␣ ␣ ␣ ␣ ␣ ␣ ␣ 57
Employee
Reactions to
Managed Care
E. Jose Proenca
Employee reactions to managed care
get less managerial and research
attention than organizational
reactions to it. This article examines
the manner in which health services
employees react to managed care and
finds that their reaction affects
perceived job insecurity,
organizational commitment, and job
satisfaction. Organization-based selfesteem, role conflict, and supervisory
support moderate these relationships.
The managerial implications of these
findings are discussed.
Managed care, the philosophy used by health care
purchasers to influence patient care decisions, costs,
and quality,1 is becoming the predominant paradigm
in health care delivery in the United States.2 HMO
membership grew over 250 percent between 1983 and
1991 and the number of current enrollees exceeds 50
million.3,4 Between 1990 and 1994, Medicaid enrollees
in managed care plans increased from 2.3 million to
7.8 million and Medicare enrollees grew by over a
million.5 In 1996, enrollment in Medicaid managed
care plans exceeded 50 percent among persons eligible for Aid to Families with Dependent Children
(AFDC) and AFDC-related programs.6
Managed care emphasizes assessment of the appropriateness of care prior to its provision, and the control of access to, type, and amount of care provided. It
has created much turbulence in the health care environment. Inpatient days and discharges have declined dramatically, as has the average length of stay
(LOS).4 Health services organizations are being held
accountable for the health status of enrolled populations. Providers are increasingly expected to care for
patients on a risk-sharing basis.
In the rush to adapt to the demands of managed
care, managerial and research attention have focused
primarily on organizational reactions to managed
care. Health care organizations have reengineered
processes, redesigned jobs, and restructured and
downsized in an attempt to cut costs and increase productivity. Research studies have documented the
emergence of alternative delivery settings; the use of
practices such as precertification, case management,
gatekeeping, provider profiling, and clinical pathways; and the formation of alliances and integrated
networks to provide a continuum of care.7–9
In contrast, very little is known about the manner in
which health services employees react to managed
care. Few, if any, studies have examined the impact of
managed care on the employees of health care organizations. This is unfortunate, since employee perceptions of environmental forces can affect their attitudes, behaviors, and performance, all of which
ultimately impact organizational effectiveness.10 An
Key words: employee attitudes, health services employees, job
insecurity, managed care, role conditions, self-esteem
Health Care Manage Rev, 1999, 24(2), 57–70
© 1999 Aspen Publishers, Inc.
E. Jose Proenca, Ph.D., is Assistant Professor, Department of
Health and Medical Services Administration, School of Business
Administration, Widener University, Chester, Pennsylvania.
58
HEALTH CARE MANAGEMENT R EVIEW/SPRING 1999
environmental force that is perceived as a threat can
cause stress, anxiety, and job insecurity among employees.11 Large-scale layoffs, such as the ones currently occurring in the health care industry, can make
workers feel demoralized, suspicious, and helpless.12
Even layoff survivors are affected, frequently exhibiting job insecurity, anger, and guilt.13 Such reactions
can lead to reduced organizational commitment, lack
of trust, low intrinsic motivation, poor job satisfaction, and impaired performance among employees.13,14 Negative attitudes may also reduce employee
commitment to organizational strategy, leading to a
withholding of effort and impeding strategy implementation.15
The research on which this article is based examines
employee reactions to managed care. It seeks to determine if the manner in which managed care is perceived by health care workers is related to the level of
job insecurity, job satisfaction, and organizational
commitment that they experience. It conceptualizes
and tests the mediating effect of job insecurity on the
relationships between perception of managed care
and employee commitment and satisfaction. Finally,
it investigates the moderating effects of organizationbased self-esteem, role conflict, and supervisory support on these relationships. Managerial implications
for health services organizations are discussed.
THEORY AND HYPOTHESES
The theoretical model developed and tested in this
study is based on the premise that the attitudes and
behaviors of individuals are influenced by their perception and judgment of the environment. 16 The
model proposes that health services workers respond
to an environmental issue, such as managed care, by
categorizing it as an opportunity or a threat. Such categorization produces affective reactions and influences the level of job insecurity, job satisfaction, and
organizational commitment experienced by these individuals. Job insecurity is posited to serve as a mediator in this model. Perception of managed care is
related to job satisfaction, and organizational commitment indirectly through job insecurity. In other
words, perception of managed care affects job insecurity which, in turn, affects satisfaction with the job
and commitment to the organization. Furthermore,
the model also proposes that these relationships are
moderated by organization-based self-esteem and
role conditions. Specifically, the strength of the relations between perception of managed care and employee reactions to it depends upon the level of selfesteem, role conflict, and supervisory support. The
relationships in the model are illustrated in Figure 1.
