HMO
Organization Business Models
There are a number of ways to analyze the organization of an HMO.
The first concept we’ll address is whether the HMO operates on a
for-profit or a
not-for-profit basis. Then we’ll look at some other organizational
variations.
Profit Versus Nonprofit
Usually, but not always, if the HMO is a producers’ cooperative
owned and
operated by a group of physicians, the HMO is for-profit. If it is
a consumers’
cooperative where the doctors are salaried employees of the HMO,
it is usually
not-for-profit.
Typical Structures: Group Model
The basic structure of an HMO involves contractual agreements with
a variety
of health care providers and facilities to provide services to HMO
subscribers.
Within that structure, four models are used, one of which is the
group model.
The group model is sometimes called the medical group
model or the group practice
model. Under this arrangement, the HMO contracts with an independent
medical group that specializes in a variety of medical services to
provide
those services to HMO subscribers. Under the agreement, the HMO pays
the medical group entity, not the individual service providers. The
medical
group itself chooses how to pay its individual physicians, all of
whom remain
independent of the HMO rather than becoming salaried employees.
Often, the HMO pays the group a capitation fee, which
is a fixed amount paid
monthly for each HMO member. Thus, the medical group can make a profit
on those members for whom a fee is paid but who use few or no services.
On the other hand, the medical group can lose money on frequent users.
Staff Model
A second type
of arrangement is the staff model, so named because the contracting
physicians are paid employees working on the staff of the HMO.
They generally operate in a clinic setting at the HMO’s physical
facilities.
When hospital services are required, the staff doctors and HMO administration
arrange for those services. In some cases, the HMO may even own and
operate a hospital.
Network Model
The network model operates much like the group model, except the
HMO
contracts with at least two, and more likely several, medical groups
rather
than just one. In addition, the HMO may make similar contractual
arrangements
with independent doctors to provide services in their individual
offices. The purpose of a network is to increase accessibility to
providers as
a convenience for HMO subscribers who might otherwise be required
to
visit a facility far from their homes or workplaces.
: Individual Practice Association Model
The fourth and final model is one that gives HMO members the maximum
freedom of choice of physicians and locations. The Individual Practice
Association (IPA) model allows the HMO to contract separately with
any combination
of individual physicians, medical groups, or physicians’ associations.
Some HMOs, in fact, have been started by such groups.
In the IPA model, there is no separate HMO facility. Physicians operate
out
of their own private offices, and their HMO patients may be individuals
the
physicians were already attending.
Open and Closed Panel Types
Open and closed panels are yet another way to characterize HMOs.
Physicians, hospitals, and other health care providers who have contracts
with an HMO are referred to as the HMO’s panel. An open panel
means any
and all providers who want to provide services for the HMO may do
so as
long as they agree to the HMO’s requirements.
In contrast, a closed panel is a limited number of health care
providers chosen
by the HMO. HMO subscribers must receive their health care services
from
this closed panel of providers in order to have those services paid
for on the
prepaid plan.
