Challenges facing HMOs: the views of four experts

Three years ago the Health Maintenance Organization (HMO) industry was flush. HMOs were making good money off their Medicare contracts. They were the darling of major corporations who relied on their managed care approach to health services delivery to control corporate health benefits costs. Consumers extolled the benefits of HMO membership as a less costly but high quality alternative to fee-for-service medicine. And even hospital chains jumped into the HMO business as what seemed at the time a guaranteed venture to increase hospital occupancy and therefore revenues. But now the industry is in a period of reassessment and realignment. Rocked by a scandal involving a big Miami HMO serving a predominantly Medicare population, federal health policy leaders are rethinking total reliance on HMOs as the answer for managing care for Medicare beneficiaries. Depressed Medicare payments have suddenly made Medicare patients unattractive to HMOs. State regulation of HMOs is being tightened. States relying on these managed care providers to care for Medicaid recipients are fine-tuning their relationships. In an effort to provide HEALTHSPAN readers with the current thinking about where the HMO industry is headed, four presentations on challenges facing the HMO industry today are summarized below. The presentations were included in a recently released book, "HMOS & Beyond: New Health Care Systems," published by the Group Health Association of America.