Busi 511 – Discussion Post 6
Liberty University
Explain the growth of managed care that began in the 1980s. As a result, how has health
care delivery evolved? Based on the literature, what does the future hold?
Managed care is defined as the mechanism of providing health care services in which a
single organization takes on the management of financing, insurance, delivery and payment (Shi
& Singh, 2017). Beginning in the 1980s, private businesses could no longer afford the cost
increases in health insurance premiums that they had to pay on behalf of their employees.
Therefore, a switch was in transition from traditional health insurance premiums to managed care
plans. Managed care essentially attempts to control the costs by controlling the provision of
services; employers control costs by limiting the employee’s options. Under managed care, fewer
specialists serve the general population and primary care physicians take on broader roles. Today,
employees enrolled in managed care plans make up 51% of all people with employer sponsored
insurance which is up 29% from 1988 (Iglehart, 1994).
In the 1980s and 1990s, the cost of covering members continued to rise without stopping
and by the 1990s, many traditional health insurers were already modifying their existing products
by introducing managed care tools (utilization review and quality measurement) (Navarro &
Cahil). By 1993, the number of people covered by traditional insurance was less than half
(48.9%) of all people who had employer-sponsored health coverage. During the growth of
managed care, many doctors became affiliated with managed care plans on a contractual basis
but some formed their own physician-controlled networks instead of giving up their control to
health insurance companies. This may be the result of the reported decrease in physician incomes
as well as the decrease in the number of referrals (Iglehart, 1994).
The growth of managed care has forced health care delivery to evolve in positive and
negative ways. Prior to managed care, most services were paid on a ‘fee for service’ basis with a
minimal review of the physician’s clinical decisions. The implementation of managed care
brought on: utilization review, prior authorization, physician profiling and mandatory second
opinions. Since the inception of managed care, physicians have claimed that clinical autonomy,
patient trust, career satisfaction and quality of care have all been diminished (Hadley & Mitchell,
2002). Even currently, managed care struggles to balance the quality of care with cost efficiency
in the attempt to meet the needs of sponsors and patient members.
Under traditional insurance, health resource utilization was uncontrolled and the costs of
resources were not considered. However, with managed care, there is a defined list of covered
benefits and services establishing the fact that now resources are being used in a more cost-
effective manner. Another difference stated earlier is that of pre-authorization. Traditional
insurance accepted and paid claims to any provider while managed care requires prior
authorization for all non-emergency services and expensive drugs/procedures. Through managed
care, there is an integration of the financing and delivery system which completes the purpose of
monitoring the patient in a total healthcare experience. Although there have been negative
connotations to managed care, it has also brought about coordinated care. This care includes
disease and case management, the implementation of population-based healthcare screening
programs, and the use of health outcomes research (Navarro & Cahil).
Regarding the future of managed care, products and distribution methods will become
essential in the competition of plans on quality, service, and price. There will also need to be a
greater influence on information technology resulting in more offshore services, information
system integration, drug safety monitoring, and high-quality information (Omachonu &
Einspruch, 2010). With the constant evolving of health care, we cannot afford to lose focus of
what matters most and that is the caring of patients. As stated in 1 Samuel 2:8, ‘He raises up the
poor from the dust; he lifts the needy from the ash heap to make them sit with princes and inherit
a seat of honor. For the pillars of the earth are the Lord’s, and on them he has set the world.’
Word Count: 661
References
Hadley, J., & Mitchell, J. (2002). The growth of managed care and changes in physicians’
incomes, autonomy, and satisfaction, 1991-1997. International Journal of Health Care
Finance and Economics, 2(1), pp. 37-50. Retrieved from https://link-springer-
com.ezproxy.liberty.edu/article/10.1023%2FA%3A1015397413797.
The Holy Bible: English Standard Version
Iglehart, J. K. (1994). Health policy report: Physicians and the growth of managed care. The New
England Journal of Medicine, 331(17), 1167-1171. Retrieved from
http://ezproxy.liberty.edu/login?url=https://search-proquest-
com.ezproxy.liberty.edu/docview/223971221?accountid=12085.
Navarro, R., & Cahill, J. The role of managed care in the U.S. healthcare system. Jones and
Bartlett Publishers. Retrieved from
http://www.jblearning.com/samples/0763732400/32400_CH01_Pass2.pdf.
Omachonu, V., & Einspruch, N. (2010). Innovation in healthcare delivery systems: a conceptual
framework. The Innovation Journal: The Public-Sector Innovation Journal, 15(1), pp. 1-
20. Retrieved from https://www.innovation.cc/scholarly-
style/omachonu_healthcare_3innovate2.pdf.
Shi, L. & Singh, D. (2017). Essentials of the U.S. health care system (4th ed). Burlington, MA:
Jones & Bartlett Learning.
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