Markets at Risk— Current and Future Challenges in a Managed Care Marketplace. C. Clinical and administrative technology challenges and opportunities.


keptics of the managed care revolution questioned from its earliest days, its ability to have a long term impact on health care costs and consumption because of inability to influence adoption and exploitation of emergent clinical technology64. The current travails with rising prescription drug costs seem to bear this concern out. Health plans have not been able to either avoid or to control the impact in ways that one might have expected prepaid organizations to be more skilled or adept at. They may have more deliberate processes in place for review and adoption of new drugs and technology, but these often only slow, rather than alter, adoption patterns. Moreover, given their relatively underdeveloped networks and delivery systems, most health plans cannot engineer the tradeoffs associated with putting more money into pharmaceuticals and off setting costs in other service areas any better than other forms of coverage, at least so far. Plans also face the added problem that their return on investment logic runs counter to the lengthy payback period in some clinical technology investments because of high levels of member turnover. Thus, they find they are often required to pay for products that will benefit other plans far in the future.

On the administrative technology side, the picture is somewhat more sanguine because many communication, data transfer, and interactive exchange technologies will lead to real improvements in production efficiency and reduced transaction costs. The challenge for plans is to acquire the scale to justify and capital to support major new investment in information technologies. There is also reason to believe, based on the experience of industry leaders, that these investments can improve member and provider satisfaction by making interaction with plans more transparent and less burdensome.

  1. L. Kohn, “Organizing and Managing Care in a Changing Health Care System,” Health Services Research, 35 (1): 37-52, 2000.