Introduction
Health maintenance organizations experienced rapid growth between1990-2003. The rise
in managed care was as a result of increasing health care costs during the 1990s in the U.S. In
managing escalating medical costs, hospitals across the U.S adopted plans in administered health
care remedies rising costs of healthcare (Strunk et al., 2002.) The strategies adopted by hospitals
included negotiations with health providers, use of primary care gatekeepers, and restricting
users from other states from accessing the health care. Regardless of the remedies adopted by the
hospitals, various hospitals raised managed care insurance covers extending the costs to the
consumers during the economic backlash in the 2000s. Therefore, multiple economic times from
boom to backlash periods of managed care required appropriate strategies to contain hospital
costs.
Different methods were used to examine various factors that affected managed health
care for all the periods: boom, mature and backlash period. Empirical methods analyzed cost-
based system comparing it to the prospective payment system. During the beginning of the boom
period, managed health care experienced changes in teaching and misappropriated methods of
payments. Hospitals transitioned from costs-based operations to a reliable payment system
leading to growth in managed care penetration. Further, there were effects of managed care as
hospitals in high managed care areas experienced slow growth rate compared to hospitals in low
managed care areas. Healthcare competition was top in the upper managed care which was
caused by high operating costs. Costs regression also affected managed health care during the
boom period. As at the start of the Boom period, there was no difference in the healthcare unit.
Little growth had been experienced at the end of boom period which was attributed to slow
growth costs meaning, and there was penetration of managed health care. Research studies
