research article “Effect of Managed Care System on Healthcare Quality of Low-income Women” found in your study materials.

Journal of Business and Educational Leadership Vol 7, No 1; Spring 2018

EFFECT OF MANAGED CARE SYSTEMS ON HEALTHCARE QUALITY OF LOW-

ABSTRACT

INCOME WOMEN

Ganesh Maniam

Texas Tech University Health Sciences Center

Managed care systems have become of increasing importance in the field of healthcare. The significance of this type of system was especially established in the United States when managed care systems became the dominant method of healthcare provision. There are specific areas involving managed care that have been studied extensively to determine the quality of managed care systems, such as location, availability, physician-patient trust, health outcomes, specialized care, and disease management – and these factors contribute to the overall perceived healthcare quality of managed care systems. Exploring the relationship between managed care systems and cost effectiveness is also vital in studying healthcare administration. Specifically, the purpose of this paper is to examine the relationship of between managed care systems and low-income women, particularly in terms of healthcare quality; a primary outcome of this paper is that managed care systems have the potential for a reduced quality of healthcare for economically disadvantaged women, while a secondary outcome of this paper is the recommendation to continue benefitting low-income women through the continued implementation of the Patient Protection and Affordable Care Act (ACA), despite the recent repeal of the individual mandate via the “Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”

Keywords: healthcare administration, medicine, public health, managed care, low-income populations, women’s health, Patient Protection and Affordable Care Act (ACA)

INTRODUCTION

Managed care systems are healthcare systems in which the ultimate aim is to reduce costs through contracting with a network of providers. This network is created by forming contracts with doctors and hospitals. During

72

Journal of Business and Educational Leadership

the last several decades, the percentage of Americans who participate in managed healthcare plans has risen dramatically – from less than 70 million in 2011 to over 90 million in 2016 (MCOL). This has made managed care emerge as the dominant method of healthcare provision in the United States (MCOL). Additionally, while health care spending in the United States has steadily increased year after year, managed care systems are widely believed to have helped to control the rising costs of the healthcare. However, Inglehart (1992) makes it clear that the costs of healthcare are steadily increasing at rates that much higher than even inflation – and that this is what galvanized the United States to trust that managed care systems would provide at least some relief. Regardless, there are many factors that affect the managed care industry such as costs, quality, and access – and this paper will explore and discuss these factors. Through examining the relationship of between managed care systems and the healthcare quality of low-income women, it is determined that there may be a reduced quality of healthcare for economically disadvantaged women; this healthcare quality issue can be best combatted for these low-income women through the continued implementation of the Patient Protection and Affordable Care Act (ACA).

Healthcare industries strive to provide quality healthcare at affordable costs, and this is normally achieved through the contracts that are in place. However, quality is a difficult thing to define in the healthcare industry because of its relationship with cost. There is always a struggle to balance cost and quality and there has always been controversy within the healthcare field surrounding the relationship between the two concepts. In regards to costs, it is clear that managed care systems have succeeded in their primary aim of lowering costs in regards to general healthcare, but MacFarland (1994) notes that this may not be the case for more specialized care, such as depression, in which managed care did not have a significantly better cost-effectiveness. Research that studies costs within managed care systems are complicated by the existence of several specific types of managed care systems, each of with have their own associated structures; each of these types of managed care systems would have a unique impact on costs based on their respective structure. Regardless, the literature seems to disagree on whether this aim of reduced costs in the managed care systems has shown to be a detriment to the quality provided in the healthcare industry. This may be because no single measure of quality exists, so it is difficult to give a definite answer. However, numerous news stories have shown the hardships of those enrolled in managed care systems who did not receive the care they need. This certainly shows managed care in a bad light, and can give the impression of lesser quality. Overall, these stories

73

Maniam

necessitate a need for increased research in managed care systems and their relationship with costs and quality.

