From Regulation to Competition: How Some Providers in New York Responded

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The New York Health Care Reform Act (HCRA) of 1996 sent a shock wave through New York’s hospital and provider community by terminating the hospital reimbursement rate system put in place 14 years earlier by the New York Prospective Hospital Reimbursement Methodology. By eliminating the relatively noncompetitive marketplace experienced by the states’ providers, HCRA’s passage heralded a growing wave of managed care market penetration. It challenged providers to work within the context of new market forces to decrease costs and increase efficiency and quality. With the help of demonstration grants from the New York State Department of Health (DOH), regional providers acquired the skills and resources needed to re-organize themselves into integrated delivery systems (IDS) that would potentially enable a smoother entry into the era of competitive markets. Over time, this project became known as the ProNets(prospectively paid health networks) project.