Utilization management as a cost-containment strategy

Utilization management (UM) is now an integral part of most public and private health plans. Hospital review, until recently the primary focus of UM, is associated with a reduction in bed days and rate of hospital cost increases. These reductions appear to have had limited impact on aggregate health care costs because of increases in unmanaged services. In the future, with electronic connectivity between payers and providers and the use of clinical guidelines and computer-based decision-support systems, the need for prospective case-level reviews will be reduced. With these changes, UM programs are likely to become more acceptable to providers and patients.