On the other hand, while healthcare in the United States is typically viewed to be expensive, managed care systems seem to have a good reputation in the scholarly world for reduced costs – indeed that is the primary purpose of a managed care system. In fact, a survey of managed care physicians suggests that managed care systems certainly reduce the expense of healthcare (Feldman, Dennis, and Edward, 1998). Although the managed care industry may have slowed the gradual increase in costs of healthcare, those costs are nevertheless rising year after year (MACPAC, 2011). This is, in part, due to the core issues in the relationship between cost and quality, which necessitates more research to define those core issues before any real progress can be made. Thus, studying managed care should certainly be a priority in regards to research efforts, as it provides insight into the continual rising costs of the American healthcare system and quality of healthcare on the population. Specifically, exploring the effects of this kind of system on economically-disadvantaged women would assist in determining the specific effect of managed care systems on minority populations, which was hypothesized to have an even further reduced level of healthcare quality.

BACKGROUND & LITERATURE REVIEW

Hellinger, 1998), health outcomes (Feldman, Dennis, and Edward, 1998), and specific disease management (Kerr et. al, 2004). While there are certainly many other factors that have been studied in terms of their effects on the quality of care and health outcomes, these have not been included within this paper. Overall, there are numerous studies that, in total, breakdown the healthcare

system into factors that are discussed within this paper.

There are a number of factors that have been identified within the

fields of healthcare and medicine that predominantly play a role in the quality of care, either in the general system or within managed care systems specifically. These factors include access to healthcare (Levinson, 2014),

physical location (Miller and Luft, 1997), patient-physician trust (

Managed care was originally designed to reduce the price of operations and other medical services. They did this by creating networks of doctors that they could send their clients to at a reduced rate, and for a

time they were very successful. A survey conducted by Feldman, Dennis, and Edward confirms that managed care systems have reduced the expense of healthcare through this model (1998). Some have classified the introduction of managed care systems to be “an economic success, but a political failure” (Robinson, 2001, p. 1) because while it certainly reduced costs, it has also confused patients with its seemingly paradoxical nature of

74

Journal of Business and Educational Leadership

both offering health benefits but also restricting access to those benefits. However, managed care systems have recently been on the decline due to a perceived lack of faith in the system and skepticism of the roles played by the government and corporations (Robinson, 2001). Despite this recent trend, there are also signs that indicate this backlash may be reversing (Alegria, Frank, & McGuire, 2005). Regardless, managed care systems have complex relationships with the costs of healthcare, though in general they appear to be successful in reducing those costs.

In regards to the relationship between healthcare and low-income women, this population may be at risk for reduced quality of care – and

Medicaid health coverage plays a significant role in the alleviation of this disadvantage. Johnson determined the coverage of the program to be quite vast, at over 12 million low-income women covered, which is equivalent to approximately one out of every 10 women in the United States (2012, p. 6). This is because when these women undergo pregnancy and give birth they become in more need of receiving much more quality of care and assistance from services provided by Medicaid. The need for more assistance is due to the poor results of pregnancy outcomes, and a study by the Wisconsin Department of Health Services determined that for low-birthweight babies had an average cost of Medicaid services of $61,902 for the first four years of their life, compared to $7,260 for a baby born at normal weight (Wheeler, Foreman, & Rueschhoff, 2013). This is because more money is needed to be spent to provide the quality of care that child needs to be nourished back to full health – and indeed, Johnson (2012) asserts that a lack of coverage for these women mean that many do not receive the routine medical services that decrease reproductive and childbearing risks which hence necessitates additional spending on the child. The root of the problem starts there: Johnson (2012) determined that more than half of women whose maternity care is financed by Medicaid lose coverage within 60 days after giving birth. This loss of coverage is at stake, and therefore it is important that proper care and services for these women are available to them. Health care physicians are to make sure that these women are receiving the proper prenatal care, and making sure they attend their regular check-ups and screenings. This is so that any signs showing complication or birth defects of any kind are captured before the delivery date of the baby. In addition,

Medicaid is providing access to educational programs that will introduce proper eating habits and health techniques that will reduce the risk of any after birth outcomes.

