Managed Care: Benefits, Drawbacks, and Implementation Analysis

This report provides a comprehensive analysis of managed care, focusing on its potential implementation in Saudi Arabia. It begins by defining managed care and its various forms, including HMOs, PPOs, and POS plans. The report then delves into the advantages and disadvantages of managed care, such as cost control and improved coordination of services versus potential limitations on patient choice and access. It identifies healthcare sectors most affected by managed care and examines its impact on patients, physicians, and healthcare facilities. The analysis further explores how managed care is implemented and functions in other countries, particularly the United States of America, providing valuable insights for Saudi Arabia's healthcare system. The report concludes by summarizing the key findings and implications for the future of healthcare in the Kingdom of Saudi Arabia, offering a balanced perspective on the challenges and opportunities associated with managed care.

Running Head: MANAGED CARE
Managed Care
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Managed Care
Introduction
Managed care dominates healthcare not only in the United States of America but also in
the entire planet. It is any system of health delivery which integrates the roles of health insurance
as well as the definite delivery of care in which the application and costs of services are managed
by means like case management, gatekeeping, and utilization review (Appold, 2018). In the
United States of America, various types of managed care plans were established by three vital
factors. Such factors various ways of arranging the service delivery, choice of providers as well
as risk and payment sharing. Currently, the Kingdom of Saudi Arabia does not have managed
care and thus is exploring various avenues and legal framework to establish a well structured and
functional managed care. In this paper, I will critically analyze the concept of managed care for
the kingdom of Saudi Arabia, the advantages and disadvantages of this concept, the healthcare
sectors which are highly affected by the managed care, the impacts of managed care on facilities,
physicians as well as the patients. Lastly, I will evaluate how managed care is working and being
implemented in other countries like the United States of America.
The concept of managed care
Managed care can be defined as a process applied to deliver cost-effective health care
without restricting access or quality (Eijk & van Eijk, 2017). The concept describes a host of
healthcare payment and delivery systems, entailing Preferred Provider Organizations (PPOs),
health maintenance organizations (HMOs) and the Point-of-Service plans (POSs). Health
Maintenance Organizations (HMOs) are described as entities which offer as well as manages
health service coverage which is provided to plan members in return for a fixed and prepaid

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premium (Ryan & Pizzo, 2017). HMOs have four types of models which include group, staff,
network and independent practice association models. The Point-of-Service (POS) is a controlled
healthcare plan which offers flexibility for individuals enrolled in the plan to receive a service
from a non-participating or participating provider having the equivalent penalty or co-pay benefit
and is dependent upon the extent of the benefit expected. The aim of such a plan is to promote
and encourage the use of participating providers. Preferred Provider Organizations (PPOs) are
descried as groups of healthcare providers, either institutional or professional, which agree to
offer services to a particular sample of individuals at a generally accepted upon, fee-for-service
discounted rate. Individuals hold the free choice of providers yet are offered financial incentives
for using healthcare professionals within the healthcare organizations (Keohane, Rahman,
Thomas & Trivedi, 2018).
The concept is speedily dominating the health care delivery as well as financing in the
U.S. Most of the Americans having private health insurance are presently enrolled in various
managed care plans (Ellis, Jiang & Kuo, 2013). It is important to note that managed care
normally relies on basically on three strategies for its implementation and success, that is,
utilization review, innovative economic and selective contracting. To effectively develop
selective contracts, organizations dealing with managed care use data and information on health
claims to compare the prices which various hospitals, as well as physicians, charge for the same
service to identify the providers with lowest charges. In a very competitive environment having
numerous providers, big managed care organizations having many enrollees may selectively
contract people with individual healthcare centers and physicians and receive considerable
discounts for offering healthcare services to their members. Managed care organizations mostly
offer innovative economic incentives to physicians and patients to encourage and motivate them

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to select less expensive types of health care (Maniam, 2018). For instance, the organizations can
require patients to have pre-authorization before using emergency rooms in hospitals to get care
for particular conditions.
Such organizations can also discourage patients from acquiring higher-priced hospitals
like expensive teaching hospitals for routine healthcare. Healthcare costs are normally regulated
by managing physician’s salary that can be fixed primarily and later be adjusted down or up
yearly based on the performance, that is, rewarding physicians who manage costs as well as
punish those who do not control such costs. To effectively conduct utilization reviews, numerous
managed care organizations have come up with a sophisticated internal computer information
system which regulate and monitor quality and prices of health car gotten by their members.
Many organizations have come up with different utilization review programs which entail
elements like preadmission screenings, surgical second opinions as well as the continued reviews
of high-cost cases.
Advantages and drawbacks of managed care
Managed care normally eliminates or decrease patients’ incentives for overuse services. It
reduces an individual’s out-of-pocket expenses as well as other financial challenges to
healthcare. Managed care also has the ability and potential to enhance better coordination of
individuals services. Given that those numerous managed care organizations use basic primary
care physicians to structure as well as direct the total treatment of the patient, in theory, or
reality, the services offered should be more prompt, customized and logical than they would be
under different systems (Lewit, Thirumalai & Wang, 2018). Managed care has the potential to
monitor the effectiveness and quality of care as well as asses the performance of both physicians