Support for the proposed relationships can be
found in the literature. For instance, individuals who
perceived environmental conditions as worsening
were found to experience higher levels of job insecurity, which in turn led to lower job satisfaction, reduced organizational commitment, and greater psychological distress.17–19 People who labeled external
events as opportunities exhibited lower anxiety,
higher self-efficacy, and better performance than
those who viewed them as threats.20,21 The model and
hypotheses are developed in greater detail in the sections that follow. The perception and categorization
of environmental issues such as managed care are discussed first, followed by the hypothesized effects of
FIGURE 1
A MODEL OF EMPLOYEE REACTIONS TO MANAGED CARE
OBSE
Role Conflict
Supervisory Support
OBSE
Perceptions of
Managed Care
Job Insecurity
Job Satisfaction
Organizational Commitment
Employee Reactions to Managed Care␣ ␣ ␣ ␣ ␣ ␣ ␣ 59
such categorization on job insecurity, job satisfaction,
and organizational commitment. Next, the role of job
insecurity as a mediator is discussed and hypotheses
are developed to test this mediating effect. Finally, a
rationale for the moderating effects of self-esteem and
role conditions is provided, leading to a hypothesis
that will test for the presence of such effects.
aged care as an opportunity. To other employees, particularly those who work in inpatient settings or those
with highly specialized skills, managed care may lead
to reduced control, prestige, and income. Such individuals will perceive managed care as a threat. Some
workers, of course, may see managed care as neither
an opportunity nor a threat, placing it in the middle of
the continuum.
Employee Perception of Managed Care
According to cognitive theory, individuals interpret and respond to environmental issues by first categorizing them on the basis of certain attributes.22 Categorization helps reduce the complexity of the
environment and influences the way a person reacts
and responds to environmental forces.23 For instance,
once an issue is categorized, any subsequent information on it is perceived in conformity with category attributes. Ambiguous information about the issue is
reconstructed in a category-consistent fashion. Missing information is inferred to fit category values.
Dutton and Jackson suggest that environmental issues are most frequently categorized on a “threat–opportunity” continuum.23 Where an issue is placed on
this continuum depends upon three attributes: (1) the
degree to which it is seen as negative or positive, (2)
the potential for loss or gain associated with it, and (3)
the extent of control an individual has over it. An environmental event or change is perceived as an opportunity if it represents a potential gain, has a positive
image, or is within the control of the individual. On
the other hand, negative or uncontrollable issues that
are likely to result in losses are perceived as threats.
People categorize environmental issues according to
their individualized schema or prior knowledge
structures, 24 and hence will differ in the degree of opportunity or threat they assign to a particular environmental issue.
Managed care has engendered cost containment activities such as service cutbacks, migration of inpatient services to outpatient settings, replacement of
specialized, high-cost employees with multiskilled,
less expensive ones, and “gatekeeper” oversight of
specialist services. It has also led to practices like standardized treatment protocols, multidisciplinary
teams, and information-driven performance evaluation. To some employees, such as those who provide
primary care, who manage information systems, or
who possess multiple skills, the activities associated
with managed care are likely to represent a positive
development. These employees will perceive man-
Employee Reactions to Managed Care
Categorization of environmental issues produces
affective reactions. 24 The perception of threats in the
environment can raise the level of job insecurity and
lower the level of job satisfaction and organizational
commitment felt by employees.17–21 People strive for
control and predictability in their lives. According to
Schein, employees form implicit agreements with
their employer organizations that specify what each
party expects to give to and receive from the other.25
Such psychological contracts with employers provide
employees with a sense of control and stability. Environmental forces that jeopardize this sense of control
induce strong feelings of job insecurity among employees.14
Job insecurity is the perceived powerlessness to
maintain desired continuity in a job situation.10,14 The
level of job insecurity experienced by an employee is a
function of how severe the anticipated job discontinuity is and how powerless he or she is to prevent it.10
Severity is determined by scope and probability of occurrence. The break in continuity expected by the individual could be permanent or temporary, and could
encompass the entire job or just some of its valued features. Discontinuity in the total job could occur
through termination, temporary layoff, demotion to
another job, or reduction of work hours. Discontinued
features may include autonomy, peer relations, customer contacts, and career advancement. Employees
who categorize an environmental issue, such as managed care, as a negative, loss-producing, uncontrollable event are more likely to expect a violation of
their psychological contract than those who see it in a
positive light.26 They will experience a higher level of
job insecurity.27
Threatening conditions in the environment affect
employee attitudes as well. 28,29 Jackson and Dutton
suggest that the perception of opportunities in the environment is associated with feelings of autonomy
and personal competence while the perception of
threats is associated with feelings of being con-
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HEALTH CARE MANAGEMENT R EVIEW/SPRING 1999
strained by others, of low personal competence, and
of a lack of personal control.30 The demands of managed care are creating new priorities in health care organizations and certain roles that were considered
critical in the fee-for-service environment are in less
demand now. Employees who see managed care as a
threat are likely to feel that their jobs are being rendered obsolete or superfluous by its low-cost, primary
care orientation. They will perceive a poorer fit between what they do and what the organization values
than employees who see managed care as an opportunity. Individuals who have perceptions of high person–organization fit experience more positive and
less negative affect, and have more positive job attitudes.31,32 Individuals who perceive a poor fit experience lower job satisfaction and organizational commitment.33 Thus, employees who see managed care as
a threat will have lower levels of job satisfaction and
organizational commitment.
