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Managed Care Organizations (MCOs) UPSC NOTE

 Managed Care Organizations (MCOs)

  • MCO is a type of healthcare delivery system that coordinates and manages healthcare services for its members. 

  • The primary goal of an MCO is to control costs, while maintaining or improving the quality of care provided to its members

  • To achieve this, MCOs contract with hospitals, physicians, and specialists to offer services to their members at negotiated rates

  • They often use a network of these contracted providers to make a comprehensive range of medical services available to members.

  • MCOs have evolved into multiple generations and forms, and have penetrated deep and wide into the health insurance space

  • Evidence indicates that they did help in reducing costly hospitalisations and associated costs.

  • In India, ever since the first public commercial health insurance was promulgated in the 1980s, the focus has been on indemnity insurance and covering hospitalisation costs, despite a near $26 billion market for outpatient consultations in the country. 

  • In an early analysis of how the HMO — or health maintenance organisation, a type of MCO — experience panned out for developing nations,  identified some important characteristics: MCOs tended to be urban-predominant, attracted the high-income cohort, and caught on in contexts where the public sector was failing or lacked strong socialist moorings

  • In addition, it required that players brought in enough financial clout, managerial capabilities, and manpower, and found well-off and well-defined beneficiary bases to serve.


  • A few successful initiatives are likely to stem from big health-care brands having a loyal urban patient-base, and pockets deep enough to forge networks and invest in administrative capacities and infrastructure

  • However, prospects of them transmuting into a consequential contributor to UHC purely based on private initiative are far-fetched. 

  • That said, there could be promise in exploring the managed care route with cautious and incremental public patronage

Way forward

  • Under the Ayushman Bharat Mission, incentives were announced for promoting the opening of hospitals in underserved areas which would preferentially cater to beneficiaries of the Pradhan Mantri Jan Arogya Yojana (PMJAY)

  • Similar incentives could be conceived for MCOs, which would insure and cater to PMJAY patients apart from a private, self-paying clientele on a limited scale initially and on a pilot basis

  • The same applies to other public sector social health insurance schemes

  • This would also contribute to increasing awareness and expanding the reach of MCOs over time, as the self-paying pool expands and grows the demand base

  • It is timely to reflect on whether MCOs hold promise for the bigger Indian health-care landscape, particularly when it comes to extending universal health care.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Managed Care Organizations (MCOs) UPSC NOTE
Managed Care Organizations (MCOs) UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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