Group of doctors and nurses. Are you ready for the transition to managed care?

Are you ready for the transition to managed care?

Many healthcare organizations are currently undergoing a transformation from fee for service to flat rate payments as they evolve into Managed Care Organizations, but the path to becoming a MCO can be paved with difficulties from a financial, HR, and operational perspective.  Here is a quick list of “lessons learned” that Managed Care Organizations should consider during their transition. What’s your take on the transition to managed care: IT systems and data?

Transition to Managed Care: What’s Up Next?

IT Systems

Establishing a new IT system is a costly and time consuming investment for Managed Care Organizations.  In addition to this IT systems vary widely in their capabilities and operational processes.  IT vendors may also differ significantly in what they offer to their clients.  While some systems are backed by personalized customer support, some only operate off of automated assistance networks.  Before choosing an IT system, consider the following:


  • Ensure that you have a working knowledge of how responsive the vendor will be to your needs, and how available they are.
  • Find out how system modifications and system errors are handled.  Make sure that you know whether the IT provider has timelines established for correcting problems, and that they are something that will work within your organization.
  • Determine what the level of involvement of the IT provider will be during system implementation.  Are you purchasing a product that you will be left on your own with, or does the vendor provide training and support?  What type of staff resources should you expect to dedicate during the implementation phase and what will the cost be to your organization?
  • Consider minimizing the changes that you will have made to the product.  The more that the product is customized, the more cumbersome it can become and the more chance that errors will occur.
  • Consider choosing the basic system model rather than the luxury model, just ensure that it meets any applicable contract requirements and has some efficiencies built in.
  • When developing reports that will be generated via the IT system, ensure that your whole Senior Management Team is active and participating.  Carving out reporting as an IT function without clinical and operational input will result in significant changes being made down the line.
  • Test, test, test, and then test again.  This will not only allow people to become familiar with the next system, but it will build confidence in the process flow while assisting your organization in pinpointing errors and inefficiencies.


Data is crucial for Managed Care Organizations, but knowing what type of data to gather, or how to utilize it in a meaningful way can be challenging.  Consider the following:

  • When utilizing data to make decisions, you will need a data baseline of at least one year.  Determine what data you have available now, and whether or not you should expect a delay in order to gather an appropriate baseline.
  • Analyze where you will source the data, and whether it will be accurate and meaningful.  Determine the best source for the data that you will collect, and only depend upon data that your organization can have a direct impact on.  For instance, if your organization has no control over hospital discharge rates, focus on what you do have control over, such as referrals to hospitals.
  • When selecting Quality Improvement Projects, ensure, once again, that they are selected based upon something that your organization has control over.  Many organizations see failure in Quality Improvement, when they select a project that has too many outside determining factors.

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