Network Development in the Managed Care Organization

Network Development in the Managed Care Organization

To guarantee that its members receive appropriate, high level quality care in a cost-effective manner, each managed care organization (MCO) tailors its networks according to the characteristics of the providers, consumers, and competitors in a specific market. Other considerations for creating the network are the managed care organization’s own goals for quality, accessibility, cost savings, and member satisfaction. Strategic planning for networks is a continuing process. In addition to an initial evaluation of its markets and goals, the managed care organization must periodically reevaluate its target markets and objectives. After reviewing the markets, then the organization must modify its network strategies accordingly to remain competitive in the rapidly changing healthcare industry. Coventry Health Care, Inc and its affiliated companies recognize the importance of developing and managing an adequate network of qualified providers to serve the need of customers and enrolled members (Coventry Health Care Intranet, Creasy and Spath, http://cvtynet/ ). “A central goal of managed care is containing the costs of delivering care, but the wide variety of organizations typically lumped together under the umbrella of managed care pursue this goal using combination of numerous strategies that vary from market to market and from organization to organization” (Baker , 2000, p.2).

To support the health plan’s organic growth strategies, pertinent business practices and operating guidelines related to new market development and significant service area expansion are designed to achieve goals and objectives. Some of these goals are establishing discipline around creating an existing or new market expansion business plan, framework for communicating business goals and priorities across the organization and establishing a means to inventory all expansion activity. As with any efficient business plan the proactive involvement of cross functional departments is critical to a successful execution. The business plan for new market development or service area expansion should include at least the following resources: actuarial services, health plan finance, underwriting, sales and marketing, product development, network management, medical management, IT, customer service organization, legal counsel and credentialing. Each one of these operational areas have a part in some aspect of the business plan and their input at the front end will ensure successful implementation.

Network management includes all of the activities that a managed care organization performs in order to design, assemble, monitor, and maintain a network of providers. For many managed care members, interaction with a managed care organization also means interaction with physicians, hospitals, and other network providers. Because the majority of a member’s contacts are with providers, the health plan’s development and management of high-quality provider networks plays a critical role in the ultimate satisfaction of members. Most of the Coventry Health plans already has some basis of evaluating whether their provider network satisfies criteria established by their accreditation body, either NCQA or URAC. Managed care organizations influence quality through the implementation of comprehensive quality improvement programs. These implementations are required for the health plan to become remain competitive and to meet the necessary expectations of the purchaser. The approach to network management also impacts group purchasers’ impressions of the company. Similarly, the satisfaction of participating providers and their staff is strongly influenced by the degree to which they understand and can easily implement the health plan’s policies and procedures. Effective network management contributes to the administrative efficiency of the health plan.

The target market development should clearly describe the service area by cities, counties, states and even zip codes. The managed care organization needs an accurate estimate of the amount and location of physician, hospital beds, pharmacies, and other ancillary services. When evaluating a provider’s location for accessibility, managed care organizations consider the distance between the provider’s location and members, as well as geographical barriers. It is not the intent of a managed care organizations to expend long trips to physicians or hospitals for medical care. For each provider type, the organization also examines typical patterns of utilization and average costs for selected services. Baker comments, “Defining a panel offers managed care plans the advantage of selecting providers with whom they are interested in working as well as the potential to obtain some contracting advantages through which they can sometimes obtain discounts