Managed Care
San Francisco. 1930. Henry Kaiser, an up and coming businessman met with a local San Franciscan doctor looking to provide health care services for his employees. This was the origin of the Kaiser Permanente Network, the company touted as the founder of the modern HMO.
In the simplest of terms, managed care refers to any type of health plan that seeks to control the cost of care by managing medical and other health-related costs. The core aim of managed care is to reduce medical and other health-related costs by encouraging primary and preventive care, and to lower the overall costs of health care through a more efficient method of delivery by the treating physician.
There are 2 primary types of managed care programs, those being:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
HMO: Within a Health Maintenance Organization, all members are referred to the HMO provider who gets paid a fixed amount of money for services.
PPO: Within a Preferred Provider Organization, members can choose to go to a provider outside of the PPO network, however, the PPO will not cover the total cost of the health services, only part. (~ 50%)
The main difference existing between HMOs & PPOs is the method of payment that the member makes to the provider for the service(s) received.
In the traditional sense, managed care was a private institution, provided by private insurance groups. Managed care has since seen a shift from the private sector to the public sector through the intervention of both State and Federal government who have seen a sizeable increase in their health care budgets. These State and Federal outlets have been exploring managed care through the implementation of programs such as Medicare & Medicaid, two programs that have become the single largest providers of health care coverage in the US.
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