Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers

Health Affairs

Volumn 17, Issue 3, 1998, Pages 216-226

  Maxwell, James ^a   Briscoe, Forrest ^a   Davidson, Stephen ^a   Eisen, Lisa ^a   Robbins, Mark ^a   Temin, Peter ^a   Young, Cheryl ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; CONSUMER; DECISION MAKING; ECONOMICS; FINANCIAL MANAGEMENT; HEALTH CARE COST; HEALTH INSURANCE; HOSPITAL PURCHASING; HUMAN; ORGANIZATION AND MANAGEMENT; UNITED STATES;

COMPETITIVE BIDDING; CONSUMER PARTICIPATION; CONTRACT SERVICES; DECISION MAKING; GROUP PURCHASING; HEALTH BENEFIT PLANS, EMPLOYEE; HEALTH CARE SECTOR; HUMANS; MANAGED CARE PROGRAMS; MANAGED COMPETITION; PRIVATE SECTOR; UNITED STATES;

EID: 0348118564     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.17.3.216     Document Type: Article

References (21)

1. The portion of workers enrolled in managed care plans rose from 51 percent in 1993 to 73 percent in 1995, according to a survey conducted by KPMG Peat Marwick. See G.A. Jensen et al., "The New Dominance of Managed Care: Insurance Trends in the 1990s," Health Affairs (January/February 1997): 125-136.
2. For a description of the principles of managed competition, see A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48.
3. L. Etheredge, S.B. Jones, and L. Lewin, "What Is Driving Health System Change?" Health Affairs (Winter 1996): 93-104. Also see U.S. General Accounting Office, Health Insurance: Management Strategies Used by Large Employers to Control Costs, Pub. no. GAO/HEHS-97-71 (Washington: GAO, May 1997).
4. L. Etheredge, S.B. Jones, and L. Lewin, "What Is Driving Health System Change?" Health Affairs (Winter 1996): 93-104. Also see U.S. General Accounting Office, Health Insurance: Management Strategies Used by Large Employers to Control Costs, Pub. no. GAO/HEHS-97-71 (Washington: GAO, May 1997).
5. J. Maxwell et al., Corporate Approaches to Implementing Managed Competition: Final Report to the Robert Wood Johnson Foundation (Boston: JSI Research and Training Institute, March 1997).
6. Corporate officers at large U.S. firms were not concerned about health care benefits control or costs in 1981, according to a survey reported in H. Sapolsky et al., "Corporate Attitudes toward Health Care Costs," Milbank Memorial Fund Quarterly/Health and Society 59, no. 4 (1981): 561-585.
7. This emphasis on employee responsibility has also become prevalent in other aspects of employee relations. See J. Maxwell et al., "Corporate Health Care Purchasing and the Revised Social Contract with Workers" (Unpublished paper, 1997).
8. See Human Resource Management, Special Issue: Measuring Human Resource Effectiveness and Impact (Fall 1997).
9. Enthoven, "The History and Principles of Managed Competition," 32.
10. For a discussion of how components of the employment contract are changing, see P. Cappelli et al., Change at Work (New York: Oxford University Press, 1997).
11. Interviews with representatives from CIGNA and other health plans, April 1996.
12. D.J. Lipson and J.M. De Sa, "Impact of Purchasing Strategies on Local Health Care Systems," Health Affairs (Summer 1996): 62-76.
13. H.S. Luft, "Modifying Managed Competition to Address Cost and Quality," Health Affairs (Spring 1996): 23-38.
14. Three examples help to illustrate the process of dissemination from these companies to their counterparts in industry. GTE's managed competition strategy has been spread by the relocation of its principal architect, Bruce Bradley, to the largest private purchaser in the nation. General Motors. Likewise, Digital's approach to purchasing was brought to the public sector when its champion, Michael Bailit, was hired by Massachusetts Medicaid. American Express's quality practices have been adapted for a national coalition of purchasers in which it participates.
15. M.D. Friedman, M. Bailit, and J. Michel, "Vendor Management: A Model for Collaboration and Quality Improvement," Joint Commission Journal on Quality Improvement (November 1995): 635-645.
16. See J. Meyer et al., Employer Coalition Initiatives in Health Care Purchasing, vol. 1 (Washington: Economic and Social Research Institute, February 1996).
17. John Snow, Inc., Health Benefits Purchasers: Orlando, Report to the Florida Agency for Health Care Administration and the Robert Wood Johnson Foundation (Boston: JSI, 1997).
18. The rate of increase in health insurance costs remained low in the last few years, at least until June 1996. See "A Look at Employers' Costs of Providing Health Benefits" (Washington: U.S. Department of Labor, 31 July 1996).
19. A few examples illustrate the cost savings from coalition participation. As a result of participating in the Pacific Business Group on Health, Fireman's Fund lowered its premiums in California by 5 percent in the initial year of group negotiations (1994). Because it joined the Buyers Health Care Action Group, General Mills's per capita costs barely increased from $4,053 in 1993 to $4,121 in 1995 (a decline when adjusted for inflation).
20. U.S. General Accounting Office, Retiree Health Insurance: Erosion in Employer-Based Health Benefits for Early Retirees, Pub. no. GAO/HEHS-97-150 (Washington: GAO, 1997); and GAO, Health Insurance: Coverage Leads to Increased Health Care Access for Children, Pub. no. GAO/HEHS-98-14 (Washington: GAO, 1997).
21. U.S. General Accounting Office, Retiree Health Insurance: Erosion in Employer-Based Health Benefits for Early Retirees, Pub. no. GAO/HEHS-97-150 (Washington: GAO, 1997); and GAO, Health Insurance: Coverage Leads to Increased Health Care Access for Children, Pub. no. GAO/HEHS-98-14 (Washington: GAO, 1997).