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Local Health Departments in a Managed Care Environment

Challenges & Opportunities

Summary of a Workshop for Senior Local and State Health Officials

This workshop took a broad look at the myriad issues facing local health departments in today's changing health care marketplace and explored new ways in which local health departments can carry out their public health assessment, policy development, and assurance activities in this new environment. It was held in Minneapolis, Minnesota, May 6-8, 1997.

About the Workshop Sponsor.


Across the United States, major changes are taking place in the way that health care services are being financed and delivered. Private employers and public health care programs are moving increasing numbers of individuals into managed care arrangements.

In response to this trend and the broader demands of purchasers for cost containment and increased accountability, health care providers are coming together to form health care networks or other organized delivery system arrangements. These developments have a significant impact on both privately and publicly insured individuals, including low-income persons covered by Medicaid or other State-subsidized health insurance programs. They also are expected to have a profound impact on both private and public providers of health care services, and on public health agencies responsible for regulating health care activities and for monitoring and protecting the health status of our Nation's population.

At the local level, the movement to managed care and the breakneck pace at which it is occurring in many areas of the country are likely to affect publicly supported health care providers and agencies, including many of our Nation's more than 3,000 local health departments (LHDs). This shift to managed care presents real challenges to those LHDs whose financial viability is threatened by the loss of revenues associated with Medicaid and other patient populations who are moved from these LHDs into other managed care arrangements.

However, in a managed care environment, local health departments still will be responsible for carrying out the core public health functions of assessment, policy development, and assurance. The movement to managed care also can afford LHDs new opportunities to redirect resources and develop new strategies—including the possibility of collaborative efforts with managed care organizations—to better carry out these essential public health responsibilities.

Determining the proper direction for a local health department to take in the midst of the monumental changes occurring within the health care marketplace can be a daunting task for local officials. They will be faced not only with a new environment, but also a very complex array of issues and factors to consider in determining the specific activities they should carry out in this new environment to fulfill these responsibilities.

For example, many local health officials are likely to be struggling to answer questions like:

  • Should my LHD continue to provide personal health care services?
  • Is it possible to link population-based services with managed care activities?
  • What new approaches to carrying out core public health functions might make sense in this new environment?

Indeed, the range of issues and options that LHDs might consider is quite broad, for the following reasons:

  • The roles played by individual LHDs within the health care field prior to the arrival of managed care varied widely.
  • The potential roles that LHDs could play in the direct delivery of personal health care and related services in an increasingly managed care environment could also vary considerably.
  • The emergence of managed care arrangements presents LHDs not only challenges, but also new ways to use resources to carry out core public health functions.


To assist public health officials in examining the changes occurring in today's health care marketplace and in charting a logical and appropriate course for their local health departments, the Agency for Health Care Policy and Research (AHCPR) produced a document entitled Assessing Roles, Responsibilities, and Activities in a Managed Care Environment: A Workbook for Local Health Officials.

This workshop was designed to compliment that document by providing a forum for the further examination and discussion of the issues raised in it. Like the workbook, the purpose of this workshop was not to prescribe what individual LHDs should do or what their future roles should be, but rather to highlight and discuss the issues and questions that public health officials must address to make more informed decisions about roles, responsibilities, and activities for their LHDs in an increasingly managed care environment. It was not intended to provide in-depth, hands-on training on specific service delivery-related topics, such as developing capitation rates or negotiating with managed care organizations.


The participants at this workshop included a broad range of individuals, including: senior staff of local health departments, State public health officials, State Medicaid officials, a State legislator, and a local elected official.

Workshop Sessions


The User Liaison Program (ULP) disseminates health services research findings in easily understandable and usable formats through interactive workshops. Workshops and other support are planned to meet the needs of Federal, State, and local policymakers, and other health services research users, such as purchasers, administrators, and health plans.

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