As healthcare markets have evolved in terms of managed care penetration and provider integration, the nature of relationships between payers and providers has also evolved. Figures 1-3 provide a guide to assist members in determining what managed care market stage their organization is currently operating within. Once that determination is made, the evolving market dynamics and interrelationships among payers and providers can be evaluated and a strategic plan of action can be formed. Payers compete aggressively on the basis of price to build critical mass relative to competitors. Consolidated physician organizations begin to emerge for contracting purposes, although limited consolidation has occurred among hospitals.
Physician organizations compete aggressively for managed care lives.
Health plans pursue aggressive management of hospital utilization and share savings with physician organizations. Hospitals form networks and systems to compete for physician organization relationships and to enhance leverage with payers. Dominant HMOs within regional markets are clearly identifiable, although pricing pressures remain significant. Hospital systems and physician organizations have aligned or have formed dominant and independent but not complementary market relationships. Vertically integrated provider systems have rationalized services and invested in infrastructure to manage risk on a global basis.