Managed care refers to various techniques, which are intended to; improve the quality of health care with a minimum cost. Health maintenance organizations (HMOs) refer to managed care services in the United States that are intended to cut down unnecessary health care costs via a variety of mechanisms. The introduction of HMOs dramatically changed the health care industry in the U.S through price competition amongst health care providers. The impact of HMOs on the health care market has been diversely studied with inconsistency in findings. These differences can be attributed to differences in geographical regions or time periods of study. As the hospitals adopted the new system of price competition, the effects of managed care have advanced with time and may vary across regions. Differences in methods of study also have a significant contribution to these differences. Only the studies that have used a fixed time interval mortality rate as the measure of quality focus on Medicare patients. The use of in-hospital mortality as a quality measure may lead to bias in findings. Managed-care plans contracted with hospitals selectively to form networks of hospitals to provide health care to their insured members. This selectivity in contracting introduced price competition, in the health market affecting lower rates of hospitals cost growth and lower rates of use of costly services and technologies, (Zwanziger and Melnick, 1988). Evidence shows that HMOs have led to quality competition in mature managed care markets. Rogowski, Jain and Escarce’s article reflects on the effect of hospital competition and HMO penetration on hospital-quality care for six medical conditions. These conditions included acute myocardial infarction, stroke, hip fracture, congestive heart failure, gastrointestinal hemorrhage and diabetes mellitus. These conditions’ selection was due to their low variation, meaning that the criterion for admitting patients is narrowly defined. The need to assess these conditions is because HMO penetration and hospital competition may have an influence to hospitalization decisions. The study states that hospitals with a high-competition degree had lower mortality rates within thirty days of admission to the hospital. Analysis using a Herfindahl index to measure hospital competition showed that higher competition lowered mortality rate of hip fracture, stroke, gastrointestinal hemorrhage, diabetes and congestive heart failure. Implications show that patients hospitalized in public hospitals were less ill than those hospitalized in private hospitals. The author concludes ‘that hospitals compete on “true” quality of care’, implying that reduced hospital costs and use of resources resulting from price competition due to managed care plans and HMOs in California led to improved hospital care. The study showed that the hospitals in California that faced high competition provided a better quality care for various medical conditions. The studies’ findings also indicate that higher HMO penetration led to high-quality care, and the salutary effects of hospital competition on quality are more robust in higher penetration markets. Principles of biomedical ethics require a conversation on the desires and needs of the patient, and the members of society. In