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and patients more effectively through the computer information system. Certain managed care
organizations offer transportation services for individuals between the facilities in which they
receive care and their homes. These services can be significant to patients with main disabilities
particularly the patients who live in homes having no access to any public transportation (Pelech
& Hayford, 2019).
However, managed care also poses a host of significant problems. For instance, managed
care organizations can direct and design their marketing strategies to attract only healthy
members of society. They can covertly and overly discourage enrollments of people who are
potentially to be users of expensively health care services. Since individuals having chronic
diseases and disabilities can be regular users of special physicians as well as other expensive
medical services, managed care organizations can view them as not desirable patients (Yocom,
2018). Moreover, managed care organizations characteristically use basic care physicians as
gatekeepers to manage and control access to care. The physicians cannot have prerequisite
expertise or experience to address and solve the unique needs of the patients having various
mental and physical disabilities (Mulligan, 2014). With more emphasis placed on basic care as
well as cost containment, managed care organizations may not offer patients with psychological
trauma, chronic diseases, and disabilities adequate and effective access to needed medical
experts who are qualified to treat, handle and diagnose their conditions. For instance, managed
care organizations can stop referrals to various psychiatrists who normally tend to offer a more
detailed and comprehensive treatment than other professionals of mental health.
Moreover, the intricacy of referral complaints and procedures and grievance processes, as
well as the materials which describe these aspects of managed care of managed care
organizations, may create tremendous problems to people with learning or cognitive disabilities

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(Mulligan, 2014). Since managed care organizations deal basically with healthy individuals
needs, they may apply definitions of ‘medical necessity’ which operate against certain
individuals. For instance, they can apply criteria which call for the restoration of function or
significant improvements as conditions for the authorization of medication, treatment, or medical
equipment. Such practices may discriminate against people with certain types of mental or
physical disabilities who cannot meet these laid down standards.
Managed care organizations can also have a business perspective which is a narrow and
short term which eventually leads to decision making which negatively affects patients. Since
numerous of these organizations work on a for-profit basis, they must generate an appropriate
return on equity to their shareholders, and owners are making the administrators be under
immense pressure to hold down certain short-run expenses. In doing so, such organizations may
deny individuals access to the continuing ancillary services like occupational, physical and
speech therapies or they can withhold expensive medical equipment from people who require
them (Gordon et al. 2018) These individuals can suffer due to the shortsighted and myopic
decisions.
A case study of managed care in the United States of America
Managed care has remained in dominant form of health in the U.S. over the past twenty
years. It has been empirically reported that over 71 million Americans have become enrolled in
HMOs and about 90 million have enrolled in PPOs (Yocom, 2018). General enrollment in health
maintenance organizations reached their peak in 2001 even though it has been substantially
declining in almost every area. However, managed care has remained a dominant form of health
coverage and care. According to a survey that was conducted in 2010 by the Kaiser Family

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Foundation’s Employer health benefits, approximately 59% of the covered staffs were enrolled
in preferred provider organizations. Health maintenance organizations had about 19% while 13
% were enrolled in HDHPs, 8% in POS plans and 1% were enrolled in conventionally indemnity
plans. With the enactment of the Affordable Care Act of 2010, the country implemented a type
of managed called Accountable Care Organizations which was seen as an attempt to improve
quality and control costs. Under the health maintenance organization approach, providers were
given economic incentives to keep costs in levels of capitated payment. Thus, in the Accountable
Care Organization model, the providers are given rewards for meeting particular quality metrics
in the ‘shared savings’ and ‘pay for performance’ contracts.
Impacts of managed care on physicians, individuals, and facilities
Even though managed care has received backing from different stakeholders, a
continuing concern has emerged that managed care mat has certain built-in incentives to
underuse services, especially specialty care. Thus, patient care can be impacted by the interest in
saving costs by organizations. The way physicians are paid under managed care can significantly
impact how they deliver their services to the public. Physicians have also expressed concern
about the effect of managed care on their practice of changing healthcare center privileges as
well as patient referral patterns (Bellot, 2017). They have also expressed concern about the threat
of nonphysicians providers who are replacing them under managed care (Modestino, 2013). A
commonly used measure of managed care organization quality is the patient’s satisfaction with
the plan. It has been empirically reported that about 99.6% of the health maintenance
organization and 80% of preferred provider organizations conduct patient satisfaction surveys.
These surveys have revealed that MCOs have not only improved quality access to health care
services but also grapple with challenges that must be effectively tackled.

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Organizations that are most affected by managed care organizations
The major sectors which have been potentially affected by MCOs are the conventional
healthcare providers like teaching hospitals, community-based providers and specialty hospitals.
Some insurance companies have also been affected by managed care organizations.
Conclusions
Managed care is a very important plan in ensuring universal health in the kingdom of
Saudi Arabia. Thus, it is vital for the healthcare system in the country to adopt the MCO plan.
However, the government must put in place measures to deal with the glaring challenges of
managed care as witnessed in different countries like the united states of America.

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