Vertical integration: model for success in the managed care environment?

A managed care organization consists of a health system with the specific task of managing the delivery of care in a cost-effective manner. A health maintenance organization is a method of delivering care to a defined populatio'n of voluntary subscribers. The subscribers are required to use designated providers. The organization agrees to provide this care on the basis of a prepaid fixed monthly charge. It shares the risk with the physician providers. Payment is in the form of a negotiated discounted fee for service or according to a growing trend whereby the provider accepts a capitated monthly fee agreeing to provide full-range services to the subscriber. Capitation clearly reverses the logic for all players. Prevention of illness rather than the delivery of episodic health care becomes the driving force. It is expected that by the end of 1995 approximately 56 million Americans will elect to receive their health care within the frame'work of a health maintenance organization. In a managed care environment, the financial incentive to reduce the number of hospital admissions is clear. Hospital occupancy rates are inversely related to the proportion of the population receiving its care in a managed environment. Because referrals to specialists represent a cost, referrals will decrease. With the thought that the generalist is a more effective manager of health care resources, a movement toward reversing the current specialist-to-generalist ratio of 60:40 will occur. As the proportion of the population receiving care in a managed care system increases, the demand for physicians will decrease. These factors all have an effect on the number of postgraduate positions available and, I suspect, on the quality of the candidates applying. Some are concerned that life as a radiologist will be less attractive from a financial and job satis-