75

Maniam

HOW LOW-INCOME WOMEN ARE AFFECTED BY MANAGED CARE

This discussion is structured to cover three overarching topics involving managed care: (1) the factors affecting general healthcare quality of managed care systems, (2) the relationship between managed care and costs of healthcare, and (3) low-income women as a potential population at risk.

Factors Affecting Healthcare Quality of Managed Care Systems

he location of physicians that are covered under the managed care system may be too far from the patients who need them, making it difficult for them to receive care. Access refers to not only the consumer’s ability to gain physical access to healthcare services, but also their financial ability to utilize those healthcare services (Levinson, 2014). Managed care may certainly help to make care more accessible financially but does not always provide a convenient location for patients to visit. Sometimes there are no providers that have contracts with a patient’s immediate area, which can be difficult for patients who cannot travel. In fact, Miller and Luft (1997) found that there was no direct relationship between managed care systems and reduced quality of care – the only exception being vulnerable subpopulations who are unable to get the care they need based on their location. Therefore, it is clear that location is a major factor in the reduction of quality of care in managed care systems. In other terms of access, a study conducted by the Office of the Inspector General it was found that slightly more than half of their 1,800 care providers in their random sample could not offer appointments to enrollees (Levinson, 2014). Of those who could offer appointments, the median wait time was two weeks, and some even received wait times of over two months (Levinson, 2014). Hence, there is a need for managed care providers to improve their networks to adequately provide the care that enrollees need and that the expansion of the network would help to improve the quality and access of managed care throughout the United States. It has been suggested that states work together to form agreements with managed care providers to accomplish this and therefore improve quality of care overall (Levinson,

2014).

Another healthcare factor is the trust between a patient and their

physician, which is vital in the field of healthcare. The literature seems to suggest that managed care systems have had a negative impact on this factor. Hellinger (1998) asserts that while they both the physician and patient have a contract with the insurance company, they often lack a personal connection between one another. This could cause trust issues

76

Access to healthcare is one of the most prominent factors of

healthcare. Physically, t

Journal of Business and Educational Leadership

between patient and doctor and could lead to a lesser quality of care; these claims are understandable, as the patient doesn’t get to choose the physician they visit and vice versa (Hellinger, 1998). Furthermore, a physician survey about managed care systems was conducted, and the survey results led Feldman, Dennis, and Edward (1998) to two main conclusions. First, their ability as physicians to carry out their professional and ethical obligations is negatively impacted by managed care systems (Feldman, Dennis, and Edward, 1998). This, in turn, negatively impacts the trust in the physician- patient relationship (Feldman, Dennis, and Edward, 1998). According to the physicians surveyed, this is because the managed care systems create the perception that the physician’s ability to put the patients’ interests first is compromised under this managed care system (Feldman, Dennis, and Edward, 1998). These physicians are concerned that patients may be influence by news sources and journalists who claim that managed care system physicians’ responsibilities to other groups, such as managed care plans, are prioritized over their responsibilities to patients (Feldman, Dennis, and Edward, 1998). One article even has recommendations to increase the levels of trust in this relationship: the six ‘C’s of “choice, competence, communication, compassion, continuity, and (no) conflict of interest” (Emanuel, 1995). Nevertheless, managed care systems have the perception of decreased trust in the physician-patient relationship – and this can negatively affect the quality of care in those managed care systems.

Health outcomes was another topic surveyed by the same team during the study. Unfortunately, the research team concluded that, per managed care physicians, this system has negatively impacted the quality of patient care (Feldman, Dennis, and Edward, 1998). The reasoning for these reduced health outcomes is attributed to a number of characteristics common to managed care systems (Feldman, Dennis, and Edward, 1998). The most prominent of these characteristics is the limitation of options, which is a common technique used by managed care systems and can be detrimental to the patient (Feldman, Dennis, and Edward, 1998). Interestingly enough, female physicians had a much higher rate of reporting negative effects of managed care systems on health outcomes, though overall it was clear that both male and female physicians had roughly the same negative opinion. On the other hand, another research team performed an analysis of the literature regarding managed care systems and determined that the associated quality of care was not significantly negatively affected, despite having a resistance to change, a lack of risk-adjusted capitation rates, and an inadequate system for quality measurement or improvement (Miller and Luft, 1997). Given the difference in results, just between these

77

Maniam

two studies, leads to inconclusive results regarding the health outcomes of managed care systems.

