Understanding managed care.

Managed Care. The combination of these two words mean different things to different people and are almost always misunderstood in American society today. Whenever we open the newspaper or turn on the television, we see or hear "managed care." It is used interchangeably with health care reform, co-payment health insurance, and conjures up visions of crowded waiting rooms and frazzled health care workers.

Managed care is a way to deliver health care. Traditionally, a patient received care wherever he wanted, from the doctor he preferred, whenever he needed it, and paid whatever the going rate was. Managing care means there is more of a system in place when a patient needs care. The amount of structure depends on the type of plan. A patient may choose a plan which offers care whenever he wants it, but not at the nearest location. He may continue with the same physician he's had for twenty years, but pay only a $10 co-payment instead of a $40 office visit charge.

A health maintenance organization (HMO) provides care for patients at a certain location by physicians who are paid by the HMO, not the patient. The patient will contribute to the cost of the visit through a co-payment, which is typically $5 to $20, regardless of treatment necessary. The patient is not charged for needed x-rays, lab tests or hospital in-patient treatment--the HMO is. Therefore, it has been in the interest of HMOs to keep patients well. The less often they have to treat patients, the less costly the care will be.

So preventative care has been the trademark for HMOs. Unfortunately, preventative care is being associated with a wise business decision, not a philosophical medical decision. But in reality, managed care has structured medicine so physicians are better able to prevent major illnesses through increased technology. It is much easier to purchase a medical record technology and use a database to track all women ages 40-60 to remind them to schedule a mammogram. With a small private practice, this work would have to be done by hand and would be very time-consuming. It would be easier to wait for the patient to call in for a check-up, and then ask if she needed additional care.

There are several types of HMOs in the United States. Group model HMOs are owned and operated by physicians who contract with an insurance agency to provide care. Staff model HMOs hire physicians to work in offices. These physicians share in any profits at the end of the fiscal year. They also share in the medical decisions. For example, if one physician has a patient who needs additional hospital tests because reasonable exploratory tests have not been conclusive, the decision will be made by all staff physicians during a utilization management meeting. The risks are shared and the profits are shared.

There are other forms of managed care delivery systems. IPAs, Independent Practice Associations or Independent Physician Associations, provide flexibility for private physicians to belong to networks. They can share paperwork and resources, while maintaining a separate community office. Physician-Hospital Organizations (PHOs) are starting up around the country as hospitals begin to network with physicians for specific services. PHOs are a unique way to share risks between two levels of patient care.

The National Association of Managed Care Physicians (NAMCP) was created to educate members about issues related to managed care, with physicians as the core of the equation. The NAMCP focuses its educational materials primarily toward physicians through conferences and publications. Physicians are wrestling with contracting issues, capitation structures and other business decisions.

Additional information is provided through Managed Care 101, a three-hour session designed to combat "information overload" on managed care issues to health care and non-health care professionals. This program is available anywhere in the country. It is appropriate for busy professionals who can't get away for conferences. Nurses, case managers, home health care providers and other health care providers are all part of the delivery system and each is addressed as part of the equation.

In March 1994, the NAMCP and the National Business Coalition on Health will present a forum for business and health leaders to discuss appropriate employer/physician issues. This forum will provide opportunities for local health and physician leaders to join forces and address issues which affect local communities. Most of these issues will revolve around some type of managed care. The more informed business leaders are about managed care, the more likely they will be to ask the right questions when negotiating employee health care contracts and benefit packages. And since physicians are spending the employers' money, it is important that they understand the specific business issues involved.

It all comes down to patient care. Americans have always had the best quality health care in the world. However, how to contain costs and what type of delivery system have always been debated. Business leaders and physicians must work together to find the best delivery system to contain costs while continuing to provide the best quality health care. For more information on the NAMCP, call [phone].

Mr. Williams is the founder of the National Association of Managed Care Physicians.