Impact of managed care on healthcare delivery practices: the perception of healthcare administrators and clinical practitioners.
Subject: Managed care plans (Medical care) (Reports)
Author: Tietze, Mari F.
Pub Date: 09/01/2003
Publication: Name: Journal of Healthcare Management Publisher: American College of Healthcare Executives Audience: Trade Format: Magazine/Journal Subject: Business; Health care industry Copyright: COPYRIGHT 2003 American College of Healthcare Executives ISSN: 1096-9012
Issue: Date: Sept-Oct, 2003 Source Volume: 48 Source Issue: 5
Geographic: Geographic Scope: United States Geographic Code: 1USA United States
Accession Number: 109666202

Managed care has introduced changes, such as cost effectiveness, access to care, and quality of care, to many components of the U.S. healthcare delivery system. These changes have affected how healthcare administrators and clinical practitioners perceive the impact of managed care on healthcare delivery practices. A survey was initiated to explore whether the perceptions of administrators differed from those of practitioners and to discover which organizational variables could explain the difference. A descriptive, cross-sectional survey design was used for the target population of administrators and practitioners in high, moderate, and low managed-care-penetration markets. Two investigator-developed instruments--the Managed Care Perceptions Inventory (MCPI) and the MCPl-Demographic--and an intact centralization of decision-making assessment subscale were used for data collection.

Administrators had a statistically significant, more positive perception of the impact of managed care on healthcare delivery than did practitioners. When the distinction between administrator and practitioner was not used as a grouping factor, managed care market penetration, nonprofit status, and years in current employment position were factors that had statistically significant associations with a more positive perception of managed care. Based on these findings, both administrators and practitioners have a role in maintaining awareness regarding their perceptions and should work collaboratively to address issues of concern. Similarly, promoting trust and commitment at the organizational level is important. Recommendations for further research are also provided.


The rapid evolution of managed care as a healthcare delivery strategy since 1990 (Comprehensive Market Intelligence 1997; Gemignani 1998; Health Trends 1998) has affected the structure of patient services and the role of healthcare professionals in delivering these services. This evolution has been primarily driven by a desire to control costs, and at the same time improve medical outcomes, by emphasizing preventive care, coordinating the delivery of services, and reducing the number of unnecessary procedures and tests (Lelyveld 1997). The literature notes the concerns of healthcare professionals (both healthcare administrators and clinical practitioners) over variation in practice patterns, access to physicians, inadequate patient treatment, and the healthcare industry (Chassin and Galvin 1998; Kertesz 1997), which professionals perceive is a result of these changes. Growth of managed care has also affected the roles of practitioners (such as physicians and nurse practitioners), who provide patient care services directly, and the roles of administrators (such as chief executive officers [CEOs], chief nurse officers [CNOs], and managed care executives), who provide services indirectly (Sultz and Young 1997). Existing literature addresses the managed-care-related perceptions of both groups of healthcare professionals, but no research has yet examined the differences in perceptions about healthcare delivery practices between these groups (American Medical Association 1998; Brandi 1998; Hopkins 1998; Joyaux 1998; Knox and Irving 1998; Shapiro 1998). The goal of the study was to explore these differences and to identify related organizational variables.

The study used a descriptive cross-sectional survey designed to examine the perceptions of healthcare professionals, which were defined as both administrators (CEOs, CNOs, and managed care executives) and practitioners (physicians and nurse practitioners). Between July and September 2002, survey packets were mailed to 654 randomly selected participants in California, Texas, and Mississippi; this survey yielded 146 usable questionnaires, for a response rate of 22.3 percent. Ninety-eight were from administrators (i.e., 25 heads of hospitals such as CEOs, 58 nursing administrators, and 15 managed care administrators of directors) and 48 were from practitioners (i.e., 16 physicians and 32 nurse practitioners). The survey packets included two investigator-developed instruments--the Managed Care Perceptions Inventory (MCPI) and the MCPI-Demographic (MCPI-D)--and an intact centralization of decision-making assessment subscale (Moseley 1974). The first survey, the MCPI, asked questions such as, "Based on your perception, how has managed care implementation in your environment impacted actual worked nursing hours (total direct hours staffed)?" Participants could pick an answer between the "significantly decreased" and "significantly increased" range on a 5-point Likert scale, with 3 as the neutral option. The second instrument, the MCPI-D, contained 14 questions assessing demographic variables purported to be related to managed care perceptions. The centralization of decision-making instrument measured participants' perception of where in the organizational hierarchy various types of decisions ate made. Prior to the study, all three instruments demonstrated adequate reliability and validity (Tietze 2002).


