Essentials of Managed Health Care edited by Peter R. Kongstvedt (Aspen Publishers, Gaithersburg, MD, 1995; 309 pp.)

Managed care is always at least a three-party transaction. Payors and providers can add value to their combined and respective products, or can exist as counterproductive adversaries. This book is disappointing to the extent to which it minimizes the symbiosis of the provider-payor-patient relationship, instead emphasizing a somewhat network and physician-driven approach. However, Essentials' well-organized overview of a managed care organization (MCO)'s financial structure makes it valuable for a MCO newcomer. Some of the chapters might also be useful for a provider who wants to know what some networks think they want. Essentials is not, nor does it claim to be, either a marketing or clinical text.

Adapted from a longer book, The Managed Health Care Handbook (second ed., Aspen, 1993), Essentials nonetheless is plausibly a freestanding resource. Its 22 chapters, fourteen of which are authored in full or part by the editor, effectively outline the status quo in managed care. The taxonomy of today's varied plans and types of provider groups, which operate under changing interpretations of antitrust laws, State charters, etc., is especially well done. Those who master each chapter's "learning objectives" will learn a good deal about the financial and legal constraints under which networks and affiliated units operate, and perhaps learn more about what a typical MCO would like its patients and providers to do and not do. However, readers may wish for more insights as to how networks can influence the probability of the desired behavior's occurring. The editor's contention that "management" must succeed "money" as the key input into health care is provocative; however, his book focuses more on minimizing expenditures of the latter than on adding product value for patients and providers through the managerial function.

Kongstvedt and his fellow authors are obviously familiar with physician attitudes and the structural aspects of managed care organizations. From the establishment of Medicare HMOs to physician recruitment, most of the key financial and operational "how-to's" of MCOs are covered in broad strokes. However, in focusing on the physician's relationship to the network, the book minimizes the roles of other providers (notably physician extenders and nurses) and patients in controlling costs and outcomes within the managed care system. For example, the MCO receives a retrospective list of inpatient charges, but a floor nurse might note inappropriate or inadequate procedures far earlier in the stay. Thus, the book's prescription of a UM nurse to make rounds may not benefit the MCO as much as providing appropriate incentives for useful information exchanges between provider and MCO staff. A few financial examples, such as case pricing, are described as "win-win" for the network and provider, but tomorrow's MCOs will hopefully achieve more synergistic (not simply vertically integrated) health care delivery.

The chapter on quality improvement could also benefit from a more marketing-oriented perspective. Instead of merely formulating constructs, MCOs can, as Kongstvedt notes, develop better questions concerning what variables really matter to patients, how they affect behavior, etc. An MCO's definition of "quality care" probably differs from its constituencies' in terms of the delivery process itself more than the resources directed toward that process. Unfortunately, many of today's health care debates are much more focused on resources. MCOs can and should help change the parameters discussed.

Although this book is not directed toward marketers, it implicitly describes a need for increasingly market-driven MCOs. For instance, the gatekeeper system undoubtedly contributes to the large turnover rate among network-employed PCPs and contracted PCPs, which in turn degrades patient satisfaction, continuity and cost-effectiveness of care. Meanwhile, the industry suffers from the public perception that managed care means substandard care. Clearly, these delivery-related phenomena are linked. No convincing data yet indicates that the constraints of a managed care plan correlate causally with its patients' health status, yet the industry faces increasing restrictions on its product design, e.g. in proliferating freedom of choice laws, any willing provider laws and other regulations. It is thus industry management's responsibility to minimize the "information gap" among providers and patients as to actual managed care outcomes, and to identify and improve process variables important to customers as well as the MCO, e.g. caregiver retention rate.

As Kongstvedt himself notes, relating patient satisfaction to clinical variables is still a work in progress. However, this task may not be survey researchers' most pressing goal. For networks to justify clinical and financial control, they must demonstrate the benefits thereof for patients to patients as well as payors. In turn, patients should comply more fully with the network's utilization protocols if such protocols are linked explicitly to benefits the patient considers important. It is the identification of such benefits, not a more complex construct of "satisfaction," which seems more urgent. Hopefully, future editions of Essentials and related works will highlight the evolution of "patient education" (which receives only a nod from this book) toward explicit marketing of behaviors to patients, just as several Essentials chapters describe ways to influence physician expectations and practice patterns.

MCOs often claim to occupy medicine's frontier; thus, one expects a book of this type to at least mention trends such as the use of statistical modeling and expert systems in clinical diagnosis. Implementation of electronic medical records, telemedicine's growth, increasing patient access to medical information via the Internet, and other manifestations of the global village will also influence consumer expectations and providers' ability to change or meet them. All these innovations are expected to improve provider-defined quality of care; however, MCOs seeking to differentiate their products must identify which of many future benefits will be or could be most important to their customers.

Besides the substandard proofreading, Essentials' other occasional shortcoming is the editor's writing style. Not even dramatic license justifies comments such as, "failure to accrue [expenses] is the equivalent of failure to diagnose cancer." The business of managed care is never as important as the care itself. In particular, a book for managers should always distinguish the two.

In summary, Essentials is an excellent schematic of today's MCO, but only today's. However, careful readers will discover considerable material for the construction of their organizations' future plans.

Laurie Gelb

Laurie Gelb is Administrative Manager, Department of Biomathematics, University of Texas M.D. Anderson Cancer Center, and a health care marketing consultant.