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MCIC Press Release

May 29 , 2008

Financial Issues Dominate Managed Care Leadership Concerns

Contact:  The MCIC
Phone:    732-292-1100

MANASQUAN, NJ -- May 29, 2008:  Financial issues dominate the concerns of health and managed care company executives, according to a survey by the Managed Care Information Center. 

Fifty-eight percent of those polled cited financial issues as one of the greatest challenges confronting the healthcare industry today.

Of the 58 percent, half cited costs as one of the greatest challenges while the other 50 percent said healthcare reimbursement and payment issues dominated their thinking. 

The survey on the managed care market, "The Managed Care Leadership Survey: Forecast 2008" was conducted by The Managed Care Information Center. 

One respondent, a manager of group products marketing for an HMO, cited cost trend mitigation as a chief concern. "Significant medical cost increases are pricing employers and individuals out of the market and decreasing the richness of benefits that the insured are able to afford." 

An executive vice president of a healthcare consulting firm agreed and said cost is the greatest threat to the industry because "it is pricing people out of the private health insurance market and forcing a government solution. Costs are creating problems for business competition." 

Respondents also cited drug pricing as a threat to the industry. 

The manager of healthcare reporting and market analysis for a physician organization said that too many health plans are not paying the right amount for drugs. The prices, the manager said, are either "way too high or way too low" and are creating issues for everyone involved – payers, providers, patients and pharmaceutical companies. 

An assistant director of a health insurance company agreed and said, "advertising created a demand for new brand name drugs and increases the use when other less expensive drugs may be just as effective." 

The underlying fear among those citing the cost issues is that the government will intervene now that healthcare has become an election year issue. 

Reimbursement is always an issue in the health industry. 

"Competitive pricing in the market among health insurers and PPOs is of concern to the provider community as the top insurers dominate in pricing and the smaller networks will have to receive better pricing from the providers in order to compete," said the director of a medical center. 

"This matter will affect the net revenue for providers as either pricing must deepen for the smaller networks or the business will otherwise transition to the larger insurers who in most cases have the deepest discounts,"  he said.

A director of managed care for a physician organization said the decline in reimbursement rates by private sector payors and government payers is a threat. "We are expected to improve our quality of care through technology which is very costly while we are reimbursed less." 

The president of Fagin Advisory Services Inc., Howard Fagin, said the fee schedule reductions by Medicare are impacting the rates provided by managed care payors. He noted that the survival of physician practices and growth in the number of physicians are dependent on practice income. 

The president of a physician organization cited the top three challenges facing providers as: 

1) Getting paid accurately according to the contract; 

2) Fighting against access to our contracts that is not specifically stated in the contract; and 

3) Continued downward pressures by payors on reimbursement to providers. 

The executive said the greatest threat was that "everyone seems to think the problems in the nation’s healthcare system can be cured by paying the providers less." 

A medical center vice president for business development said the continued governmental ratcheting down of reimbursement levels for payers and providers is a challenge. 

 "Reimbursement throughout the healthcare delivery system is problematic,"  he added.

The executive director of managed care contracting for a medical center said that "lowering reimbursement to hospitals is not the answer. Patients suffer. The MCOs pocket the profits at the expense of the consumer. Those patients who have little to no coverage also suffer since the hospitals can no longer afford indigent patients." 

The survey results are published in The Executive Report on Managed Care, www.healthresourcesonline.com/managed_care/14nl.htm

About the Managed Care Information Center:
The Managed Care Information Center (MCIC) gathers, collects, compiles, analyzes, studies, interprets and distributes business news and information on the managed care industry. The MCIC delivers this strategic business information to its clients via executive newsletters, yearbooks, leading industry databases and directories, management reports, and client research studies. The information is available in print, on CD-ROM and via the Internet at www.themcic.com and www.healthresourcesonline.com/managed_care 

Address: The Managed Care Information Center, 1913 Atlantic Ave., Ste. F5, Manasquan, NJ 08736; (732) 292-1100, www.themcic.com.