In 1994, more than fifty-five million Americans (21% of the US population) were enrolled in managed care HMOs. Within this group, 9 million had access to PSO options (United HealthCare, 1996). This number included 67% of the employees of large firms. Additionally, about 79 million workers and their dependents had access to PPOs. Some 23% of Medicaid beneficiaries, and 9% of Medicare beneficiaries, were also in managed care plans.

Managed care industry experts predict that growth in enrollment in managed care plans will continue at a rate of 10% or more for the next several years, and that by the year 2000, more than 80% of the US population will be receiving their health care in a managed care environment (Ladden, 1996).

The surge of interest in managed care is based in large part on dual assumptions: that managed care plans will lower costs for payers and consumers; and that quality can be maintained in a cost-effective environment. However, fulfillment of these assumptions is proving to be problematic for consumers, providers, and the industry (May & Shaeffer, 1995).

Consolidation and restructuring of the health care industry and the subsequent utilization of managed care strategies exist along a continuum. According to the AHA Environmental Assessment, managed care markets will continue to evolve through phases, commencing with discounted fee-for-service, moving to market-driven financing and delivery, and ultimately to true integration. AHA notes that each market is different, and will proceed faster or slower, depending on local conditions and in some regions, market conditions may stabilize without ever reaching a fully-integrated model. They predict that eventually there will be, at most, 10 competitors in any region, with market shares ranging from 10 to 30 percent (Gerstein, 1995).

As IDNs evolve, they will produce more mergers, not only in the provider community, but between provider-insurers and insurers themselves (Gerstein, 1995). Many hospitals have already launched their integration efforts by consolidating among themselves. More than 650 of the nation's hospitals were involved in mergers or acquisitions in 1994, or 10 percent of all hospitals in the country. About half were the result of investor-owned firms' mergers; however, 301 other hospitals were involved in 176 deals during 1994, excluding hospitals merely affiliating (Gerstein, 1995).

This trend toward corporatization and consolidation is perhaps best represented by examining the aggressive growth of Columbia/HCA, Inc. In only seven years, Columbia/HCA grew from two Texas for-profit hospitals to an international health care delivery system of more than 330 hospitals in 37 states and two European countries, nearly 150 ambulatory surgical centers and a variety of other tightly-integrated services (Heineccius, 1995). This was accomplished by acquisitions of smaller proprietary hospital chains and by partnering with nonprofit hospital systems. Columbia/HCA has achieved cost-savings through vertical integration of all local medical services and creation of successful partnerships with physicians; volume purchasing discounts; exclusive supplier partnerships; refinancing of hospitals long-term debt at more favorable rates; eliminating excess capacity and duplication of services; and significantly reengineering operations, including nursing services (Heineccius, 1995). Wherever Columbia/HCA has entered the market, competitor hospitals have rapidly moved to consolidation and other alliances, giving rise to intense competition over prices and positioning for lucrative managed care contracts. The effects of this kind of market volatility and aggressive competition have far-reaching implications for consumers and nurses alike.