MANAGED CARE: Evolution and Distinguishing Features

Abstract

Managed care as a system of health care delivery has grown tremendously in popularity in the United States during the past decade in response to demands by employers and government for cost containment, enhanced access, and improved quality. Managed care took root in the 1800s as prepaid health services provided by employers for immigrants coming to the United States to work. The forerunner of modern managed care, prepaid group practice, later was dwarfed by the unbridled development of FFS medicine under indemnity insurance in the post-World War II period and stunted by early reactions of organized medicine. The early health care reform years of the 1960s spawned HMO legislation in the 1970s, which prompted ever-escalating growth in HMO enrollment. Market-driven health reform has prompted the evolution of health care delivery to the modern-day version of managed care. In this system, health care is provided by a limited number of contracted providers at reduced rates of reimbursement. Patients are channeled to these contracted providers, and clinical decision making of these providers is influenced by the MCO through utilization management and quality assurance. Financial risk is shifted from payers and insurance companies to providers to influence further clinical decision making. All of these characteristics of managed care pressure providers toward higher levels of integration and foster greater reliance on management information systems. Gaining a perspective from the history of managed care, understanding managed care's distinguishing features, and dealing effectively with the pressures of these unique characteristics are important in successfully caring for patients, managing the risk structure, and succeeding professionally in this current environment for health care delivery.