Informatics for the transition from managed care to organized care.

HEALTH CARE BYTES

In the move from managed care to a system of organized care in which providers accept responsibility for both the financing and the delivery of care, a key ingredient will be information systems that speed the flow of accurate and up-to-date records about health plan members. Insurance companies may hold the key to the capital and the standards to create computer-based patient records.

By managed care, I mean health care services sold to employers as health insurance benefits for their employees, characterized by a delivery system of independent providers contracting with a health insurer. The beneficiaries of the health insurance can obtain all the benefits of the health insurance as long they follow the rules of the insurance and see providers approved by the managed care plan. The providers have little, or nothing, in common except for the contracts they have signed to participate in the delivery system of the insurer. The network of providers and the insurance benefits available to beneficiaries are defined by the insurer. The insurer manages the network. The providers and the beneficiaries play by the rules dictated to them by the insurer. If the providers can acquire the capability to process claims, manage membership services, and finance the health insurance, who needs the insurers?

The insurer usually charges the employer for utilization management services, including preadmission certification, concurrent review, and retrospective analysis of claims, to "manage" providers and control their tendencies to treat patients with too many services. To my way of thinking, managed care is hideously inefficient from the point of view of the delivery system. Sure, the insurers bargain with providers with covered lives and providers give up discounts off their retail fees to participate in the insurer's network, and some of the savings are passed along to employers. And, yes, utilization management may reduce the number of unnecessary tests and procedures ordered by physicians, but at a large administrative cost to providers that is not passed along to the buyers of services. Is there a better way to organize health care services?

I call the better way organized care, as opposed to managed care. In organized care, the middleman role that the insurer plays, the role of organizing providers, supervising their services, and managing services for members is removed, and providers organize and govern themselves, with information and shared values, to satisfy the requirements of the buyers of health insurance-the employer and its employees. The insurer adds value as long as no other entity can organize a network of providers; print membership materials; staff a telephone pool to answer questions of beneficiaries, patients, and providers; process claims; and arrange financing when the employer is not self-insured. These administrative functions can be performed by a provider organization, obviating the need for the insurer in the equation at all. When I say organized care system (OCS), I mean an organization of providers that has acquired the administrative wherewithal to manage the clinical and financial responsibilities of a health care insurer, and to contract directly with employers in its location.

There will be a role for the large health insurers with national scope for many years to come, because large employers want to deal with one insurer, not a multitude of separate organized care systems in various parts of the country. But for most Americans, employed by firms with one location of operation, the local organized care system will become more and more appealing. Getting the insurer out of the middle of the health care transaction between buyers of health insurance, beneficiaries of that insurance, and providers will eliminate considerable cost in inefficient communication and the bureaucracy built up by the middleman function.

For providers to perform effectively and efficiently, without the insurer in the way, they need to know one another and share an efficient means of communicating with each other about patients, about the insurance program purchased by the employer, and about the past ailments of patients and the services rendered to them by the delivery system. What sort of information processing do providers need to take on the insurers' administrative and financial roles? In addition to the insurers' traditional roles, what information do providers need to manage their patients well and to support preventive health activities for their members and continuous quality improvement activities for themselves? What information do providers need to care for patients better than they have in the past?

Providers are moving from producing procedures at single points in time, and being managed in a minimal way by annoying external entities - insurance companies and managed care plans - to managing the care of populations of people over time and managing themselves in a thorough and comprehensive way to maximize the quality of health care services they, the providers in their own delivery systems, produce for their members, the covered lives whose outcomes the providers try to enhance to gamer the best clinical results for their members and patients, which will help them win additional contracts later. The providers are working together, depending on each other to produce good outcomes, and not as isolated as they were in managed care, when the insurance company was the intermediary. In order to carry the level of performance to the next higher plane, above the realm of managed care, providers need to act and work in concert. They need to incorporate the concept of primary care provider, not as a gatekeeper, but as a conductor or orchestrator of the services made available to patients. They need to share information about their patients quickly. to expedite and improve the care of individuals and to produce the opportunity for systematic study of the results of their work to allow them to improve quality over time.

The OCS needs claims processing, coordination of benefits, enrollment and membership services, ways of keeping accurate records of the providers who are a part of the network, credentialing records, practice guidelines that have been adopted by the organization, rules for certification of certain procedures, and rules for case management, utilization review, and home health care treatment. The OCS needs the same kinds of information services that a managed care system needs, but providers will be using their information systems to help them manage their own services, rather than have their services policed by an outside entity that does not put information at their fingertips. The OCS needs practice management capabilities for scheduling patients for care and recording the serviced rendered to them, risk management systems to control the financial risk that goes with the role of OCS, and data on all the services rendered to patients and all the clinical findings from physicians' examinations and laboratory studies, for on-line, realtime patient care and for retrospective clinical and health services research analysis.