Less frequently studied as a factor of healthcare is specific disease management. One study specifically compared the quality of care between the Veterans Affairs (VA) and commercial managed care systems in regards to treatment of diabetes. Through looking at over 8000 patients in total, it was determined that patients in managed care systems receive less testing, counseling, and examinations, resulting in less quality of diabetes care overall (Kerr et. al, 2004). It is worth noting that patients reported high satisfaction with diabetes care for both VA systems and managed care systems (Kerr et. al, 2004). Another study looked into the managed care population differences in breast cancer survival for women based on race and discovered that, disturbingly, African-American women have much lower survival rates for breast cancer than their European-American women counterparts (Yood et. al, 1999). This conclusion was determined after controlling for extraneous factors such as socioeconomics, age, marital status, etc. (Yood et. al, 1999). This is worth mentioning because in managed care systems, it would appear that it may not only be low-income women who receive less quality of care, but also women who are a racial minority as well. While this paper will only explore the effects of managed care systems on the population in general and low-income women, this discovery suggestions the need for this future direction of research as well.

Relationship Between Managed Care Systems and Cost

Managed care systems have a complicated relationship with costs and quality of care. In the pursuit of lowered costs, managed care systems may have negatively impacted some of the factors affecting quality of care. Certainly, many studies are quick to blame managed care for the reduction in quality of the American healthcare system, particularly for minority populations or low-income populations – while some argue against and others are inconclusive. Within the healthcare industry, the costs of care can rise to levels that consumers often cannot afford; this is common for specialized care such as the treatment of depression, cancer, and other serious illnesses (Alegria, Frank, & McGuire, 2005). MacFarland (1994) specifically studied the cost effectiveness of managed care systems in treating depression, and was unable to find a significant difference in cost-

effectiveness. Algeria, Frank, & McGuire (2005) suggest that this is because it is often difficult to find specialty doctors who are willing to work under a managed care contract, since managed care contracts often offer less competitive salaries, and this in turn reduces the quality of the healthcare offered to patients in managed care systems. Another factor in the relationship between costs and quality of patient care is the costs of

78

Journal of Business and Educational Leadership

medication itself. For example, psychotropic medication is relatively expensive, and the associated costs for the amount that these individuals would need for effective treatment is therefore very expensive, especially in a system that aims to reduce costs as much as possible (Alegria, Frank, & McGuire, 2005). As demonstrated by the costs of both specialty physicians and certain pharmaceuticals, further research should explore both patient needs and effective treatment in managed care systems – as currently both are unmet by the current managed healthcare system. The issue is worsening to the point that there are high levels of dissatisfaction with managed care on both the consumer side and provider side (Mays,

Claxton, & White, 2004). That being said, Miller (1994) conducted a literature review in which he determined that patients in managed care systems had a much higher rate of satisfaction with costs than their peers in other types of systems.

Studying the relationship between managed care systems and costs is complicated by the fact that many different types of managed care systems exist: exclusive provider organizations (EPOs), preferred provider organizations (PPOs), and health maintenance organizations (HMOs) are the most well-known examples. Each of these specific systems have their own associated structures that, in turn, affect their respective relationships with costs. For example, health maintenance organizations (HMOs) are a type of managed care system that was initially established to approach health from a wellness perspective, rather than a disease perspective. These systems generally have their patients select their primary care doctor to serve as the gatekeeper to other medical services, with the exception of emergency care. In order to utilize other medical services, the patient must consult with their primary care doctor and, if approved by the HMO, they will obtain a referral so that they can receive this care, which would then fall under their insurance coverage. These HMOs were founded on the belief that through getting regular checkups and treating illnesses early, patients are not only able to reduce healthcare expenses, but also improve their health and extend their lifespan (Alegria, Frank, & McGuire, 2005). In regards to the costs of this system, some healthcare economists have argued that the HMO system is especially victim to the moral hazard issue in which patients utilize additional and unnecessary healthcare because they are insured, but that these healthcare utilizations are inefficient and thus do not reduce the overall costs of healthcare (Alegria, Frank, & McGuire, 2005). Another noteworthy aspect of the costs of managed care systems is that many hospitals contracted with HMOs have historically been either nonprofit or not‐ for‐ profit, so that while the overarching goal was the reduce costs, this did not translate to an expectation of high profit margins

