The underlying rationale of managed care is that cutting access to health services cuts health costs. Aiming to control burgeoning expenses, businesses use HMOs, which generally restrict insurance coverage of health services, especially mental health care, keep patients away from specialists and away from expensive name-brand drugs, and refuse as many claims as possible.

Contrast this with the coverage at financial services giant Merrill Lynch & Co., which acts as its own insurer. They chose to focus on clinical excellence: insistence on the best possible treatment, cost non-withstanding; brand-name and generic drugs available at the same copay; the same coverage for psychiatric ailments as for other illnesses; and no arbitrary limits on benefits such as inpatient psychiatric hospital care.

Which is cheaper? Ultimately, the Merrill approach - at about 75% of the average healthcare cost per employee spent by other large employers. The overall costs to Merrill have also dropped slightly every year, for the last 4 years.

Merrill focuses on early detection and expert, prompt and thorough treatment, using on-site clinics, and quality monitoring software developed by Active Health Management Inc. The software coordinates information from throughout the health care process in order to flag mistakes and misdiagnoses, prompt  follow up on early symptoms of disease, and cue inquiry when patients don't fill prescriptions. [A common lapse for those with depression, as with other chronic diseases.]

Large claims are characteristic of late-stage illness, and Merrill's system has led to a decided drop in large claims (of over $50,000). Fewer large claims have saved them an estimated $6.5 million over five years - and saved their employees time, trouble, and perhaps many lives.

Following Merrill's great success, several other corporations have inaugurated Active Health Management's quality-monitoring system, and the federal government will begin a pilot run using the system this summer.