Institute for the Study of
Healthcare Organizations & Transactions

 

MANAGED BEHAVIORAL HEALTH CARE FIRMS AND INSTITUTIONAL THEORY:  IS THE CASE CONVINCING?

INTRODUCTION         RISE OF COMPETITION        "CARVING-OUT" BEHAVIORAL HEALTH SERVICES

DATA       THE THEORETICAL FRAMEWORK      A Conceptual Model and Research Agenda

DISCUSSION             IMPLICATIONS FOR HEALTH POLICY AND MANAGEMENT           CONCLUSION

REFERENCES

 

ABSTRACT

This paper presents descriptive data on managed behavioral health care (MBHC) organizations across a four year period, 1990-1993, and demonstrates empirically that they expanded on several important dimensions during the period. It then proposes a research agenda by employing institutional theory and by posing three questions that are intended to guide the research. The overriding theme of the paper is that MBHC firms operate in an environment that has been shaped by institutional, technical, and competitive pressures. The existence of this complex, hybrid environment has practical implications for policymakers and health care managers as well as theoretical concerns for researchers who seek to predict the ways in which these firms, and the field as a whole, will evolve. As the research into these organizations unfolds, it will be necessary to push the theory beyond its usual applications in order to address the complicated forces that shape the managed behavioral health care field.

INTRODUCTION

During the 1960s and 1970s, events occurred in the environment that paved the way for the rise of competition in the health care field. Feldstein (1988) clearly documents the emergence of competition in the health care field beginning when the Medicaid and Medicare programs were established in 1965. Although services to the mentally ill have historically been viewed as different from mainstream health care services, behavioral health care services were not been immune from the evolving competitive environment. The environment in which these specialized services were provided fostered the evolution of a specialized managed care organization, the managed behavioral health care (MBHC) firm.

THE RISE OF COMPETITION IN THE GENERAL HEALTH CARE ENVIRONMENT 

In the 1960s and 1970s, inflation served to stimulate the demand for private insurance but as insurance coverage in the private and public sectors increased, consumer concern with health costs diminished. Health providers were able to increase their prices with little fear of decreased demand. Business firms were able to pass on the higher labor costs (which resulted from rising health care prices) by increasing the prices of their goods and services. One result was that federal, state, and private health care expenditures increased sharply. Another result was that a pattern developed among health care providers: They could increase their prices with little interference from either the market or the state. As this was occurring, events in the broader environment took place that dramatically altered the character of the health care field in general.

Federal Initiatives   The Health Maintenance Organization (HMO) Act passed in 1973 enhanced the growth, development, and political power of HMOs even though it took several years for the impact to be felt. A second related initiative occurred in 1979 when Congress amended the Certificate of Need legislation so that the original legislation, as passed in 1974, would not be used to inhibit competition. The amendment particularly affected HMOs that had been subject to restrictions that limited opportunities for growth.

In 1981, with the passage of the Omnibus Budget Reconciliation Act (OBRA), Congress amended the Medicaid Act to provide states with greater flexibility in how they pay for care to the medically indigent. States were no longer required to offer the medically indigent "free choice" of medical provider, rather, they could now take bids and negotiate contracts with selected providers for the care of the indigent (Feldstein, 1988). Finally, a factor that contributed to the competitive environment was the passage of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). This piece of legislation permitted managed care organizations, such as HMOs, to contract with Medicare on a risk basis. Managed care programs which emphasized strict utilization controls began to proliferate in the private health insurance field as organizations signed up to participate in this risk program.

Private Sector Initiatives  While federal initiatives were important forces in the health care industry, the major impetus to the growth of competition actually occurred in the private sector. Feldstein (1988) identifies two factors that caused the private sector to be concerned about the rising costs of health care. In 1981, the United States faced a severe recession which led to unemployment, loss of income, and a decrease in health insurance benefits. In addition, the recession lowered tax revenues for states and consequently many states cut back on their Medicaid benefits, decreased the number of persons eligible for Medicaid, and instituted cost containment measures such as prior authorization. Feldstein (1988) notes that the pressure from foreign competition caused employers in many industries to seek ways to remain competitive; health insurance was targeted as an area where employers could cut operating costs. Pressure was applied to insurance companies to reduce premiums and businesses began to self-insure or to add deductibles and coinsurance to employees' health plans.

"CARVING-OUT" BEHAVIORAL HEALTH SERVICES

Policy initiatives that took place in the general health care field eventually were influential in the development of the behavioral health care field. The outcome was the development and proliferation of procompetitive strategies such as HMOs and other types of managed care organizations in this segment of the market.

