US Transition from Fee-for-service to Managed Care did Not Cut Costs
US Circa 1970-1980
Over the 1970s and 1980s, just as there were trends in demographics, women’s roles, and types of occupations both inside and outside healthcare in the United States.
- Heterosexual, nuclear family
- Wife did not work, but husband did
- Husband had health insurance through work.
Because technology was not as advanced, it was possible for physicians to run their own private practices the way attorneys do today.
- Doctors were entrepreneurs in private practice
- Hire nurses, support staff
- Had privileges at nearby hospitals.
- Family could see any provider for any reason
- Insurance always paid provider bills
- Providers and patients could move, but keep a long-term relationship.
- Tempting for providers to overbill for expensive procedures
- Extra procedures not only too expensive, but can be dangerous for patients
US Circa 1990-2000
In the 1990s and 2000s, there was now more diversity in terms of family type, and women as well as men were in the workplace and could get health insurance..
- Many single-parent homes where parent worked, family health insurance through work
- Two parents working allowed a choice between health insurances.
Now, physicians could not afford to run private practices anymore, mainly due to advancements in technology.
- Private practices were closed, purchased or merged.
- Physicians went to work for health systems.
- Patient-provider relationships ended, and new ones formed.
- The purpose was to cut the waste associated with fee-for-service, especially unnecessary tests and procedures.
- This was accomplished by health plan forming a network of contracted providers. The contract says how much the provider would get paid for tests and procedures.
- Patients now had to choose from a list of contracted providers.
- These were different depending on the insurance, so it was hard to form a long-term patient-provider relationship. Old relationships resolved, and new ones shifted often.
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