Consolidation and restructuring: the next step in managed care

Abstract

Rising expenditures on health care in the U.S. have been facilitated by the fundamental problems of asymmetric information and insurance-induced moral hazard. If managed care is to succeed, it must take both into account through strategies such as information-based consumer education and provider risk-sharing. Because larger networks offer significant advantages in implementing such strategies, hospital mergers, physician-hospital alliances, and economies of scale are major trends in the evolution of managed care.