Final answer:
Managed care optimizes healthcare efficiency through various models like fee-for-service and HMOs, addressing challenges like adverse selection and improving delivery in response to demand.
Step-by-step explanation:
Managed care refers to various methods of streamlining health services to improve the quality and efficiency of healthcare. In the face of an aging population and increased healthcare demand, providers in the U.S. have sought ways to optimize healthcare delivery. This led to a trend of hospital mergers in the 1990s, while today, innovations like telemedicine and artificial intelligence enhance care efficiency. In terms of financing, there are significant differences between a fee-for-service system and health maintenance organizations (HMOs). The fee-for-service model compensates providers based on service costs, whereas HMOs pay providers a set fee per patient, promoting resource allocation within patient care. These systems aim to address issues like adverse selection, where asymmetric information in insurance markets creates a challenge for insurers.