Managed Care Organization – Health System Example

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'Managed Care Organization' is an excellent example of a paper on the health system.   Joining a Managed Care Organization (MCO) would have various effects on the clinic in regard to staffing, financial stability, and patient volume. If the hospital needs to add staff to deliver a program; for instance adding more specialist to handle a contract, it would require considering how to pay that person prior to receiving the reimbursement of the services. Joining the MCO would also increase the financial stability of the clinic. In particular, it would provide funding to help the clinic run and hence thrive into the future.

Due to the patients’ volume, relocation may become necessary since the clinic's current location size may restrict the ability to see them. This managed care perspective plays a role that is vital in the past and present debates about Medicaid and Medicare reform (Gold, 2003). MCOs may use various strategies and procedures to reduce costs. They may be classified by ways in which they reduce the medical care cost less than the premiums their clientele are paying, that is, how they make money.

The MCOs have the administrative overhead that is substantial; they must gain significant savings in hospital charges, pharmacies, and physicians. It may occur in ways such as: reducing the price paid by the MCOs to the providers such as the hospitals and the doctors. Secondly, limiting access to care or shifting to care that is cheaper than the MCO would have provided. Lastly, in noninsurance companies, more services that are profitable should be supplied by the MCO and fewer that are not. The managed care effect on the quality and cost of care has been more moderate than it had been predicted by its opponents and supporters (Miller and Luft, 2002). The incentives of the MCOs are meant to counter the traditional fee-for-service (FFS) incentives of reimbursement.

The physicians are encouraged to provide for the patients more care, therefore driving up the cost of care. Under the MCOs, physicians are encouraged to use specialty referrals and fewer tests, see patients more quickly, keep patients out of the hospital and use drugs that are less expensive. Mullen et al. (2010) stated that, as a result, physicians are expected to shift resources increasingly toward quality improvement.

Some questions that the representatives would be asked about their company’ s specific plans that would help the clinic make a decision entail. First, their commercial program type which is a health care coverage paid for by individual consumers or employers. Secondly, their Medicare plans type that is medical coverage for younger persons who cannot work since they are disabled and people over the age of 65. Third, their Medicaid which is a state-funded and federally-mandated health care program for disabled and low-income persons.

Lastly, the health insurance marketplace which provides standardized and government-regulated health care plans. The evolution of the MCOs and the consumer-driven health plans (CDHPs) has affected the healthcare environment today by integrating the financing and delivery of healthcare services. The CDHPs has gone from being a marketed concept that is new to start-up companies to products that the major health insurers offer. The MCOs have changed the roles and relationships between physicians and patients in that it is a significant influence on the patient and practitioner satisfaction hence contributes to practice maintenance, and it is the primary compliance of maintenance.

On the other hand, the CDHPs have enabled the patients to be more prudent about their expenses medically. The performance-based contracting leads to patient selection (Shen, 2003).


Gold, Marsha, 2003. "Can Managed Care and Competition Control Medicare Costs?" Health Affairs. P.W3-176-188.

Miller, Robert H. and Luft, Harold S., 2002."HMO Plan Performance Update: An Analysis of the Literature 1997-2001"Health Affairs.p.63-86.

Mullen, K. J.; Frank, R. G. & M. B. Rosenthal 2010. “Can you get what you pay for? Pay-for-performance and the quality of healthcare providers,” Rand Journal of Economics, 41 (1), 64 –91.

Shen, Y. 2003. “Selection incentives in a performance-based contracting system,” Health Services Research, 38 (2), 535-552.

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