Dramatic improvements and savings will take at least a decade. But a choice must be made. Whom do we want in charge of managing the full complexity of medical care? We can turn to insurers (whether public or private), which have proved repeatedly that they can’t do it. Or we can turn to the local medical communities, which have proved that they can. But we have to choose someone—because, in much of the country, no one is in charge. And the result is the most wasteful and the least sustainable health-care system in the world.
In El Paso, the for-profit health-care executive told me, a few leading physicians recently followed McAllen’s lead and opened their own centers for surgery and imaging. When I was in Tulsa a few months ago, a fellow-surgeon explained how he had made up for lost revenue by shifting his operations for well-insured patients to a specialty hospital that he partially owned while keeping his poor and uninsured patients at a nonprofit hospital in town. Even in Grand Junction, Michael Pramenko told me, “some of the doctors are beginning to complain about ‘leaving money on the table.’ ”
And most of the time, people associate technology as our phones and computers, but its everywhere, making our cars go farther on less fuel, providing better health care to those in need, and even making your morning coffee.
To determine whether overuse of medical care was really the problem in McAllen, I turned to Jonathan Skinner, an economist at Dartmouth’s Institute for Health Policy and Clinical Practice, which has three decades of expertise in examining regional patterns in Medicare payment data. I also turned to two private firms—D2Hawkeye, an independent company, and Ingenix, UnitedHealthcare’s data-analysis company—to analyze commercial insurance data for McAllen. The answer was yes. Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything—more diagnostic testing, more hospital treatment, more surgery, more home care.
The first PBMs were created by managed care organizations in the 1980s to apply managed care principles, such as provider networks and patient co-pays, to the drug benefit portion of health care plans.
There are three types of utilization review: prospective, concurrent and retrospective. Prospective review isreview or authorization for elective procedures or services prior to suchservices being rendered. Concurrent review is review orauthorization for procedures or services during the time such services are beingrendered. An example of concurrent review is when a physician calls aManaged Care Organziation (MCO) and requests an initial length of stay (LOS)for a patient and then after the patient has been admitted into the hospital,the physician calls the MCO and explains that due to extenuating circumstancesthe patient needs to stay in the hospital for a longer time and the physicianrequests an extended length of stay (ELOS). Retrospective reviewis review of services after they have been rendered, typically using medicalcharts. Most physicians, have learned through the years, to not haveretrospective review used as a source for payment by MCOs because hindsight isalways 100%.
The principal objective of utilization management is the reduction of practice variations by establishing parameters for cost-effective use of health care resources. There are four main techniques or tools used in utilization management: demand management, utilization review, case management, and disease management. Utilization management helps MCOs control costs and improve quality.
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-What are the challenges faced by MCOs regarding practice variations? -What do you think can be done to meet these challenges?
-Differentiate between the three main processes of institutional utilization management.
-Determine the main purposes of each process of institutional utilization management? Which process do you think is the most important, and why?
-Research the role of the utilization management nurse.
-Explain the functions of the utilization management nurse, and compare and contrast the information from that organization.
-Explain your understanding of disease management and case management. -What in your opinion are one major similarity and one major difference between the two types of management?
1. Determine the utilization and the efficiency for each of these situations:
a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 8 loans per day.
b. A furnace repair team that services an average of four furnaces a day if the design capacity is six furnaces a day and the effective capacity is five furnaces a day.
c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems? Explain.
3. A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.
a. What volume per month is required in order to break even?
b. What profit would be realized on a monthly volume of 61,000 units? 87,000 units?
c. What volume is needed to obtain a profit of $16,000 per month?
d. What volume is needed to provide a revenue of $23,000 per month?
e. Plot the total cost and total revenue lines.