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Selective contracting in California: an update.

L Johns

    Inquiry : a Journal of Medical Care Organization, Provision and Financing
    |January 1, 1989
    PubMed
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    Selective contracting in California healthcare successfully reduced hospital cost inflation and shifted care to outpatient settings. However, it has not impacted hospital capacity or quality of care.

    Area of Science:

    • Health Services Research
    • Health Economics
    • Healthcare Policy Analysis

    Background:

    • Six years of selective contracting policy implementation in California.
    • Context of rising population, aging demographics, and declining inpatient utilization.
    • Need to understand the multifaceted impacts of managed care strategies.

    Purpose of the Study:

    • To evaluate the effectiveness of selective contracting on hospital costs and care delivery settings.
    • To assess the influence of selective contracting on preferred provider organization (PPO) adoption.
    • To examine the policy's effects on hospital capacity, capital expansion, and quality of care.

    Main Methods:

    • Analysis of six years of data on healthcare services in California.
    • Observational study design to assess policy impacts.

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  • Comparison of trends in hospital costs, revenues, utilization, and capacity.

    • Main Results:

    • Demonstrated reduction in hospital inpatient cost and revenue inflation.
    • Significant shift of inpatient care towards outpatient settings.
    • Widespread adoption of the PPO health benefit option across the state.
    • No discernible impact on excess hospital capacity or capital expansion; potential encouragement of expansion.
    • Lack of evidence regarding effects on the quality of care.

    Conclusions:

    • Selective contracting is effective in controlling hospital cost inflation and promoting outpatient care.
    • The policy has successfully expanded PPO utilization.
    • The policy's impact on hospital capacity and quality of care remains unproven and potentially negative.