Official websites use. Share sensitive information only on official, secure websites. Prepaid group practices PGPs — multispecialty groups that vertically integrate the organization, financing, and delivery of health services to a specific population—were once viewed as the most cost-effective and efficient model for achieving national health care reform e.
A comprehensive review of comparative empirical studies HMOs versus FFS since concluded that the total costs for HMO enrollees were 10 to 40 percent lower than those for comparable enrollees with conventional indemnity insurance Luft Although PGPs did not originate as a competitive response to fee-for-service indemnity health insurance, many proponents viewed them as a promising means of helping contain rising medical costs, encouraging a more rational allocation of health care resources, and improving the access to and delivery of quality services McNeil and Schlenker Enthoven a and b , for example, argued that PGPs would promote competition within the health care financing and delivery system by stimulating conventional providers to restructure medical practice and insurance benefits, acting as a catalyst for overall cost containment.
Policy experts theorized, for example, that multispecialty groups could achieve greater economies of scale than other provider types could, by buying supplies and equipment in volume, spreading out the risk that accompanies capitated payments, gaining access to financial capital at lower interest rates, achieving a prominent brand name in the community, and attracting experienced physician managers. In their operation, PGPs in particular could offer more efficient clinical care by combining the services of primary care physicians, specialists, and nonphysician providers; by avoiding an undercapacity in primary care practitioners and an overcapacity in specialists; and by retaining clinical responsibility for their patients in both outpatient and inpatient settings Robinson It is timely, therefore, to reflect on the potential, performance, and prospects of prepaid group practice as a system delivery model for the future.
To do this, we examine the rise and fall of the Kaiser Permanente KP expansion effort in North Carolina in order to gain insight into making prepaid group practice work. We trace and analyze the key events in the North Carolina KP's entry and start-up, its performance and growth over time, and its exit. We use interview data collected from former and current KP national, regional, and local managers; North Carolina public officials; state and national health care experts; and supplemental analyses of enrollment, financial, and other secondary data.
We conclude that KP's failed North Carolina expansion resulted not from an inherent flaw in the PGP model but from a complex interaction of political, economic, and organizational factors. We believe that PGPs should still remain of special interest to those reformers who see the health system changing through marketplace competition. Kaiser Permanente KP began on the West Coast as a company-funded and company-managed means of providing medical care services to workers in Henry J.
