Critical Reflections on Managed and Integrated Care

• Introduction
• Managed Care – What Is It?
• Case For Primary Care and Maori Providers
• Other Fish-hooks and the Future
• References

Introduction

There are two main reasons that scepticism remains about managed care. Firstly, managed care’s dubious pedigree from the USA’s healthcare management organisations (HMOs) of the 1970s, where it was seen as the means of controlling costs created by clinical decisions, sometimes against the individual interests of patients. Secondly, because managed care is associated with a series of neo-liberal reforms in health care implemented by the National Government in New Zealand from 1991. The New Zealand public remains sceptical of the health reforms process which can be seen in the enormous public interest in health matters during recent political elections.

In New Zealand, "managed care" has been transformed into "integrated" or "co-ordinated care" to remove the stigma associated with the USA models and to reflect a different emphasis. Rather than on "managing" health care, the focus is on integrating primary and secondary care or on co-ordinating health care services in the interests of a particular population. The semantics may not amount to much if the underlying nature of the models remains the same. Certainly, there is reason to believe that government’s primary motivation for some version of managed care arises from controlling health expenditure and managing political risk.

Political risk is evident in the public’s opposition to the health reforms despite repeated attempts by government to "sell" the reforms’ benefits. Furthermore, the public seems reluctant to be rid of a "free public health system", despite the fact that New Zealand’s health system has always involved a mixture of private care, mainly through general practitioners (GPs) and through public care, mainly via public hospitals. The provision of secondary health services was a key part of the contract between the state (or Government) and the public under the welfare state which dominated the way in which relations were organised in health care from the late 1930s until 1990. Under that system, the contract formed between individual citizens and the state meant that hospital care would be provided according to need, irrespective of an individual’s ability to pay.  ¹   This right was changed by the 1991 reforms with the introduction of partial "user-pays" for pharmaceuticals and hospital services, although these hospital charges were later relinquished following public opposition.

Managed Care – What Is It?

Managed care is seen as "the development of a range of techniques for ensuring the delivery of an optimum quantity and quality of care in a cost-effective manner".  ²   Managed care organisations are concerned with "aligning financial and clinical incentives".  ³   This type of managed care organisation can purchase health services in primary and secondary care on behalf of a client who is registered with them. Coopers & Lybrand explain it thus  ⁴  : "Such an organisation would receive a lump-sum allocation from the relevant RHA(s) and, in return, would be expected to deliver, or contract for, the services required by its enrollees. In doing so, the managed care organisation would have a high degree of autonomy to shape the pattern of health and disability support services for the people it served".

Malcolm and Shalowitz explain that managed care has been led in New Zealand by Independent Practitioner Associations (IPAs) and was linked to the Americanisation and commercialisation of the health system.  ⁵   Furthermore, these changes, as identified by other researchers and commentators, are "part of a fundamental international trend in health system policy with moves towards capitation, equitable funding and the integration of primary and secondary care" (p6  ⁵  ). While IPAs have been at the forefront of promoting possible benefits of integrated care to patients and practitioners, there have also been many advocates amongst Government and senior health personnel. A number of overseas "experts" have been brought to New Zealand from the USA and Europe to explain how managed care operates overseas and to promote possible applications of these models in New Zealand.

The formation of managed care organisations is a logical next step in the process of removing Government from health services provision. The introduction of competitive tendering for services by the National Government in 1991 and the introduction of a purchaser (now funder) / provider split were designed to achieve efficiencies in the health sector. These changes assumed that health was just another commodity and could operate with the same market principles as any other industry . This view is questioned increasingly even by previous proponents. A review by the Steering Group to Oversee Health and Disability Changes advised toning down the competitive and commercial nature of health services in favour of a more collaborative approach.  ⁶  

Managed care is an attempt to grapple with a perceived problem of managing patient demands within a limited budget. (New Zealand’s proportion of GDP spend in health is lower than other OECD countries at 7.5% in 1995 compared to the USA’s 14.5%.)  ⁵   The involvement of large insurance companies such as Aetna has also generated concern because of the possible prioritisation of profit before care. As such, managed care is often associated with health reforms which are based on principles of economic rationalism.

Managed care is intended to deliver profitability and benefits to patients through the careful management of both patients’ clinical needs and organisational demands. Integrated care is intended to deliver profitability and benefits to patients through the stream-lining of a continuum of care between primary and secondary health services; and co-ordinated care through the co-ordination of health providers in the interests of a defined population of patients (like a broker).

Other countries have grappled with the underlying problems that managed care attempts to solve, problems such as "more cost effective ways of delivering health services to meet ever growing demand due to ageing populations, more expensive drugs and medical technology and changing expectations [of patients]." (p6  ³  ).

The UK has trialled devolution of budgets to general practices with responsibility to manage patient care within those budgets, while the USA have attempted to "integrate different components of the health care delivery system into hierarchies or networks in order to achieve economic synergies, avoid duplication and improve outcomes" (p6  ³  ).

In May 1998, the New Zealand General Practitioners’ Association announced Government’s intention to capitate general practice in New Zealand. Capitation is a capped payment system whereby health providers are paid a pre-determined amount to care for a particular population of patients. This is intended to address the wide variation in utilisation of a fee-for-service primary health care service. Malcolm and Shalowitz claim that there is “serious underfunding of primary care services for some disadvantaged, underserved populations including the indigenous Maori population” (p6  ⁵  ). This form of capitation may mean convergence between "market-driven and public health care systems as both seek ways of achieving greater cost-effectiveness in resource constrained environments".  ⁷   Malcolm and Shalowitz believe that IPAs enable "collaborating to build up collective professional accountability amongst primary care physicians for cost as well as quality of care, developing information systems, decision-making about priorities".  ⁵  

Case For Primary Care and Maori Providers

Integrated care is seen as promising by IPAs and Maori providers, with opportunities for direct involvement of GPs or Maori health professionals in planning, contracting and evaluating care on behalf of their patients. The Coopers & Lybrand report prepared for Te Kete Hauora, Ministry of Health, in 1995  ⁴   was enthusiastic about "co-ordinated care" for Maori. While pointing out that this could include a range of models including fund-holding, health care plans, performance incentives, capitation and collaborative purchasing, it argued that Maori aspirations can be better met through this configuration. One of the unexpressed assumptions of this report is that this is because these providers are closer to the populations they serve. However, the difficulties of co-ordinating public health strategies across vulnerable populations remain unaddressed in the report.

