Through utilization review (UR), managed care organizations (MCOs) monitor and alter physician treatment decisions. We show that the value of UR depends on physician incentives. Not surprisingly, when physicians have incentives to significantly overtreat patients, UR can improve social welfare...

An accidental healthcare system -- Paging doctor Welby -- Therapy for an ailing health economy -- The managed care prescription -- Self-help -- The quality revolution -- Mending the safety net -- Reviving the American healthcare system