Managed Care Update: Managed Care Failure Now Official – 7 January 1999
The United States system of managed competition in health care also known as “Managed Care” is more expensive than the traditional non-competition system it replaced.
Executive Director of the Australian Doctors’ Fund, Mr Stephen Milgate, said “The policy platform on which managed care is built is the concept that introduced conflict into health care will promote vigorous and efficient allocation of resources as competing groups attempt to ‘outbid’ for rival claims on the health dollar. The outcome of this ‘managed warfare’ was supposed to be lower costs at no decrease in quality.”
“The ALP and the Democrats embraced managed care in 1995 with the acceptance of the Australian Health Insurance Association’s proposal of vigorous contestable contracts between all parties in the health care system. The Australian Health Insurance Association blatantly stated ‘We support managed care initiatives.’ The Lawrence legislation was passed in 1995 entrenching managed competition into the Australian health care financing system. The Liberal/National Coalition did not attempt to change the legislation in government and has enhanced its application.”
According to 1999 version of The Comparative Performance of US Hospitals: The Sourcebook hospitals with high level of managed care enrolment had a 47% higher than the median administrative expenses per discharge.
HCIA Inc (a leading US health care information content company which maintains the industry’s largest health care data warehouse) has released data showing overhead expenses to be higher in hospitals with high manage care enrolment and lower in traditional hospitals. “Managed care companies create an administrative burden on hospitals, which must bear the onus of detailed claims processes and utilisation review procedures.” (Checking up on doctors treatment patterns.) HCIA Report.
“This latest evidence flies in the face of advocates who have claimed that the injection of corporate style management into health care would result in lower costs and higher quality. Clearly the evidence is now firmly to the contrary,” said Mr Stephen Milgate.
“We now have in place in Australia a framework of managed competition which is a ‘cost driver’.”
“In the interests of lower health costs all political parties should work together to repeal the Lawrence legislation and return to a system of collective bargaining and effective group representation in health care” said Mr Milgate.