On the basis of the preceding discussion, it may be
hypothesized that:
Hypothesis 1: Health services employees who perceive
managed care as more of a threat than an opportunity will
experience higher levels of job insecurity, and lower levels of job
satisfaction and organizational commitment.
The Mediating Effect of Job Insecurity
Baron and Kenny describe a mediator variable as
“the generative mechanism through which the focal
independent variable is able to influence the dependent variable of interest”34(p.1173) and suggest that “mediators explain how external physical events take on
internal psychological significance.”34(p.1176) They note
that a variable acts as a mediator to the extent that it
accounts for the relationship between a predictor and
the criterion of interest. The model in this study proposes that perceptions of managed care influence employee attitudes through an intervening mediator,
which is job insecurity. According to Baron and
Kenny, a mediating effect exists when the following
conditions are met: (1) the independent variable is significantly related to the presumed mediator variable,
(2) the independent variable is significantly related to
the dependent variable, (3) the mediator variable is
significantly related to the dependent variable, and
(4) a previously significant relationship between the
independent and dependent variables is no longer
significant when the mediator is controlled.34
The previous section addressed the first two of the
four conditions necessary to demonstrate the mediat-
ing effect of job insecurity in the relationship between
employees’ perception of managed care and their
level of job satisfaction and organizational commitment. Hypothesis 1 will test if the independent variable, perception of managed care, is significantly related to the mediator variable, job insecurity
(condition 1). It will also test if perception of managed
care is significantly related to the dependent variables, job satisfaction and organizational commitment
(condition 2). The rest of this section addresses conditions 3 and 4.
When employees enter into a psychological contract with their employers, they exchange their effort,
time, and loyalty for rewards and stable employment.
A sense of affective and attitudinal attachment to the
organization develops when employees perceive this
exchange to be equitable.35 Employees who are attached to the organization exhibit high levels of commitment, satisfaction, and trust.36 Feelings of job insecurity can reduce employee attachment to the
organization. Employees who perceive important job
features or even the job itself to be at risk are likely to
feel that the organization is abrogating the psychological contract.14 Social exchange theory suggests
that in such situations employees reduce their commitment to the contract as well, thereby becoming less
attached to the organization. 37 As attachment decreases, so does organizational commitment.
The reduced organizational attachment associated
with job insecurity can also be expected to lower the
level of satisfaction felt by employees. Job satisfaction
is an affective response to job features.38 The perceived presence of valued features enhances the degree of job satisfaction.39 Since job insecurity reflects
an inability to retain important job features, it is likely
to result in lower job satisfaction among employees. It
can therefore be hypothesized that there will be negative relationships between job insecurity and job satisfaction, and between job insecurity and organizational commitment. This hypothesis, which is stated
below, will test the third condition necessary to demonstrate the mediating effect of job insecurity.
Hypothesis 2: Health services employees who experience higher
levels of job insecurity will exhibit lower job satisfaction and
lower organizational commitment.
According to Reynolds, employees’ perceptions of
the environment are related to their attitudes indirectly, whereby the perceived event is associated with
changes in job conditions or employment status, and
these mediating changes result in changes in atti-
Employee Reactions to Managed Care␣ ␣ ␣ ␣ ␣ ␣ ␣ 61
tudes. 40 This perspective suggests that employee perceptions of managed care will influence job satisfaction and organizational commitment by way of a
mediating change in the level of job insecurity. Perception of managed care as a threat precipitates anxiety about the psychological contract and job longevity, and this uncertainty and job insecurity leads
employees to be less satisfied with their jobs and less
committed to their organizations.14 Similar relationships, wherein environmental perceptions affected
job insecurity, which then influenced satisfaction and
commitment, have been reported in the literature. 17–19
Although the perception of managed care is expected to be significantly related to job satisfaction
and organizational commitment, these attitudes are
not likely to be directly affected by it; rather, perception of managed care will influence job insecurity,
which in turn will affect satisfaction and commitment.
If job insecurity does account for the relationships between perception of managed care and employee satisfaction and commitment, then its addition to the
model as a predictor of each attitude should render
insignificant any previously significant relations between perception of managed care and the two attitudes. Such a result would meet the fourth condition
for demonstrating the mediating effect of job insecurity. The following hypothesis will test for this condition.
Hypothesis 3: When job insecurity is controlled, the significant
relationships that perception of managed care has with job
satisfaction and with organizational commitment will no
longer be significant.
In sum, this study hypothesizes that job insecurity
will mediate the effect of employee perception of
managed care on job satisfaction and organizational
commitment. Hypotheses 1, 2, and 3 will test for the
presence of this mediating effect.
