Medical malpractice: some implications of contract and arbitration in HMOs

The "crisis" of medical malpractice has led to increasing advocacy of abandoning the fault-finding and litigation approaches. Health maintenance organizations (HMOs) afford unique institutional settings for developing alternatives. Explicit contracts between provider-managers and member-patients can allow consumers to determine how risk-prevention-and overall quality-they are willing to invest in. Not just principles of economic efficiency, but also of distributional equity can inform HMO performance-standard contracts; and arbitration may be the best mode for managing disputes arising from them.