Operations of Managed Care Services in the United Arab Emirates - Thesis Example

Preface We have analyzed the starting and operations of managed care services in the United Arab Emirates. This sector is mainly governed by the government funded health services. But with the efforts by the Government, private companies are also providing their services in this region. It has not only helped the people in accessing better health care services but also helped in reducing the load from the government hospitals and clinics. We have tried to explore the efforts made by government to assure better and necessary healthcare services to its citizens, residents and visitors at the most affordable price. We have analyzed and study the major player of this sector, National Health Insurance Company- Daman. We have explored their plans and operations. We have also tried to discuss the ever lasting argument, if Managed Care really helps to cut cost and how managed care has helps in improving the standards of patient’s care. We have tried to understand these arguments with the economic theories presented by a number of researchers and tried to highlight the major issues related to it. Conclusion How Does Managed Care Help Cut Cost? It is a widely accepted that the managed health care plans including health maintenance organizations and insurance providers reduce costs while offering high level health care services and facilities. But still, it can be argued that they had no contribution towards reducing national health expenses of the government. The practices of purchasers including government and employers along with the tax laws and other market imperfections have reduced the demand for real cost containment and reducing the managed care plans of an enough incentives to cut cost and price (Enthoven, 1993). These conditions can be corrected further while managing the competition in an effective manner and executing a complete plan for achieving optimal targets. According to a number of economists, the effect of insurance on incentives can be responsible for these factors. People are more reluctant towards the risks as the illness and the treatment cost are uncertain factors. These have lead to the requirement of insurance. But the insured people approaches for more care while their physicians support them in doing so. They support them to buy more care after they are insured which they wouldn’t have approached if they were not insured. Usually the physicians are paid for their services in the form of high incentives and they are always willing to provide more services. This has resulted in the increased supply of specialists along with new technology developments raising the demand as well as the cost and thus, increasing the per capita expenditures of the nation. The products and services markets are usually consist of suppliers and individual purchasers. This is the standard model for insurance services including health insurance. Sometimes there are sponsors or agents contracting on behalf of a group of insured people getting coverage for all or offering different health plans to individuals as per their choice. The theories like inelastic and elastic demand can be also helpful in understanding if Managed Care help cut cost. The total revenue-price times quantity-is measured by the area of the rectangle under the demand curve. As shown in the graph below, total revenue is greater in case of higher price in the case of inelastic demand. Where as the total revenue is more with lower price, in case of elastic demands. When health care costs is going higher, it is beneficial for the customers and public to make the demand curve more elastic to increase the incentives of providers so that the cost and price can be reduced (Enthoven, 2003). Figure: Inelastic And Elastic Demand (Enthoven, 2003). The UAE healthcare system was mainly funded by the government providing essential healthcare to all the citizens and residents. But in the recent years, a number of private healthcare providers have entered the market. The government is encouraging these private companies in order to improve the healthcare facilities in the state while sharing the increased load on the government healthcare centers. This has given rise to the requirement of a healthcare insurance program in order to meet the sudden challenges and the financial burdens. This has also helped the government to reduce the financial burden due to the healthcare facilities. The primary objective of managed care is to provide better quality of healthcare and easy access for all. The regulation of premium rates directly affects these factors. When the regulations are rated in the form of capping the maximum premium levels, it directly influences the access to insurance as well as healthcare. So managed care helping in the total cost cutting is contradict here. The cost should also include the costs of regulatory body and functions. This affects the entire healthcare system. But the managed care provides a complete coverage and can be very useful in critical conditions. Health is among the necessities which can not be ignored. The managed care and especially the health insurance are going to play an inevitable role in the coming time especially in the countries like the United Arab Emirates. Managed care has a deep impact on people’s life by providing them a reliable source to look upon in problems. The government’s initiative in the direction of necessary health to all is to assure a healthier community and nation. The increase in the gross expenditure can be argued, but the better