Collaboration Among Competing Managed Care Organizations for Quality Improvement

Summary of a Conference November 13, 1997

The National Roundtable on Health Care Quality

Division of Health Care Services

Institute Of Medicine

Molla S. Donaldson, Editor

Washington, D.C.

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--> Collaboration Among Competing Managed Care Organizations for Quality Improvement Summary of a Conference November 13, 1997 The National Roundtable on Health Care Quality Division of Health Care Services Institute Of Medicine Molla S. Donaldson, Editor NATIONAL ACADEMY PRESS Washington, D.C. 1999

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--> National Academy Press 2101 Constitution Avenue, N.W. Washington, DC 20418 NOTICE: The project that is the subject of this conference summary was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the National Roundtable on Health Care Quality were chosen for their special competences and with regard for appropriate balance. The Institute of Medicine was chartered in 1970 by the National Academy of Sciences to enlist distinguished members of the appropriate professions in the examination of policy matters pertaining to the health of the public. In this, the Institute acts under both the Academy's 1863 congressional charter responsibility to be an adviser to the federal government and its own initiative in identifying issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. Support for this project was provided by The Agency for Health Care Research and Policy (Department of Health and Human Services), The Commonwealth Fund (a New York City-based private independent foundation), the National Research Council, the Department of Defense (Health Affairs), and Pfizer Inc. The views presented in this summary reflect the discussion during the conference and are not necessarily those of the agencies or organizations with which they are affiliated or of the funding organizations. Additional copies of Collaboration Among Competing Managed Care Organizations for Quality Improvement are available for sale from the National Academy Press, 2101 Constitution Avenue, N.W., Box 285, Washington, DC 20055. Call (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area) or visit the NAP's on-line bookstore at International Standard Book Number 0-309-06386-8 This report is available on line at For more information about the Institute of Medicine, visit the IOM home page at Copyright 1999 by the National Academy of Sciences. All rights reserved. Printed in the United States of America. The serpent has been a symbol of long life, healing and knowledge among almost all cultures and religions since the beginning of recorded history. The serpent adopted as a logotype by the Institute of Medicine is a relief carving from ancient Greece, now held by theca Staatliche Museen in Berlin.

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--> National Roundtable On Health Care Quality Mark R. Chassin (Cochair), Professor and Chairman, Department of Health Policy, The Mount Sinai Medical Center, New York Robert W. Galvin (Cochair), Chairman of Executive Committee, Motorola, Inc., Schaumburg, IL Kathleen O. Angel, Vice President, Benefits and Worldwide Solutions, Digital Equipment Corporation, Maynard, MA Marcia Angell, Executive Editor, New England Journal of Medicine, Boston Robert A. Berenson, Vice President, The Lewin Group, Fairfax, VA Robert H. Brook, Professor of Medicine and Health Services, UCLA Center for Health Sciences, and Vice President and Director, RAND Health, The RAND Corporation, Santa Monica, CA Ezra C. Davidson, Jr., Associate Dean, Primary Care, Professor and Former Chair, Department of Obstetrics and Gynecology, Charles R. Drew University of Medicine and Science Arnold Epstein, John H. Foster Professor and Chairman, Department of Health Policy and Management, Harvard School of Public Health Clifton Gaus (until 4/01/97), Administrator, Agency for Health Care Policy and Research, Rockville, MD Charlene A. Harrington, Professor and Chair, Department of Social and Behavioral Sciences, School of Nursing, University of California at San Francisco John K. Iglehart, Editor, Health Affairs Quarterly, and National Correspondent, New England Journal of Medicine, Potomac, MD Brent James, Executive Director, Intermountain Health Care, Institute for Health Care Delivery Research, Salt Lake City, UT Rhoda Karpatkin, President, Consumers Union of the United States, Yonkers, NY Kenneth W. Kizer, Under Secretary for Health, Veterans Health Administration, U.S. Department of Veteran Affairs, Washington, DC Gerald Laubach, Former CEO, Pfizer Inc, New York David McK. Lawrence, Chairman and Chief Executive Officer, Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals, Oakland Edward Martin (Acting), Assistant Secretary of Defense for Health Affairs, U.S. Department of Defense, Washington, DC William L, Roper, Dean, School of Public Health, University of North Carolina, Chapel Hill O. David Taunton, Private Practice of Endocrinology, Birmingham, AL Bruce Vladeck (until 9/13/97), Administrator, Health Care Financing Administration, Washington, DC

