Full Text HS-95-005


NIH GUIDE, Volume 24, Number 12, March 31, 1995

RFA:  HS-95-005



Agency for Health Care Policy and Research

Application Receipt Date:  June 20, 1995


The market for health care services is being transformed by mergers
and consolidation of various health care organizations and by
collective purchasing of health care and insurance, as well as more
"value driven" purchasing by single large employers.  The rapid
growth of managed care arrangements is one important component of the
change engulfing this industry.  The decline in the number of
independent hospitals and physician groups is another.

There are anecdotes, but limited factual information, about the types
of market structures and organizations that are now emerging in the
health care sector.  Even less is known about how these structures
are influencing the competitive strategies of health providers and
insurers, the quality and types of care available in the market, or
the price and equitable distribution of services.  The formulation of
public policy to deal with these changes depends upon a better
understanding of what structural and behavioral changes are taking
place in these markets, how and why these changes are occurring, and
their implications.

The Agency for Health Care Policy and Research (AHCPR) invites
applications for projects to describe and examine the effects of the
dramatic changes in the markets for health care services.

AHCPR will give priority to projects that take advantage of available
data, promise early results, and are modest in scale.  The scientific
review panel that will evaluate applications will be instructed to
give particular weight to these factors when scoring applications.


The Public Health Service (PHS) is committed to achieving the health
promotion and disease prevention objectives of "Healthy People 2000,"
a PHS-led national activity for setting priority areas.  AHCPR urges
applicants to submit grant applications with relevance to the
specific objectives of this initiative.  Potential applicants may
obtain a copy of "Healthy People 2000" (Full Report:  Stock No. 017-
001-00474-0 or Summary Report:  Stock No. 017-001-00473-1) through
the Superintendent of Documents, Government Printing Office,
Washington, DC 20402-9325, telephone: 202-783-3238).


Applications may be submitted by domestic non-profit organizations,
public and private, including universities, clinics, units of State
and local governments, non-profit firms, and non-profit foundations.
Racial/ethnic minority individuals, women, and persons with
disabilities are encouraged to apply as Principal Investigators.


This request for applications will use the research project grant
(R01) mechanism.  Responsibility for the planning, direction, and
execution of the proposed project will be solely that of the
applicant.  This is a one-time solicitation.  The total requested
project period may not exceed three years.  The anticipated award
date is September 30, 1995.


AHCPR has set aside $2.5 million in Fiscal Year 1995 for first year
support of approximately ten projects developed in response to this
solicitation.  AHCPR will award the major part of these funds for
analyses that examine how changes in the structure of defined markets
have affected the way health care providers produce and market care
and the price, distribution, and quality of services available.
Funding for continuation support will depend on annual progress
reviews by AHCPR and the availability of funds.


Rapid changes are occurring in markets for health care services.  The
structural changes in the market have been characterized in part by
the development and expansion of integrated delivery systems, mergers
of hospitals and physician practices, and collective purchasing and
"value driven" purchasing by large employers of health insurance and
health services.  In many markets the number of buyers and sellers
has changed significantly.  There are also signs that the behavior of
those who produce health care services is changing.  Public
advertising to attract patients is now common.  So are financial
arrangements in which providers share risk with third-party payers or
accept guaranteed payments in exchange for limits on their
professional autonomy.  There is growing evidence that many producers
now compete on the basis of price or the types of services they
provide.  One quite visible change has been the development of
centralized decision making and the integration of services.  We are
moving rapidly away from delivery systems that operate primarily
through sole practitioners and small, independent group practices to
systems dominated by large, multi-product health services firms,
often investor owned and for profit rather than non-profit.

A host of State experiments designed to control the costs of care
reflect an underlying uncertainty about the appropriate structure of
the industry, provider behavior, and the impacts of change on the
price, content, and quality of patient care.  Driven by continued
pressure on their budgets, many States have encouraged and even
stimulated some of the changes now seen in the health sector.  These
changes provide a natural laboratory for studying how specific
organizational arrangements influence how much patients pay for care,
how that care is financed, and how the use of services has been

As a result of discussions with other Federal agencies, the National
Advisory Council for Health Care Policy, Research, and Evaluation and
various panels of experts, AHCPR has developed this solicitation to
study the role of market forces in changing the content and delivery
of health care in America.

Understanding the behavior of health providers and changes in the
cost, type, and quality of health services being made available
depends upon some analyses of the structure of specific health care
markets.  The Robert Wood Johnson Foundation is now sponsoring a
number of descriptive studies of particular health care markets.
This solicitation is not intended to replicate these studies.
Rather, AHCPR wants to encourage studies that use information now
available on different markets to analyze changes in the
organization, production, marketing, pricing, quality, access, and
distribution of health care services.