The Moderating Effects of Organization-Based
Self-Esteem and Role Conditions
While mediators specify the mechanism by which a
given effect occurs, moderators specify the conditions
under which the effect occurs.41 According to Baron
and Kenny, a moderator is a “variable that affects the
direction and/or strength of the relation between an
independent or predictor variable and a dependent or
criterion variable.”34(p.1174) They state that a moderating effect is different from a mediating effect in that
moderators always function as independent variables
whereas mediators shift roles from effects to causes
depending on the focus of the analysis. A variable is
considered to be a moderator if the relationship between two other variables is a function of the level of
the moderator variable.42 In the proposed model, the
relations between employees’ perception of managed
care and their reactions to it are deemed to be contingent upon the level of self-esteem, role conflict, and
supervisory support. Specifically, the level of self-esteem felt by employees will determine the extent to
which variation in the perception of managed care is
associated with variation in job insecurity. As well,
the level of self-esteem, role conflict, and supervisory
support experienced by employees will determine the
degree to which job insecurity affects job satisfaction
and organizational commitment. The test for moderation is based on the fact that the moderator interacts
with the independent variable to have an impact on
the level of the dependent variable. A moderation effect exists when this interaction is significant.34 Hypotheses to test these effects are developed next.
Individual reaction to environmental forces varies
as a function of organization-based self-esteem.43 Selfesteem is the degree to which employees perceive
themselves to be important, meaningful, effective,
and worthwhile members of the employing organization.44 It reflects a sense of self-perceived value and
competence that is derived from the individual’s role
within the organization. Employees with high self-esteem believe they are capable of satisfying their needs
through their organizational roles. When environmental conditions are threatening, employees with
low self-esteem suffer more than their high self-esteem counterparts.45 Brockner suggests that people
with low self-esteem are more behaviorally plastic
than those with high self-esteem.46 They pay more attention to external cues, are more responsive to environmental forces, and are more affected by them in
terms of attitudes and behaviors. Brockner also notes
that low self-esteem employees experience more externally induced uncertainty and allow negative
events in one area to generalize to other domains of
their job.47
According to Ganster and Schaubroeck, not only
are low self-esteem employees more susceptible to
stressors, such as the threat of managed care, than
high self-esteem employees, but they are also more
passive in coping with these stressors.48 Compared to
individuals with high self-esteem, those with low selfesteem react more strongly to negative cues in the environment and take fewer constructive actions to
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HEALTH CARE MANAGEMENT R EVIEW/SPRING 1999
mitigate their effects. Among employees who perceive managed care to be a threat, those with low selfesteem are more likely to feel anxious about it and associate it with a potential discontinuity in their job or
its features. They are more likely than their high selfesteem peers to translate the negative press on managed care to their own job context. High levels of selfesteem, on the other hand, act as buffers against poor
environmental conditions.45 Thus self-esteem can be
expected to moderate the relationship between employees’ perception of managed care and their level of
job insecurity.
Hypothesis 4: Self-esteem will moderate the relationship
between perception of managed care and job insecurity: Low
self-esteem employees will react more negatively than high selfesteem employees to the perception that managed care is a
threat, with higher job insecurity as the outcome.
The uncertainty associated with their continued
role in the organization produces stress and anxiety in
employees with high job insecurity. According to
Schuler, ability allows individuals to cope with jobrelated stressors and moderates the effect of such
stressors on employee responses.49 The feelings of
competence and personal worth associated with selfesteem are likely to have a similar buffering effect on
stressors.45 Pierce, Gardner, Dunham, and Cummings
found that self-esteem moderated the effects of ambiguity and overload on employee satisfaction.50 It is
likely that self-esteem will also moderate the relationship between job insecurity and the organizational
commitment and job satisfaction of employees. Given
their higher reactivity to negative cues46 and their
greater passivity about changing them,48 low self-esteem employees are likely to respond more negatively
to job insecurity than high self-esteem employees, exhibiting lower levels of commitment and satisfaction.
Role conditions, such as role conflict and supervisory support, affect the level of anxiety and uncertainty in employees. Role conflict occurs when individuals play two or more organizational roles
simultaneously, with the performance of one precluding the performance of others.51 Health services employees often experience conflicts between their clinical role as patient advocate and their organizational
role of cost containment. Conflicting role requirements increase the level of uncertainty and reduce the
sense of control felt by employees.14 High role conflict
also creates anxiety and stress, exacerbating the effects of job insecurity and leading to a further reduc-
tion in organizational commitment and job satisfaction among insecure employees.
Supervisory support occurs through supervisor behaviors that provide goal clarity, work facilitation,
personal support, role support, and protection. Such
behaviors provide employees with a sense of direction and empowerment that can mitigate the sense of
helplessness associated with job discontinuities. Supportive supervisors can help employees to better understand the impact of managed care on their jobs and
to prepare for any negative consequences. They can
also prevent rumors and speculation about managed
care from having adverse effects on employee attitudes. Employees who perceive a high level of supervisory support are more likely to believe that they will
be protected from job-related losses.52 Social exchange
theory suggests that employee inferences about
strong supervisory support will contribute to their
own attachment to the organization.53 Such attachments will help maintain high levels of organizational
commitment and job satisfaction. While a supportive
supervisor can buffer employees against the negative
effects of job insecurity, a nonsupportive supervisor
can do the opposite by increasing employee stress,
anxiety, and powerlessness.
