Perhaps patients worry about this as well, and have become more wary of their physicians. Patients' concerns are likely heightened by the many articles about managed care in the lay press that echo concerns about expanded physician responsibilities to other groups, including contractual obligations to managed care plans, 37 and about how the need to conserve costs could challenge physicians' abilities to maintain loyalty to patients.
Such a diminished sense of obligation to professional mores could eventually undermine physician-patient trust. Some authors 10 have predicted that managed care could result in problems in communication between physicians and patients because of shorter office visits due to demands for increased productivity, and by inflated patient expectations from advertising.
Our questionnaire did not ask physicians to identify other factors that might have favorably impacted on communication. Ethical conflicts that could arise for physicians operating in managed care health systems have been well documented. Forty-nine percent indicated negative effects on their abilities to respect patients' autonomy. These findings, coupled with the concerns expressed by respondents that under managed care cost cutting takes priority over quality of patient care, indicate that managed care results in troubling conflicts of interest for physicians, and that patient care may be compromised under these systems.
In fact, in the open comments, the survey respondents were often passionate about the conflicts of interest and decreased services to patients. Fewer physicians cited negative effects on other ethical obligations. Most physicians in the survey group do not find the informed consent or information-giving processes to be impaired under managed care. We cannot explain how the physicians weighed the demands of increased productivity and shorter visits on the ability to provide information and engage in the informed consent process with patients.
Other authors have commented that the informed consent process may be compromised by subtle choice limitations dictated by economic concerns, either at the level of the physician 2 or at the level of benefits negotiated by health care purchasers. One third of respondents indicated that physicians are less able to respect patient confidentiality under managed care.
Although managed care often uses quality assurance techniques such as individual patient chart reviews and computerized data banks for utilization and quality reviews, 41 many physicians may not view this access to patient information as a meaningful violation of patient confidentiality. The continuity of the physician-patient relationship is a central obligation for practitioners of clinical medicine. Changes in managed care plans offered by employers, and insurance changes due to job changes, have affected continuity of care.
A 2-year longitudinal study using patient questionnaires found continuity to be higher in fee-for-service systems than in prepaid health care systems. It is likely that our respondents were comparing managed care with fee-for-service, a system that has the potential to cause ethical conflicts for physicians.
The fee-for-service system encourages overutilization of resources, which may result in the provision of unnecessary and possibly detrimental services. Most of our physicians identified decreased patient choice in medical decisions as having a negative impact on the physician-patient relationship, which could adversely affect care as well. Most also identified limitations in choice of specialist, in frequency of specialist visits, in sites of diagnostic testing and procedures, and in length of hospital stay as having a negative impact on the overall quality of patient care.
Limiting options for care is one of the main methods that managed care systems use to control health care utilization. While limiting options is not necessarily bad for the quality of patient care, most physicians responding to our survey believe that at least some limitations in health care are detrimental.
Federal and state legislatures have begun to respond to concerns regarding choice, with the passage of direct-access laws that would allow patients to see specialists without a referral from the primary care providers.
Most respondents believed that managed care frequently provides better preventive services, and the largest group believed that managed care frequently decreases expense. Physicians in other survey studies 25 have expressed similar opinions about cost cutting and preventive care. While physicians' attitudes on quality of care do not substitute for more objective evidence, they identify areas for further investigation when designing quality evaluations.
Women physicians were significantly more likely to report negative effects of managed care in areas of physician-patient relationship, effect of limitations on quality of care, and on the effects of managed care on time available to spend with patients.
Sex differences in practice style between male and female physicians have been documented, 45 , 46 and may have a role in the sex differences found in this study. The effect of sex on attitudes toward managed care needs to be explored in greater detail. Most other surveys about physicians' attitudes toward managed care have generally been part of larger surveys designed to elicit a wide variety of views from physicians.
The American Medical Association survey 36 found even greater negative physician sentiment toward managed care. Eighty-one percent of the physician respondents viewed the impact of managed care on the physician-patient relationship as negative. Seventy-one percent saw managed care as having a negative impact on quality of care.