When compared, sample characteristics of the two groups were found to be representative of the overall study target population. Subsequently, four areas of research were explored.

One research area addressed in the study was healthcare professionals' perceptions of the impact of managed care on healthcare delivery practices. Impact of managed care on healthcare delivery practices was defined as the sum score of the MCPI. The mean score for administrators and practitioners on the MCPI was 2.67 (standard deviation [SD] = .33) on a five-point Likert scale, indicating that this sample perceived the impact of managed care between the "slightly negative" and "no change" range. Although research exists about the pros and cons of managed care impact (Anders 1998; Chassin and Galvin 1998; Schear 1998), few studies represented both administrators and practitioners. One study that had findings similar to the current study indicated that respondents were slightly more likely to perceive managed care as a threat than an opportunity (Proenca 1999).

Individual items of the MCPI were assessed for positive and negative impact on the subjects' perceptions of managed care on healthcare delivery practices. The five items that had the highest mean score (positive impact) and representative associated references are listed in Table 1.

Lowe and Baker (1997) suggested that these tire items were important quality indicators to measure the impact of changes to inpatient care as a result of managed care implementation. Participants in the current study perceived these items as only being moderately affected (mean = 3.06 to 3.63, SD = .70 and .73, respectively). The five items that had the lowest mean score (negative impact) and representative associated references ate listed in Table 2.

In addition to exploring healthcare professionals' perceptions, the difference between administrators' and practitioners' perceptions of the impact of managed care on healthcare delivery practices was also of interest. Using analysis of variance analysis (ANOVA), findings revealed that a statistically significant difference existed (F = 1,144 = 6.870, p = .010), which suggested that administrators (mean MCPI sum score = 130.36, SD = 15.74) had a more positive perception of managed care than did practitioners (mean MCPI sum score= 123.22, SD = 14.89). Post-priori power analysis was .61 at alpha .05, which, although not optimal, was considered acceptable for the purposes of this study (see Cohen 1998).

No studies have compared administrators to practitioners in terms of perceptions of managed care, but most practitioner-oriented studies indicated that experience with managed care was associated with a negative perception of managed care's impact on healthcare delivery practices (Joyaux 1998; Kaiser Family Foundation 1999; Levine and Lieberson 1998; Warren, Weitz, and Kulis 1999). The findings of the current study are reflective of these studies in that practitioners in the current study reported a negative perception of managed care.

Noting the differences in perceptions between administrators and practitioners, the next area of exploration aimed to discover whether the differences were related to specific organizational variables: managed care stages, profit status, and centralization of decision making. Using analysis of covariance (ANCOVA) with each of the three organizational variables as covariates, the findings revealed that administrators reported a significantly higher (more positive) perception of managed care than did practitioners. As noted in the ANOVA test, postpriori power analysis was .61 at alpha .05, which, although not optimal, was considered acceptable for the purposes of this study (see Cohen 1998). However, the ANCOVA revealed that the difference was not related to stage of managed care penetration, profit status of the organization, or centralization of decision making in the organization.

Additional analysis, using the entire sample as one group, was conducted to examine the MCPI score in relation to variables other than role. Three variables were found to have a statistically significant relationship with perception of managed care: an organization's profit status, managed care market penetration, and healthcare professionals' years in their current position.

Profit status had a slightly negative correlation with MCPI sum score (r = -.190, p = .011), indicating that forprofit organizations had slightly more negative perception of the impact of managed care on healthcare delivery practices than did nonprofit organizations. This finding was supported by the research of Mathematica Policy Research (1999), which revealed that for-profit organizations primarily focus on maximizing profits and, therefore, tend to have negative perceptions of managed care.

