Monday, July 9, 2012

Why CCO's may not fail like HMO's

In response to @ChargerJeff, who asked why CCO's would fare any better than HMO's:

HMO's did succeed at cost control, which is a primary purpose of CCO's.  Where HMO's failed was in working cooperatively with doctors and patients, CCO's if they are to last will have to do better.

Reasons to think they will:
  • We already have managed care, particularly in OHP.  The distance between where we are and where CCO's are going is shorter than the distance between indemnity plans and HMO's.
  • The distance between doctor patient interactions and financial authority is shorter, you're less likely to see the kinds of coverage conflicts for which HMO's were notorious. 
  • There is more cost awareness among providers now than there used to be.  Concepts like variation and evidence-based medicine are gaining growing acceptance, even if they are not entirely mainstream.
  • Maybe most important, providers have no choice.  CCO's are an attempt to control costs by empowering providers, if they fail the alternative is to control costs by disempowering providers and stripping them of authority over treatment.  Think about the ER restrictions that Washington considered (and that for-profit hospitals have implemented), or more direct interventions in provider pricing.

None of this is to say that CCO's are a sure thing, there's a reason the feds made their funding contingent on results.  But the cost of trying in my view is much smaller than the cost of doing nothing and hoping that a 40 year history of medical inflation will somehow reverse on its own.

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