The view from communities

Competition In Health Care: Its Evolution Over The Past Decade

Understanding the roller-coaster experience with the use of market forces in health care over the past ten years provides important context for discussions of likely future developments in the nature of competition. The period began with acceptance of managed care transforming the organization of medical care delivery and proceeded to a period in which many of the changes were reversed. The vision of integrated delivery has now been replaced with a vision of a more active role for consumers. But the greatest potential for a larger role for consumers lies in mechanisms that apply competitive pressure on providers to improve the quality of care that they provide and reduce their costs.

The end of an era: what became of the "managed care revolution" in 2001?

OBJECTIVE

To describe how the organization and dynamics of health systems changed between 1999 and 2001, in the context of expectations from the mid-1990s when managed care was in ascendance, and assess the implications for consumers and policymakers.

DATA SOURCES/STUDY SETTING

Data are from the Community Tracking Study site visits to 12 communities that were randomly selected to be nationally representative of metropolitan areas with 200,000 people or more. The Community Tracking Study is an ongoing effort that began in 1996 and is fielded every two years.

STUDY DESIGN

Semistructured interviews were conducted with 50-90 stakeholders and observers of the local health care market in each of the 12 communities every two years. Respondents include leaders of local hospitals, health plans, and physician organizations and representatives of major employers, state and local governments, and consumer groups. First round interviews were conducted in 1996-1997 and subsequent rounds of interviews were conducted in 1998-1999 and 2000-2001. A total of 1,690 interviews were conducted between 1996 and 2001. DATA ANALYSIS METHODS: Interview information was stored and coded in qualitative data analysis software. Data were analyzed to identify patterns and themes within and across study sites and conclusions were verified by triangulating responses from different respondent types, examining outliers, searching for disconfirming evidence, and testing rival explanations.

PRINCIPAL FINDINGS

Since the mid-1990s, managed care has developed differently than expected in local health care markets nationally. Three key developments shaped health care markets between 1999 and 2001: (1) unprecedented, sustained economic growth that resulted in extremely tight labor markets and made employers highly responsive to employee demands for even fewer restrictions on access to care; (2) health plans increasingly moved away from core strategies in the "managed care toolbox"; and (3) providers gained leverage relative to managed care plans and reverted to more traditional strategies of competing for patients based on services and amenities.

CONCLUSIONS

Changes in local health care markets have contributed to rising costs and created new access problems for consumers. Moreover, the trajectory of change promises to make the goals of cost-control and quality improvement more difficult to achieve in the future.

Consumer beliefs and health plan performance: it's not whether you are in an HMO but whether you think you are

Surveys that rate how persons enrolled in HMOs and other types of health coverage feel about their health care are used to bolster claims that HMOs provide inferior quality care, providing justification for patient protection legislation. This research illustrates that the conventional wisdom regarding inferior care in HMOs may color how people assess their health care in surveys, resulting in survey findings biased toward showing HMOs provide inferior care and reinforcing existing stereotypes. Using merged data from the Community Tracking Study Household and Insurance Followback surveys, we identify privately insured persons who correctly and incorrectly know what kind of health plan they are covered by. Nearly a quarter misidentified their type of health coverage. Differences between responses by HMO and non-HMO enrollees to questions covering satisfaction with health care and physician choice, the quality of the last physician's visit, and patient trust in their physician shrink or disappear when we control for beliefs about what type of plan they are covered by. Results suggest that researchers and policy makers should be cautious about using consumer surveys to assess the relative quality of care provided under different types of health insurance.