Correlation between managed care market penetration and MCPI sum scores yielded a slightly negative relationship (r = -.147, p = .038), indicating that healthcare professionals in higher managed care penetration markets tend to have a more negative perception of the impact of managed care on healthcare delivery. A preponderance of healthcare literature states that managed care tends to be negatively perceived by healthcare providers as well as by consumers (Burdi and Baker 1999; Conway, Hu, and Daugherty 1999; David 1999; Kaiser Family Foundation 1999; Krieger 1999; Simon et al. 1999; Warren, Weitz, and Kulis 1999).

Years in current position was found to have a slightly, but statistically significant, more positive relationship with perception of the impact of managed care on healthcare delivery (r = .179, p = .031). A study by Sutcliffe (1994) found that job tenure of the top executives of 89 firms was positively related (r = .31, p < .05) to the munificence skill of the executive to assess availability of resources and the extent to which an environment supports sustained growth.


The following conclusions are based on the findings of this study:

1. Healthcare professionals reported a positive relationship between the implementation of managed care and (l) RN wage rate, (2) ambulatory care access, (3), urgicare access, (4) employee accidental exposure to sharps, and (5) proportion of bachelor-degree-prepared RNs in the workforce. Conversely, healthcare professionals reported a negative relationship between the implementation of managed care and (1) patient intensity of illness, (2) time spent in basic patient care, (3) RNs available to provide direct care to patients, (4) average inpatient length of stay, and (5) RN vacancy rate. Most of these findings are consistent with reported literature.

2. Perception of the impact of managed care on healthcare delivery practices is significantly higher (more positive) for healthcare administrators than for clinical practitioners and is not related to managed care market penetration, profit status, of centralization of decision making.

3. Regardless of healthcare professional role (administrator or practitioner), professionals from nonprofit organizations have a slightly, but statistically significant, higher (more positive) perception of the impact of managed care on healthcare delivery practices.

4. Centralization of decision making has no relationship to healthcare professional role (administrator or practitioner), managed care market penetration, or profit status.

5. Regardless of healthcare professional role (administrator or practitioner), professionals from high managed care market penetration areas had a slightly, but statistically significant, lower (more negative) perception of the impact of managed care on healthcare delivery practices.

6. Regardless of healthcare professional role (administrator or practitioner), the longer professionals are in their current position, the higher (more positive) their perception of the impact of managed care on healthcare delivery practices.

7. The MCPI was determined to be a valid and reliable measure of perceptions of managed care and its impact on healthcare delivery practices.


This study examined the impact of managed care implementation on the perceptions of two groups of healthcare professionals and the factors affecting those perceptions. Clinical practitioners were found to have a more negative perception than did healthcare administrators, and several factors were identified that affected those perceptions. Among these factors were that patient intensity of illness has increased even as the average inpatient length of stay has decreased and that less time and fewer RNs were available to provide direct patient care. Other identified factors were market penetration, profit status, and years in current position. The impact of managed care was perceived to be more negative, the higher the managed care market penetration; more positive in nonprofit organizations than in for profits; and more positive, the more years the healthcare professionals had been in their current position. Based on this information, both administrators and practitioners have a role in maintaining awareness regarding their perceptions of managed care's impact on patient care delivery practices.

Implications for Healthcare Administrators

Organizational administrators play several roles in managing perceptions. First, they must continually monitor the perceptions of their own administrators and practitioners and the relevant factors affecting those perceptions. This study suggests that the MCPI may be a useful tool for gathering this type of information.

A study by Proenca (1999) suggests that negative perceptions can be improved through strategic interventions focused on factors that contribute to negative perceptions. This indicates that organizational administrators should formulate and implement interventions that target those identified factors. For example, a descriptive study of the "hassle factor" experienced by physicians indicates that one ten-minute hassle occurred for every four to five patients and that more than 40 percent of these hassles interfered with the quality of care, the doctor-patient relationship, or both (Sommers et al. 2001). This type of awareness should help administrators understand potential tensions among physicians and foster commitment to work with them to alleviate these tensions. Research by Warren, Weitz, and Kulis (1999) suggests that appropriate interventions also include keeping practitioners involved and informed of issues about which they express concern. Administrators at all levels should be considered part of the intervention strategy.

Implications for Clinical Practitioners

Clinical practitioners must monitor their own perceptions and seek to manage any that are negative. They should express their concerns to their organization's administrators and work collaboratively to remain involved and well informed about their issues.

