Academic Medical Centers and Managed Care: Uneasy Partners

Abstract

Academic medical centers (AMCs)-the medical school, the teaching hospital, and the faculty practice plan-depend heavily on patient revenues. Growth in managed care is changing AMCs' revenue streams and creating stresses that are already apparent in areas with a high penetration of health maintenance organizations (HMOs). The prevalence of managed care requires that AMCs adapt to survive and also raises public policy issues related to the financing of medical education. This Commentary discusses the problems facing AMCs that stem from the advent of managed care.Definitions of managed care differ; for our purposes here, it encompasses any measure that, from the perspective of the purchaser of health care, favorably affects the price of services, the site at which the services are received, or their rate of use. Managed care assumes many forms and is becoming the predominant force in the health care marketplace. For example, enrollment in HMOs reached 38.8 million in June 1992, compared with 10.2 million ten years earlier.1 Although enrollment estimates for preferred provider organizations (PPOs) vary widely, by all accounts the number of persons under PPO arrangements has surpassed HMO enrollment; PPOs were only a nascent force ten years ago. Inpatient precertification and concurrent review-bold measures a decade ago-have become the norm in indemnity plans. Specialized programs have evolved to control costs of services such as mental health care and prescription drugs. Managed care also is becoming an integral part of Medicare and Medicaidcritical revenue sources for AMCs. Finally, most reform proposals embrace competitive health plans or other vehicles to promote managed care.Teaching hospitals and faculty practice plans can relate to managed care entities in multiple ways: ( 1 ) AMCs can contract for an individual specialty service, which might be reimbursed on either a discounted fee-for-service basis or a capitation basis; (2) AMC hospitals and physicians can be paid a

Broadening the Scope of Nursing Practice

“…During the 1990s, cost containment pressures generated by the expansion of managed care became a significant challenge for AMCs, in part because of the higher overhead rates necessary to fund their teaching mission . 203,204 As cost containment drives prices at AMCs down to the same level as prices at community hospitals, fewer resources are available to support training . To the extent that training new health care providers is a public good, 205 society at large may be adversely affected by policies that equalize reimbursement at community and teaching hospitals .…”

“…Further, because AMCs often treat a disproportionate number of Medicaid and uncompensated care patients, 206,207 equalizing costs between AMCs and community hospitals will inhibit AMCs from shifting these added costs onto private payers . This restriction could put an added financial strain on AMCs, ultimately threatening their ability to stay in business .…”

Expressing uncertainty in clinical interactions between physicians and older patients: What matters?

“…The higher propensity to express uncertainty among physicians at the AMC could be associated with their tendency to attract “a sicker mix of patients” due to their focus on tertiary care. [55] Thus, the cases the physicians receive are more complex, which is associated with greater uncertainty regarding diagnosis, treatment, and outcomes. Also, AMCs have been touted for being “more competent in managing-- and educating students to manage-- the uncertainty involved in creating clinical paradigms” [56].…”

Cord-Blood-Cell Transplantation — A Real Sleeper?

“…As academic centers strive to become streamlined, they encounter serious obstacles: the discontinuity between the priorities of the autonomous clinical departments, 8 which seek to retain control over revenues from patient care; the priorities of the teaching hospital, which operates independently; and the pressures exerted by managed-care plans, which seek to negotiate with a single organization capable of providing comprehensive medical care to an enrolled population at the lowest possible price. There are still many payment arrangements, but the trend favors contracts with providers who can accept the full financial risk of treating patients in exchange for one capitated payment.…”