Does managed care bring low cost, high quality?
Does managed care bring low cost, high quality?
Study suggests it does, but experts are wary
Can lower costs actually go hand in hand with higher quality? Has managed care achieved that goal?
A study by Health Risk Management (HRM) in Minneapolis suggests there is a relationship between low cost and high quality. But outcomes experts caution that the question is far from settled.
"Over and over again, we find studies that show in any [payer] structure we look at there’s vast amount of room for improvement," says Robert H. Brook, MD, vice president of Rand in Santa Monica, CA, and director of Rand’s health program. "Right now, we can’t say managed care has improved quality substantially. Neither can we say that fee-for-service was so good that it couldn’t be changed."
In the QualityFIRST Index of HRM, states with high quality rankings also had low per capita health care costs, while the reverse was true of states that ranked in the bottom 10 or 25 for quality. The low-cost, high-quality states also tended to have higher than average penetration of managed care. (See chart, at right.)
Link Between Quality and Cost | ||
The 1999 QualityFIRST Index published by Health Risk Management in Minneapolis showed that states ranking high on quality indicators also had lower per capita costs, while low-ranking states had relatively higher costs. Here are the rankings and cost figures: | ||
Top 10 |
||
Quality Rank | State | Per Capita Health Care Costs |
1 | Minnesota | $228 |
2 | Hawaii | $227 |
3 | Wisconsin | $218 |
4 | New Hampshire | $235 |
5 | Vermont | $218 |
6 | Massachusetts | $315 |
7 | Connecticut | $274 |
8 | Washington | $230 |
9 | Maine | $221 |
10 | Iowa | $222 |
Bottom 10 |
||
Quality Rank | State | Per Capita Health Care Costs |
41 | Kentucky | $253 |
42 | Texas | $253 |
43 | Alabama | $218 |
44 | New Mexico | $223 |
45 | South Carolina | $231 |
46 | Oklahoma | $315 |
47 | Tennessee | $295 |
48 | Arkansas | $248 |
49 | Louisiana | $317 |
50 | Mississippi | $255 |
Average of top 10 states: | $239 |
|
Average of top 25 states: | $246 |
|
Average of bottom 10 states: | $260 |
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Average of bottom 25 states: | $268 |
The states were rated based on 46 indicators, including economic measures (such as unemployment, lack of health insurance, and poverty), population health (such as overweight, violent crime, air pollution, and smoking), and outcomes (such as preventable hospital admissions, complication rates, and self-reported health status).
"We’re trying to show states, health plans, and consumers how their states stack up against other states in very specific areas that other surveys may not cover," says George Ryan, HRM director of information services. "We feel it’s a unique study." The report includes mini-profiles of states, highlighting their strengths and weaknesses as revealed by the indicators.
Outcomes experts agree that managed care has the potential to lower costs while raising quality. But whether it has or not may never be known, says Brook. "It’s very, very hard to change a nonmanaged system. The potential to produce good is there [in managed care]. "I don’t think that potential has been realized in most current organizations," says Brook, who is professor of medicine and public health at the University of California at Los Angeles. But there’s very little evidence that it produced lower quality than what was there before it took over."
One difficulty arises in the definition of managed care. There’s tremendous variability in contracting arrangements and competitive forces in different markets, says Neill F. Piland, DrPh, research director of the Center for Research in Ambulatory Health Care Administration of the Medical Group Management Association in Englewood, CO.
"Are you comparing the same kind of contracting managed care organizations?" he asks. "There’s a tremendous difference between a closed panel HMO and a preferred provider organization or point of service organization. The incentives offered are tremendously different."
Providing disease management and preventive care can save money in the long term, but they require a substantial investment to implement, notes Piland.
In fact, Brook asserts that too much attention is paid to small differences between payment systems while health care in general is plagued with significant overuse and underuse. "We ought to hold both managed care and fee-for-service accountable for providing a quality product that it isn’t currently," he says. "Both areas have a lot of waste, and both areas fail to do a lot of things that people need."
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