The Changing Face Of Managed Care

TLDR

Managed care plans are shifting toward less restrictive products, broader networks, and more flexible contracts in response to marketplace pressures, while also refocusing on profitability rather than solely market share. These changes result in higher health‑care costs for purchasers and consumers.

Abstract

Managed care plans—pressured by a variety of marketplace forces that have been intensifying over the past two years—are making important shifts in their overall business strategy. Plans are moving to offer less restrictive managed care products and product features that respond to consumers' and purchasers' demands for more choice and flexibility. In addition, because consumers and purchasers prefer broad and stable networks that require plans to include rather than exclude providers, plans are seeking less contentious contractual relationships with physicians and hospitals. Finally, to the extent that these changes erode their ability to control costs, plans are shifting from an emphasis only on increasing market share to a renewed emphasis on protecting profitability. Consequently, purchasers and consumers face escalating health care costs under these changing conditions.