During the late 1980s, in an attempt to monitor service utilization, contain costs, and to provide necessary benefits to employees, large employers adopted a strategy of "carving out" or separating benefits such as behavioral health benefits from the rest of their health plan. MBHC companies represent one form of such a carve-out arrangement that developed in the private sector. Behavioral health carve-outs have the potential for producing significant savings because they may be managed by firms that specialize in behavioral health care treatment and they allow a self-funded employer who offers more than one plan to standardize its behavioral health care benefit design. Moreover, since HMOs generally have had more restrictive behavioral health benefits than indemnity plans, carve-outs have the potential for reducing the adverse selection that occurs when employees who need behavioral health services opt for an indemnity plan over an HMO (Wojcik, 1993).

On the other hand, carve-outs may be more expensive to administer and may require more coordination among health care providers. Lack of integration between specialized providers, such as behavioral health providers, and general medical providers can be especially troublesome since many behavioral health problems have medical consequences, e.g., liver disorders among recovering alcoholics, and some medical conditions have behavioral health consequences, e.g., depression following a mastectomy.

DATA ON MANAGED BEHAVIORAL HEALTH CARE FIRMS

Source A study of HMOs found that 44% of the surveyed HMOs (N = 405) contracted with "outside" organizations for alcohol, drug, and mental health services (Peterson, Christianson, and Wholey, 1992). Although Peterson, et al., identified the existence of these "outside" organizations, they did not analyze them. One probable reason is that obtaining detail about these "outside" MBHC firms has proved to be surprisingly difficult. "As a category, they are neither listed nor discussed by the American Managed Care Review Association, the Group Health Association of America, the American Psychiatric Association, or the American Hospital Association" (Giles, 1993, 27-28).

As it happens, information on MBHC firms was collected and published in annual directories by the industry periodical, Business Insurance, for the years 1990 through 1993. It is important to note that these directories appear to be the only current source of information on many of these organizations. The data reported in this paper include information that was available in the directories on 115 MBHC organizations during the period, 1990-1993.

Descriptive Characteristics of MBHC Organizations  The median age of the firms was 12 years and they are based in 31 states representing each of the six major geographic regions of the country. However, 76 firms (66%) have their home offices in just 10 of the states: California, Illinois, Minnesota, New Jersey, Florida, New York, Pennsylvania, Michigan, Missouri, and Texas. Most of them (e.g., 84% in 1993) were for-profit and had parent companies (70% in 1993). The parent companies were often insurance companies or larger, more general, for-profit, managed care companies (Kihlstrom, 1995).

Services Offered by the Firms  MBHC organizations may compete on the basis of quality of service (Dorwart and Epstein, 1993). In general, MBHC firms offer a wide range of services, however, the services that are offered by them can be grouped into broad categories.

Table 1 presents the services that were offered by the firms in a representative year, 1993. Assessment/treatment services range from the treatment of stress and occupational problems to the treatment of suicide attempts. Ninety firms (78%) offered the complete standard package of assessment/treatment services. Seven services comprise the standard package of health promotion services (ranging from how to stop smoking to AIDS awareness). In 1993, 43 firms (37%) offered the standard package of health promotion services. Educational/general services are other services offered by MBHC firms. One hundred and one firms (88%) offered the standard package of educational/general services which includes such services as workplace problem identification and supervisor training. Finally, with respect to utilization review services, 88 firms (77%) offered the complete standard package which includes inpatient and outpatient precertification, concurrent review, and case management.

Table 1

                                                 Number of Firms Offering Service               Percent

Panel A: Assessment/Treatment Services Offered by MBHC Firms (N=115)

Stress

114

99

Occupational

111

97

Family/Marital

113

98

Alcohol Abuse

112

97

Legal Problems

97

84

Drug/Chemical Abuse

113

98

Financial Concerns

103

90

Adolescent Treatment

107

93

Suicide

111

97

 

Panel B: Health Promotion Services Offered by MBHC Firms (N=115)

Smoking Cessation

80

70

Nutrition/Weight Control

60

52

Stress Management

110

96

Alcohol Awareness

107

93

Drug/Chemical Awareness

108

94

AIDS Awareness

80

70

Elder Care

79

69

 

Panel C: Educational/General Services Offered by MBHC Firms (N=115)

Employee Education

108

94

Supervisor Training

109

95

Drug-Free Workplace Adherence

106

92

Workplace Problem Identification

106

92

 

Panel D: Utilization Review Services Offered by MBHC Firms (N=115)

Inpatient Precertification

101

88

Outpatient Precertification

104

90

Concurrent Review

89

77

Case Management

109

95

The Growth of the Firms  Four indicators, presented in Table 2, depict different ways in which the firms have developed during the four years of the study.

