Controlling the Use and Cost of Medical Services

The New Mexico Experimental Medical Care Review Organization — A Four-Year Case Study

by Robert H. Brook, Kathleen N. Williams, John E. Rolph, Bryant M. Mori

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Evaluates a generously funded comprehensive peer review system in place for a fairly long time. The medical review system produced no net savings, nor did it have a demonstrable effect on hospital use. One major effect on quality of care (in injection use) was produced. Careful examination of findings led to the conclusion that Professional Standards Review Organizations (PSROs) may influence quality of care but will play little role in containing medical care costs. If expenditures on peer review approach the level spent in New Mexico, then $3 to $5 billion will be spent on such activities nationwide. Given such cost projections, society must specify clearly how much quality of care needs to be altered to warrant such expenditures. The authors conclude that focus of the PSRO program should be shifted to improvements in quality of care and away from containing costs of care. More fundamental actions by other social agents are necessary to accomplish the latter. (Published in [Medical Care Supplement], September 1978.)

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