MANAGED CARE: Industry Woes Felt by Health Care Providers
The "powerful forces wreaking havoc" on the managed care industry are spilling over into the hospital and nursing home fields, "where a wave of bankruptcies have already begun," the Los Angeles Times reports. Already, the health care industry has witnessed massive consolidations and nursing home and emergency room closings. Jay Gellert, president and CEO of Foundation Health Systems, said the "pressure won't let up ... until a new model for providing and paying for health care is developed." He said the "core" of the problem is that "the managed care business model is based on viewing employers and the federal government ... as the most important customer." Although these two groups are the major purchasers of health plans, consumers are gaining a louder voice in determining what those plans will include. According to the Los Angeles Times, within the next two years industry officials predict a complete market shift to occur with "employers continuing to subsidize basic health care, but consumers choosing their own plans and paying for extra coverage" out of pocket.
New Players, New Game?
The managed care industry continues to battle a number of problems, including the "squeezing" of physician and hospital payments in order to keep employer premiums low. These cuts came on the heels the federal government's slashing of Medicare and Medicaid payments, increasing the fiscal burden on physicians groups and hospital chains. Thus, as insurers "struggle to reinvent themselves," they may find themselves "propping up providers along the way" -- increasing reimbursement rates to providers and even modifying their payment methods. Managed care plans also struggle to find ways in which the Internet can serve as a revenue generator. Despite these obstacles, industry insiders remain optimistic. Mark Harrison of the investment bank Shattuck Hammond Partners, said, "We've seen a lot of industries go through this. ... They've come out of it fine in the end. But with some casualties along the way" (Bernstein, 4/6).