Integration of Financing and Delivery of Services

The strong trends toward the integration of financing and delivery of services and the growth of for-profit enterprise in health care (IOM, 1986b) have serious implications for quality of care. Prospective payment systems, capitated programs, and many other payment methodologies put providers at financial risk. Price competition among providers and insurers is vigorous, and competition for market share is being pursued through overt marketing to consumers and employees to an unprecedented degree. These developments, it is feared, lead to conflicts within, or erosion of, the traditional physician-patient relationship. Others perceive these trends as obstacles to providing continuity of care; instead of increasing the choices, these developments limit the choices of providers available to consumers.

Utilization Management and Utilization Review

Utilization management encompasses efforts to monitor the appropriateness of treatment and treatment sites to control unnecessary utilization6 without jeopardizing individuals’ equitable access to needed medical care. Integrating utilization management with other strategies for balancing cost, quality, and access should improve the effectiveness and efficiency of the health care system (Gray and Field, 1989), but overly aggressive, poorly understood, or badly administered efforts may prove detrimental by imposing harmful confusion or delay on patients and by taking practitioner time away from patient care. Because the private sector has been much more aggressive about installing utilization management requirements in health care plans for the nonelderly than has the government for Medicare (Brown et al., 1989; MBGH, 1989), the potential net impact of greater utilization management efforts on the elderly remains to be determined.

Growing use of utilization management techniques by third-party payers to reduce costs of health care by decreasing (presumably) unnecessary or inappropriate services places pressure on quality assurance programs to ensure that decisions resulting from such techniques do not affect quality negatively. Quality assurance programs frequently are jointly responsible for utilization management and utilization review, and they often view their efforts as one branch of the overall responsibility to balance concerns about cost, access, and quality (Gray and Field, 1989).7 Utilization management and utilization review increasingly evaluate the need for a health care service in addition to the more traditional review of the appropriateness of setting and length of stay. The very recent push to develop practice guidelines, which would then be used in utilization management programs, is evidence of the concern about overuse of inappropriate and unnecessary services and hence about quality of care.

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