A survey conducted by the Texas Medical Association 26 found that half of the physician respondents believed that managed care has an adverse impact on patient care. Another survey, 15 looking at the attitudes of primary care physicians toward capitated reimbursement, a common feature of managed care, found that physicians believe that capitation is having a negative impact on the physician-patient relationship and on the appropriate use of referrals and services.
These previously published surveys support the concerns of the physician respondents in our survey. Our survey extends the findings of these survey studies by providing physicians' views on specific aspects of the physician-patient relationship, and ethical obligations under managed care overall.
It is still an open question as to whether physicians' attitudes on these issues reflect decrements in quality care or patient outcomes. Studies 17 - 23 on outcomes and quality-of-care issues in managed care systems have shown both positive and negative changes.
Patients may be more positive about managed care. The Health Tracking Initiative and the Community Snapshots study 16 surveyed health care consumers in 15 communities in That survey did not report on the patients' views on the impact of managed care on the physician-patient relationship, or on medical ethics, but revealed that most respondents believed that managed care would have a positive impact on health care.
The design of our survey has several potential limitations. A broad definition of managed care was offered to the physician respondents, because we were aiming to elicit their general perceptions about practice under managed care.
However, physicians' views are likely influenced by the specific managed care contracts that they are participating in. There may be subgroups of physicians whose views are either more positive or more negative because of the specific terms of their contracts.
The findings of our study make such investigation more imperative. The Delaware Valley region had a distinct health care profile at the time of the study. The area had been highly penetrated by managed care, particularly of the HMO and independent practice association model and point of service enrollment. Specialty and sex distribution were similar between the respondents and nonrespondents, and nonrespondents participated in the same managed care organizations since the mailing list was derived from 4 provider handbooks, but we cannot generalize to the entire sample.
Survey questions were written in the third person, asking about the profession in general and not about personal experiences. However, many respondents' written comments reflected personal experiences, substantiating their responses to questions. Many respondents appear angry at their loss of control, autonomy, and income. It is likely that this anger affects some physicians' appraisals of the deleterious effects of managed care.
Since our survey was completed, managed care has already begun to assume new configurations, partially in response to public backlash against managed care. Other plans allow patients to seek care from providers outside of the health plan for an increased fee. Upon review of the American experience, it seems that a number of factors contributed to the decline of this approach. The initial wave of opposition to managed care appeared as challenges to control of health care utilization, such as choice of providers.
Physicians were never reconciled to allowing insurance plans to choose practitioners and hospitals. During the 's, a wave of class action litigation was directed at the ability of plans to direct referrals for health services.
The plaintiffs in these cases, including consumers, physicians, and other providers, sought financial damages and injunctions against managed care business practices. Although courts in the United States were reluctant to declare the costs control methods of plans illegal, the full range of litigation supported negative perceptions of managed care among consumers and businesses [ 19 ].
During the late s, the legal reaction against managed care in the United States was accompanied by deteriorating relationships between plans and health care providers. Increased consumer dissatisfaction with the business practices of plans, including apparent arbitrary denials of service and failure to pay claims promptly, added fuel to provider complaints about low payment rates. Providers also objected to the terms of risk contracting agreements which required them to carry a significant burden of pharmaceutical costs and other expenses.
All of these developments generated a wave of opposition to managed care by hospitals and physician groups. These activities frequently resulted in the termination of contracts and network instability [ 20 , 21 ].
During the second half of the 's, consumer litigation and provider reactions against managed care caused these many of these plans to change their traditional business approaches. In order to regain the favor of consumers and providers, plans in many communities loosened controls on provider utilization.
Plans relaxed the use of physicians as gate keepers and allowed consumers direct access to specialists. Requirements for referrals to other types of services were loosened. Stringent authorization procedures for use of hospital emergency departments and for certain surgical procedures were also relaxed.
This process amounted to a substantial movement away from the aggressive health care management approaches which had supported the rise of this approach [ 22 ]. To replace these utilization control mechanisms, many managed care plans introduced mechanisms that included more interaction with subscribers, such as case management and electronic information exchange.
Subscribers were encouraged to modify health related behaviors by visiting web sites and obtaining additional information concerning preventive care. In many communities, managed care plans placed increased emphasis on wellness programs and disease management. The industry was shifting its focus from controlling utilization to influencing it. The retreat from direct management of health care utilization toward softer approaches led to a general weakening of accountability to consumers.
