HMOs: The Health Care of the Beast Essay

This essay has a total of 1544 words and 7 pages.

HMO

HMOs: The Health Care of the Beast

Many people are concerned about rising health care costs. In reaction to this, some
individuals and companies are gravitating toward the assumed lower prices of Health
Maintenance Organization (HMO) health plans. HMOs spend billions of dollars each year
advertising their low cost services. While these savings look good on paper, there are
many pages of small print. The explanation after the asterisk indicates that not only do
the HMOs lack lower costs, but they also short-change the patient in quality care. Much of
the money spent on premiums goes directly into the pockets of stockholders and less is
then available for

patient care. In addition, the main clinical decisions are made not by doctors, but by a
board of directors more interested in the bottom line than in little Jennie's cough. When
the facts are considered, HMOs should not be permitted to assume the role of the primary
medical care-givers.


Traditional insurance companies and HMOs have comparable premium rates. HMOs are too
profit oriented and, because of this, their patient care lacks in quality. One way that
HMOs cut their costs is to spend less on direct care. As opposed to fee-for-service (FFS)
companies, patients relying on their HMO spend 17 percent less time in the hospital
regardless of the degree of their illness. This said, patients in Medicare HMOs also spend
about 17 percent less time than they would in a traditional setting. It is surprising
that, in spite of this fact, Medicare patient risk contracts actually cost Medicare 6
percent

more than they would have if done in a fee-for-service setting. (Rice, 79-80) The lack of
savings is not limited to Medicare recipients. Spending on health care in California,
which has one of the highest concentrations of HMOs of any state in America, is about 19
percent higher than the national average. There has only been one year since HMOs became
so prevalent, 1994, in which employers nationwide saw a drop in their health insurance
costs -- and it was an almost imperceptible 1 percent. These companies' earnings continue
to skyrocket, and the HMO executives are always on the lookout for ways to increase
profits by

reducing care to their members. It is troubling that while cost remains nearly the same,
the deficiency in quality service continues to increase.


Most of the money generated by FFS insurance goes directly to patient care and physicians'
salaries. In recent years, the idea of physician owned clinics has gained new ground in
the industry. A group of doctors band together to create their own private corporation.
These businesses, being privately owned, have the luxury of not having to deal with the
fiscal demands of stockholders and other investors. Thus, the doctors have the ability to
use the generated funds to care for their patients. Yet with volume purchasing of gauze,
needles, and other medicating implements, they are able to compete favorably with the

HMOs.

Part of the monies generated by HMOs is used to pay stockholder dividends; the demands of
the investors must be met. In 1994 salaries and stock awards to the heads of the seven
largest HMOs averaged $7 million each. Shareholder-owned

companies saw earnings increase by as much as 20 percent each quarter ("News"). Because of
this, the corporation rather than the physician becomes the patient care decision maker.
In other words, the medical decision making process is subject to approval by a board of
directors. In some cases these individuals go to great lengths to save money. For
instance, some HMO

doctors are forced to sign a "gag order," which forbids them to advise their patients
about expensive medical care which their HMO does not want to pay for. Doctors may
actually be penalized by their HMOs because, in violation of a gag order, they discussed
with their patients the option for a procedure the HMO did not want to pay for. Equally
maddening is that HMOs sometimes give their doctors financial bonuses for not ordering
tests or referring their patients to specialists. Some HMOs pay doctors according to a
Continues for 4 more pages >>




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