ABSTRACT

There are many different types of managed care organization, although the foundations from which they operate begin within a number of common assumptions or observations concerning the delivery of modern health care. They might be summarized as follows:

• the methodology used to reimburse providers has a significant impact on the efficiency of medical practice patterns. Therefore it is a primary objective of managed care programmes to create meaningful incentives for providers to practise cost effectively

• the service needs of large population groups are essentially predictable. As a result a wide range of services can be provided at a predetermined premium through defining appropriate clinical practice criteria, enforcing their application through effective utilization controls, and eliminating inappropriate financial incentives

• effective health care is also cost-efficient health care. Within this, that it makes economic sense - as well as being better for the individual-to try and prevent illness. As a result managed care companies and particularly HMOs have a strong primary care focus (by US standards)

• there is an overmedicalization of the population which results both in inappropriate treatments being performed and an undue dependence on medical services. Managed care attempts to influence this through a mixture of patient education, empowerment, and the aforementioned use of financial incentives which are directed both at the physician and the patient

• physicians playa key role in the delivery of services and hence in the expenditure incurred. Unless means are devised to influence their delivery of services the organization's financial viability is compromised

• a company cannot be successful unless it has a certain critical mass of financial, information and management resources.