7 Things You Need to Know About Managed Care in 2010
via Corporate Research Group’s Weblog by Carl Mercurio on 12/17/09
Shameless promotion time. We’ll be releasing the 18th annual edition of our Outlook for Managed Care next month, our best-selling report. This year’s 100-page edition includes a special section on the “7 Things You Need to Know About Managed Care in 2010.” Here’s a taste.
1. Strategy: Cigna, Humana and United are just three health plans that have announced a new strategic emphasis for a post-reform world. But will these new strategies move the needle in any considerable way? Hint: No.
2. Individual: Reform will boost membership but strain margins – with Blue Cross Blue Shield plans most at risk.
3. Medicaid: Plans will struggle with a growing but changing membership mix that includes childless adults suffering from a variety of untreated conditions and lacking complete medical histories. Bottom line: More members, strained margins, market exits.
4. Medicare: The real impact of reform on various Medicaid Advantage offerings will be as follows: really bad for PFFS and special needs plans, and a toss-up for HMOs. Meanwhile things will be at least O.K. — perhaps even very good — for Medicare PPOs and group.
5. Prospects: Despite the rhetoric that managed care will enjoy some kind of big windfall from reform, we just don’t see it playing out that way long-term — which is one reason why shares in these companies are trading at all-time low multiples.
6. The Big Picture: It will be difficult to remember that managed care is a struggling industry when the underwriting cycle turns up, boosting industry profits. That’s especially true as the up-cycle will likely gain momentum coincident with rollout of the initial elements of reform — masking longer-term challenges such as the erosion of the industry’s lucrative fully funded business lines.
7. Consumer-Directed Healthcare: An important year as CDHPs test whether they will ever be more than a niche product for the relatively healthy and wealthy. We continue to see niche status for this line, but you never know.
Surgical Quality Difficult for Health Plans to Assess: Study
Health plans face significant challenges in reliably assessing the quality of individual surgeons’ patient outcomes, and need better ways to measure physician quality when selecting the best surgeons for their members, according to a study published in the December American Journal of Managed Care.
The study examined the results of more than 220,000 coronary artery bypass graft (CABG) procedures performed in 75 Florida hospitals between 1998 and 2006.
Marco Huesch, a physician and assistant professor of strategy at Duke University’s Fuqua School of Business, conducted the analysis. “While it might be natural to assume that health plans select surgeons based on the quality of their patient outcomes, as it turns out, it’s generally almost impossible for an individual company to do so,” Huesch said in a statement.
Huesch’s analysis of rates of in-hospital mortality did find differences in outcomes between surgeons. However, it also confirmed that the law of small numbers, a situation where there are too few items in a sample to draw reliable conclusions, would prevent insurers from accurately assessing the quality of the Florida surgeons’ care.
“While we found differences in mortality rates across physicians, no single insurance provider had enough patients undergoing surgeries by the same physicians in order to generate statistically significant data against which it could judge outcomes,” Huesch said. He said the current effort to reform U.S. health care is likely to exacerbate the situation. “As we create new insurance entities to cover previously uninsured Americans, we’ll simply have even more data being collected by separate companies, none of which is being combined in a way that it can be usefully evaluated.”