Table 2:  Means of Four Indicators, 1990-1993

  1990 1991 1992 1993
Service Area (# of states) 24 23 29 29
Firm Size 445,825 598,058 661,460 838,682
Contracted Staff 726 930 2037 2426
% Revenue 48 46 56 52

Note:  Based on 115 Firms  All F (3,342) >7.22, all p <.001

Size of the Service Area  This variable represented the extent to which the firms' geographic networks grew during the period. Across the four year period, the mean size of the firms' service areas increased.

Firm Size  The number of lives covered by the organization represented the network of clients and often is used as a proxy for size of the firms' operations. In 1990, the mean firm size was approximately 445,800 "lives covered" but by 1993, the mean firm size was approximately 838,700, a significant increase.

Contracted Staff  Many of the firms reported that they contract with professionals in particular cities or geographic areas to provide behavioral health services to clients. The size of the provider network increased significantly across the period.

Percent of Revenue Derived from Managed Mental Health Care  This variable, which represented the degree to which managed mental health care was an integral part of the firms' business, also increased significantly.

THE THEORETICAL FRAMEWORK

While the basic characteristics of the firms are important to understanding their fundamental nature, the environment in which the firms developed is critical to understanding the forces that will influence them in the future. According to the institutional approach, the collective organization of the environment plays a fundamental role. Davis and Powell (1992) state that "the environment of organizations is made up of other organizations and that the demographic and structural properties of the environment shape organizational behavior" (p. 354). They note (citing Scott, 1983) that environments are comprised of technical requirements, bundles of resources, patterns of communication, and, "cultural elements--symbols of legitimacy, belief systems, and professional claims" (p. 354-5). The environment includes key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products (DiMaggio and Powell, 1983, 148).

DiMaggio and Powell (1983) believe that organizations compete for resources, customers, political power, institutional legitimacy, and economic and social fitness. Conformance to "rational myths" (Meyer and Rowan, 1977), may demonstrate social fitness. Myths are generated by formal organizational structure and have two key properties. First, they are rationalized and impersonal prescriptions that identify various social purposes as technical ones and specify, in a rulelike way, the appropriate means to pursue these technical purposes. Second, they are highly institutionalized and, in some sense, beyond the discretion of any individual participant or organization (Meyer and Rowan, 1977). They are taken for granted as legitimate.

Davis and Powell (1992) note that these rational myths are beliefs that specify what activities need to be carried out and what types of actors must be used to achieve specific social purposes. Because of the specificity and goal-directedness, these beliefs are rational; however, they are similar to myths in the sense that their efficiency is presumed on the basis of their wide adoption.

Within this framework then, how does a practice or an organizational form become institutionalized? Davis and Powell (1992) note that one line of thinking locates institutionalization within the formal aspects of the organization. In this work, the process of institutionalization is associated with the actions of the state, the professions, and key organizations in the field.

One indication that institutionalization has occurred is that the organization becomes less vulnerable to social intervention (Jepperson, 1991). Measures of the degree of institutionalization include the extent to which the practice or form is embedded in a framework of other institutions and the degree to which they are taken-for-granted.

The third key component of the institutional approach is the effect that the environment, operating through the process of institutionalization, has on the structure of the organization. DiMaggio and Powell (1983) believe that institutional isomorphism occurs and is the result of three primary mechanisms.

First, a coercive influence may result from both informal and formal pressures exerted on Organization A by other organizations on whom Organization A depends and by the cultural expectations in the society within which Organization A functions. DiMaggio and Powell (1983) offer several examples of this coercive influence. Government mandates, standard operating procedures, and authority roles that become formally defined.

Second, a mimetic process may influence the structure of an organization. DiMaggio and Powell (1983) state that uncertainty is a powerful force that encourages imitation. Citing March and Olsen (1976), they note that when organizational technologies are poorly understood, when goals are ambiguous, or when the environment creates symbolic uncertainty, organizations may model themselves on other organizations. Moreover, organizations tend to model themselves after other organizations that are perceived to be legitimate or successful (DiMaggio and Powell, 1983, 152).

Third, normative pressures which stem primarily from professionalization may influence the structure of an organization. DiMaggio and Powell (1983) identify two aspects of professionalization that are important sources of institutional isomorphism: 1) The growth of professional communities based on knowledge produced by university specialists and legitimated through academic credentials; and, 2) formal and informal professional networks, e.g., professional and trade associations.

