The Avenue Group

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  Managed Care

  What is Managed Health Care?
   A health delivery and financing system where an     enrolled population pays a fixed annual fee (capitation)
    to a medical provider for access to health services as     needed.

  Financing Health Care
  The Managed Care Model

There are many models for finance and
     delivery of medical services, among which
     are self- financing (out of pocket as need arises)
     and various forms of risk pooling. The high
     cost of   medical care, particularly in case of      hospitalisation, makes self financing out of reach
     for all but the wealthiest members of society.

     Thus risk pooling - where a large number of people       contribute a small amount each year, or the benefit
      of the relatively few who actually become ill - has       gained a significantly greater role.

    The Challenge of Affordable,
     Accessible Care
     In a developing country, with limited resources, the       challenge is to ensure that resources available are put       to their most efficient use, and it is therefore important       to encourage providers to offer creative alternatives to       government health care provision.

    Avenue Healthcare offers affordable high quality      medical services in the market based on the principals      of Provider-based Managed Healthcare. This form of      risk pooling eliminates the need for costly middle men,      such as insurance companies, by making the medical     provider itself a repository for the pooled funds.

    The provider, instead of investing in office buildings, the     stock market, or interest bearing bonds, uses member     funds to build hospitals, clinics, and otherwise invest in     medical equipment and facilities to be used for patients     as need arises. This direct link from patient to provider     offers the most efficient solution in reducing costs while     providing a regular and predictable source of income for     the provider.

    Financial Risks of Medical Care
    Fee for Service

Risks associated with the costs of medical care are        borne by the patient. Insurance Risks associated with        the costs of medical care are borne by a third party.        Capitation Risks associated with the costs of care are        transferred to the provider.

- Different health finance mechanisms have
       different systems of incentives.
     - Incentives are influenced by costs.

     - The party undertaking to pay is the one who has the        incentive to reduce costs.

Incentives in Fee for Service
- Patients have incentives to control costs but cannot         determine treatment.
     - Only the provider is able to control costs, but providers        have little incentive to do so.
     -  Provider incentives to give more medical care         contribute to escalating costs.

    Incentives in Managed Care
    -  Because services are prepaid, providers have         incentives to reduce costs.
     -  Providers have incentives to keep members         healthy, not just treat illness.
     -  Prevention is better and cheaper than cure.
     -  In a competitive environment, providers have         incentives to give high quality, effective care.

    Objectives in Managed Care
    -  Provide high quality medical care.
     -  Provide care efficiently.
     -  Reduce costs to patients.

    What Managed Care Does?

     - Integrates Services.
      - Coordinates Care.
      - Maintains Health.
        • Brings all aspects of health care under one           umbrella, giving patients easy access to the           care they need.
        • Manages and directs caregivers to ensure           comprehensive, efficient and effective           treatments.
        • Has a vested interest in ensuring its members           remain as healthy as possible.