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Consolidation and restructuring: the next step in managed care.
P M Danzon1, L G Boothman, P E Greenberg
1Wharton School, University of Pennsylvania, Philadelphia 19104, USA.
Health Care Management (Philadelphia, Pa.)
|September 5, 1995
Summary
Rising healthcare costs stem from information gaps and moral hazard. Managed care strategies like education and risk-sharing, supported by larger networks from mergers, are key to addressing these issues.
Area of Science:
- Health economics
- Healthcare management
Background:
- Healthcare expenditures in the U.S. are rising.
- Asymmetric information and moral hazard are fundamental problems in healthcare.
- These issues impact the effectiveness of healthcare systems.
Purpose of the Study:
- To analyze the role of asymmetric information and moral hazard in rising healthcare costs.
- To explore strategies within managed care to address these challenges.
- To identify key trends in managed care evolution.
Main Methods:
- Analysis of healthcare economic principles.
- Examination of managed care strategies.
- Identification of trends in healthcare market structures.
Main Results:
- Asymmetric information and moral hazard contribute to rising U.S. healthcare expenditures.
- Information-based consumer education and provider risk-sharing are crucial managed care strategies.
- Larger networks, achieved through mergers and alliances, offer advantages for implementing these strategies.
Conclusions:
- Managed care must address information asymmetry and moral hazard for success.
- Strategies like consumer education and risk-sharing are vital.
- Market consolidation, including hospital mergers and physician-hospital alliances, facilitates effective managed care.