Hypothesis 5: Self-esteem, role conflict, and supervisory
support will moderate the relationships that job insecurity has
with job satisfaction and organizational commitment:
Employees who experience low self-esteem, high role conflict,
and low supervisory support will react more negatively to job
insecurity, with lower satisfaction and commitment as the
outcome.
METHODS
Data
Data to test the hypotheses were collected through
a survey of employees from five hospitals in a large
metropolitan area in the northeastern United States.
Four of the hospitals provided general medical and
surgical services and one specialized in children’s services. Three hundred (300) questionnaires were distributed, of which 198 were returned and 182 were
complete in all respects. Seventy percent of the respondents had direct patient care jobs while the rest
did administrative work. The former group included
nurses, dietitians, laboratory and radiology technicians, and other clinical occupations. The respondents
had, on average, 6.4 years of organizational tenure
Employee Reactions to Managed Care␣ ␣ ␣ ␣ ␣ ␣ ␣ 63
and 14 years of work experience. Eighty-eight percent
(88%) had 2 or more years of college education.
Measures
Perception of Managed Care
A 5-item measure assessed employee perception of
managed care (e.g.,”To what extent is managed care a
threat or opportunity to your department?”). Respondents indicated, on a 5-point scale ranging from 1
“major opportunity” to 5 “major threat,” the degree of
opportunity or threat they associated with managed
care. Perception of managed care was calculated as
the mean of the five item scores, with a higher mean
score signifying that managed care was more of a
threat than an opportunity. Coefficient alpha for this
measure was .78.
Job Insecurity
Job insecurity was assessed with a measure developed by Ashford, Lee, and Bobko. 14 Their measure
recognizes that job insecurity is a function of the potential loss of the job itself, the potential loss of important job features, and powerlessness to prevent the
loss. Accordingly, it has three subscales to assess the
three components. Responses to these three subscales
are combined multiplicatively to arrive at a measure
of job insecurity.14
Potential loss of the job itself was measured
through a 6-item subscale that asked about the likelihood of changes affecting the total job (e.g., “How
likely is it that you may lose your job?”). Potential loss
of valued job features was measured as the product of
(1) the importance of specific job features, and (2) the
likelihood that these features will change for the
worse. An 8-item subscale with job features like autonomy, scheduling freedom, and co-worker relations
was used. Responses on both subscales ranged from
1, “very unlikely,” to 5, “very likely.” On the second
subscale, responses for importance of job features
ranged from 1, “no importance,” to 4, “great importance.”
Powerlessness was measured through a 5-item
subscale using response formats ranging from 1
“strongly agree” to 5 “strongly disagree.” A sample
item is “I understand this organization well enough to
control things that affect me or my job.” Coefficient
alphas for the total job, job feature, and powerlessness
subscales were .85, .83, and .73, respectively. Job insecurity scores were computed by multiplying the powerlessness score with the sum of scores on the other
two subscales.
Self-Esteem
Self-esteem was measured with a 10-item instrument developed by Pierce, Gardner, Cummings, and
Dunham.44 Respondents were asked to indicate, on a
5-point scale, the degree to which they agreed or disagreed with items such as “I feel I can make a difference in my organization” and “I am taken seriously in
this organization.” The self-esteem score was calculated as the mean of the 10 items. Coefficient alpha for
self-esteem was .85.
Role Conditions: Role Conflict and Supervisory
Support
Subscales from the Michigan Assessment of Organizations survey were used to assess role conflict and
supervisory support.54 Two items measured role conflict (e.g., “To satisfy some people on my job, I have to
upset others”). A 6-item subscale on personal support, goal clarity, work facilitation, and other supervisory behaviors was used to measure supervisory support (e.g., “My supervisor would protect my interests
in this firm”). Both measures used a 5-point response
format ranging from 1, “strongly disagree,” to 5,
“strongly agree.” Coefficient alphas for role conflict
and supervisory support were .75 and .88, respectively.
Organizational Commitment
The 9-item Organizational Commitment Questionnaire developed by Mowday, Steers, and Porter was
used to measure commitment36 (e.g., “I am willing to
put in effort beyond that normally expected in order
to help this organization be successful”). The 7-point
response format ranged from “strongly disagree” to
“strongly agree.” Coefficient alpha was .90.
Job Satisfaction
The 5-item satisfaction scale of the Job Diagnostic
Survey was used to measure job satisfaction
(e.g.,”Generally speaking, I am very satisfied with
this job”).55 The response format ranged from 1,
“strongly disagree” to 7, “strongly agree.” Coefficient
alpha was .77.
RESULTS
Table 1 lists the means, standard deviations, and
correlations of the study variables. The respondents
were just as likely to perceive managed care as an opportunity as they were to perceive it as a threat. On
average, they reported a low level of job insecurity
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HEALTH CARE MANAGEMENT R EVIEW/SPRING 1999
TABLE 1
DESCRIPTIVE STATISTICS AND CORRELATIONS
Variables
1.
2.
3.
4.
5.
6.
7.
