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Health care delivery systems in review
Insights
Restrictive utilization reviews in Health Maintenance Organizations (HMOs) are less cost-effective than anticipated. Despite industry challenges, HMO enrollment grew, and successful plans are focusing on market share and niche products for financial improvement.
Area of Science:
- Healthcare Management
- Health Economics
- Managed Care
Background:
- Physicians face increasing utilization review restrictions within Health Maintenance Organizations (HMOs).
- Cost containment strategies in healthcare are under scrutiny for their actual effectiveness.
- The managed care industry operates under significant financial and regulatory pressures.
Purpose of the Study:
- To evaluate the cost-effectiveness of restrictive utilization review procedures in HMOs.
- To analyze the financial condition and market dynamics of the HMO industry.
- To identify strategies employed by successful HMO plans.
Main Methods:
- Analysis of evidence regarding utilization review procedures.
- Review of cost containment pressures from employers and regulatory limitations.
- Examination of HMO enrollment data and industry financial trends from an SMG census.
Main Results:
- Evidence suggests utilization review measures are not as cost-effective as initially believed.
- Health Maintenance Organization (HMO) enrollment increased significantly in 1988, while the number of plans decreased.
- The overall financial condition of the HMO industry is improving, even with the failure of a major plan.
Conclusions:
- Restrictive utilization reviews may not be the most effective cost-containment strategy.
- Successful HMOs are adapting by analyzing market share and developing specialized products.
- The managed care landscape is consolidating, with growth in enrollment and a focus on strategic positioning.
Abstract:
As physicians grapple with restrictive utilization review procedures, evidence indicates that these measures are not as cost effective as originally believed. Cost containment pressures from employers, limitations on price fixing and incentive arrangements all contribute to a further controlled environment for physicians practicing within HMOs. An SMG census reveals that HMO enrollment grew significantly in 1988, while the number of plans declined. The financial condition of the industry is improving, despite the demise of one of the largest plans. Successful plans are analyzing their market share and developing niche products to improve their position.