Managed care can be described as a system that influences and integrates the payment and delivery of health care. This system is designed to create administrative control of access to healthcare services as well as the cost and quality of healthcare.
Managed care organizations (MCOs) include a collection of contracted providers, some form of benefits to its subscribers who need to utilize care from non-contracted providers, and some form of authorization or precertification system. (Peter R. Kongstvedt, 2007)
Managed care is a collection of systems that work with different groups of people including buyers, sellers, and the community in general, and the government. Managed care can affect a healthcare organization’s relationship with buyers, sellers, their community, and the government. Managed care can affect a healthcare organization’s relationship with buyers in many ways. Buyers constitute the Medical Care Practitioners who utilize the medical equipment supplied by vendors. The relationship between the buyers and the vendors is affected by the buying power as dictated by the healthcare organization with whom with practitioners are contracted. According to Lee H. Perlman, president of GNYHA Ventures, providers want to “pay the right vendor, the right price, for the right outcome”. (Perlman, 2016) Medicare and Medicaid for example, have recently made a move from “payment for volume to payment for value”. (Perlman, 2016) This regulatory decision means that these organizations have started to purchase medical equipment by using a better informed and a more data-driven decision making process. One such example is Medicare’s new use of “bundled payments”. Skilled nursing facilities with a minimum rating of at least 3 stars, can qualify for waivers in order to house patients who have had a short hospital stay for hip or knee replacement surgeries. Patient data available today, along with new technology, are major factors in determining the outcomes of the patients. Many hospitals and other organizations have also developed value analysis committees whose job it is to review the purchasing decisions of the organization and also to identify the products that have resulted in better patient outcomes. This value-based approach weeds out products that are not having a positive outcome for the patients allowing the committee to identify areas where the purchasing budget should not be spent, as well as areas where the purchasing budget will result in more useful product purchases. This new way of thinking also forces the sellers to adjust their way of thinking as well.
Managed care can affect a healthcare organization’s relationship with sellers in many ways as well. Sellers, in the healthcare industry, constitute those companies that provide the necessary medical equipment and tools utilized by the healthcare providers. This could include medical suppliers, the medical device industry, and medical manufacturers. Managed care has a direct effect on the relationship between the users of medical technology, the providers, and the sellers of medical technology, the suppliers, because the managed care organization will dictate the terms and process of procuring medical devices, tools, and equipment. This means that the managed care organization will determine the budget for new devices, including how often there are purchased, where they are purchased, cost-ceilings, types of devices, and every other aspect of the purchasing de...