Beyond managed costs

Managed care organizations (MCOs) face an uncertain future. While consolidation and price competition have expanded their market share, health care expenditures are expected to rise in the near future, and the cost containment premise--and promise--of MCOs is being threatened by mixed blessing and nonsupportive stakeholders. To shed light on MCOs' situation, we discuss four drivers for change in health management in the U.S.: technology, regulation, consumerism, and demographics. Using those four drivers, we then assess the various stakeholders in the industry through a competitive analysis and a stakeholder analysis. These analyses suggest that the munificence of the MCO business environment has significantly declined, especially among supplier and buyer stakeholders. Hence, MCOs cannot continue to manage health care costs alone as this will no longer generate sufficient support among buyer and supplier stakeholders. Instead, MCOs must tackle five critical health care issues by working closely with other stakeholders and also by learning what they can from innovative health care initiatives both inside and outside the United States.