ABSTRACT
Originally, the cost savings that were perceived to be delivered by many managed care organization (MCO) programs were associated with the more centralized model types, such as group-oriented and staff model health maintenance organizations (HMOs). Hospitals attempted to emulate these forms using a variety of organizational structures, and in most cases, these proved to be inefficient and unmanageable and unable to assume and control the risk associated with capitated contracts. Figure 1.1 demonstrates the basic variety of medical staff and physician relationships with hospitals in a form that shows that there are only a couple of cost avoidance and cost control mechanisms that have been tried over the years. These are arrayed in a fashion that uses a Boston Consulting grid* to organize the idea of cost control with certainty.
