How successfully can academic faculty practices compete in developing managed care markets?

The author investigated the range of competitive options available for academic faculty practices and their associated academic medical centers located in health care markets with relatively limited development of managed care plans. Using personal and telephone interviews, he studied two such markets in 1994, one in Philadelphia, Pennsylvania, and one in Atlanta, Georgia. Representatives of faculty practices in these cities were asked to assess whether their practices would be attractive or unattractive for contracting with managed care providers; eight attributes of faculty practices (e.g., specialist physicians' availability within the group; prices of services offered by the group) were used as criteria. Similarly, representatives of local managed care plans were asked to use the same criteria to indicate what they would consider attractive or not in their local faculty practices when considering a physician services contract with such a practice. In both markets, the image of the academic medical center was generally considered to be a strong asset to the faculty practices. But all sectors also agreed that the nature of practices' utilization management and what was seen as their excessive use of resources in the academic environment were causes for concern. Also, the difference between the practice patterns of managed care physicians and academic faculty physicians was regarded as a cultural one in which traditional patterns of academic training are considered inimical to fostering the prudent management of patients. The findings strongly suggest that opportunities for faculty practices to negotiate with managed care plans and help shape their areas' future health care environments still exist in developing markets throughout the United States. But even those practices with such opportunities cannot succeed without significant internal restructuring to transform themselves to successfully deal with the new world of managed care.