APPLICATION OF INSTITUTIONAL THEORY

In any thorough application of institutional theory, it is necessary to define the organizational field. With respect to managed behavioral health care, the following entities comprise the field: private and public psychiatric hospitals; psychiatric units within general hospitals; community mental health centers; insurance companies; employee assistance firms; utilization review firms; MBHC firms; HMOs; PPOs; state licensing agencies (of both professions and facilities); social workers; clinical psychologists; psychiatrists; professional associations; state Medicaid agencies; Medicare; and, state insurance agencies.

A Conceptual Model and Research Agenda

In this section, a conceptual model, depicted in Figure 1 and Figure 2, (click on the figure to see an enlarged version) and a research agenda based on institutional theory will be presented. Three broad questions will be posed in order to frame the research. With respect to the first question, the unit of analysis is the organizational field; the analyses that are logical consequences of the remaining two questions suggest that it shifts to "networks" of actors. Therefore, while the model, as a whole, represents the depth and the richness of the institutional approach, out of necessity the model may best be tested in two separate phases.

Figure 1

managed care figure 1.gif (8781 bytes) 

Figure 2

Managed care figure 2.gif (6108 bytes)

Research Question 1: What specific factors in the field influence the development, growth, and structure of MBHC firms? (Or, what are the indicators of institutionalization?)

Professionals. Professional associations, such as the American Psychological Association, the American Psychiatric Association, and the National Association of Social Workers are influential in shaping the opinions of their respective members and play a prominent role in lobbying either for or against legislation that affects the membership and the delivery of mental health services.

In January, 1995, the then-president of the American Psychological Association stated, "Managed care is the greatest force altering the way psychologists practice. Corporate executives, not providers, are dominant in today's health care market, and they have permanently altered the daily existence of our practitioners." (Martin, 1995, 44). The American Psychiatric Association and the National Association of Social Workers have expressed "concern" about the effects of managed care on the provider-client relationship. The positions of these associations have the potential to decrease the degree to which managed behavioral health care is accepted if the membership adopts the positions of their respective associations.

However, a countervailing force exists that may offset the effects of the professional associations' attitudes toward managed care. If the rate of behavioral health professionals in an area is high, clinicians may be more amenable to working cooperatively with MBHC firms in order to ensure the viability of their practices. Therefore, as behavioral health professionals must work more cooperatively with managed behavioral health care and MBHC firms, managed behavioral health care, as an institution, will gain legitimacy.

Rational Myths. Meyer and Rowan (1977) discuss specific processes that generate rationalized myths of organizational structure. First, they note that "as the relational networks in societies become dense and interconnected, increasing numbers of rationalized myths arise." They provide the following example: In modern societies, the relational contexts of business organizations in a single industry are roughly similar from place to place. Under these conditions, a particularly effective practice, occupational specialty, or principle or coordination can be codified into mythlike form. The laws, the educational and credentialing systems, and public opinion then make it necessary or advantageous for organizations to incorporate the new structures.

Dorwart (1990) identifies six prevailing beliefs about managed behavioral health care which can be considered rational because they have shaped the organization and delivery of behavioral health services and because their acceptance has been promoted mainly by third party payers and employers.

The beliefs or myths discussed by Dorwart can be succinctly summarized. The rational myths about managed behavioral health care (and its forms) are that it is a new phenomenon; it will reduce costs in the long run; it will, by itself, resolve policy dilemmas concerning who is treated or how care is allocated; it is entirely about costs; it does not affect quality of care; and, finally, it alone is the cause of current problems in the provision of behavioral health services. (This last myth has been adopted primarily by the providers of behavioral health care and not by the third party payers or employers).

Managed behavioral health care, to many, has become synonymous with cost saving and with the policy issue that focuses on the allocation of care. With respect to the beliefs identified by Dorwart (1990), the cost saving mechanisms employed by managed mental health care such as utilization review and the ways in which care is allocated through a gatekeeping mechanism have become codified. These practices have become legitimate, not because these mechanisms have been subjected to rigorous scrutiny and have been shown to have an impact on outcome, but because these mechanisms establish a perception of rationality and efficiency. As a result, a belief or myth has emerged that managed mental health care is entirely about costs, that it will reduce costs in the long run, and that it is able to resolve the dilemma concerning who is treated or how care is allocated.

