Consumer-oriented managed care: oxymoron or new direction?

Introduction The article "Managed Care: The Next Generation" provides a fresh perspective on managed care, a field that started as a "calling" but turned into an industry and whose principles now serve as a basis for structuring the health system. With cover articles in Time, presidential decrees on appropriate care, and a stream of restrictive state regulations on the industry, policymakers, health providers, and the public need perspective on the concept of managed care and its potential in meeting demands for more acceptable as well as more efficient healthcare. Michael Sachs' article provides an assessment of market trends that challenge managed care organizations. This commentary examines the strengths and weaknesses of alternative models on the market issues of cost and consumer choice. Information gleaned from public hearings, newspaper editorials, and surveys such as the Sachs' Group Market Report provide a strong and consistent message of consumer and provider dissatisfaction with "managed care." One could conclude, and many policymakers have, that managed care is synonymous with restricted access, prescribed benefits, and regulated utilization. Sachs describes two models that provide choice of benefits and providers for consumers and incentives for providers to be efficient. One is left with the inevitable conclusion that while there are many restrictive managed care models, there are also new generational models that provide promise for consumer and provider control and satisfaction. Sachs views managed care from the perspective of changing consumer values, translated into customer expectations and market potential. His arguments are not mere speculation but are supported by a body of evidence, collected over time and in different markets. The challenge for healthcare executives is to translate these market trends into principles for designing and implementing changes in financing and delivery systems to respond to new opportunities and demands. To perpetuate old models as if they are based on some universal principle of managed care is bad policy and bad management. The management question is, "How can my organization respond competitively to increasing consumer demands for control over benefits structures, service choices and locations, services integration, customer participation with providers as coproducers, and, of course, low cost?" Sachs' message reminds us that using this strategy results not only in providing good service but is good business. This approach will require managers to understand the fundamental changes in consumer selection and use of health services. Some will conclude the health system gives lip service to this area but that it is not a real force and is not taken very seriously. In doing so, they fail to recognize traditional core values that have always underpinned the consumption of health services and the consistent reports of dissatisfaction by consumers when cost reductions have been achieved at the expense of service. Considerable evidence exists on the design and function of next-generation models. The most difficult challenge might be to transform the system. Previous managed care models merely overlay new financing and incentive systems on traditional delivery models. Next-generation models will have to transform the system. Definitions Don't Help. Concepts Do! Definitions are not important except as a means of understanding the defining principles and stages of development of managed care in this rapidly changing field. Definitions are extremely varied, but fall generally into three schools of thought. First, managed care can be described as a diverse array of techniques, such as provider incentives, clinical decision controls, and utilization review methods, designed to improve efficiency, increase productivity, and thus lower costs (see quotations from the American Medical Association and Congressional Budget Office on pages 4 and 5). …