A new approach to managed care: the provider-run organization

Behavioral managed care has been dominated by for-profit carve-out managed care organizations who deliver mental health and substance abuse services by reducing services and fees to the detriment of patients and providers. We offer a new model of managed care based on a provider-run, hospital-based approach in which provider groups contract directly with HMOs and eliminate the managed care organization intermediaries. This approach allows providers to maintain or regain control of the delivery of behavioral health services. A model is presented of an academically based organization which has achieved utilization patterns compatible with the demands of payors. Innovations in service delivery, network management and fiscal issues are reviewed.