Several of the myths are difficult to transform directly into measurable variables, but it is possible to employ proxy variables that would provide reasonable measures. For example, the degree to which managed behavioral health care is a "new" phenomenon in an area can be measured by the penetration rates of HMOs and/or PPOs. The penetration rate is an indicator of the extent to which managed care has already been accepted in a specified geographic area such as a Metropolitan Statistical Area (MSA) or a county.

Next, by determining the rate of outpatient and partial care additions (as defined by the National Institute of Mental Health) in an area, it is possible to discern to what degree an area has structures in place that are conducive to managed care. Outpatient treatment and partial care programs are believed to provide appropriate care at lower costs and tend to be utilized to a greater degree than inpatient treatment by managed care plans.

Finally, other measures such as a decrease in indemnity plans and/or fee-for-service reimbursement structures in an area indicate the extent to which the cost containment aspect of managed care, in general, has become institutionalized. In these areas, the operation of MBHC firms may be perceived as more legitimate because other managed care mechanisms are already taken for granted.

State/Regulatory Factors. Rich (1992) discusses the increasing number of legal issues that have arisen with the advent of managed care in general and managed behavioral health care in particular. MBHC firms will "inevitably be confronted by a number of legal issues that will have a significant effect on the pace and nature of their development" (Rich, 1992, 289). Although many of these issues are still evolving and managed care entities are becoming increasingly sophisticated, these legal concerns will be critical developmental factors for the field and the MBHC firms.

Mandatory state insurance requirements for behavioral health influence the content of the benefit packages and the concomitant administrative structures in MBHC firms. Lubotsky-Levin (1988) notes that there are three forms of state mandated alcohol, drug, and mental health benefits: mandatory availability which requires the plan to offer a purchaser the option of specific benefits; mandated benefit packages which require the insurer to include specific benefits in all of its plans; or, a combination of the two. MBHC firms may choose not to be locked into offering a particular benefit package. Therefore, a firm may decide not to provide services in those states with mandated benefit packages.

State laws that seek to regulate the way in which MBHC provider networks are formed and operate will also influence the structure and development of MBHC firms. There are three laws that effect provider network development and operation. First, "any willing provider" laws force a behavioral health plan to accept any provider willing to meet the plan's terms and conditions. If a practitioner agrees to the terms and conditions, the plan may not exclude him/her from the professional network. Second, "freedom of choice" laws permit the plan's members to seek care from non-participating providers. In addition, these laws may prohibit financial incentives that are designed to promote the use of participating providers. Finally, "due process" laws require plans to maintain an appeal mechanism for issues that relate to network participation (State Managed Care Legislative Resource, 1995).

Overall, these three laws have the effect of influencing the size and composition of provider networks. If the networks are large and inclusive, the behavioral health professionals will retain more autonomy over their practice styles and patterns and will have a greater opportunity to shape managed care. If the various professions have a high degree of influence in shaping managed behavioral health care and MBHC firms, then managed care and MBHC firms will be more vulnerable to intervention and less institutionalized in the field.

Finally, many states have enacted laws that regulate the utilization review function. The extent to which utilization review is regulated in a state affects the structure and operation of MBHC firms because it influences the scope and intensity of the utilization review services conducted by the firm, the firm's reporting mechanisms, and even the types of professionals that must be hired in order to conduct the type of review that is required by law. MBHC firms that operate in states that regulate utilization review to a high degree will have more highly developed administrative mechanisms and will therefore tend to be more institutionalized in the field.

Other Organizations. Organizations in a similar type of environment may begin to resemble each other as they respond to similar regulatory and normative pressures. Moreover, "They adopt organizational forms because the forms have been dictated by patron organizations such as funding agencies or because a given form becomes a generally accepted practice in their field" (Orru, Biggart, and Hamilton, 1991, 362).

In the early 1990s, the most common organizational form of the MBHC firm seems to be modeled after the PPO. It includes a contracted network of independent providers who agree to accept reduced fees and abide by prior authorization and other managed care procedures (Trabin and Freeman, 1995). However, a second organizational form resembles the staff model HMO. Clinicians are employed on a salaried basis by the MBHC firm and provide care within the organization. Finally, recently HMOs have begun to move toward more mixed or hybrid models. A few of the MBHC firms seem to have adopted this organizational form which contains both groups of providers and affiliated networks of independent providers (Trabin and Freeman, 1995).

It is clear that other successful organizations in the managed care field have had an influence on the practices and on the organizational forms adopted by the MBHC firms. However, particularly with respect to form, the MBHC firms seem especially heterogeneous. It is not clear why one MBHC firm would choose one organizational form over another or why a particular firm might switch forms. It may be the case that the managed behavioral health care environment poses conflicting pressures on organizations and that one organization selects one set of responses and another organization operating in the same environment selects a different set of responses. In the final analysis, the work pertaining to the influence of other managed care organizations on MBHC firms is still in its infancy.

