Reports from the field-Market trends

Business groups seek quality

Managed care organizations should pay close attention to a growing trend described in a recent article in Health Affairs, which suggests that many business coalitions are bypassing health plans and negotiating directly with providers to offer the best quality of care for the dollar.

Researchers analyzed data from a 1998 survey of 75 business coalitions and interviewed nine business health coalition leaders. They found that these regional, state, and local employer groups are using their market power to contain their own health costs.

Most coalitions use incentives, penalties

Findings include:

• 90% of coalitions reported collecting and analyzing data about health plans and providers.

• Four of five coalitions reported negotiating the terms of one or more health benefits with health plans and providers.

• 35% of coalitions reported bypassing health plans and negotiating comprehensive coverage directly with providers.

• Nearly six of every 10 coalitions that reported negotiating coverage, whether from health plans, providers, or carve-out services, write performance incentives (such as bonuses and premium rebates) and penalties (such as withholding payments) into their contracts.

Researchers report that coalitions use incentives to encourage cost reduction and improved customer service and to encourage and reward good clinical care.

[See: Fraser I, McNamara P, Lehman GO, et al. Pursuit of quality by business coalitions: A national survey. Health Aff 1999; 18:158-165.]