Doctors' profit margins are shrinking, and the managed-care systems are using incentives to group people together.

The governor told Frist that based on his findings he was going to take the $3 billion and put it into a total managed-care system.

The city's insurance carrier uses a managed-care system for mental health that requires therapists to file detailed written reports to justify using benefits.

"There are some doctors who actually prefer the managed-care system," she said.

One of those issues, he said, is "reforming" the managed-care system.

They require sustained intervention by skilled professionals who, under the current managed-care system, are overextended.

Most hospitals and health care systems are now focused on a transition from a fee-for-service to a managed-care system.

"The main issue is how much more hassle and harassment a physician is going to have to endure under the current managed-care system."

But now comes evidence that managed-care systems are bending to satisfy both patients and doctors with modifications in at least one key area, payments to physicians.

It is also a matter of trying to maneuver children on Medicaid into a managed-care system.