Managed care plans face the challenge of satisfying marketplace preferences for less restrictive care while holding down costs

Managed care plans—pressured by a variety of marketplace forces that have been intensifying over the past two years—are making important shifts in their overall business strategy. Plans are moving to offer less restrictive managed care products and product features that respond to consumers' and purchasers' demands for more choice and flexibility. In addition, because con- sumers and purchasers prefer broad and stable networks that require plans to include rather than exclude providers, plans are seeking less contentious con- tractual relationships with physicians and hospitals. Finally, to the extent that these changes erode their ability to control costs, plans are shifting from an emphasis only on increasing market share to a renewed emphasis on protecting profitability. Consequently, purchasers and consumers face escalating health care costs under these changing conditions.