Utilization review, the assessment of the appropriateness and efficiency of hospital care through review of the medical record, and utilization management, deliberate action by payers or hospital administrators to influence providers of hospital services to increase the efficiency and effectiveness with which services are provided, are valuable but relatively unfamiliar strategies for containing hospital costs. The purpose of this synthesis is to increase awareness of the scope of and potential for these approaches among health services managers and administrators, third-party payers, policy analysts, and health services researchers. The synthesis will assist the reader to trace the conceptual context and the historical development of utilization review from unstructured methods using individual physicians' professional judgment to structured methods using explicit criteria; to establish the context of utilization review and clarify its uses; to understand the concepts and tools used in assessing the efficiency of hospital use; and to select, design, and evaluate utilization review and utilization management programs. The extent of inappropriate (medical unnecessary) hospital utilization and the factors associated with it are described. Implications for managers, providers, and third-party payers in targeting utilization review and in designing and evaluating utilization management programs are discussed.