Factors that might be used to describe the health care markets could
include: number, concentration, and administrative linkages of
providers; State and local regulatory conditions, especially with
respect to advertising, pricing, and limitations on market entry; the
penetration of managed care arrangements; the nature and extent of
risk-sharing arrangements between insurers and health care providers;
the number of employer or employee coalitions; the size of the market
controlled by public entities; and local economic conditions that
might influence demand for care.

Researchers might focus on such questions as the following:

o  What are the consequences of consolidation among purchasers and
suppliers of health care services with respect to the price, quality,
and types of services?

o  How has concentration on the supply and demand sides of the market
affected the profitability, efficiency, and equity of the health care

o  How has the form of competition in the health care industry
changed and how do these changes relate to the characteristics of
specific markets?

o  What are the changes in local health insurance markets and how
have these changes affected the price and distribution of care, the
types and quality of services, and the adoption of new diagnostic and
therapeutic technology?

o  How have changes in the organization of providers, regulatory
controls, concentration, and demand for services affected the
pricing, products, and competitive strategies of different kinds of
providers?  Studies could focus on such providers as hospitals,
tertiary care facilities, and physician practices

o  How have the changes in the markets affected the supply and demand
for labor skills, composition and use of health care workforce,
technology, equipment, and capital by different groups of providers?

One of the major changes in the health care sector is the growth of
managed care organizations.  Such organizations include health
maintenance organizations, preferred provider organizations,
physician-hospital organizations, community health networks, and a
variety of other more or less integrated arrangements.  It is
important to recognize that the integration of various types of
providers does not necessarily involve the formation of a managed
care entity.

Managed care organizations use structured interventions to control
health care decisions and the allocation of resources.  These
interventions have a number of implications for the quality of
services, efficiency of providers, and the cost and price of care.
At present there is no clear understanding of the consequences of
managed care organizations on these and other measures of

Many managed care organizations have data on the use of covered
services and these data could be of value in examining issues
involving the conduct and performance of providers.  AHCPR encourages
a collaboration between these organizations and analysts seeking to
study the industry.

Researchers might focus on such questions as the following:

o  How do the organizational and financial characteristics of managed
care organizations (MCOs) affect efficiency, profits, technological
approaches, and clientele?

o  How do different forms of MCOs affect the way care is produced and
resources are employed?

o  How do MCOs compete for contracts or patients and how does the
competitive strategy influence sales, services, and profits?

o  How do the characteristics of different markets affect the
organizational structure, production decisions, and health care
services of MCOs?

Studies proposed in response to this solicitation may employ a range
of research methods including experimental and non-experimental
design, case control and cohort studies, and economic and other forms
of modeling.  Investigators are encouraged to use existing data sets
wherever possible and to employ analytic strategies that generate
results relatively quickly.  Applications must be explicit and
detailed with respect to describing the data, methods, and techniques
that will be employed in the analyses.


It is the policy of AHCPR that women and members of minority groups
must be included in all AHCPR supported health services research
projects involving human subjects, unless a clear and compelling
rationale and justification are provided that inclusion is
inappropriate with respect to the health of the subjects or the
purpose of the research.

A new NIH policy resulting from the NIH Revitalization Act of 1993
(Section 492B of Public Law 103-43) supersedes and strengthens NIH's
previous policies (Concerning the Inclusion of Women in Study
Populations, and Concerning the Inclusion of Minorities in Study
Populations), which were in effect since 1990 and which AHCPR had
adopted.  The new NIH policy contains some provisions that are
substantially different from the 1990 policies.  AHCPR plans to
publish guidelines specific to AHCPR.  In the interim, AHCPR will
follow the NIH guidelines, as applicable.

All investigators proposing research involving human subjects should
read the "NIH Guidelines for Inclusion of Women and Minorities as
Subjects in Clinical Research," published in the Federal Register of
March 9, 1994 (FR 59 11146-11151) and reprinted in the NIH Guide for
Grants and Contracts, Volume 23, Number 11, March 18, 1994.

Investigators also may obtain copies of the NIH policy from the AHCPR
program staff listed under INQUIRIES.  AHCPR program staff may also
provide additional relevant information concerning this policy.


Applications are to be submitted on research grant application form
PHS 398 (rev. 9/91).  State and local government applicants may use
form PHS 5161, Application for Federal Assistance, and follow those
requirements for copy submission.  These forms are available at most
institutional offices of sponsored research; the Office of Grants
Information, Division of Research Grants, National Institutes of
Health, Westwood Building, Room 449, Bethesda, MD 20892, telephone
(301) 710-0267.  For AHCPR, applications are available from Global
Exchange Inc., 7910 Woodmont Avenue, Suite 400, Bethesda, MD 20814-
3015, telephone: 301-656-3100, Fax: 301-652-5264.

