The incentive for a managed care organisation is to maintain the health of its enrolled population and to minimise expenditure on health treatment services.

Therein lies the origin of the name of the most common and most talked about form of US managed care, the HMO.

Andrea Steiner and Ray Robinson summarise the role of HMOs as follows: 'All HMOs offer care to defined populations, who accept restricted choice. They transfer risk to providers via capitation-based funding and hence combine financial and resource management.'

Source: Smith J. Managed Care: a route map for exploring health policy changes. New Face of the NHS. Royal Society of Medicine Press. London, 1998.