The drive to control explosive growth in health care costs has propelled managed health care from a novel alternative to the cornerstone of the health care delivery system. As managed care penetration increases across the United States, the health care industry is experiencing unprecedented consolidation in insurer, provider, and purchaser arenas. Consequently, it has become difficult to identify managed care organizations and their products by name alone. The same acronym might describe an organization, a product, or a line of business within a larger organization. Even within each category, the salient features associated with a given term are often elusive. Furthermore, hybrid structures are proliferating in response to competitive market pressures and variable state regulation. These changes undermine the utility of typologies and continua traditionally used to describe managed care organizations.

The term managed care organization has become a wastebasket expression used to describe organizations that have overall accountability for the health of an enrolled population. These organizations integrate financing or insurance functions with management of health care delivery. They manage both access to provider networks and the quality of health outcomes. Although original managed care organizations integrated financing and delivery under one roof, modern organizations have adopted a broad array of organizational structures. Mergers, acquisitions, and joint ventures are blurring the lines between freestanding prepaid health plans, traditional insurers, integrated delivery systems, and provider organizations.

During this period of transition, it is useful to construct a framework for comparison of managed care organizations based on their organizational structure, target markets, function relationships, and interaction with the external environment. Familiarity with the basic models or types of managed care organizations and their products is a prerequisite to a deeper understanding of the functional anatomy of a managed care organization.