With fewer direct controls in place and greater reliance on indirect mechanisms the assessment of performance of individual plans by businesses and government became more difficult [ 8 ]. Related to these approaches, some managed care plans adopted business strategies which placed greater emphasis on profitability. Chief among these was a movement away from contracting for high risk populations. Facing increased dissatisfaction from consumers and greater competition from traditional insurance in the market place, private plans in many areas increasingly focused on lower risk populations as a means of improving profitability.
As a result, many private managed care plans withdrew from participation in public managed care programs with high risk populations such as the elderly Medicare and the indigent Medicaid. Between and , the number of plans serving Medicare patients declined by 20 percent. By , total Medicare managed care enrollment was lower than it had been in Between and , the number of insurance plans participating in Medicaid declined by 15 percent.
The development had a major impact on State governments because more than half of all Medicaid recipients were enrolled in managed care [ 23 ]. Increased efforts by managed care plans to compete in the United States health care marketplace also led to the adoption of other business strategies characteristic of traditional insurance.
These included reduced a greater emphasis of raising premiums to support profitability. This approach effectively passed along a higher proportion of health care expenses to subscribers. Managed care plans also catered more to consumer preferences in order to expand market share [ 24 ]. All of these activities effectively changed managed care from its traditional structure in the United States.
As the focus on continuity of care and regulation of utilization diminished, managed care plans became more like other types of insurance such as indemnity plans and preferred provider organizations. As choice of providers was substituted for gate keeping, physicians and increased premiums took the place of utilization controls, the line between managed non managed care became blurred.
This entire process amounted to a decline of managed care shortly after the approach had reached its highest level of acceptance. This decline was reflected in a decreased ability of managed care to restrain costs, a major reason for the increased use of this form by payor during the s and 90s. As a result of this development, a major barrier to health care spending was removed and per capita expenditures began to rise.
This situation is illustrated by changes in annual per capita health care spending for all payors in the United States, summarized in Figure 1. This information identifies both the zenith and the decline of managed care. Between and , the impact of this approach reached a high point, as annual increases in per capita spending declined to only about two percent per year.
The decline of managed care during the late s produced a rapid erosion of this position. Annual increases in per capita spending nearly quadrupled to almost eight percent by and kept increasing after the turn of the century. These developments were paralleled by in annual increases of changes in per capita spending for private health insurance, the area of the economy in which managed care developed prior to the s. After declining to less than five percent in , annual increases in per capita expenses for private health insurance rapidly recovered to over 10 percent after the turn of the century.
These developments are summarized in Figure 2. Annual percent change per capita spending for private health insurance United States — The increases in pre capita health expenditures identified in these tables occurred because of a retreat from traditional cost controls by managed care plans and because of the transfer of many expenses to consumers. As previously noted, changes in the behavior of these plans in some metropolitan areas included less reluctance to raise premiums, rather than contain costs, in order to avoid operating losses.
Many of the 'soft' programs that were added in order to compete with traditional health insurance were offered at an additional cost. This information concerning the impact of managed care on health care expenses does not identify the impact of the decline of the approach on continuity of care and other outcomes, for which quantitative data are not available.
It might be assumed that, with increased emphasis on consumer choice and less attention to control of referrals and provider participation, the integrity of care across health systems also deteriorated during this period. All of these developments effectively moved managed care plans in the United States closer to traditional insurance plans in their behavior and impact on health care expenditures.
They undermined the ability of this approach to differentiate itself from traditional health insurance as a mechanism which actively managed care and contained costs. They made it considerably more difficult for the approach to exert a direct impact on health care outcomes.
Ironically, these characteristics had been the major selling points of the approach since its inception. It should be noted that, during this period, traditional insurance plans have also moved toward managed care by adopting features of health maintenance organizations such as utilization controls. As a result, the border between these two types of insurance is now almost non existent.
The change in the character of managed care also had profound implications for the future of health care cost containment in the United States. It deprived government and the private sector of one of their most powerful weapons in restraining expenditures. It also signaled an important change in the direction off public and private sector health policy.
