BUS FPX 4121 Assessment 2 External Forces and Ethical Challenges

BUS FPX 4121 Assessment 2 External Forces and Ethical Challenges

External Forces and Ethical Challenges

Managed care is a type of health coverage that highlights cost reduction and preventive care. Managed care plans typically use networks of providers. These networks mainly include health maintenance organizations (HMOs) (Centers for Disease Control and Prevention, 2022).

This paper entails recent statistical evidence for managed care and factors influencing ethical healthcare management practices. At the same time, the last section focuses on the strategies to prevent these challenges and maintain compliance with regulations.

Market Forces Affecting Managed Care

Market forces are the economic forces that are crucial in determining the supply and demand for goods and services. Market forces can affect managed care in a number of ways, including:


Managed Care Organizations (MCOs) compete with each other to invite their members (Centers for Disease Control and Prevention, 2022). This competition often leads to better benefits and more innovative care delivery models. This can also result in the negative marketing of a company that fails to fulfill the insurance of the patients (Namburi & Tadi, 2020).

Government Regulation

The government also plays a role in shaping the managed care market through regulations such as the Affordable Care Act (ACA). The ACA has expanded access to health insurance. It now includes standards for managed care plans that are required to cover essential health benefits. Namburi and Tadi (2020) state that enrollment in HMOs grew as an effect of ACA, from 84.8 million in 2014 to 89.3 million in 2015. PPOs, however, continued to increase after the 1990s as a result of market trends.

BUS FPX 4121 Assessment 2 External Forces and Ethical Challenges

Since the adoption of Medicare and Medicaid in the 1960s, the ACA’s enactment was thought to have had a substantial influence on the American healthcare system. MCOs are now responsible for the services that they offer to their members. Managed care plans were observed to be elevated in the healthcare industry due to the Affordable Care Act (Namburi & Tadi, 2020).

Ethical Challenges in Managed Care

The drive to save expenses is an ethical challenge for all of the MCOs. As initiatives, MCOs must find methods to reduce expenses and stay in business. One strategy is to restrict services. However, this can make it more difficult for patients to get the essential treatment. The most affected by this strategy will be the patients with chronic issues.

Another strategy is to bargain with providers for reduced fees. This pressurizes them to see more patients in less time. It can also make them utilize less expensive supplies and equipment. The standard of care might suffer as a result. MCOs must ensure their cost-cutting strategies do not harm patients and maintain transparency. They must also make sure to strike a balance between cost-cutting and high-quality treatment (Namburi & Tadi, 2020).

Another ethical challenge in managed care is managing the privacy of Patient Health Information (PHI). MCOs have access to patient’s sensitive information. These can range from details about patients’ conditions and prescription medications to treatments. The PHI is private and sensitive information (Chiruvella & Guddati, 2021).

The MCOs must take precautions to keep it safe from unauthorized access. MCOs can manage this ethical issue by creating robust privacy and security policies and procedures. The MCOs must ensure compliance with HIPAA regulations. The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that protects patient information (USA Managed Care Organization, n.d.).

Strategies to Address Ethical Challenges in Managed Care

There are a number of strategies that MCOs can use to prevent ethical challenges. One of these strategies is developing and implementing a strong code of ethics. A code of ethics must articulate the MCO’s values. It should also direct healthcare staff to make ethical decisions. The code of ethics should be developed with input from staff and other stakeholders. Furthermore, it should also be reviewed by managers and updated regularly (American Institute for Healthcare Management, n.d.).

Another strategy is to monitor and audit compliance with the code of ethics and other policies. MCOs should regularly monitor and audit compliance with their code of ethics. This will help to identify and address potential problems before they cause harm (Kachoria et al., 2023).

The strategies above assist MCOs in staying in compliance with external laws like the ACA and HIPAA. A robust code of ethics will support MCOs in adhering to the ACA’s requirements. It will mandate that they give members plain and straightforward information about their coverage options and benefits using HIPAA regulations.


Managed Care Organizations (MCOs) provide a cost-effective way to care for the patients. However, MCOs must comply with the rules of ACA and HIPAA to avoid any ethical dilemmas.   


American Institute for Healthcare Management. (n.d.). Ethical issues in managed care – American Institute for Healthcare Management.



Centers for Disease Control and Prevention. (2022, August 8). Managed care – Health, United States. www.cdc.gov.


Chiruvella, V., & Guddati, A. K. (2021). Ethical issues in patient data ownership. Interactive Journal of Medical Research, 10(2), 1-9, e22269.


Kachoria, A. G., Sefton, L., Miller, F., Leary, A., Goff, S. L., Nicholson, J., Himmelstein, J., & Alcusky, M. (2023). Facilitators and barriers to care coordination between Medicaid accountable care organizations and community partners: Early lessons from Massachusetts. Medical Care Research and Review, 107755872311680.


Ludomirsky, A. B., Schpero, W. L., Wallace, J., Lollo, A., Bernheim, S., Ross, J. S., & Ndumele, C. D. (2022). In Medicaid managed care networks, care is highly concentrated among a small percentage of physicians. Health Affairs, 41(5), 760–768.


Namburi, N., & Tadi, P. (2020). Managed Care Economics. PubMed; StatPearls Publishing.


USA Managed Care Organization. (n.d.). HIPAA. USA Managed Care Organization. Retrieved October 22, 2023, from



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