Perception of managed care
Job insecurity
Organizational commitment
Job satisfaction
Self-esteem
Role conflict
Supervisory support
Means
SD
1
2
3
4
3.46
48.43
4.86
4.62
3.89
3.35
3.73
0.85
19.13
1.25
1.24
0.50
0.96
0.78
.45**
–.15*
–.15*
–.14*
.12
–.23**
–.48**
–.45**
–.40**
.10
–.46**
.62**
.44**
–.15*
.54**
.47**
–.16*
.49**
5
–.03
.47**
6
–.05
*p < .05
**p < .01
and fairly high levels of organizational commitment,
self-esteem, and supervisory support. Regression
analyses were performed to test the relationships between employee perception of managed care and
their levels of job insecurity, job satisfaction, and organizational commitment (Hypothesis 1). The results
are presented in Table 2 and indicate that Hypothesis
1 was supported. The degree to which managed care
was perceived as more of a threat than an opportunity
had a significant positive relationship with job insecurity (p < .01), and significant negative relationships
with job satisfaction (p < .05) and organizational commitment (p < .05). Employees who perceived managed care as a threat felt more insecure in their jobs
and experienced lower levels of job satisfaction and
organizational commitment than employees who perceived it as an opportunity.
Hierarchical multiple regression analyses were performed to test for the mediating effect of job insecurity on the relationships between perception of managed care and the levels of job satisfaction and
Employees who perceived managed care as a
threat felt more insecure in their jobs and
experienced lower levels of job satisfaction and
organizational commitment than employees
who perceived it as an opportunity.
TABLE 2
RESULTS OF REGRESSION ANALYSES: RELATIONSHIPS BETWEEN PERCEPTION OF MANAGED CARE
AND JOB INSECURITY, JOB SATISFACTION, AND ORGANIZATIONAL COMMITMENT
Criterion/Predictor
Job insecurity
Perception of managed care as a threat
Job satisfaction
Perception of managed care as a threat
Organizational commitment
Perception of managed care as a threat
*p < .05
**pp < .01
β
R2
.45**
.22
F
46.51**
4.14*
–.15*
.02
–.15*
.02
4.04*
Employee Reactions to Managed Care␣ ␣ ␣ ␣ ␣ ␣ ␣ 65
organizational commitment in employees. According
to Baron and Kenny, three regression equations must
be estimated to test for mediation.34 The first equation
has to show that the independent variable (i.e., perception of managed care) is related to the mediating
variable (i.e., job insecurity). As indicated in Table 2,
perception of managed care was significantly related
to job insecurity (p < .01). Thus, the first requirement
for mediation was supported. The second equation
must demonstrate that the independent variable (perception of managed care) is related to the dependent
variables (job satisfaction and organizational commitment). This requirement was also supported. As
shown in Table 2, perception of managed care was
significantly related to both job satisfaction (p < .05)
and organizational commitment (p < .05).
Finally, the dependent variables (job satisfaction
and organizational commitment) must be regressed
on both the independent variable (perception of managed care) and the mediating variable (job insecurity).
Mediation is demonstrated if the presumed mediator
is related to the dependent variables when these variables are regressed on both the independent variable
and the mediating variable. Furthermore, if job insecurity mediates the relationships between perception
of managed care and the levels of job satisfaction and
organizational commitment, then these relationships
must diminish or disappear when job insecurity is
held constant.
Table 3 presents the results of the two hierarchical
regression analyses in which job satisfaction and organizational commitment were regressed on job insecurity (entered in the first step) and perception of
managed care (entered in the second step). First, the
results indicate that job insecurity was significantly
and negatively related to both job satisfaction (p < .01)
and organizational commitment (p < .01). These findings support Hypothesis 2. Second, with job insecurity in the model, the relationships between perception of managed care and the levels of job satisfaction
and organizational commitment were no longer significant. Whereas in the second regression equation
(Table 2) the standardized coefficients for perception
of managed care were significant for both job satisfaction (beta = –.15, p < .05) and organizational commitment (beta = –.15, p < .05), these coefficients attenuated to nonsignificant levels when job insecurity was
controlled in the third equation (Table 3). These findings support Hypothesis 3. In sum, these results support the hypothesis that job insecurity mediates the
effect of employee perception of managed care on job
satisfaction and organizational commitment.
