational and research mission that is being severely undercut by the cost-containment strategies of managed care organizations, says Marguerite Jackson, RN, PhD, CIC, FAAN, administrative director of the medical center epidemiology unit at the University of California in San Diego.

"The managed care companies have no interest in the teaching and research functions of the teaching hospitals," she says. "That is not their mission, which is to provide a service at the lowest cost to their covered lives. It is very painful to me personally to have to make decisions based on business economics that I feel often are at variance with what is best for the patient. When you really ask the question of what is 'quality care,' it is very rapidly becoming neither."

Jackson agrees that ICPs in general are well positioned to survive the changes by demonstrating their skills in epidemiology and problem solving, but notes that ongoing efforts like demonstrating cost savings through medical product evaluations do not necessarily translate to budget needs like additional full-time equivalent (FTE) staff.

"That helps, but does it help me save FTEs -- no," she says. "I have fewer FTEs than I had in 1981. So every time it comes to budget time, I have to fight for survival of my tiny little staff. We have to justify our existence. All we have left is salaries and paper clips -- we have no discretionary money anymore."

Fewer patients, shorter stays

Emphasizing that many of her colleagues in other teaching hospitals are in much the same situation, Jackson says a major contributing factor is declining patient census -- a situation created in part by managed care's demands for shortened lengths of stay.

"Our census is down, and the census is what pays the bills," she says. "As the hospital marketplace shifts from the inpatient to the outpatient setting, census falls and revenue falls."

Conceding teaching hospitals are getting hit hard by the new economic realities in health care, White says traditional methods of subsidizing medical teaching and research through "cost shifts" from other health care sectors may now need to be bolstered by more direct federal and state relief efforts.

"One of the things we are going have to do as a nation is confront our need for medical education, uncompensated care, and biomedical research, and more fully fund those functions directly," he says. "But this is all happening in an environment in Washington where people are looking to cut budgets -- not increase budgets."

Infection control makes economic sense

Overall, however, White rejects criticisms of the managed care industry, saying such health plans have every incentive to want to prevent adverse events like nosocomial infections.

"Even if what the naysayers say was true --- that all these managed care companies care about is the bottom line, and if you're spending money on [infection control], it's bad -- it still wouldn't make any sense," he says. "Because having an institution in your plan where rates for nosocomial infections have gotten out of control is going to be very bad for everyone's bottom line."

Regardless, even some ICPs who report generally favorable conditions in managed care environments -- with justified expenditures approved and support of administration clear -- are coping with paper-thin department budgets.

"Managed care is actually very prevention-oriented -- because if you prevent things, you don't have to spend money on them," says Eddie Hedrick, BS, MT(ASCP), CIC, infection control manager at the University of Missouri Hospital and Clinics in Columbia. "Infection control really should be able to thrive in this environment. We are attacking this as an opportunity. But I've told [administration] I'm down to cutting pencils and paper. If they need to get rid of something, it will have to be me, because my staff is absolutely essential for us to function. I'm the gravy here -- the manager."


1. Centers for Disease Control and Prevention. Prevention and managed care: Opportunities for managed care organizations, purchasers of health care, and public health agencies. MMWR 1995; 44(RR-14):1-12.

2. Haley RW, Culver DH, White JW, et al. The efficacy of infection surveillance and control in preventing nosocomial infections in U.S. hospitals. Am J Epidemiol 1985; 121:182-205.

3. Haley RW. Managing Hospital Infection Control for Cost-Effectiveness: A Strategy for Reducing Infectious Complications. Chicago: American Hospital Publishing; 1986. *