HSOs, HMOs, and CHOs: The Continuing History of Capitation-Funded Health Care

Ontario Health service organizations (HSOs) provide physician services funded by monthly payments per enrollee and one-third the cost of hospital days saved. They reduce hospitalization rates, but are providing less multidisciplinary care than expected. American health maintenance organizations (HMOs) provide both physicians' services and hospital care. They reduce hospitalizations, and their physicians manage greater patient loads, while patients receive equivalent ambulatory care. Comprehensive health organizations (CHOs) in Ontario provide almost all health services for their current per capita cost. Greater cost-effectiveness is expected through greater use of management, deinstitutionalization, auxiliary personnel, and health promotion. Proponents of organized medicine have strong reservations about the expected results. The ethics of providing incentives (i.e., capitation) to underservice patients should also be considered.