Ahh, Coventry... The place where, allegedly, an attractive young lass by the name of Lady Godiva took a truly bareback horse ride to convince her husband to lower taxes. Today's Coventry, managed-care provider Coventry Health Care (NYSE:CVH), may not appeal to the same prurient interests but is no less comely.

First-quarter revenue climbed 21.5% to $1.57 billion, though that growth rate drops to 10.5% if you exclude the First Health acquisition, which closed earlier this year. Net income rose almost 52%, and Coventry management said that the First Health acquisition added about $0.04 (or 3.8%) to earnings.

While membership was up only slightly in the company's Health Plan business, the medical loss ratio improved by 150 basis points, and there was further improvement in the enviable operating efficiency. What's more, rate increases led to a 9% improvement in the commercial insured yield.

On the First Health side, there is still much work to be done. This business' selling, general, and administrative expenses are still a hefty percentage of revenue, and management continues to target synergies and cost improvements. While there were pockets of good news -- the Federal Employees Health Benefits open enrollment numbers were slightly better than expected, and progress was made in the workers' compensation business -- these are only the first few plays in what will be a long game.

Despite the amazing strength (and equally impressive stock runs) seen in the managed care/health insurance space of late, some analysts are beginning to call a top to the market. The thinking goes that companies like Coventry, along with the likes of UnitedHealth (NYSE:UNH), Humana (NYSE:HUM), and WellPoint (NYSE:WLP), simply can't keep up the pace of top-line growth and margin improvement.

This theory holds that insurance companies have pushed medical loss ratios about as low as they can reasonably go and that workers and employers simply can't keep digesting rate increases in the high single digits or low double digits. If this line of reasoning holds out, sooner or later membership growth would fall off, and one or more insurers would get nervous and begin cutting rates to attract more members.

To some extent, this is probably true. After all, there are limits to what the companies can continue to achieve on both the medical-cost and rate-increase fronts. Operating expenses, however, could still be reduced further, and companies like Coventry could see added benefits from buying troubled operators like First Health and bringing the operations up to their standards.

As someone who has missed out on Coventry stock a couple of times already, I'm not about to say that it can't go higher. But that also doesn't necessarily mean I'm going to buy the stock now, either. Membership growth is pretty sluggish, and valuation is creeping up a bit relative to likely future growth.

I'm not saying that the end is nigh for companies like Coventry, but I am starting to wonder just where these companies are going to turn for their next round of growth. Long-term investors will likely come out OK in the end, but I'm thinking that organic growth is going to start getting a bit harder to come by.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).