Moderated hierarchical regression analysis was
used to test the extent to which self-esteem moderates
the relationship between perception of managed care
and job insecurity (Hypothesis 4). Job insecurity was
the dependent variable. Perception of managed care
was entered first into the regression, followed by selfesteem, and then the interaction term between managed care perception and self-esteem. It is advisable
to control for main effects before testing for interaction effects.56 Moderation is indicated when there is a
significant change in R2 between the main and interaction effects.57 The regression results are shown in
Table 4. First, perception of managed care explained a
significant amount of the variance in job insecurity (R2
TABLE 3
RESULTS OF HIERARCHICAL REGRESSION ANALYSES: THE MEDIATING EFFECT OF JOB INSECURITY
Criterion/Predictor
Job satisfaction
Job insecurity
Perception of managed care as a threat
Organizational commitment
Job insecurity
Perception of managed care as a threat
*p < .05
**p < .01
β
∆R2
–.49**
.08
.21**
.01
–.53**
.09
.24**
.01
F (Final)
23.76**
28.98**
66
HEALTH CARE MANAGEMENT R EVIEW/SPRING 1999
= .22, p < .01). At the second level of entry, self-esteem
explained a significant amount of incremental variance in job insecurity (change in R2 = .11, p < .01). Finally, the interaction term explained a significant
amount of additional variance in job insecurity
(change in R2 = .02, p < .05), indicating that self-esteem
had a moderating effect on the relationship between
perception of managed care and job insecurity. These
results support Hypothesis 4. The coefficient of the
interaction term was negative and significant, indicating that among employees who perceive managed
care as a threat, high levels of organization-based selfesteem were associated with lower levels of job insecurity. High self-esteem employees felt less job insecurity from the threat of managed care than did low
self-esteem employees.
The moderating effects of self-esteem, role conflict,
and supervisory support on the relationship between
job insecurity and job satisfaction and on the relation-
ship between job insecurity and organizational commitment were also tested with moderated hierarchical
regression analyses. Satisfaction and commitment
were the dependent variables. In each equation, job
insecurity was entered in the first step, followed by
self-esteem, role conflict, and supervisory support in
the second step, and the cross-products of job insecurity with each of the other independent variables in
the third step. Table 4 presents the regression results.
Job insecurity accounted for a significant level of variance in job satisfaction (R2 = .20, p < .01) and organizational commitment (R2 = .23, p < .01). The variables
entered at the second level explained a significant
amount of incremental variance in job satisfaction
(change in R2 = .16, p < .01) and organizational commitment (change in R2 = .15, p < .01).
Finally, there was a significant change in R 2 between the main and interaction effects for both job satisfaction (change in R2 = .03, p < .05) and organiza-
TABLE 4
RESULTS OF MODERATED REGRESSION ANALYSES: THE MODERATING EFFECTS OF SELF-ESTEEM,
ROLE CONFLICT AND SUPERVISORY SUPPORT
Step
1
2
3
1
2
3
1
2
3
a
p < .10
*p < .01
**p < .05
Criterion/Predictor
Job insecurity
Perception of managed care as a threat
Self-esteem
Managed care x self-esteem
Job satisfaction
Job insecurity
Self-esteem
Role conflict
Supervisory support
Job insecurity x self-esteem
Job insecurity x role conflict
Job insecurity x supervisory support
Organizational commitment
Job insecurity
Self-esteem
Role conflict
Supervisory support
Job insecurity x self-esteem
Job insecurity x role conflict
Job insecurity x supervisory support
β
∆R2
R2
.47**
–.34**
–1.14*
.22**
.11**
.02*
.22**
.33**
.35**
–.45**
.25**
–.12*
.26**
.14
–.62*
.32
.20**
.16**
.20**
.36**
.03*
.39**
.23**
.15**
.23**
.38**
.04*
.42**
F (Final)
30.59**
15.72**
17.39**
–.48**
.18**
–.10a
.32**
–.18
–.05
.71**
Employee Reactions to Managed Care␣ ␣ ␣ ␣ ␣ ␣ ␣ 67
tional commitment (change in R2 = .04, p < .05). The
interaction between role conflict and job insecurity
was significant, indicating that role conflict moderated the relationship between job insecurity and job
satisfaction. The negative interaction term suggests
that insecure employees who experienced high role
conflict felt less satisfied with their jobs than insecure
employees who experienced lower levels of role conflict. Supervisory support moderated the relationship
between job insecurity and organizational commitment, as indicated by the significant interaction of job
insecurity and supervisory support. The positive interaction term implies that insecure employees who
perceived high levels of supervisory support were
more committed to the organization than insecure
employees who experienced lower levels of support.
These results provide partial support for Hypothesis
5.
DISCUSSION
The findings of this study support the premise that
health services employees react to managed care in
ways that can ultimately impact organizational effectiveness. They indicate that some employees perceive
managed care as a threat while others see it as an opportunity. The manner in which managed care is categorized influences the level of job satisfaction and
organizational commitment felt by employees. Those
who perceive managed care as a threat experience
lower job satisfaction and commitment to the organization than others who see it as an opportunity. Employee reactions to managed care stem from their
concerns about the fulfillment of the implicit psychological contract with employing organizations. Managed care has garnered much negative publicity and
the recent cutbacks in services and personnel have
been attributed to it. These events give rise to feelings
of diminished personal competence and control, causing employees to doubt their fit with and value to the
organization. Such feelings reduce job satisfaction
and organizational commitment.
