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Evolution of Managed Care

Evolution of Managed Care

Although the term “managed care” has been utilized since the first generation HMOs were put into place over 40 years ago, over time the meaning of these two words has evolved since they were first coined. In today's world these words may have returned to what the originators of the term had in mind.

A health maintenance organization as it was originally conceived was an organized structure of care and services utilizing aligned providers and motivated enrollees to, literally, maintain health. Mechanisms were put in place to enable this to occur and to ensure financial stability. However, insurance companies, primarily because of their skill and experience at handling large groups of people, soon took over these 'mechanisms' and the insurance model for large population's prevailed. This was characterized by a payment mechanism which controlled cost, and a risk model that penalized providers for excessive and/or unnecessary costs; managed care morphed into “managed utilization”. Elaborate processes were put in place requiring pre-approval for office visits, procedures, treatment plans, supplies, and pharmaceuticals. By controlling the utilization of services through their management protocols, HMO's were able to control their expenditures. The providers, understandably, were always unhappy with these required utilization approval processes, often done by personnel with little or no clinical experience. Quality and safety outcomes for clinical care were, in fact, not being managed; cost control was the driver and often poor clinical results occurred.

Today there is now a rapidly growing focus on “value rather than volume” for the clinical encounters, and so “managed utilization” is returning to the true and original meaning of the term – “managed care”. By utilizing best practices determined by evidence–based medicine, insurers and providers are determining that not only are the clinical outcomes better, but that the cost of services also can be reduced. It is imperative that both the numerator and denominator of the value equation be in place at all times:

VALUE = Clinical Quality + Service Quality / Cost

As many of our previous blogs indicated, if left unchecked, “value” could become nothing more than a way to control costs and “care” will be replaced once again by “utilization control" of the services.

With two evolutions of the definition of the term “managed care” over the last four decades, a third one now will be emerging as the healthcare industry is beginning to focus on population health management and well-care. If indeed such focus becomes the primary direction supported by the insurers, providers, and most importantly, the patients, then the term will evolve from the management of “utilization” and the management of “care” to “managed health”. Is this not where we should be focused today? We need to eliminate many illnesses, stabilize chronic conditions, and keep as many people as possible well and happy for as long as possible. This is what the visionaries who invented the term “managed care” originally had in mind. Let us hope that this is the case, and more importantly, let us all work to make this evolution happen!