The movement of managed care away from utilization controls and toward higher premiums shifted the burden of health policy toward the consumer. It suggested that payors would support consumers in shaping health care and the organizations that provide it, rather than having the payors assume leadership.
This change would lead to important developments in the policy environment of this sector. The decline of managed care as the major driver of health care policy and reimbursement within the United States has opened the way for new forces to shape this area. The nature of these forces became visible in the late s as managed care plans shifted responsibility for health care decision making to consumers.
The resulting annual increases in health care expenditures, summarized in Figure 1 and 2 , were also effectively shifted to consumers through higher premiums, deductibles, and copayments. For example, in preferred provider organizations, the most widely used health plans, single coverage deductibles increased more than 50 percent between and More employers began offering high deductible plans.
The rate of increase of out of pocket spending has increased every year between and [ 25 , 26 ]. The rise of increased consumer involvement in health care in the United States has developed on several fronts.
At the broadest level, it has taken the form of a greater consumer role in decision making concerning treatment. In the late 's the use of television, newspapers, and electronic media to market health care to consumers became pervasive. Drug companies became major users of this approach.
They have conducted enormous media campaigns to promote the use of sexual stimulants, allergy medicines, and cosmetic treatments. Access to large marketing budgets has made it possible for these companies to reach millions of consumers with their messages.
Local and regional diagnostic firms have also marketed magnetic resonance imaging and whole body scanning through similar campaigns [ 27 ]. These efforts have been successful because they gone directly to users of health care. They have circumvented insurance companies, managed care, and even physicians. Listeners are urged to 'ask' or 'tell' their doctor to prescribe any number of medications or tests. The clear message of all of these initiatives is for individual consumers to take a greater role in health care decision making.
Greater user involvement in health care that was stimulated by the decline of managed care, as well as media initiatives of the pharmaceutical industry and other groups, have led directly to the development of a new type of health insurance in the United States, the consumer driven health plan. These mechanisms complete the change initiated by the decline of managed care by directly assigning health care decision-making to consumers.
Consumer driven health plans are designed to address the major objectives of managed care, development of healthful behaviors and containment of health care costs. Components of consumer driven plans usually include the following. Support for consumer decision making through availability of internet based information concerning health care risk factors and provider outcomes.
Tracking of employee health expenses through the system [ 28 , 29 ]. Neither the employers nor the managed care organizations wanted to emphasize the limitations on choice of doctor. So people approached managed care with the expectations they had acquired under FFS. Suddenly people found themselves under limitations they had not experienced before. In many cases, people were forced to change doctors, not permitted to go to the doctor they wanted, or were denied proposed medical procedures.
The backlash was made worse by the fact that large numbers of people were offered no choice of health insurance plan. This and other surveys found that dissatisfaction levels among those without choice are typically twice as high as among those with choices. Yet another negative consequence of the policy of little or no consumer choice was that the managed care plans, quite rationally, came to see the employer rather than the employee as the customer they must please.
So these employer policies, combined with physician anger that I will discuss later, made managed care a tinderbox in which incidents, real or imagined, could produce national conflagrations. Neither proponents nor opponents had good data on which to base their cases. But when HMOs and other insurers attempted to implement this as a standard for coverage-in the context of a crisis atmosphere regarding health care costs and intense pressure from government and employers to restrain premiums-in and , 25 states and the federal government adopted early discharge laws generally requiring coverage of hour stays for uncomplicated vaginal deliveries.
This was obviously symbolic politics; people wanted to make a statement about managed care. For the most part, with respect to such contractual provisions, HMOs are the agents of government and employers who contract with them and determine the coverage they want to buy. Practically all health insurance policies, public or private, for-profit or non-profit have such exclusions. They are not an invention of profit-seeking HMO carriers, though the media and politicians often implied they were.
This seems ironic in view of the fact that recently published randomized controlled trials do not support the efficacy of this procedure. Public opinion would not allow HMOs to enforce their contracts. I do not doubt that managed care has made errors and damaged the health of some people. But I doubt that these errors caused the backlash. After all, the medical literature is replete with studies that show that the health care system has been making many serious errors and killing large numbers of people through negligence for years-all independent of managed care-and that has produced no backlash.