79

Maniam

(Alegria, Frank, & McGuire, 2005). It is worth noting that for these nonprofits, the government-mandated definition of nonprofit hospitals required the funneling of any remaining profits into new programs or expanded facilities (Alegria, Frank, & McGuire, 2005). Overall, HMOs serve as an excellent example of the fact that specific managed care systems vary on certain structures and policies that certainly affect their associated impact on cost reduction of healthcare.

Managed care is a driving force in the evolution and cost reduction of the United States healthcare system, but most employers and state governments do not view these systems as the primary means to control healthcare costs. Within the past two years, health care costs have continued to rise significantly despite the ever-increasing enrollment in managed care systems (Alegria, Frank, & McGuire, 2005). Some experts contend that managed care can control costs without jeopardizing the quality of care – they argue that the ideal managed care plans and their providers are rewarded financially for keeping people healthy, which limits cost increases and improves quality (Alegria, Frank, & McGuire, 2005). Furthermore, managed care systems emphasis on the use of preventive services and patient education helps to not only cut costs, but also develop clinical guidelines that allow physicians to forgo costly procedures that have little likelihood of improving a patient’s health (Alegria, Frank, & McGuire, 2005). Given that medical science can define more precisely what works and what does not, they assert that unnecessary care in these systems can thereby be identified and reduced to decrease costs (Alegria, Frank, & McGuire, 2005). Meanwhile, Litvak and Long (2000) outline other methods utilized by managed care organizations to reduce costs: through negotiating with suppliers for lower material prices, only retaining employees who are absolutely necessary to maintain a high quality of care, and hiring consultants in the field of healthcare management. Additionally, their research suggests that variability amongst patients is the leading cause of high costs – and that variability analysis would therefore be a useful tool for managed care systems to utilize in order to further reduce costs (Litvak & Long, 2000). Nevertheless, costs are difficult to control in any industry, but especially in the healthcare industry – but managed care systems have been proven to be successful in reducing the costs of healthcare for their patients.

Low-Income Women as a Potential Population at Risk

80

Women, particularly low-income women, are a population within the managed care system that may be disadvantaged. Many women are unable to receive the quality of care they need within the health care industry due to barriers created by poverty, cultural differences, race, ethnicity, geography, sexual orientation, gender identity, or other factors

Journal of Business and Educational Leadership

that contribute to health care inequalities. In essence, these women are receiving insufficient and improper care from health care providers. This paper focuses on the specific population of women that are classified as low- income or economically-disadvantaged. Having limited access to quality health care can result in an increase of various health problems for many economically-disadvantaged women in America. Therefore, it is highly likely that low-income women are at risk for a reduced quality of care in managed care systems.

To help solve this issue, these women are being enrolled into managed care programs through Medicaid or Medicare, which make a

improve their care by providing low-cost medical benefits to many low- income women and children below a certain wage, alongside parents of Medicaid-eligible children, low-income seniors, and people with disabilities. From a federal standpoint, the expansion of Medicaid to all Americans with a family income below $14,520 a year has allowed for low- income women without dependent children, who previously would not be eligible, to now qualify for Medicaid. The expansion of Medicaid and Medicare through the ACA has helped improve access to more affordable health coverage and health care services for all women. Overall, these services and programs that Medicaid is offering to address this issue beforehand are predicted to reduce the rate at which newborns experience after-birth effects of prematurity, low birthweight, and being faced with life- threatening birth diseases or effects. This will, in turn, reduce the vast amount of money that Medicaid already must spend on providing these services for low-income women in the end. These results, in addition to the overall benefits that economically-disadvantaged women gain from Medicaid, contribute to the idea that the continued implementation of the Affordable Care Act is the best policy for these women, so as to contribute towards ensuring that they are not at risk for a reduced quality of care in managed care systems

