Uneasy alliances: managed care plans formed by safety-net providers.

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PROLOGUE: Providers have had overwhelmingly discouraging experiences when they have attempted to take control of their own destinies by assuming health plan functions. Provider-sponsored organizations (PSOs) in Medicare and commercial physician practice management firms (PPMs) represent two high-profile variations on a common theme: Restricting reimbursement and utilization of care is painful, even if you do it yourself. Similarly, when safety-net providers band together to meet the challenges of Medicaid managed care, tensions between finance and delivery of care persist, albeit in new forms. The demanding public missions of the sponsoring organizations complicate the task in unexpected ways, as Michael Sparer and Larry Brown explain in a paper that sorts out the conflicting imperatives faced by safety-net plans in Denver, New York, Kansas City, and Boston. Unlike their commercial counterparts, though, these plans can't walk away. The authors are from the Division of Health Policy and Management of the Joseph L. Mailman School of Public Health at Columbia University in New York, where Sparer is an associate professor. He has doctoral degrees in political science from Brandeis University and in law from Rutgers School of Law and is the author of Medicaid and the Limits of State Health Reform (Temple University Press, 1996). Brown is a professor in the division. He holds a doctorate in government from Harvard University and was formerly a Brookings Institution senior fellow and editor of the Journal of Health Politics, Policy and Law. Health care providers that have traditionally served the poor are forming their own managed care plans, often in alliance with local safety-net peers. These alliances make it easier to raise needed capital, increase the pool of likely enrollees, and enable plans to benefit from efficiencies of scale. At the same time, however, the alliances often are undermined by conflicts of interest among the different sponsors and between the sponsors and the plan. This paper suggests that these plans are most likely to do well when the state makes special efforts to help and when plans have the leadership and financial reserves to take advantage of their supportive state policies.

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