Answer :
Final answer:
Managed care firms have reduced liability by adopting systems like Health Maintenance Organizations (HMOs) that limit the amount of care provided, and technology such as EMRs to control cost increases.
Explanation:
To reduce their liability brought about by the challenges of new technology offering only small beneficial effects, managed care firms have strategized in various ways. One such strategy has been to shift the focus of health care to the incentives of providers rather than consumers. This has been made possible primarily through health maintenance organizations (HMOs). HMOs function by providing health care on a fixed amount per person enrolled in the plan, regardless of the number of services provided. This system creates an incentive for healthcare providers to limit the amount of care provided, thus reducing the moral hazard problem, while also protecting providers from excessive demand.
Furthermore, the adoption of technology such as electronic medical records (EMRs) has helped to control increases in healthcare costs and administration expenditure. In today's healthcare landscape, many doctors are paid with a combination of managed care and fee-for-service.
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