How do providers put all this information at their own finger tip With standardized and shared office practice systems, computer based patient records, and insurance-oriented managed care information systems that are impossible to implement in a setting where the providers are independent of one another, do not share governance or financial risk for the care of defined populations of patients, and are "coordinated" by multiple third-party insurers, not by themselves

In order to share a computer-based patient record, providers must agree to standardize the data definitions they use and their means of collecting data about their members and their patients. Standardizing on vendors' software and hardware makes the work of integrating data simpler, but the key to successful sharing of data is standardizing data definitions. The providers in an OCS want to share information easily about members, and patients. To do so, the technological barriers to data transfer among incompatible systems must be eliminated (by very hard work and considerable capital). Without a shared organizational structure that allows participating providers to pool and share capital for information systems, to establish standards and mandate adherence to them, and to share a staff of information systems experts to implement them, it will be impossible to create computer-based patient records for an OCS.

But the principal competitive advantage that providers in an OCS have that will help them compete successfully with managed care systems controlled by insurers are the computer-based patient records that providers can implement for themselves and that insurer-dominated delivery systems cannot implement without the insurer owning the providers and funding the information infrastructure itself. Will providers have the capital and the political wherewithal to use it to develop their own shared information infrastructure for computer-based patient records? Frankly, except in the case of large provider-driven organizations, such as hospital systems and the largest group practices, the sort of hard bargaining to establish information standards that all providers will share just will not take place. But there is another alternative, and it may define the future role of insurers in organized care.

The alternative is for the insurer to partner, join forces, integrate, or merge with a selected delivery system of providers, and, over time, the providers will begin to behave like an organized care system, with the insurer as a partner rather than an overseer. The insurer begins to act less like an outside entity harassing providers and more like a systems integrator, bringing the capital and expertise to provide the information systems for the delivery system. Providers will probably be working for the insurer, but the arrangements between providers and insurer may be comfortable, like those of providers working at academic health centers, and the intellectual and investment capital represented by the insurer builds die organization in which providers work. This relationship between providers and insurers seems to be happening in many parts of the United States today.

The Kaiser Permanente health care organization, an organized care system that is 60 years old, includes physicians in the Permanente Medical Group; a health plan in the Kaiser Health Plan; and, in California, an extensive network of health care treatment facilities, including hospitals, managed by the Hospitals Division. This organization is planning to spend many hundreds of millions of dollars on information systems infrastructure to give physicians in afl its service locations access to computer-based patient records. With this infrastructure, the organization can move information about patients to clinicians more quickly and more accurately than by paper, can increase the velocity and consistency of care throughout the system, and can promulgate practice guidelines that the physicians themselves have adopted. This system will not be imposed on providers by an outside policing entity. This electronic system of patient information, and automated advice to clinicians, will be designed by and for clinicians to help them work more efficiently and effectively.

What other organizations can do the same? Most providers are not organized into entities they control. They are organized into delivery systems by payers. I predict that, over time, payers will reduce the number of providers with whom they contract and will work cooperatively with providers who treat patients best and have the best outcomes of care. Providers will prefer to work with fewer managed care plans, the ones that treat them the best and give them the most patients. Therein lie the seeds of a close, symbiotic relationship. Traditional indemnity insurers don't want to go out of business and see all their customers flock to organized care systems such as Kaiser. And physicians do not want to see all their patients migrate in the same direction. So, to compete, providers and insurers will collaborate, until their working relationship resembles that of Kaiser. As the Permanente Medical Group grows, physicians in it feel less like partners and more like employees. So, too, with physicians affiliated with Prudential, or Aetna, or MetroHealth. Eventually, many providers will ally with one delivery network or another. The conversion from independent provider contracting with many insurers to one with a long-term, exclusive contract with a single payer may take place when the provider wants access to the computer-based patient record and the insurer makes a long-term, exclusive contract a prerequisite to the provider's gaining access to the insurer's information systems.

So, we have come full circle. We started with insurers creating managed care plans, keeping providers independent of each other and practicing in delivery networks defined by those insurers, in which providers are "managed" by utilization review and the requirement for prior approval of expensive services and in which providers have very little individual influence. Now we are moving to a time when providers almost "marry" with one insurer or another to gain access to computer-based patient records that in most communities only insurers have the wherewithal to define and capitalize. The entire premise that providers and insurers will find the reason to marry their efforts is secured by the importance of capital and standards in the establishment of computer-based patient records.

Marshall Ruffin, MD, MPH. MBA, FACPE, is President and CEO of The Informatics Institute, Until he started the Institute, he was Clinical Information Officer, INOVA Health System, Falls Church, Va. He continues to consult to the Informatics Department of that organization.