It should be clear that the MBHC firms operate in resource environments that are complex. On occasion, the firms face conflicting pressures, e.g., the opposition to managed care by the professional associations and, simultaneously, the oversupply of behavioral health professionals in certain markets. Assessing the net impact of these conflicting forces presents difficult analytical and methodological problems. As a result, the two questions that follow focus only on one mechanism in the environment that influences the structure of MBHC firms: the mimetic process.

Research Question 2: How do mimetic processes influence MBHC firms?

As discussed above, the environment in which MBHC firms must function and survive is a turbulent one characterized by constant change and innovation. In order to overcome the uncertainty created by the turbulence in the environment, Granovetter (1985) argues that personal contacts across firms are often employed. In the managed behavioral health care field, personal networks may be a solid source of knowledge regarding new practices, organizational forms, types of service, or additional changes that may be on the horizon.

Galaskiewicz and Wasserman (1989) examine the ways in which network ties allowed organizational decision makers to discern how other organizations in the same field cope with similar environmental conditions and accommodate their behavior to those conditions. The rationale underlying their project was that decision makers are more likely to adopt the strategies of those who they have come to know and trust through personal ties.

In the managed behavioral health care field, there are very large and well-established firms that seem to be influential. They are active participants in the American Managed Behavioral Healthcare Association (AMBHA) whose goal is to ensure that the field's perspective is considered in any health care reform effort. This trade group currently represents nineteen of the leading managed behavioral health care organizations (The 1995 Behavioral Outcomes & Guidelines Sourcebook, 1995). Representatives of these large MBHC firms attend the trade association meetings and conventions such as those sponsored by the Institute for Behavioral Healthcare. In fact, the staff of these large MBHC firms often offer presentations/workshops on current topics in the field at trade conventions.

Because the field of managed behavioral health care is very new, the smaller MBHC firms in it look to the larger, more established MBHC firms for guidance regarding service packages, practices, organizational forms, etc., that are accepted in the field. For example, using the data on the 115 MBHC firms that were presented above, differences between the smaller firms and larger firms can be analyzed at the baseline year, 1990. Specifically, it may be the case that the packages of services offered by the 115 firms discussed above are different for smaller firms than for the larger MBHC firms. If the packages do differ, it is possible that over time the services that are offered by the smaller firms will come to resemble the services that are offered by the larger firms as the smaller firms seek to model themselves after the larger, more established firms. This is an empirical question and the analysis has not yet been conducted.

However, it is important to note that the larger, well-established MBHC firms developed their ideas about acceptable practices and organizational forms from contacts with the established HMOs and PPOs in the more general managed care field. Therefore, it is also important to examine the extent to which the larger firms have modeled themselves after more successful organizations such as HMOs and PPOs.

To identify the ways in which information is shared and the degree to which practices, organizational forms, etc., are adopted, requires an examination of the networks that exist in the field. Specific issues that must be examined include: What types of organizations do the large MBHC model themselves after? How are ties established that facilitate successful modeling? What connections exist between the smaller MBHC firms and the larger MBHC firms? What services, practices, and organizational forms do the "leaders" in the field value? Are these the services, practices, and forms that are adopted by smaller MBHC firms?

Research Question 3: What are the consequences of mimetic processes for MBHC firms?

D'Aunno, Sutton, and Price (1991) examine hybrid organizational treatment units that, as a result of the diversification of mental health centers into drug abuse treatment, moved from an environment that represented relatively consistent demands to a fragmented environment that presented conflicting demands and predict that the units would adopt conflicting practices as a response to the change in the environment. However, because organizations have a limited ability to meet environmental demands, the units would also adopt only those few practices that tended to be valued by external groups as a way of maintaining a minimum level of legitimacy. They found that these hybrid treatment units combined hiring practices from both fields but adopted conflicting goals for client treatment and somewhat inconsistent treatment practices.

D'Aunno, Sutton, and Price (1991) also predict that the hybrid units would receive more external support from sources in the mental health sector if they tended to employ mental health practices. They found that units that continued to use mental health sector practices after they began to treat drug abuse clients had more external support than units that altered their routines and relied less on such practices. This finding supports the institutional view that environmental actors reward organizational isomorphism.

