Related Experiment Videos
Managed competition in practice: 'value purchasing' by fourteen employers
J Maxwell1, F Briscoe, S Davidson
1John Snow, Inc., Research and Training Institute, Boston, USA.
Health Affairs (Project Hope)
|June 25, 1998
Summary
Large U.S. companies adopted "value purchasing" for health benefits, using managed competition and business tactics. This strategy significantly improved financial results and reshaped business-healthcare interactions.
Area of Science:
- Health economics
- Business administration
- Healthcare management
Background:
- In the 1990s, large U.S. companies began transforming health benefits procurement.
- This transformation involved creating a hybrid model known as "value purchasing."
- Few anticipated large corporations would drive health system reform.
Purpose of the Study:
- To analyze the implementation and impact of "value purchasing" by large U.S. companies.
- To understand the organizational and strategic changes involved in this procurement model.
- To assess the financial and systemic effects of corporate health benefit strategies.
Main Methods:
- Companies combined managed competition principles with business tactics.
- New organizational forms were developed to manage health benefits.
- Financial incentives and competitive bidding were used to negotiate with health plans.
Main Results:
- The studied companies achieved impressive financial results through value purchasing.
- Corporate demands on the healthcare delivery system increased significantly.
- The interface between businesses and healthcare organizations evolved.
Conclusions:
- Value purchasing represents a significant business-led innovation in health benefits.
- Corporate strategies are increasingly influencing health system reform.
- The spread of these practices is expected to further transform healthcare markets.