For women, healthcare quality in general has improved since the development of the Patient Protection and Affordable Care Act (ACA) in 2010. Before the ACA was issued, high healthcare costs in addition to being charged higher insurance premiums due to their biological sex led to many low-income women having no health insurance and minimal access to healthcare services. The ACA was designed to increase health insurance quality and affordability, lower the uninsured rate by expanding insurance coverage, and reduce the costs of healthcare (Patient Protection and Affordable Care Act, 2010). The law requires insurers to accept all applicants, cover a specific list of conditions and charge the same rates regardless of pre-existing conditions or sex (Patient Protection and

81

Maniam

Affordable Care Act, 2010). It prohibits plans from charging women higher premiums just because they are female (Patient Protection and Affordable Care Act, 2010) – and this allowed women to be charged the same amount as men for the same health insurance plan. As a result of this Act, these changes to the healthcare system gives lower-income woman the opportunity to receive the quality of care they deserve. These developments refer to healthcare in general, rather than managed care systems. In regards to managed care systems specifically, there are a great deal of these systems established through Medicare and Medicaid; given the expansion of these services through ACA, then managed care systems are therefore also expanded to include more low-income women than previously. However, the recent repeal of the individual mandate via the “Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” will undoubtedly affect this population and their healthcare. However, this law will not affect the Medicaid expansion, federal subsidies for low-income Americans paying insurance premiums, or the individual insurance markets – and therefore the ACA will still improve healthcare for low-income women.

Managed care systems – especially those established in collaboration with Medicare and Medicaid – play an important role in making health care more accessible and affordable for everyone in need of health care services, including for low-income women. With the implementation of the ACA, the effectiveness of managed care systems has been even further expanded. However, the repeal of the individual mandate certainly reduces the effectiveness of the ACA in increasing the healthcare access for these women, but nevertheless the ACA is still, on the whole, beneficial to this population. Healthcare of women has improved dramatically in the United States, having overcome the many challenges that exist within the health care industry. The American healthcare system has gone from low-income women not being able to afford health care due and being denied coverage to a system that at least attempts to treat low- income women fairly. However, the system needs to continue to move forward to improve healthcare and the quality of healthcare for these economically-disadvantaged women. The continued implementation of the Affordable Care Act (ACA), even with the recent repeal of the individual mandate, is one such method of moving forward.

CONCLUSION & RECOMMENDATIONS

After reviewing the literature and exploring the issues associated with managed care systems, there is strong reason to believe that managed care systems may have led to lowered quality of care in the pursuit of ensuring low costs. There are a number of specific areas of managed care

82

Journal of Business and Educational Leadership

explored by this paper, including: factors that affect quality of care in managed care systems, the relationship between managed care systems and cost effectiveness, and the potential for low-income women to be a population at risk for reduced levels of healthcare quality in managed care systems. While there is currently no evidence in the literature to suggest that low-income women are at a particularly high risk for a reduced quality of care in managed care systems, this may be due to a lack of research – and indeed there is certainly a high potential risk of reduced health care quality for this population. Therefore, this paper suggests that the healthcare system as a whole, and possibly managed care systems specifically, may have led to a reduced quality of healthcare for economically disadvantaged women. Furthermore, this paper recommends that the low-income women would hence benefit through the continued implementation of the Patient Protection and Affordable Care Act (ACA), which expands coverage for them, even without the individual mandate. The implications for healthcare management, if these two recommendations are followed, would be a continued improvement of the quality of healthcare for low-income women, as well as the greater population in general. Future directions for research in the field of healthcare administration primarily include a systematic study on this topic to truly determine if there is a negative effect of managed care systems on the healthcare quality of low-income women, since as of now we can only speculate a potential risk.