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Ten ways HMOs have changed during the 1990s

¹Center for Survey Research, KPMG Peat Marwick, Washington, D.C., USA.

Health Affairs (Project Hope)

|May 1, 1997

Summary

The 1990s saw significant shifts in health maintenance organizations (HMOs), including more for-profit plans and industry consolidation. Research has not yet determined if these changes improved care quality or patient satisfaction.

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Area of Science:

Health Services Research
Healthcare Management
Health Economics

Background:

The 1990s witnessed substantial evolution in managed care, significantly impacting health maintenance organizations (HMOs).
These transformations were driven by market forces and policy changes influencing healthcare delivery and financing.

Purpose of the Study:

To examine ten major transformations within the HMO industry during the 1990s.
To analyze shifts in organizational structure, financial models, and market dynamics of HMOs.

Main Methods:

Utilized data from annual surveys by the Association of American Health Plans.
Analyzed industry trends including plan profitability, organizational models, consolidation, cost-sharing, and physician payment structures.

Main Results:

Observed growth in for-profit HMOs alongside a decline in nonprofit plans.
Documented a shift from vertically integrated models to virtually integrated ones (e.g., individual practice associations).
Noted increased industry consolidation via mergers and acquisitions, higher patient cost-sharing, and a move towards capitation for primary care physicians.

Conclusions:

The study identifies key structural and financial changes in the HMO industry during the 1990s.
Current evidence is insufficient to link these industry changes to demonstrable improvements in the quality of care or patient satisfaction.

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