I am personally disappointed at how difficult it is to get health care providers and the public interested in quality measurement and improvement. Further, we found evidence that medical injury contributed at least in part to the deaths of more than 13, patients in that year. Twenty thousand of them will die as a direct result …. I believe the fundamental problem is that doctors and patients, who were used to and expecting unlimited care, were revolting at the very idea of limits.
The next major problem area is the emergence of a dysfunctional industry structure. Back in the s when we were developing the ideas that have become known as managed care and managed competition, Paul Ellwood and I envisioned that in a competitive environment of multiple and responsible consumer choice of health plan, groups of doctors, or networks of independent doctors, would find it in their interest to commit to work together to manage quality and cost of care for their voluntarily enrolled populations.
They would accept total capitation payment for all the costs of care with appropriate reinsurance for high cost cases. Among the many strategies these medical groups would pursue to improve quality and cut cost, would be:. Match the resources used to the needs of the populations they serve thus correcting the specialty imbalances and surplus of beds and high tech facilities ; Concentrate costly complex services in regional centers that would realize economies of scale and experience; Adopt what we now call Continuous Quality Improvement, including study of practice variations and adoption of best practices, process improvement or reengineering, benchmarking, analysis of errors and development of methods to prevent them, etc.
Follow rational personnel substitution and referral processes among specialists, generalist physicians and other health professionals; Evidence-based medicine and outcomes measurement and management, avoiding treatments that were inappropriate or that conferred very low marginal health benefits on patients relative to cost. And development of formularies based on the judgments of the physicians treating the patients in order to achieve a high degree of compliance, and the bargaining power that comes with it.
These groups or networks would team up with one or a few carriers as partners who would market their services, including pricing, advising on plan design, contracting with employment groups, and the many other functions they perform. The doctors would bear the risk of costs and make all of the medical decisions, including quality and utilization management, and they would determine the premium by mutual agreement with the carrier in recognition of the demands of a competitive market.
I emphasize partnership because, in the long run, health plans cannot succeed without the loyalty, commitment and responsible participation of the doctors. Also we envisioned a gradual transformation so that people would have time to develop the underlying delivery systems.
That policy had three negative consequences. First, it weakened the bargaining power of the managed care organizations. Second, it meant that managed care had to accept the inefficient overutilizer as well as the efficient, and the poor quality doctors as well as the good quality doctors. That important dimension of selectivity was impaired. And third, this policy did not lead to the formation of cohesive groups of providers that could work together to improve quality and economy of care.
Worse yet, the combination of carriers seeking to meet the cost containment demands of government and employers, and doctors who wanted to maintain the status quo produced an adversarial relationship with a great deal of conflict over capitation rates, other methods of payment, and utilization decisions.
In a manner reminiscent of employer policies, the HMOs insulated the medical groups from the market in the sense that the medical group could see no benefit, in the form of more patients, or happier patients, from accepting a lower capitation rate. A lower capitation rate simply meant higher profits for the carrier. Narrowly focused plans such as staff model HMOs and other closed panel organizations practically disappeared. It is as if Stanford University said to its professors that it would pay in full the price of purchase and maintenance of any car we chose.
There will be little market for plans focused on individual medical groups or care systems as long as employees are cost unconscious and see nothing to gain from accepting limited choice. Responsibility for utilization decisions was mixed. Typically in California where delegation to medical groups was most advanced, the carriers retained most of the risk of hospital costs, so they had to be involved in utilization decisions. However, one of the most important aspects of a managed care plan for the health care system is its relationship with Medicaid and the ongoing work of the Affordable Care Act.
Many individuals who rely on health insurance plans like Medicaid for their healthcare are enrolled in managed care scenarios. This involves states making contracts with private healthcare organizations to provide care to Medicaid enrollees, with states paying a set amount of money to these organizations per patient.
This is known as comprehensive or capitated care. As of July 1, , 40 states including D. Approximately 40 percent of Medicaid patients are enrolled in MCO plans, and as Medicaid expands, these enrollment numbers are also likely to grow. However, many of these patients are those who require long-term care and other more expensive services, which becomes a funding issue that providers must maneuver their way through. This is also one reason why many organizations are beginning to emphasize preventive care techniques.
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