Cooperating with managed care or sleeping with the enemy:  Mental health care in the 90s


To work effectively with managed care one has to know its history, its development, and the drivers for change that are shaping the industry's future. In a global economy the competitiveness of US companies was seen to be hampered by the cost of providing medical benefits. In the 1980's, the situation was further compounded by the fact that medical costs were rising faster than inflation and mental health/substance abuse costs four times faster. To get cost control, managed care was developed with an emphasis on utilization review. The need for specialized review in this area by experts (i.e., not the usual medical/surgical UR nurses) soon became apparent and so the "carve out" industry was born. The results were dramatic and successful. However, unintended consequences soon became apparent, barriers to access, failure to integrate behavioral medicine, cost shifting incentives, provider negativity, triangulation of patients, and consumer dissatisfaction. In the face of these, carve out has developed. At the same time, the increased accountability for quality and outcomes has driven significant development within behavioral managed care. Two major drivers are now further defining the future of the industry: 1) Integration, and 2) Increased consumer power. The need to reintegrate behavioral medicine into the full arena of total medical care is obvious. It makes good clinical sense (improved outcomes, more satisfied patients) and good economic sense (medical cost offset). This creates new opportunities and challenges for the current delivery system. At the same time, employers are increasingly seeing the need to integrate all health services, direct and indirect (i.e., medical costs, disability costs, workers' compensation costs, productivity issues, etc.). They are looking at the total impact of health costs on the life and functionality of the individual. At the same time, increasingly better informed consumers with direct access to new information sources, such as the world wide web, are wanting an increased say about the type, extent, and nature of the services they receive. Understanding these trajectories will allow individuals to develop their own services as providers, as well as point to the ways that one can establish a new partnership with managed care companies, interested in outcomes, clinical effectiveness and profiling in a world that increasingly demands more evidence about practices and practitioners than ever before.






David J. M. Whitehouse

Original Work Citation

Whitehouse, D. J. M. (1997, July). Cooperating with managed care or sleeping with the enemy: Mental health care in the 90s. Plenary presented at the 2nd EMDR International Association Conference, San Francisco, CA



“Cooperating with managed care or sleeping with the enemy:  Mental health care in the 90s,” Francine Shapiro Library, accessed October 27, 2020,

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