Beyond competition

• Published in: Health Affairs Vol. 16; no. 2; pp. 171 - 180
• Main Author: Berenson, R A
• Format: Journal Article
• Language: English
• Published: United States Health Affairs 01.03.1997; The People to People Health Foundation, Inc., Project HOPE
• Subjects: California; Capitation; Capitation Fee; Collaborative approach; Community Participation; Competition; Competitive advantage; Consumer protection; Consumers; Disclosure; Economic Competition - trends; Employees; Employers; ERISA; Financial incentives; Health Benefit Plans, Employee - organization & administration; Health care delivery; Health care policy; Health insurance; Health maintenance organizations; HMOs; Incentives; Integrated delivery systems; Managed care; Managed Care Programs - economics; Managed Care Programs - organization & administration; Managed Care Programs - standards; Managed competition; Markets; Medicare; Medicine; Monetary incentives; Networks; Patient Advocacy; Patients; Payments; Physician Incentive Plans; Physicians; PPOs; Premiums; Purchasing; Quality control; Quality improvement; Quality management; Quality of care; Quality of service; Quality standards; Reimbursement; Reinforcement; Risk adjustment; Risk sharing; State laws; Total Quality Management - organization & administration; United States; Virtual networks; United States > US; California
• ISSN: 0278-2715; 1544-5208
• DOI: 10.1377/hlthaff.16.2.171

Managed care organizations often cannot be easily differentiated on the basis of organizational characteristics. Even the provider networks that competing health plans use may be virtually identical in response to employee pressure for broad provider choice. In markets with many undifferentiated networks, current approaches to quality improvement may be more intrusive than helpful. Health plans should delegate quality improvement activities to constituent provider groups and need to explore collaborative approaches to quality improvement. Although many are uncomfortable with using financial incentives to influence professional behavior, the use of capitation to restrain costs is inevitable. Instead of arbitrarily limiting financial incentives, consumers should be protected in market-compatible ways. In particular, expansive disclosure requirements and risk adjustment of both premiums and capitation payments are recommended as approaches that will reward high-quality care.