Is there a Future for
Integrated Care Systems
in the Consumer Era?
AcademyHealth Annual Research Meeting
June 6, 2004
The Clinical and Economic
Performance of Prepaid
Group Practices
Kenneth Chuang, MD
Harold Luft, PhD
R. Adams Dudley, MD, MBA
Prepaid Group Practices


There is theoretical rationale to believe that
prepaid group practices (PGPs) might be more
successful in implementing quality and efficiency
initiatives than other systems
Prior comparisons of fee-for-service (FFS) plans
to health maintenance organizations (HMOs)
have found few difference in overall
performance
Health Maintenance Organizations



Receives a premium to cover a set of services
Accepts obligation to deliver or arrange
purchase of medically necessary services
2 current subtypes
Prepaid Group Practice (“delivery system HMOs”)
such as Kaiser Permanente and other staff- and
group-model HMOs
 Independent Practice Associations (“carrier
HMOs”)

Types of HMOs


Delivery system or staff/group model

Multi-specialty group practice

Mutually exclusive health plan partners

Providers are salaried
Carrier model

Often single specialty groups or solo practice

Contracts with providers who may contract with
many insurance carriers

Providers may share financial risk
Fee-for-Service*

Patients have freedom of choice of provider

No contract between insurer and doctor

Physicians have freedom of choice in prescription

Physician payment per service rendered (no insurer
control over physician income)

Direct fee negotiation between doctor and patient

Physicians often practice in solo or small single
specialty practice
*Weller CD. Iowa Law Review. 1984
Characteristics of PGP that May
Contribute to Improved Quality over FFS


Prepayment for a Defined Population

Creates budgetary certainty

Facilitates investment in re-organization

Provides financial incentive to optimize

Justifies outreach to patients (preventive)
Institutional/Cultural Insulation

Allows internal focus for overall quality rather than
individual specialties
Characteristics of PGP that May
Contribute to Improved Quality over FFS

Group Practice
 Integrates
 Can
specialties and settings
create economies of scale
 Allows
for novel arrangements of care
 Benefits
from shared governance
 Benefits
from shared clinical data across sites
 Can
adjust supply of providers to meet
demand
Mitigating Factors

More Complete “Capture” of Providers


Clinician autonomy versus shared
governance/central decision-making
Measurement of Performance

No incentive for performance documentation

Limited choice of plans affect on satisfaction

Spillover of PGP performance into local system
Mitigating Factors

Larger Scale
 Economies
of scale still may not be enough
to overcome costs of implementation of new
technologies
 One standard of care for all patients can lead
to diseconomies of scale

Stable Enrollee Population
 Population

is only relatively stable
Other
 Spread
of PGP from original site
Research Objective
To determine whether prepaid group
practices deliver higher quality and/or
more efficient clinical care than fee-forservice practices
Methods

PubMed literature search 1980 - present






keywords: prepaid, prepaid group practice, managed care, HMO, Health
Maintenance organization, organized delivery system, PPO, fee-forservice, HMO market share, HMO market penetration
Hand search of recent articles from Health Affairs, Health
Services Research, Inquiry, Journal of the American Medical
Association, and Medical Care
Initial literature search: 1146 studies
Additional 97 identified from review of more recently published
articles and articles accumulated by authors for related
publications
Inclusion criteria: Peer reviewed studies that compare
performance of PGP to FFS
Exclusion criteria: Inability to identify prepaid group practice as
a subgroup of HMO within the study
Methods

All but 22 articles were excluded


Inability to distinguish PGP from HMO in general
5 areas of comparison
Preventive Care
 Patient satisfaction
 Processes of Care
 Clinical Outcomes
 Costs of care

Findings

Clinical settings varied significantly –
mortality in obstetric care to outpatient
rheumatology arthritis improvement

Costs: 3 studies showed PGP have
decreased imputed costs (~25%)
Performance of Prepaid Group
Practices vs. Fee-for-Service Health
Plans
# of Comparisons
PGP Better
PGP = FFS
FFS Better
Domains
Preventive Care
Patient Satisfaction
Processes of Care
Clinical Outcomes
p<0.05 p>0.05 within 5% p>0.05
15
3
6
1
3
5
5
10
4
5
5
11
0
15
1
4
0
13
2
1
Summary
25
23
25
20
16
p<0.05
Performance of Prepaid Group
Practices vs Fee-for-Service Health
Plans
PGP Better
# of studies
PGP = FFS
FFS Better
Domains
Preventive Care
Patient Satisfaction
Processes of Care
Clinical Outcomes
p<0.05 p>0.05 within 5% p>0.05
4
2
5
1
2
1
2
4
2
1
3
7
0
4
1
2
0
5
2
1
Summary
12
7
12
7
8
p<0.05
Conclusions
Relatively little is known about the
performance of PGPs
 PGPs are better at providing preventive
services than FFS
 FFS has higher patient satisfaction than
PGP
 Evidence to date shows no significant
difference in processes of care or
outcomes

Implications
Future research needs to separate
HMO type according to structural
characteristics so that policymakers
can better understand relative
performance