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Managed Care

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Local leaders and circumstances determine how the arrival of managed care will be received in rural communities

The reactions of rural communities to managed care vary from defensive, with local players attempting to deflect what they perceive as the evils of managed care, to welcoming, when changes in health financing and organization are viewed as opportunities to improve local delivery systems. This is the conclusion of a study supported by the Agency for Healthcare Research and Quality (HS09195) and led by Keith J. Mueller, Ph.D., of the University of Nebraska Medical Center. He and colleagues studied the experiences of purchasers, providers, and others in six diverse rural communities. The rural sites in six States (Oklahoma, Minnesota, New York, Washington, Tennessee, and South Carolina) were selected because of significant anticipated or current changes ranging from expansion of Medicaid managed care to development of provider networks.

These case studies revealed that some local providers, led by local leaders, developed their own "bunker" strategies to ward off the worst effects of financial discounting and medical management that managed care organizations (MCOs) wished to impose (Tennessee and South Carolina). In South Carolina, network leaders, caught between competing visions of local physicians and some hospital administrators, were leaning toward the physicians' views. This meant they were reluctantly willing to consider managed care contracts but only on terms that maximized the independence of local providers. In Tennessee, providers' resistance to change was more widespread; there were no clear advocates for changing current practices.

In each of the four sites where local objectives were furthered by market change, a local catalyst led the effort. When managed care became operational, major sources of support were available. In New York and Oklahoma, regional health systems were anchored by large regional hospitals that could support changing systems. In Washington, consolidations of local physicians into a single clinic, which then affiliated with the one hospital in the region, led to a pooling of resources. Minnesota combined resources, but through a regional cooperative. In the communities studied, resources, leadership, and community capacity molded change to meet the needs of the community.

The researchers conclude that the most practical way to preserve and protect a local approach to health care and to maximize returns for local providers is to form integrated networks. This will allow rural providers to achieve the economies of scale necessary to support information systems, referral systems, and other techniques for achieving cost efficiencies. Also, large regional networks can aggregate populations to pool risk.

See "The changing landscape of health care financing and delivery: How are rural communities and providers responding?" by Dr. Mueller, Andy Coburn, Sam Cordes, and others, in the Milbank Quarterly 77(4), pp. 485-510.

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