Managed Care Glossary

Managed care (Health Maintenance Organizations or ‘HMO’) is a comprehensive treatment package in which both the delivery of the healthcare services is integrated along with the costs of providing the services. Most of the services provided under managed care are cost-effective in nature. This healthcare service seems to be very popular in the US, as more than 60% of the population have availed managed care packages. The company that provides managed care arranges a more comprehensive and coordinated healthcare organization that would be providing all-round medical care to the patient in one roof (Kyomen, H. H. , 2005).

Cost-effective options are provided to the patients. Unnecessary expenditures, diagnostic interventions and duplication of tests or treatment procedures are prevented. Emphasis is given on providing preventive care, and inpatient or hospitalization for short durations, according to the requirements. Managed care is ideal for elders because several medical facilities such as preventive consultation, hospitalization, general care, mental healthcare and drugs are combined at an acceptable cost (Sauber, R. S. , 1997).

Managed care is also suitable for providing of mental healthcare as the services are high quality and an interface with general healthcare is provided. Physicians and specialists who are competent are employed to serve the patients in the managed care organization. The physician may transfer patient work to other healthcare professionals who have received training to do so. Research has shown that elder patients and other populations who required medical care benefited a lot from the managed care approach (both economically and from the healthcare services being offered).

Healthcare was considered more predictable and unexpected costs reduced substantially. Options or packages that are more suitable for one’s healthcare needs can be selected. In managed care, as the healthcare professionals take up a lot of responsibilities in providing the services, the quality of services provided are very high. The decisions taken in managed care is also evidence-based. In the US, several alternative healthcare approaches adopted as early as the 19th century, has risen in the development of the managed care approach.

Some of the main objectives of these alternative approaches were to meet the healthcare needs of certain groups (such as workers and their families) and rural populations. The patient paid a certain amount of fees to the physician, who in turn would provide certain services in accordance with the terms and conditions of the contract. These prepayment schemes slowly began to be called “HMO’s’. In Oklahoma 1929, Dr. M. Shadid managed to enroll several farmers for providing healthcare services under his prepaid scheme.

The LA Water and Power Department provided healthcare facilities in partnership with Dr. Ross and Dr. H. Loos, to about 2000 staff members and their families. This expanded to 12, 000 members in 5 years. Dr. Garfield provided prepaid healthcare services to more than 5000 construction workers in an LA project, in 1933. A major portion of the premium was paid by the company and a small portion was paid by the workers. Henry Kaiser liked the scheme of Dr. Garfield, and during World War II, he provided similar services to shipping and steel companies.

He then provided such schemes to the general public, after the end of the war. He expanded his scheme, and called it as the ‘Kaiser Permanente Health Plan’, having more than half a million customer in 10 years. During the 1930’s and 1940’s, there was development in the prepayment healthcare practices in several parts of the US, which later led to the development of the HMO’s. Several companies such as the Group Health Cooperative, San Joaquin Medical Foundation and the Health Insurance Plan offered services.

However, the basic structure and ownership of these organizations varied and were controlled by trusts, individuals, families, societies, board of representatives, etc. Although, managed care was costlier than insurance packages, HMO’s offered comprehensive and coordinated services. Initially, the AMA and the regular healthcare system opposed managed care. The AMA felt that non-professionals could not be allowed to take care of patients. It also felt that companies could not ‘corporatize’ the healthcare system.

However, the AMA slowly began to accept this concept of treatment, as their actions could be considered a violation under the Sherman Antitrust laws. In the 1970’s, the political circle and various groups wanted to bring about a revolution in the healthcare system in the US, in order that it suits the people’s needs, more effectively. President Nixon began to adopt the HMO System as a strategy for providing cost-effective and comprehensive healthcare in the US.

A separate HMO Act was formed which would provide developmental funds and loans to the HMO’s. Efforts were on to increase the number of organizations under the HMO service provide list. Laws that banned provisions of prepaid healthcare services were declared null and void. Dr. Paul Ellwood had suggested these measures to the Nixon Administration in order to bring a positive transformation in the US Healthcare System. In the 1980, 1990, and the first-decade of the 21st century, the HMO industry began to grow (TMCI, 1998).

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