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--> Institute of Medicine Staff Molla S. Donaldson, Project Director Kathleen Nolan, Research Assistant Tracy McKay, Project Assistant

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--> PREFACE AND ACKNOWLEDGMENTS The National Roundtable on Health Care Quality was established in 1995 by the Institute of Medicine (IOM). The Roundtable consists of experts, formally appointed through procedures of the National Research Council who represent both public and private-sector perspectives and substantive expertise, not organizations. The Roundtable was supported by funds from the National Research Council's Endowment, the Commonwealth Fund, the Agency for Health Care Policy and Research (Public Health Service, U.S. Department of Health and Human Services), the U.S. Department of Defense, and Pfizer Inc. In 1996, the Roundtable asked a group of individuals to advise it on aspects of quality in managed care. Because it is often believed that competition is the primary lever for improving quality, the group was interested in exploring the limits of competition and the possible value of collaboration among health plans to improve quality. Accordingly, a Steering Committee composed of Robert A. Berenson, M.D., Clark Havighurst, J.D., John Iglehart, Mark Pauly, Ph.D., Lee Newcomer, M.D., and Stephen C. Schoenbaum, M.D., planned a workshop which was held on November 13, 1997. The conference explored potential areas for collaboration to improve quality among competing health plans within the constraints established by the antitrust laws and other legal requirements. The conference was convened to clarify what is meant by "collaboration for quality," to clarify the limits of such potential activities, and to explore ways to stimulate collaboration. Robert A. Berenson, M.D. introduced the subject, and Clark Havighurst, J.D prepared and presented a commissioned paper on antitrust concerns in collaboration. His paper is included in this summary. Charles C. Eads, Ph.D. provided an overview view of collaboration in other industries, particularly, the automotive industry. The summary describes speaker and reactor comments about antitrust and other legal barriers, and examples of collaboration in health care as well as other industries.

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--> The conference had three sessions. The first session addressed conceptual issues. The second session was a reactor panel discussion among parties with different perspectives. The third session included real-world examples of collaborative efforts. Finally, the conference participants were invited to discuss their views and conclusions about the plausibility of collaborative efforts in health care and ways to encourage such efforts. This summary has been reviewed according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The purpose of this independent review is to provide candid and critical comments to assist the authors and the National Academy of Sciences in making the published summary as sound as possible and to ensure that the summary meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The content of the review comments and the draft manuscript remain confidential to protect the integrity of the deliberative process. The Institute of Medicine would like to thank the following individuals for their participation in the review of this document: Catherine Borbas, Ph.D.; Peter Barton Hutt, L.L.M.; George Isham, M.D.; David Nerenz, Ph.D.; and Leif I. Solberg, M.D. While the individuals listed above provided many constructive comments and suggestions, responsibility for the final content of the summary rests solely with the authoring group and the National Academy of Sciences.

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--> CONTENTS Summary   1     Why Do Organizations Collaborate?   1     Antitrust Issues   2     Standard Setting   3     Information Collection and Exchange   4     Selecting High-Quality Providers   4     Lobbying and Working with Government   4     Conclusion   5 Session 1: Conceptual Issues In Collaboration   6     Introduction to Collaboration Robert A. Berenson   6     Potential Areas for Collaboration   7     Issues for the Conference   9     Legal Issues in Collaboration Clark C. Havinghurst   9     Some Rudiments of Antitrust Law   12     Specific Pitfalls to Be Avoided   16     Standard Setting   18     Information Collection and Exchange   22     Selecting High-Quality Providers   25     Lobbying and Working with Government   26     Conclusion   28     Collaboration for Quality Improvement Among Managed Health Care Organizations: What Can Be Learned from the Experience of Other Industries? George C. Eads   29

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-->     Why Do Organizations Collaborate?   29     Why Do Organizations Refuse to Collaborate?   30     How Are These Examples Relevant to Health Care?   31 Session 2: Panel Presentations   33     Lessons from the Electronics Industry, Bruce A. Mueller   33     Antitrust Regulation, Robert F. Leibenlufi   34     The Limits of Competition, Paul B. Batalden   35     The Medical Director's Perspective, George J.Isham   36 Session 3: Examples Of Collaboration   38     Health Care Education Research Foundation, Catherine Borbas   38     The Employers' Managed Health Care Association, Donald M. Steinwachs   39     Pacific Business Group on Health, Thomas J. Davies   40     The Foundation for Healthy Communities, Rachel M. Rowe   42     The National Rural Health Association, Tim Size   43     Barriers to Collaboration   45 Biographies Of Speakers   47 Conference Agenda   51