Managing Managed Care

Our inequitable, inefficient, oftentimes uncaring health care "system," revealed. -- Jeffrey G. Kaplan, M.D., M.S.

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"Up to 30% of Medicare spending is wasted on needless care."

"After adjusting for differences in health, income, medical price and other factors, the Dartmouth researchers’ overall conclusion is that the more costly areas and institutions provide a lot more tests, services and intensive hospital-based care than the lower cost centers. Yet their patients fare no better and often fare worse because they suffer from the over-treatment."

This is from a NY Times editorial (June 13, 2009) that I believe is actually referring to variation research at Dartmouth, begun by Jack Wemberg.  As an example--

Katherine Baicker, Amitabh Chandra [Dartmouth]  "Medicare Spending, The Physician Workforce, And Beneficiaries’ Quality Of Care."  Health Affairs, 10.1377/hlthaff.w4.184 [Posted 4/7/04]


The quality of care received by Medicare beneficiaries varies across areas. We find that states with higher Medicare spending have lower-quality care. This negative relationship may be driven by the use of intensive, costly care that crowds out the use of more effective care. One mechanism for this trade-off may be the mix of the provider workforce: States with more general practitioners use more effective care and have lower spending, while those with more specialists have higher costs and lower quality. Improving the quality of beneficiaries’ care could be accomplished with more effective use of existing dollars.


 "Pay for better risk-adjusted outcomes and cut down on waste." April 19th, 2017

Norbert Goldfield, MDRichard Fuller, MS, both of 3M argue that one can "improve healthcare efficiency and reduce waste and inappropriate care, making it possible to consider coverage of more individuals." Read that blog post.


1. Use "clinically credible risk adjustment that encompasses all populations...The risk adjustment process must also recognize the impact of socioeconomic disparities and make sure that health care professionals/providers are not discriminated against because they are taking care of high-cost, high-need patients" for instance.

2. Risk-adjusted capitation of all services rendered, which includes "payments made by the federal government to states for the Medicaid program."

3. Link financial incentives to improved outcomes. Note: five outcomes are already translated into dollars, which accounts for approximately 90% of potentially preventable outcomes as follows:8

  • "Potentially preventable admissions (e.g. diabetes out of control),
  • Potentially preventable readmissions (an infection necessitating a hospitalization occurring many days after discharge for a hernia operation),
  • Potentially preventable outpatient services (e.g. preventable MRIs for back pain or operations for back pain),
  • Potentially preventable complications (e.g. pneumonia occurring several days into a hospital stay for a patient hospitalized with a stroke),
  • Potentially preventable Emergency Room visits (such as a visit to the ER for a cold)."

4. "Financial incentives to decrease these potentially preventable events must be accompanied by regular and detailed reports that detail opportunities for improvement in these five types of potentially preventable events (collectively refer to as PPEs)."