Characteristics of the Health Care System

Contemporary health care delivery in the U.S. has developed from a fee-for-service arrangement, with its escalating costs, to a focus on managing care. Mechanic & Schlesinger (1996/2001) note, "in its broadest sense, managed care refers to organizational arrangements that seek to alter treatment practices so that care of acceptable quality can be provided at lower cost" (p. 431). Although managing care, to give the most benefit for the least cost, seems a sensible approach, in the U.S. it has not been terribly successful for many in need of health care services. Indeed, as Gervais and Vawter (1999) note, "the turn to managed care was a response to the cost-containment interests of purchasers" (p. 4) of insurance (employers and government). In its present forms, it is not necessarily sanctioned or approved by society.

One criticism of managed care is that it is often provided at the expense of quality health care. For example, cost-cutting in institutional settings has led to the lowering of the number of nurses available for patient care. This has occurred despite several recent studies that support the idea that the professional nurse-to-patient ratio is inversely related to good patient outcomes (Needleman et al., 2002; Wunderlich, Sloan, & Davis, 1996).

In addition, managed care has contributed to the commercialization of health care delivery (Finkelman, 2001). It is associated with disincentives for providers to give the care they see as needed. "One of the means an MCO (Managed Care Organization) uses to manage costs is to shift some of the financial risks back onto the physicians and hospitals" (Fremgen, 2002, p.235). There is a pressure on health care providers to reduce tests, treatments, and in some cases referral to specialists. HMO-initiated disincentives to provide care are the source of conflicts of interest between the provider and patient well-being. The emphasis is on economics rather than facilitating the "moral good". Insurance companies compete with each other for patients but it is the healthier (less costly patients) that are desirable clients. There are a complex variety of different provider arrangements.