Managed care. A product of market dynamics
D. F. Drake
The development of managed care is described as an unexpected product of
competition between public and private purchasers of health care. Managed
care is a series of purchasing techniques that employers have applied to
reduce the cost of their employees' health benefits. Its most significant
use has been as a device for bargaining with individual health care
providers by encouraging or requiring employees to purchase health care
services from a select set of providers. Selective contracting has broken a
40-year-old barrier to price competition among health care providers, who
have responded to this negotiating tactic by forming or joining larger
organizational units to strengthen their bargaining power. Although the
so-called managed care revolution has reduced the rate of increase in
health care costs by creating a more competitive price environment, it is
simply a start toward a more effective health care market. It is very much
a work in progress that will affect and be affected by both political and
market changes occurring over the remainder of this century.
