Academic psychiatry and managed care: a case study

An academic department of psychiatry in New York City eliminated the need for behavioral managed care intermediaries by transforming itself from a fee-for-service system to a system able to engage in full-risk capitation contracts. The first step was to require health maintenance organizations to contract directly with the department. The department formed two legal entities, a behavioral management services organization for utilization management and a behavioral integrated provider association. The authors describe these entities and review the first year of operation, presenting data on enrollees, capitation rates, and service utilization for the first three contracts. The fundamental differences in the treatment model under managed care and under a fee-for-service system are highlighted. The authors conclude that by contracting directly with insurers on a full-risk capitation basis, departments of psychiatry will be better able to face the economic threats posed by the cost constraints inherent in managed care and maintain or re-establish their autonomy as care managers as well as high-quality care providers.