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QUALITY QUICKIE: Managed care works in California (according to Managed Care)

While the managed care industry generally has more or less given up the concept of trying to manage the way physicians practice, it’s not quite so in California. The CCHRI, a mostly payer/provider funded group, albeit with representation from organized medicine, reported late last week that both clinical performance indicators and member satisfaction are getting better.

How come the connection between managed care and quality is still alive in California, after a combination of physician and consumer outrage beat managed care to death with a stick in the rest of the USA? Well, like everything else it’s mostly an accident of history.  California has big medical groups.  They tend to have the management structures in place that allow them (even if they haven’t always) to both measure their physicians’ clinical performance and work to actively change their behavior.  Outside the left coast physicians still tend to practice in smaller groups and the groups that do exist tend to be smaller, looser or affiliated with a clinical teaching practice (and therefore be unmanageable!).

So how did California get that way?  Well, by dint of historical accident, it had the Kaiser Permanente organization. Because of the inherent price advantage Kaiser’s pre-paid (or capitated) plan had over the traditional insurance companies, in the late 1970s and early 1980s Blue Cross went actively looking for physician organizations that looked something like the Permanente Group on which to base their incipient HMO, the forerunner of HealthNet.  They found several groups mostly in southern California.  Of course they were historical accidents too.  One, Friendly Hills, was a group of family docs who’d covered for each other on call and gradually developed closer business links.  Another, Mullikin, was (I was once told) a haven for gay doctors who couldn’t find other places to practice. By the mid-1990s these groups and their ability to deliver high quality population-based care in a heavily internally-managed environment was well known in the industry. I spent many a session frightening East Coast hospital management teams with the specter of what would happen to their  occupancy rates if those crazy Californians brought their "bed-days per thousand" rates to their town. It even got the attention of the east coast medical intelligensia. Unfortunately both the greed aggressive business tactics of the health plans and the greed incompetence of the Medpartners organization which bought the vast majority of these groups had driven them into chaos and bankruptcy by the late 1990s.

It appears that the medical groups are recovering from that era of chaos and are now getting back onto the "good" managed care track.  With employers paying more and health plans not being under the financial gun they were in the mid-1990s, the CCHRI report shows that there’s potential within California for real improvement in those population clinical improvement measures that we were all talking about 10 years ago.

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