Optimally effective communication about the issues should be the objective for both administrators and practitioners. Communication is central to the main four management competencies outlined by Warren Bennis (Clutterbuck and Hirst 2002), which includes the management of attention, meaning, trust, and self. Bennis indicated that to be truly effective, both leaders and managers must develop their self-awareness, become role models for communication in the organization, and learn to encourage and manage constructive dissent. Bennis and Townsend (1995) state that to create a sustained trusting environment, leaders must act in ways that produce constancy, congruity, reliability, and integrity when interacting with those being led.

Annison and Wilford (1998) suggest that to achieve more trust, managers must maintain strong relationships with staff and recruit and retain employees who have "professional passion" about their work. In addition, to combat the pressures of constant change and the increasing complexity of delivering patient services, Annison and Wilford call for simplification of processes, recommend greater collaboration among providers, and propose that healthcare professionals examine the integrity of their own behaviors and their organization.

Similarly, promoting commitment at the organizational level is important. According to Hoff (2001), the growth of a medical management specialty is a significant event associated with managed care. Physician executives are lauded for their potential in bridging the clinical and managerial realms. They also serve as a countervailing force to help the medical profession and patients maintain a strong voice in healthcare decision making at the strategic level. A high level of commitment to both organization and profession has been found among physician executives. Supportive work climate and positive peer relationships are valuable in fostering this commitment.


Variables explored in this study suggest certain relationships among variables; however, several questions remain. The following are some recommendations for further research.

Additional research is needed with a larger, more defined sample. Between groups, the administrators were more strongly represented than were the practitioners, and within groups, the nursing administrators and the nurse practitioners were more strongly represented than were their counterparts. Recommendations for future sampling efforts relate also to the relatively small physician group. For example, prior research has indicated a distinction between the perceptions of primary care physicians and specialists (Burdi and Baker 1999; St. Peter et al. 1999; Warren, Weitz, and Kulis 1999).

A less extreme managed care market penetration rate should be used for targeting the low managed care group. In this study, Mississippi was identified as the state with the lowest managed care market penetration rate--that is, 3.2 percent. In several cases, healthcare professionals in Mississippi were unable to participate in the study because they "have no managed care" in the area.

This study used HMO penetration rates because these rates ate a common indicator of the stage of managed care in a given market. However, further research can benefit from examining more specific indicators such as managed care contract payment type (Warren, Weitz, and Kulis 1999), involvement type (Lepore and Tooker 2000), and number of hospital-sponsored physician alliances (Burns et al. 2000).

Sixty-two percent of study participants were either nursing administrators of nurse practitioners. Other managed care impacts, such as communication (Cadogon et al. 1999), corporate ethical guidelines (David 1999), and team member relationships (Olson 1998), have only been studied from a nursing perspective. Thus, analysis of the perception of the nursing group compared to the nonnursing group is recommended in an effort to optimize understanding of both groups.

Psychometric testing is needed for the MCPI. Acceptable levels of reliability and validity were obtained with the tool, but further refinement is possible that can shorten the tool and enhance applicability to a wider population of healthcare professionals. Under the principle that outcomes improvement is the ultimate healthcare delivery objective, this study may launch research that further studies the impact of better aligned managed care perceptions on healthcare delivery outcomes. Findings might reflect the association between similar perceptions among healthcare professionals and positive patient outcomes.


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Sunil K. Sinha, M.D., M.B.A, FACP, CHE, director, Managed Care Clinical Center, VA Maryland Health Care System, Baltimore

With the advent of technology and the increasing number of new drugs and scientific breakthroughs, life spans have become longer and overall quality of life has improved. But this has come at a cost, which has transformed the "practice of medicine" into the "business of medicine." In the name of cost effectiveness, cost containment, and improved quality of care, managed care and its techniques have had an indelible effect on the U.S. healthcare system. Independent of its actual degree of effectiveness in accomplishing the above-mentioned goals, the perceived impact of managed care has definitely been successful in evoking opinion and debate among those involved across the healthcare spectrum, including administrators, practitioners, and consumers.