One way of examining the consequences of mimetic processes involves the larger MBHC firms. If the large MBHC firms have become more isomorphic with other organizations in the field, such as HMOs and PPOs, then the number of referrals from these organizations will increase as the legitimacy of the MBHC firms in the field is realized. Indicators include the extent to which firms demonstrate an increase in the number of "lives covered", an increase in the percentage of revenues that are derived from the managed care portion of the firm, and/or an expansion of the geographic area of service over time. An underlying assumption is that the larger MBHC firms depend upon other firms in the field for referrals.

DISCUSSION

This paper began by reviewing the broad competitive forces that shaped both the general health care environment and the behavioral health care environment. MBHC firms represent one organizational form that emerged as a result of the emphasis on cost containment and the perceived need to monitor behavioral health utilization.

Bradman (1994) identifies three evolutionary stages of managed behavioral health care efforts. The first generation of managed behavioral health care involved utilization review and case management departments within the insurer's company or the HMO. However, the "frequent failure" (Bradman, 1994, 9) of these efforts gave rise to a second generation of effort that consisted of specialized MBHC companies which attempted "to control and monitor providers" (Bradman, 1994, 9).

A third generation of managed behavioral health care is emerging which is provider-based and which will increasingly contract directly with employers and selected insurance carriers thereby by-passing the "middle man" (Bradman, 1994, 9), the MBHC firm. This third generation, provider sponsored networks (PSNs), can be formed by a variety of providers in an area, e.g., hospitals, community mental health centers, as well as groups of clinicians. However, as with other aspects of managed behavioral health care, it is much too early to evaluate the capabilities or viability of these provider-based arrangements.

Whatever shape the field takes, a more theoretically based analysis is required in order to move from mere description and more toward explanation and causation. It is clear that an institutional perspective is a rich framework that has much to offer in terms of explaining the development of MBHC firms. However, the conceptual model proposed in the previous section captures only a portion of institutional theory. For example, it only examines the mimetic process and several possible effects of that process on MBHC firms. MBHC firms are influenced by normative and coercive processes as well.

However, even if all of the causes and effects could be included in a single analysis, there is an underlying theoretical issue that is problematic. Alexander and D'Aunno (1990) raise the issue when they note that "health care organizations . . . are being increasingly pressured to improve efficiency" (p. 60) and argue that these organizations operate in a hybrid environment comprised of both technical and institutional pressures.

Throughout this paper, the assumption was that MBHC organizations function in an environment that has been shaped by the same forces as the general health care environment. These competitive forces have influenced the emergence of the technical pressures within the managed behavioral health care field.

One example can be offered by focusing on the service data that were presented earlier. The primary function of utilization review has traditionally been to screen for inappropriate care. This is mechanism is often used to ensure that the services provided are efficient. However, utilization review services can actually be categorized into two types: traditional and expanded (Shalowitz, 1993, 20). Expanded utilization review services focus both on whether the service is necessary and on whether it is "good" care. Therefore, expanded utilization review services, e.g., outpatient precertification for behavioral health care (Shalowitz, 1993, 20), can be viewed as a response to the existing competitive pressure to provide "better" service.

In 1993, 90 percent of the firms reported that they offered expanded utilization review services in the form of precertification for outpatient behavioral health treatment (see Table 1 above). Although the extent to which outpatient treatment services have been reviewed is limited and still quite controversial, many employers believe that outpatient utilization review for behavioral health services is an integral component of their behavioral health care programs. The majority of the MBHC firms have responded by offering this technical service.

It is clear that MBHC firms are shaped by technical as well as institutional forces. But, in the case of MBHC firms it is, at least in some instances, competitive forces that create the technical pressures which Alexander and D'Aunno (1990) discuss.

One of the troublesome issues in examining MBHC firms from an institutional perspective has been how to build a "competition factor" into the conceptual framework. As noted throughout this paper, competition is a pervasive influence in the health care field in general and in the managed behavioral health care field in particular. Institutional theorists have been relatively silent on this issue. The unresolved conceptual question is: How can the strong competitive influence inherent in this field be captured by this framework? Does the competitive factor mediate the relationship between the degree of institutionalization and isomorphism or that between isomorphism and external support?

Powell (1991) suggests that when resource environments are complex or difficult, heterogeneity is the result and organizations in the field may respond strategically to external demands. He urges that more theoretical refinement and empirical work be conducted in order to more fully explain the circumstances surrounding a particular firm's choice regarding practices and organizational form. In the final analysis, additional theoretical refinement must be done in order to take into account the high degree of competition in the managed care field.

