Abstract
Over the past two decades the California workers' compensation industry has been responding to rapidly rising medical costs. The first response was to attempt to adopt principles of managed care; the second, to increase efficiency by integrating activities, first within companies, then between companies and providers, and finally across companies providing both group health and workers' compensation. This article chronicles the integration movement, analyzes the forces driving it, and discusses how contradictory government incentives have both propelled and hindered integration.