This study focuses on administrators and practitioners to learn whether a difference exists in their perceptions of managed care effectiveness and, if so, to find out the underlying variables responsible. The study sample was drawn from three states (California, Texas, and Mississippi) where the managed care markets were deemed to have high, moderate, and low penetration, respectively. The surveys were administered between the months of July and September 2002 and had an overall rate of return of 22.3 percent. Ninety-eight administrators (CEOs, nursing administrators, and managed care executives) and 48 practitioners (16 physicians and 32 nurse practitioners) responded with usable data, and the sample characteristics of the two groups were found to be representative of the overall population.

From the perspective of a clinician, I was not surprised that the general perception about managed care effectiveness among the practitioners surveyed was found to be negative. In discussions with clinician colleagues, I hear many examples of obtrusive and prescriptive practices adopted by managed care entities. It is not uncommon to hear these practitioners speak of their frustrations about not being able to do what they were trained to do or to complain about decisions that were based on a "cookie-cutter approach" to medicine. This frustration coupled with the issues related to malpractice have forced many physicians to rethink their decisions to practice medicine. At the other end of the spectrum is the nursing shortage, which can be traced to a number of factors, including growing job dissatisfaction stemming from reduced direct patient-care time and increasing nonclinical duties.

From the perspective of a physician executive, I know that the goal of an administrator must be to provide the best quality healthcare to the greatest number possible with the finite resources available. It is truly a balancing act, with decisions being made based on the best data available, and that can explain administrators' positive perception of managed care in this study. From the sample characteristics, I see that about 60 percent of the responding administrators had a clinical background, but it is not clear if this background was a factor in the group's results. Seeing if the results were any different with more physician input would be interesting, especially between low and high managed care markets.

The author has successfully touched on a very relevant topic, which has significant implications on the administration and delivery of healthcare services. I agree with the view that a better understanding and collaboration between administrators and practitioners will be helpful and that additional research with a larger, more defined sample is needed.

For more information about this article, please contact Dr. Tietze at This dissertation study was conducted in conjunction with Texas Woman's University, College of Nursing, Denton, Texas.
Five MCPI Items with the Highest Mean Score

MCPI Item                          Mean Score (SD)

1. Average hourly                    3.63 (.73)
rate for RNs

2. Ability to utilize                3.18 (.93)
treatment services from
ambulatory care generalist

3. Ability to utilize                3.15 (.83)
treatment services
from emergency services

4. Incidents of accidental           3.07 (.73)
exposure to sharps
(e.g., needle sticks)

5. BSN (bachelor-degree-             3.06 (.70)
prepared nurses)
percentages of total
nursing staff

MCPI Item                     Associated References

1. Average hourly            Buerhaus and Staiger 1996;
rate for RNs                   Charles et al.
                               2000; Mezibov 1998

2. Ability to utilize        Lowe and Baker 1997;
treatment services from        St. Peter et
ambulatory care generalist     al. 1999

3. Ability to utilize        Augustine and Dietrich
treatment services             1998; Lowe and
from emergency services        Baker 1997

4. Incidents of accidental   Holodnick and Barkauskas
exposure to sharps             2001; Lowe and Baker
(e.g., needle sticks)          1997; Matson
                               2000; Rosenstock 2000

5. BSN (bachelor-degree-     Charles et al. 2000;
prepared nurses)               Lowe and
percentages of total           Baker 1997; Moses 1998
nursing staff

Five MCPI Items woth the Lowest Mean Score

MCPI Item                                Mean Score (SD)

1. Intensity of illness                     1.91 (.61)

2. Availability of time for                 2.16 (.59)
staff nurses to provide basic
nursing care

3. Patient perception that there            2.16 (.77)
are not enough RNs available to
provide direct care

4. Average impatient length of stay         2.20 (.70)

5. RN vacancy rate                          2.20 (.67)

MCPI Item                                Associated References

1. Intensity of illness                  Lowe and Baker 1997

2. Availability of time for              Lowe and Baker 1997; St. Peter
staff nurses to provide basic              et al. 1999
nursing care

3. Patient perception that there         Augustine and Dietrich 1998;
are not enough RNs available to            Lowe and Baker 1997;
provide direct care                        Rothschild, Berry and
                                           Middleton 1996

4. Average impatient length of stay      Lowe and Baker 1997;
                                           Rothschild, Berry, and
                                           Middleton 1996

5. RN vacancy rate                       Freudenheim and Villarosa
                                           2001; Lowe and Baker
                                           1997; Tri-Council 2001
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