The Role of Health Maintenance Organizations in the Health Care Market

This paper studies the role of health maintenance organizations in the health care market. Health Maintenance Organizations (HMOs) represent the growing wave of health care in the future by eliminating unnecessary and costly procedures. Vanishing are the repetitive tests that once victimized the consumer. By regulating fixed costs, the industry is forcing a change in testing and research. Since HMOs regulate costs, they are particularly prominent in the elderly population. Financial efficiency helps provide the proper organized system of long term care brought by the aged. Also, complex paper work and bills will be eliminated and comprehensive coverage will be added to the growing population of aged or retired persons. Cost effectiveness of HMOs have helped to bear arms in a fight against rising health care costs. Discounted contractual rates attained by virtue of agreements with providers is one step taken in this direction. By assessing fixed figures for specialized services, providers are left with no alternative but to reduce costs to avert large write-offs. Many sources such as economic, political and social sources encourage the growth of prepayment in order to contain costs. Consumers can benefit by referral to providers that specialize in the care they are seeking. In addition, their liability is reduced by having to pay percentages of discounted rates, or in some cases have care provided for them at no cost. Thus, prepayments plans which are initiated by HMOs are cost efficient for the entire community. Not only do consumers benefit but doctors and hospitals also prosper. Doctors are granted fixed rates and attract additional patients by merely being a certain company\u27s approved provider. If the medical staff of a hospital will work with an HMO on the same team, a hospital will probably keep beds filled and remain competitive with other hospital in the market. It is very important that HMOs and hospitals work together to ensure a smooth working network. Sacrifices are made but overall benefits may be realized by all participating parties