This research also supports the contention that the
relationship between perception of managed care and
employee attitudes is mediated by job insecurity. Employees who perceive managed care as a threat experience a higher level of job insecurity, which in turn
leads to lower job satisfaction and organizational
commitment. The negative cues associated with managed care arouse suspicions of possible contract violation by employers and lead employees to anticipate a
loss of job continuity. Employees who experience job
insecurity and uncertainty regarding their future role
in the organization develop stress and anxiety, and
call into question any affective attachments they have
to the organization. They decide that they can no
longer be committed to an organization that is likely
to either take away their job or cut back some of its
valued features. Such stress and the potential loss of
important job characteristics also produce dissatisfaction with the job.
Finally, this study upholds, to some extent, the notion that employee reactions to managed care are
moderated by individual and organizational characteristics. The results suggest that reactions to managed care are moderated by the level of organizationbased self-esteem, role conflict, and supervisory
support experienced by employees. Organizationbased self-esteem buffers employees from the perceived threat of managed care, resulting in less job insecurity. High levels of self-esteem reduce employee
perception of negative cues, make them feel less susceptible to environmental threats, and deter the passive acceptance of negative consequences. Self-esteem
does not, however, seem to protect employees from
the anxiety and negative affect that results from job
insecurity. There was no support for the hypothesized
moderation by self-esteem of the relations between
job insecurity and job satisfaction or organizational
commitment. It appears that the feelings of self-worth
and competence associated with self-esteem, while
making employees feel less vulnerable to external
events, cannot help them deal with the disappointment and stress of pending discontinuity in the job.
Some support is found for the premise that employee reactions to managed care are moderated by
organizational practices. Organizational practices create work role conditions that can moderate the effects
of job insecurity. The results indicate that role conflict
exacerbates the negative effect of job insecurity on job
satisfaction but not its effect on organizational commitment. Insecure employees experience even less job
satisfaction, but not lower commitment, when role
conflict is high. This selective moderating effect may
be attributed to the fact that role conflict increases jobrelated stress and uncertainty, a condition that affects
employees’ job satisfaction more than it does their
commitment. This study also found that supervisory
support reduces the negative effects associated with
job insecurity. In this case, the relationship of job insecurity with organizational commitment is moderated
but not its relationship with job satisfaction. In the
68
HEALTH CARE MANAGEMENT R EVIEW/SPRING 1999
presence of high supervisory support, insecure employees exhibit greater commitment, but not higher
satisfaction, than they would have done otherwise.
When supervisors provide personal and role support,
set clear goals, and facilitate work performance, employees gain a better understanding of their own role
in the organization and believe that it will be protected. When supervisors show concern for worker
interests, workers reciprocate through greater commitment to the organization. It appears that this feeling of reciprocity influences organizational commitment more than it does job satisfaction.
CONCLUSION
This study fills an important gap in the research on
the effects of managed care. It contributes to our understanding of how employees in health services organizations react to managed care. It also confirms
that reactions to environmental forces, such as managed care, occur not only at the macro or organizational level but even at the micro or individual level.
The findings of this research indicate that it is just as
important to focus on employee responses to managed care as it is to study organizational responses to
it. Employee reactions such as job insecurity, commitment, and satisfaction can influence the success of patient-centered teams, collaborative networks, and
other organization-level responses to managed care.
Future research should take a longitudinal approach
to capture the dynamic nature of employee reactions.
It should also use objective measures of the independent variables to counter the common method variance that may arise from self-report measures.
This research has important managerial implications. Its findings suggest that health services managers should pay attention to the manner in which their
employees perceive and react to environmental forces
such as managed care. Workers who perceive managed care as a threat will experience a higher level of
job insecurity that in turn leads to lower job satisfaction and organizational commitment. Managers can
influence this chain of events in many ways. First,
they must focus on employee perceptions of managed
care. The perception of managed care as a threat
stems from the mostly negative coverage it has received in the media, from the fear and concerns being
voiced by professional associations, and from rumors
of cutbacks among health care organizations. Managers can reduce the perceived threat by portraying
managed care in a positive light, by educating em-
ployees on the opportunities associated with managed care, and by promoting an open and honest discussion of its implications to the organization.
Second, managers must intervene to prevent job insecurity among employees who perceive managed
care as a threat. They can reduce the uncertainty and
helplessness that leads to job insecurity by helping
employees cope with the job changes and cutbacks
arising from managed care. This may be achieved by
providing employees with new skills, job enrichment,
alternative career paths, stress management programs, and career counselling. By enhancing employees’ self-esteem, managers can help them deal with
the negative consequences of managed care. Finally,
management must act to limit the decline in job satisfaction and organizational commitment that occurs
among insecure employees. Managers can create
working conditions that attenuate the effects of job
insecurity on employee attitudes. Improved job design can eliminate role conflict and reduce dissatisfaction among insecure employees. Mentor programs
and supervisory support can reduce the stress and
uncertainty felt by insecure employees. Supervisors
can be more supportive by setting clearly defined
goals, by helping employees cope with work-related
problems, by showing a concern for employee needs
and interests, and by encouraging employee participation in decisions that affect them. Employees feel
more committed when they know that the organization cares about their well-being and is itself committed to facilitating their transition to managed care. In
summary, skillful management of employee reactions
to managed care can enhance the effectiveness with
which health services organizations adapt to it.
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