Health Care Markets and Managed Care

New Evidence and Emerging Issues

A major purpose of research on health care markets is to provide key private and public decisionmakers with the information they will need to make critical decisions. In February 1997, the Agency for Health Care Policy and Research's (AHCPR) Center for Organization and Delivery Studies, in conjunction with Health Affairs, held a 2-day conference.

The conference had two objectives:

1. To share findings from AHCPR-funded studies with leaders from industry, the policy community, and the research community.
2. To help researchers learn how to better meet the information needs of policymakers.

On the first day, researchers from 10 major projects funded by AHCPR in late 1995 presented their preliminary findings. The grants were designed to provide timely information on how transformations in the marketplace are affecting the structure and organization of health care, and how these changes are affecting delivery systems. On the second day of the conference, panels of public policymakers, private decisionmakers, and legal experts discussed how health services research could be useful to them.

Based on the presentations made at this conference, the following set of articles was published in the Health Affairs November/December 1997 issue to form the first comprehensive look at what is currently happening in the health care marketplace. The articles include:

• In "Segmentation of Hospital Markets: Where Do HMO Enrollees Get Care?" José J. Escarce and colleagues suggest that health maintenance organizations (HMOs) may not systematically channel their enrollees to high-volume, low-mortality hospitals. (pp. 181-192)
• In "Which Types of Hospital Mergers Save Consumers Money?" Robert A. Connor and colleagues find that, overall, horizontal mergers benefit consumers but more antitrust scrutiny is needed. (pp. 62-74)
• Jan P. Clement and others in "Strategic Hospital Alliances: Impact on Financial Performance," find that when hospitals form strategic alliances, their revenues increase but their costs do not. (pp. 193-203)
• Lawton R. Burns and colleagues question prevailing tools used for analyzing market evolution in "Managed Care, Market Stages, and Integrated Delivery Systems: Is There a Relationship?" Their findings indicate that these tools seem better at producing a snapshot of markets rather than distinguishing sequential stages of development. (pp. 204-218)
• In "The Provision of Primary Care: Does Managed Care Make a Difference?" Carol J. Simon and co-researchers find that in response to managed care, physicians have been specializing more, and this is linked to their involvement in managed care. (pp.89-98)
• In "Effects of HMO Penetration on Physicians' Work Effort and Satisfaction," Jack Hadley and Jean M. Mitchell document the extent and nature of physicians' reservations about how they now practice medicine. (pp. 99-111)
• In "HMO Market Structure and Performance: 1985-1995," Douglas R. Wholey and colleagues take a comprehensive look at a decade of managed care data and find evidence confirming the widely held perception that hospital days are declining among HMO patients, while use of ambulatory care is up. Their analysis not only documents the role of plan competition but also provides a closer look at the differential patterns of competition for different kinds of managed care organizations. (pp. 75-84)
• In "Judge Posner's RFP: Antitrust Law and Managed Care," William M. Sage points out that the dearth of empirical data on competition in the managed care market leads to theoretical guesses in our courts of law. His paper calls for sound empirical information that can be used in the formulation, appropriate enforcement, and litigation of antitrust law. (pp. 44-61)
• In "Doctors and Their Discontents," David Colby points out that despite dramatic changes in physicians' autonomy, medicine continues to be an attractive profession. (pp. 112-114)
• In "Ominous Signs and Portents: A Purchaser's View of Health Care Market Trends," Michael H. Bailit argues that a decline in competition and few rewards for higher-quality care threaten the health of the managed care marketplace. (pp. 85-88)

This issue of Health Affairs (Vol. 16, No. 6) can be ordered from the Health Affairs Web site (https://secure1.nmpinc.com/hopelink/forms/backcopies.htm). Select to access online highlights in Research Activities of the articles. For information on another AHCPR study published in the same issue of Health Affairs, select for the press release "New Research Brings Needed Evidence to the Debate on Managed Care."

Current as of February 1999

Internet Citation:

Health Care Markets and Managed Care: New Evidence and Emerging Issues. February 1999. Agency for Health Care Policy and Research, Rockville, MD. http://www.ahrq.gov/about/cods/codsevid.htm