Organizing and managing care in a changing health system

To examine ways in which the management and organization of medical care is changing in response to the shifting incentives created by managed care.

Site visits conducted in 12 randomly selected communities in 1996/ 1997.

Approximately 35-60 interviews were conducted per site with key informants in healthcare and community organizations; about half were with providers.

A standardized interview protocol was implemented across all sites, enabling cross-site comparisons. Multiple respondents were interviewed on each issue.

A great deal of experimentation and apparent duplication exist in efforts to develop programs to influence physician practice patterns. Responsibility for managing care is being contested by health plans, medical groups and hospitals, as each seeks to accrue the savings that can result from the more efficient delivery of care. To manage the financial and clinical risk, providers are aggressively consolidating and reorganizing. Most significant was the rapid formation of intermediary organizations, such as independent practice arrangements (IPAs), physician-hospital organizations (PHOs), or management services organizations (MSOs), for contracting with managed care organizations.

Managed care appears to have only a modest effect on how healthcare organizations deliver medical care, despite the profound effect that managed care has on how providers are organized. Rather than improving the efficiency of healthcare organizations, provider efforts to build large systems and become indispensable to health plans are exacerbating problems of excess capacity. It is not clear if new organizational arrangements will help providers manage the changing incentives they face, or if their intent is to blunt the effects of the incentives by forming larger organizations to improve their bargaining power and resist change.