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Direct contracting is gaining popularity as employers seek new ways to control health care costs. Eliminating third parties like HMOs and PPOs can create long-term savings, but it's much more complicated than many hospitals realize, experts warn.
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The managed competition approach was originated by Alain Enthoven, a professor at the Stanford University Graduate School of Business, in the late 1970s, and has since been refined by Enthoven and a group of colleagues meeting in Jackson Hole, Wyoming. This outline was presented by Enthoven at hearings on cost control in health care reform held by Senator Edward Kennedy (D-MA) in December 1992.
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