Managed Health Care


Health Economics

  • In the US, managed health care refers to a system of health care in which services are delivered through a network of contracting hospi tals, physicians and other providers and financed through a set fee. Some forms of managed health care, such as preferred provider organizations (PPOs) and point-of-service plans (POSs), allow patients to receive services outside the network but at a higher out-of-pocket price than for in-network services. Closed-panel health maintenance organizations (HMOs) do not allow this but POSs, which are one form of open-panel HMOs, do. Ideally, the managed health care organization monitors the quality and appropriateness of care to guard against both over- and under- utilization, although sometimes cost containment or dumping the patient on another cost centre are said to be the most tangible motivations. Typically, primary care physicians are either salaried or paid capitation rates in HMOs and POSs, but in PPOs they generally are paid on a fee-for-service basis. HMOs and POSs usually require that patients first see a primary care gatekeeper for referrals but this is rarely the case in PPOs. Managed health care organizations rely more on supply-side controls (such as the provision only of services for which there is evidence of cost-effectiveness) than on demand-side, although recent years have seen substantial increases in patient cost-sharing requirements.

    In idealized form, managed health care will effectively control both the demand and the supply side of a local market, acting as agent for members, eliminating demand for ineffective care on the one hand, and negotiating lower prices and restricting provision to services deemed to be cost-effective on the other. In the diagram, for example, the 'normal' demand curve D is shifted to the left (DM) and the price negotiated down from P to PM so that total expenditure falls from the amount indicated by the larger rectangle to that indicated by the smaller shaded one. Although the diagram does not show the (hoped for) impact on health, it indicates the potential that managed health care has for cost control. Essentially the same reasoning often lies behind arguments for ' socialized ' medical care.

  • acronymMHC
    (written as managed health care)
  • synonymManaged Competition
    (written as managed health care)

General Science

  • noun a group of genes located next or near to one another that make cells separate and distinguishable from those of other organisms