health facilities and healthier citizens are the scale of development. Managed care has surely proven to be useful in cost cutting for millions of citizens and residents of UAE. It has made them more capable to get the best possible healthcare service and better and more reliable coverage even while they are on work or traveling in other countries. The requirement of healthcare in such conditions can raise the cost a lot. But due to managed care provisions, the worries are less. Still, the requirements are quite complex and there is always a demand to provide sufficient coverage at the most reasonable cost. The initiatives taken by the government and companies in this direction will surely result in cutting the entire cost with the help of managed care. How Does Managed Care Help Improve the Standards of Patients Care Managed care has evolved as an effective solution for a number of challenges. A number of countries all around the world are promoting and relying on the managed care while promoting private players in this sector. This has lead to the solution of many problems while reducing the load on the government. As an outcome, compulsory insurance is a reality in Abu Dhabi for its citizens and residents. Very soon, this will be observed in the remaining parts of the United Arab Emirates. The compulsory healthcare insurance will solve a number of problems associated with the provision of healthcare facilities to the citizens and residents of UAE. This will help in improving the healthcare scenario in the state. Figure: Demand Curve and Marginal Revenue Curve (Enthoven, 2003). It can be really beneficial to analyze demand curves and inelastic demand in order to understand these arguments. As explained by Alain C. Enthoven in Why Managed Care Has Failed to Contain Health Costs, these reasons can be understood with the concepts of economic analysis. Demand Curve relates the price charged by a supplier and the quantity of service or goods he sells to his customers. Usually demand curves have downwards slope due to the fact that a supplier can attract more customers while cutting down the price. Enthoven has shown in his paper a demand curve for Health Maintenance Organization Membership in an employment group of around 2500 members (Enthoven, 2003). It explains the behavior on offering a fee-for-service and free-choice-of-provider plan of $150 as premium and a Health Maintenance Organization Membership with a lower premium. So this HMO membership offers cost reduction for the members accepting limited providers. As per the curve shown, fifty additional employees have chosen the HMO for every dollar of premium reduction. The price is set after making the decision, while keeping in mind that reduction in price will cause losses in revenue along with more customers. These effects can be explained with the help of marginal revenue curve. Enthoven also explains that if the Health Maintenance Organization is bound to deliver services for an average and marginal cost like $100 per member per month, the organization can maximize its profit by choosing the price and quantity at which the marginal revenue equals marginal cost, as per the economic theories. In case the marginal revenue goes beyond the marginal cost, the organization can increase its profits by cutting down the price further and attracting more customers to get the membership. As shown in the graph, the health maintenance organization maximized their profits by keeping the premium of $125 getting 1250 employees as their members (Enthoven, 2003). Managed care has facilitated all the citizens to have better access to the best possible healthcare services available. It has also helped in providing international standard healthcare services while reducing the load on the old government healthcare facilities. With the growing population and demand, the role of managed care is getting more important. It has assured more reliable and healthier lives. The healthcare facilities provided to the citizens is the actual measure of a nation’s development. Healthcare is one of the basic necessities and many countries including the United Arab Emirates emphasizes on necessary healthcare to all for free or at the most economic rates. The government provides heavy funds for healthcare services. With the advancement of managed care, this economic burden has been a lot lighter on the government. Also, the standard of healthcare has improved with the entry of private companies in the sector due to the increasing competition. Overall, these factors have definitely improved the standards of patients care. The patient can get easy access to all types of healthcare services of international standards in his own country. The United Arab Emirates is trying to further improve the healthcare to make it a preferred destination in future for other nationals seeking better healthcare services. This will generate revenues and employment for the UAE people. The life expectancy has increased up to the level of developed countries in UAE. The number of hospitals and clinics has increased and even remote areas are equipped with the necessary healthcare facilities. Citizens as well as the residents, emigrants and visitors are accessing better healthcare services. Managed care has made it accessible for all. Even the middle to lower income groups can have necessary healthcare of international standard. This all has been made possible because of managed care. It has certainly improved the standards of patient’s care and will further support the society and nation in the coming time. Read More