PPO and HMO performance factors: insurance company evaluation criteria

A venture into managed care should be done only following the proper amount of due diligence. The goal should be to select the most effective managed care organization with the flexibility to meet long-term needs and the mission to work on an ongoing basis to improve service and managed care performance. Unfortunately, all too often purchasers do not demand critical information from managed care service providers. As a result, poor quality organizations have prospered and delivered less than satisfactory results. In fact, it is not unusual that savings from discounts are more than offset by increased use of health care services because of poor utilization management. It is important to be aware that use of the appropriate selection methods and monitoring performance on an ongoing basis are best done by dedicated professionals. They are also resource intensive and require a sophisticated systems capability. Since resources and systems involve significant investment, the most appropriate course for purchasers is to play the role of educated consumers. Detailed documentation should be demanded from all potential service providers to ensure that due diligence and ongoing management are in fact performed. The health care management staff at ITT Hartford is often told by managed care vendors that few other purchasers perform thorough review. It is imperative that managed care be scrutinized at least as closely as any important business venture.