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Adverse selection at academic health centers.

S M Retchin1

  • 1Virginia Commonwealth University, Richmond, USA.

Clinical Performance and Quality Health Care
|December 8, 1997
PubMed
Summary

Academic health centers (AHCs) face financial distress due to market competition and adverse selection. Patients with severe illnesses are drawn to AHCs, increasing their vulnerability and network exclusion by health plans.

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Area of Science:

  • Health economics
  • Healthcare management
  • Medical economics

Background:

  • Academic health centers (AHCs) are experiencing significant financial challenges.
  • Market competition and selective contracting introduce price competition into healthcare.
  • These factors threaten the core missions of AHCs.

Purpose of the Study:

  • To discuss the issue of adverse selection impacting AHCs.
  • To analyze the probability of sicker patients seeking care at AHCs.
  • To understand the implications of adverse selection for AHCs' financial stability and network participation.

Main Methods:

  • The manuscript presents a conceptual discussion of adverse selection in the context of AHCs.
  • It analyzes the factors contributing to AHCs' vulnerability to adverse selection.
  • The study examines the impact of health plan contracting strategies on AHCs.

Main Results:

  • AHCs are particularly susceptible to adverse selection due to their role as referral centers, specialty focus, research capabilities, and patient demographics.
  • Adverse selection increases the likelihood of AHCs being excluded from health plan networks.
  • Contracting for tertiary care only exacerbates adverse selection at AHCs.

Conclusions:

  • Adverse selection poses a significant financial threat to academic health centers.
  • Health plans' network management strategies can further disadvantage AHCs.
  • AHCs must address the challenges posed by adverse selection to ensure their financial viability and continued service provision.

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