HMOs don't have to fail

One of the bright spots in the sometimes black picture that is painted of our national health care system is HMOs. Health maintenance organizations provide health services to an enrolled group of patients for a fixed, prepaid fee. This arrangement induces HMOs to try to keep patients healthy for a competitive rate. Because of its special nature, however, an HMO cannot be managed like a fee-for-service hospital or group practice. And because few managers fully understand them, more and more HMOs are failing. The authors of this article say, however, that some failures can be avoided. Good management techniques can help HMO managers-whether they are community-spirited citizens or seasoned executives-overcome many of the problems that plague HMO plans: out-of-control utilization rates, growth that can occur overnight, conflict between the values of HMOs and of the physicians that staff them, and competitors in the health field.