Impact of managed care on quality of healthcare: theory and evidence.Am J Manag Care. 1997 Aug; 3(8):1153-70.AJ
Each strategy for managing healthcare risk has important and unique implications for the patient-provider relationship and for quality of care. Not only are different incentive structures created by different risk-sharing arrangements, but these incentives differ from those in a fee-for-service environment. With fee-for-service and traditional indemnity insurance, physicians have incentives to provide healthcare services of marginal value to the patient; under managed care, physicians have fewer incentives to provide marginally beneficial services. However, the impact of financial arrangements on quality of care remains ambiguous, because it depends on the strategic behavior of physicians with regard to their informational advantage over their patients. Using the framework of an agency theory model, we surveyed the current scientific literature to assess the impact of managed care on quality of care. We considered three different dimensions of quality of care: patient satisfaction, clinical process and outcomes of care measures, and resource utilization. Although we found no systematic differences in patient satisfaction and clinical process and outcomes between managed care and fee-for-service plans, resource utilization appears to be decreased under managed care arrangements. Given the strengths and weaknesses of fee-for-service and managed care, it is unlikely that either will displace the other as the exclusive mechanism for arranging health insurance contracts. Policy makers may be able to take advantage of the strengths of both fee-for-service and managed care financial arrangements.