IMPLICATIONS FOR HEALTH POLICY AND MANAGEMENT

This paper presented descriptive data on these MBHC firms across a four year period, 1990-1993, and demonstrated empirically that they expanded on several important dimensions during that period. These data are important to understanding and tracking the future development of the firms. In the future, policymakers, managers, and health services researchers must attempt to address several important issues that have both practical and theoretical implications for the field's evolution.

First, an accurate assessment of the number of individuals whose behavioral health care is managed is necessary. Currently, all that can be said is that the number is increasing. Feldman (1992) notes that "the large managed mental health programs are operated by private for-profit firms" (p. 18) and "they are not likely to be enthusiastic about providing data that could help illuminate the extent, nature, and perhaps, effects of their services" (p. 18).

Second, MBHC firms have been criticized for a variety of reasons including inappropriately denying necessary care in an effort to contain costs, restricting access to providers and facilities, maintaining inadequate provider networks, incurring high administrative costs, and funneling clients to public crisis centers (Bradman, 1994). However, it is important to point out that most of the existing evidence is anecdotal.

The issue of quality of care will be the most important issue in the area of managed behavioral health care in the near future. Attempts to assess and ensure quality will most likely assume two major forms: an increased emphasis on regulation of managed care and on data and studies that can serve as the foundations for assessing quality of care (Feldman, 1992).

Third, the MBHC organizations discussed in this paper are relatively new to the managed care field. The firms began by providing services to an employed population and have, more recently, begun to contract with states to provide services to Medicaid enrollees.

Several important points must be considered as MBHC organizations begin to provide service in the public sector. Technically, MBHC organizations must develop the capability to measure and report information on quality of care, cost, utilization, and consumer satisfaction to the state mental health authorities. Developing an adequate information system will require collaboration between the various professionals in the field, e.g., information system managers and the providers of service who understand the behavioral health care service characteristics and historical utilization patterns of Medicaid enrollees.

The service requirements of the Medicaid population may prove to be more extensive than those of the employed population. The package of assessment/treatment, health promotion, and general/educational services that the firms offer may be adequate to meet the needs of the employed population. However, no systematic analysis of the quality of services has been conducted and therefore no conclusion can be offered.

With respect to providing service to the Medicaid population, MBHC organizations must be able to develop a quality network that offers a full range of services including vocational training, housing, transportation, and other types of social services. If these services are not provided directly by the managed care organization, positive linkages/relationships must be formed and maintained with community agencies and/or subcontractors who will provide the requisite services. Establishing the infrastructure and\or hiring the staff to maintain such vital links will have an impact on the cost of providing services to the Medicaid population.

Finally, the evaluation of treatment outcomes will be a key area that MBHC organizations must address. Formal programs of outcomes research must be developed using appropriate measures of the important domains (Rosenblatt and Attkisson, 1993) such as clinical and functional status, life satisfaction, and safety and welfare. For some members of this population, outcome assessments must be conducted in several different contexts in order to obtain an accurate evaluation. For example, information from the client, the family, and the broader social network, e.g., school or work, may be required in order to obtain a complete assessment since the client may function well in one context but not in another.

CONCLUSION

This paper raises an important question that must be addressed in future applications of the institutional perspective to the managed behavioral health care field. Alexander and D'Aunno (1990) suggest that the health care environment may be best thought of as a hybrid environment that is governed by both technical forces and institutional forces. If it is true that the health care environment is a hybrid environment, then the managed behavioral health care field may also be considered a hybrid with technical, competitive, and institutional forces trying to shape it. If that is the case, is the institutional perspective still an appropriate one for this field?

As the research develops, it will be necessary to push the theory beyond its usual applications in order to adequately address the issues that shape the managed behavioral health care field. One of the obstacles to conducting research in this area is that it is a dynamic field and just when a researcher thinks that the boundaries of and the actors within the field are known, the boundaries and actors change.

But, Powell (1991) commented on this issue when he notes that the boundaries of a field may shift as a result of geography or political forces (or both simultaneously). As noted above, aspects of a field may shift as a result of competitive forces as well. Shifting boundaries force existing organizations to react but they also allow new organizations into a field. Examining both the process and the outcome of such shifts would broaden the scope of the institutional approach.

ACKNOWLEDGEMENTS

An edited version of this paper appears in "Managed Behavioral Health Care:  A Case for Institutional Theory", by Lucy Canter Kihlstrom, which appeared in Research in the Sociology of Health Care, Vol. 15, 1998 pp. 35-55. (JAI Press)

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Lucy Canter Kihlstrom, PhD

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