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UCLA/RAND STUDY OF BLUE CROSS OF CALIFORNIA PROVES MANAGED CARE WORKS

 WOODLAND HILLS, Calif., Aug. 25 /PRNewswire/ -- A recent study has shown that managed care techniques can provide high-quality health care at significant cost savings. The study by the UCLA School of Public Health and RAND, used Blue Cross of California (BCC) hospital network data.
 Managed care health plans are partnerships between hospitals, doctors, carriers, employers and consumers. They help control medical costs better than traditional systems and annual cost increases are smaller. Over half of all Californians are enrolled in managed care programs, more than any other state.
 "The Effects of Market Structure and Bargaining Position on Hospital Prices," a 10-year study by lead author Glenn A. Melnick, an associate professor at UCLA and a resident consultant at RAND, demonstrates that managed care can effectively lead to lower health care prices.
 The study, which was based on the experience of BCC's Prudent Buyer Plan preferred provider organization (PPO), and published in the Journal of Health Economics, supports federal reform proposals that rely on aggressive competition between managed care plans. This leads to greater price discounts, and the greater the competitive intensity in a hospital market, the larger the price discount obtained by payers.
 The study shows that by changing the economic incentives to encourage health care providers to compete on the basis of price, health care costs can be lowered. "Our research," Melnick said, "shows that hospitals, when faced with the need to compete for managed care contracts, will cut their costs substantially and quickly. Although not yet complete, our research to date on physicians' behavior under managed competition is similar to our findings on the hospital sector."
 Melnick also said, "Price competition can encourage health care managers and providers to manage health care resources and meet health care needs in a more cost-effective manner without forgetting about patient service and satisfaction."
 Blue Cross of California Chairman and Chief Executive Officer Leonard Schaeffer said the study confirms BCC's 1987 decision that managed care was the way of the future. "Today, 92 percent of our business is in our managed care networks. We are committed to working with the excellent providers in our networks to offer cost effective, high-quality managed care for our members."
 Schaeffer said, "Health care reform must rely on effective competition between managed care plans, not artificial price controls or premium caps, to truly contain costs over the long run."
 Blue Cross of California is a non-profit, tax-paying, public benefit corporation providing health care benefits to more than 5.7 million Californians. Blue Cross offers a wide range of health plans and a managed care approach to financing and delivery. Blue Cross is committed to bringing affordable, accessible health care to all Californians. In 1992, Blue Cross paid $8.5 billion in benefits.
 -0- 8/25/93
 /CONTACT: Larry Bryant of Blue Cross of California, 818-703-2473 (office), or 818-703-7311 (residence)/


CO: Blue Cross of California; UCLA School of Public Health; RAND ST: California IN: HEA INS SU:

EH-JL -- LA007 -- 5690 08/25/93 08:06 EDT
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Publication:PR Newswire
Date:Aug 25, 1993
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