The RFA label available in the form PHS 398 (rev. 9/91) application
form must be affixed to the bottom of the face page of the original
application.  Failure to use this label could result in delayed
processing of the application such that it may not reach the review
committee in time for review.  In addition, type "RFA HS-95-005" in
Section 2a on the face page of the application form and mark the
"YES" box.

Submit a signed, typewritten original of the application, including
the Checklist, and three signed photocopies, in one package to:

Division of Research Grants
National Institutes of Health
6701 Rockledge Drive, Room 1040 - MSC 7710
BETHESDA, MD  20892-7710
BETHESDA, MD  20817 (for express mail)

At the time of submission, two additional copies of the application
should be sent to:

Michael Hagan
Agency for Health Care Policy and Research
2101 East Jefferson Street, Suite 502
Rockville, MD  20852-4908

Applications submitted under this RFA must be received in the
Division of Research Grants, NIH, by June 20, 1995.  If an
application is received after that date, it will be returned to the
applicant without review.


Upon receipt, applications will be reviewed by the Referral Office,
Division of Research Grants, NIH, for completeness, and by AHCPR
staff for responsiveness to the RFA.  Incomplete applications will be
returned to the applicant without further consideration.
Nonresponsive applications will be transferred to a standing AHCPR or
other appropriate scientific review group for review through routine
mechanisms.  The determination of any application as nonresponsive
will be the sole responsibility of AHCPR.

Applications may undergo triage by the peer review group on the basis
of relative scientific and technical competitiveness.  The AHCPR will
withdraw from further consideration those applications judged to be
non-competitive for award and notify the applicant Principal
Investigator and institutional official.  When an application is
reviewed, the peer review committee may recommend further
consideration or no further consideration.  The committee will also
assign priority scores to the applications for which further
consideration is recommended.  Recommendations of the peer review
committee may be reviewed subsequently by AHCPR's National Advisory
Council for Health Care Policy, Research, and Evaluation.  The peer
review process is rigorous, and only those applications judged to be
of greatest merit will be recommended for further consideration.

Review Criteria

The general review criteria for AHCPR grant applications are:

o  significance and originality from a scientific and technical

o  adequacy of the proposed method(s);

o  availability of data or proposed plan to collect data required for
the project;

o  adequacy of the plan for organizing and carrying out the project;

o  qualifications and experience of the Principal Investigator and
proposed staff;

o  reasonableness of the proposed budget;

o  adequacy of the facilities and resources available to the
applicant; and

o  adequacy of plans to include both genders and minorities and their
subgroups, as appropriate for the scientific goals of the research.

The initial review group will also examine the provisions for the
protection of any experimental subjects.

Also applicable to this RFA, in addition to the general review
criteria, is the:

o  extent to which projects take advantage of available data, promise
early results, and are modest in scale.


Applications will compete for available funds with all other
applications for this RFA.  In making funding decisions, AHCPR will
consider:  Quality of the proposed project as determined by peer
review, availability of funds, and program balance.


The AHCPR welcomes the opportunity to clarify any issues or questions
from potential applicants.

Direct inquiries regarding program matters to:

Michael Hagan
Agency for Health Care Policy and Research
2101 East Jefferson Street, Suite 502
Rockville, MD  20852-4908
Phone:  (301) 594-1354 ext. 124
E-mail:  mhagan@po3.ahcpr.gov

Direct inquiries regarding fiscal matters to:

Ralph Sloat, Grants Management Officer
Agency for Health Care Policy and Research
2101 East Jefferson Street, Suite 601
Rockville, MD  20852-4908
Phone:  (301) 594-1447
E-mail:  RSloat@po7.ahcpr.gov


This program is described in the Catalog of Federal Domestic
Assistance, number 93.226.  Awards are made under authorization of
the Public Health Service Act, Title IX (42 U.S.C. 299-299c-6), and
are administered under the PHS Grants Policy Statement and Federal
Regulations 42 CFR Part 67, Subpart A, and 45 CFR Part 74 (Part 92
for State and local governments).  This program is not subject to the
intergovernmental review requirements of Executive Order 12372.

The Public Health Service strongly encourages all grant recipients to
provide a smoke-free workplace and promote the non-use of all tobacco
products.  In addition, Public Law 103-227, The Pro-Children Act of
1994, prohibits smoking in certain facilities (or in some cases, any
portion of a facility) in which regular or routine education,
library, day care, health care, or early childhood development
services are provided to children.


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