The Coopers & Lybrand report was unashamedly supportive of co-ordinated care, arguing that it potentially offers better integration of services, increased responsiveness, improved equity, stronger incentives for prevention, capped expenditure and better risk management.  ⁴   However, little evidence is provided to support these comments. Indeed, managed care is being seriously questioned in the USA, at the very time that New Zealand looks like adopting it in some form.  ⁸  

In particular, evidence of the benefits of competition in health services – such as between competing Integrated Care Organisations (ICOs) – is not encouraging internationally. As Robert Bowie and Ian Shirley point out: "Internationally, the evidence for the benefits of competition is incomplete and far from compelling" (p318  ¹  ). They argue that the American system is singularly unsuccessful. It is expensive with little evidence of superior health outcomes: "For Americans in lower income groups, the health care provided is commonly acknowledged as unsatisfactory. Moreover, competition has tended to be based on crude indicators of consumer-perceived quality, rather than price." They go on to say, "Typically, the use of the market mechanism in health care – where consumer knowledge is low and where payment may be by a third party – involves sizeable transaction costs with unproven benefits in terms of resource allocation. Further, even if a competitive market was to succeed in allocating resources efficiently, there could be no assurance that it would meet socially determined equity targets" (p318  ¹  ).

Support also exists for "physician accountability and leadership in influencing clinical decision making for both cost and quality" through IPAs.  ⁵   Malcolm and Shalowitz identify that: "Progress towards managed / integrated care has been as rapid and appears to be potentially more extensive than any other country including the USA" (p2  ⁵  ). They go on to say that: "Government had high expectations that managed competition, at least between providers, would reduce costs and improve access. These assumptions have been proved to be fundamentally flawed" (p3  ⁵  ). These flaws include financial problems: "since 1993 actual government health expenditure has increased by 25–30%. Access was diminished as the waiting list for elective surgery has grown by 50%” (p48  ⁹  ).

Maori remain keenly interested in co-ordinated care as a means of allowing more direct control over health services to Maori patients. There is an assumption that Iwi-led ICOs administered by Tribal Authorities will emerge in the next few months consistent with the implementation of Treaty of Waitangi principles by Crown (Government) agencies.  ¹⁰   However, little thought has been given to possible ethical conflicts as Tribal Authorities become responsible for telling Maori patients what core services will, and will not, be provided, trading off financial against clinical benefits and ensuring co-ordination across tribal boundaries of public health and health protection initiatives. It will be difficult to take on political fights in the interests of public health if Iwi are intrinsically linked to these matters themselves. However, this must be balanced against unanimous support by Maori for greater control over health policy, service delivery and evaluation.

Other Fish-hooks and the Future

Both critics and senior health advisers are concerned about the possibility of cream-skimming by ICOs – that these organisations might seek “easy-to-treat, low-cost patients. Doctors might refuse to enrol very sick people, such as Aids or cancer patients, because they were too expensive”.  ¹¹   The Transitional Funding Authority (now the Health Funding Authority) believe that two strategies for addressing this could be, “either paying the health organisations more to take some at-risk groups of people, such as the elderly, or it could force them to take everybody” (ibid).

Furthermore, the reforms are seen by some critics as "shifting financial risk away from the Government and on to private organisations, which ultimately would mean more costs to patients."  ¹²  

Coopers & Lybrand identified the following difficulties: enrolment criteria; funding formula; proving membership; cost shifting; restrictions on the use of health and disability; transaction costs; ability to manage risk; management capacity; implementation time frame; and accountability.  ⁴   Of particular interest are cost-shifting and ability to manage risk. There is evidence of cost-shifting already occurring within the health sector with private individuals contributing the greatest increase between 1991 and 1996, followed by the then Accident Compensation Corporation (ACC; now renamed the Accident Rehabilitation and Compensation Insurance Corporation) and private health insurers (p48  ⁹  ).

The Coopers & Lybrand report points out the danger of small populations that are subject to "fluctuations in demand and hence costs" and suggest a possible minimum membership for co-ordinated care schemes. However, the authors do not suggest what that minimum number might be.

Despite these difficulties, it is almost certain that some form of integrated care will be trialled in New Zealand in the next few months with a view to working out these fish-hooks and expanding the scheme to cover the whole of the country.

While there are clear benefits in involving primary and secondary care clinicians more directly in decision-making, along with vulnerable populations such as Maori and Pacific Island peoples, these discussions occur in a vacuum of information about what else will exist in this proposed system. There seem to be few opportunities for developing a population based approach to preventative medicine as promoted by Geoffrey Rose,  ¹³   despite the obvious benefits of such. Rather this kind of public health thinking is seen as being woolly and inconsequential.  ^{14     15}  

The proposed transition to integrated care will not absolve Government from addressing fundamental issues associated with health care within New Zealand such as, how much money should Government spend on health and what is the nature of the contract between Government and its citizens in respect of health. Continual changes to health care structures do little to improve morale amongst health professionals and the public. A broader and more democratic consensus is required for these reforms to succeed.

References