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Health Care System Evolution in Modern World


The evolution of health care system has had a significant influence in the development of the current health care system. The process has largely been influenced by the advancement of research and technology on the medical field (Shi & Singh, 2009). The development of managed care organizations heralded a period of professionally organized health care system which provided a basis for managed care programs in USA. They were designed to control the spiraling growth in health care expenditure through the use of the unit cost as a guideline in the pricing of health care services (Way & Mayer, 2008).

Managed care contributed to the great transformation of the way health care delivery systems are organized (Ginsburg, 2005). It was an attempt to make health care market oriented by balancing the supply side and the demand side forces in the delivery of health care services. In addition it sought to integrate the health care providers with the players into a single organized system intended at creating a cost effective system and monitoring accessibility of health care services (Corder, Phoon & Barter, 1996). The programs brought cost efficiency into the system and set the stage for primary care provider system. A Primary Care Provider is a general physician who checks the suitability of specialty services for the patients (Shi & Singh, 2009). The purpose of this paper is to examine how the evolution of managed care deliver system has influenced the current health care systems.

Effects of evolution of managed care on of health care system

Managed care system since its inception failed in its mandate due to the decline in the number of general physicians in the system. According to Bodenheimer & Grumbach (2005) the decline was as a result of the growing tendency by the medical training systems to place high value on specialization and increased emphasis on high incomes of specialty physicians. This impacted negatively on the accessibility of health care by patients.

On the positive side of managed care, it led to competition in health care forcing healthcare providers to improve the health care quality and integrate cost efficiency. The health care system led to a 73% increase in the number of employees under the system in 1995 which was up from 27% recorded eight years earlier according to a survey by KPMG Peat Marwick in 1996. Managed care as a result led to better understanding of the role of competition on health care setting the stage forward for the development of the current health care systems. The public response to the system and criticism leveled against it informed the development of the Medicare system (Ginsburg, 2005).

The healthy insurance industry saw a robust growth under the managed care system especially for those companies that established themselves as HMO product providers. The health care policy later led to the development of integrated delivery system as hospitals joined in the insurance system. To effectively cope with managed care, hospitals resulted to consolidation of their businesses. This was designed at increasing their leverage in an increasingly heightening competition in the provision of health care plans. The major downside of these mergers is that they tended to inhibit competition hence compromising the quality of health care.

The hospital mergers were further catalyzed by Columbia/HCA merger which brought about apprehension among hospitals who saw the new competition as a threat to their markets. To avert further acquisitions by Columbia/HCA, hospitals started an acquisition spree of those companies that were perceived to be under threat of further acquisition. Independent hospitals were losing their competitiveness to hospital systems in an environment that was becoming profit oriented. This resulted in relentless search for merger partners.

The plans thus reduced the bargaining power of physicians. Those under the plan lost their leverage to individual hospitals that had relatively higher wages. As a result the number of generalized physicians declined to result to the deterioration of the health care in United States. The weaknesses of managed care caused discontent among physicians and consumers leading to changes in insurance products and the change of public policy. Consumers on their part cited heavy restrictions in medical care as their source of concern. There were concerns for example that HMOs denied them opportunity to choose a physician of their choice. On the other side, physicians were uncomfortable with both restrictions and reduction on their payment rates.

Following heavy backlashes by employees against the managed care, employers responded by reducing restrictions in the managed care products hence making them friendlier to their employees. In the market profitability increased as a result. Other restrictions such as a requirement to seek authorization from employers before undergoing some of medical treatment procedures were dropped. All these profound changes took place in the late 1990s.

On a positive note, under managed care system, the loosening of the health care system led to the gaining of additional leverage by hospitals in negotiation with health plans. Following dissatisfaction by consumers and physicians increased acquisitions and strained capacity of hospitals, the empowerment of hospitals became inevitable. However, although the physicians’ terms improved, their leverage did not rise with an equal degree to that of the individual hospitals.

In the recent years the consumers have gained a greater role in shaping the direction of the health care delivery systems. The current system has achieved this by shifting incentives from the service provider to the consumer. The consumer has also benefited from increase in freedom of choice in selecting their preferred health care service provider and choosing among the many available options for diagnosis and treatment.

Competition among the health care providers spurred the integration of modern technology among hospitals in a bid to cut costs and to improve operation efficiency. This has seen the rapid integration of information technology in medical care. This however tended to favor larger medical facilities which forced smaller hospitals to merge to be able to utilize IT efficiently. Those physicians in private practice were also forced to integrate with larger ones to sail through the souring competition.


To properly understand the impact, managed care is having on the current health care system and the way forward for the health sector, we will have to consider the evolution of our health care delivery system. It will be of paramount importance to identify the key stakeholders and the crucial parts they have played in the evolution of current health care systems. It s important to note that no one can single handedly influence the changes needed to produce an efficient system from the current health care system. Each of the stakeholders input will be important to produce the whole which can only be achieved through collaborative efforts from all parts of the system. The objective of all these efforts must be geared at promoting a healthier nation and an efficient system. To produce the desired results, all the key players will be required to cooperate with others towards the much needed health care reform (Corder, Phoon & Barter, 1996).

Reference List

Bodenheimer, T. S. & Grumbach, K. (2005). Understanding Health Policy. New York: McGraw-Hill Companies, Inc.

Corder, K. T., Phoon, J. & Barter, M., (1996). Managed care: employer’s influence on the health care system. CBS Interactive Inc. Web.

Ginsburg, P. B. (2005). Competition In Health Care: Its Evolution Over The Past Decade. Project HOPE–The People-to-People Organization. Web.

Shi, L. & Singh D. A. (2009). The evolution of health services in the United States. In A. M. Barker (Ed.), advanced practice nursing: Essential knowledge for the profession. (pp. 129-160). Massachusetts: Jones and Bartlett Publishers.

Shi, L. & Singh, D. A. (2009). A distinctive system of health care delivery. In A. M. Barker (Ed.), advanced practice nursing: Essential knowledge for the profession. (pp. 71-90). Massachusetts: Jones and Bartlett Publishers.

Way, W. L. & Mayer, F. S. (2008). Failures of Medicare Part D Delivery and Recommendations for Improvement. MediMedia USA, Inc. Web.

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