Doctor examining a patient
When President Nixon signed the Health Maintenance Organization (HMO) Act of 1973, significant changes were made to the way Americans received and paid for health care services. The authorization of HMOs strengthened efforts to manage health care costs by mandating preventive health measures, and managing how patients received services from high-cost medical specialists.
History
Health care organizations that are recognizable as HMOs have been in existence since 1930. Henry Kaiser began the first significant effort at providing managed health care for his employees. This organization became the HMO Kaiser Permanente. According to a dissertation developed for the Rand Corporation, "When Kaiser moved to Hawaii in 1954, Kaiser Permanente came with him and eventually became the 2nd largest health insurer in that state." The success of Kaiser Permanente led to the passage of the HMO Act of 1973.
Purpose
HMOs are designed to provide quality health care to its members and at the same time control costs. HMOs focus on preventive health care services that are intended to prevent or reduce major illnesses that drive up medical costs. Consistent management of health care services enables HMO leadership to extend medical care to a growing membership and still make a profit for the organization. Non-profit HMOs are able to provide health care at an even lower monthly premium.
Function
There are three design functions that are primarily responsible for the cost savings inherent to HMOs. Members are required to receive basic medical care from an assigned primary care physician. Secondly, if your medical problem needs to be addressed by a specialist, you will need to receive a referral from your primary care physician. The third requirement is that you must seek authorization from the HMO to be admitted to the hospital for surgery or other high-cost procedures. The authorization requirement can be waived for necessary emergency care.
Benefits for providers
Doctors in private practice experience significant costs maintaining an office, paying for staff, and purchasing supplies and medical equipment. The distractions of managing the business side of a medical office detract from the responsibility of meeting the medical needs of patients. A physician aligned with an HMO receives assistance with these business responsibilities, freeing up valuable time for meeting the needs of patients. The focus on managed care allows physicians to have the resources to provide preventive care to patients.
Considerations
Patients new to managed care must learn work with a primary care physician to gain access to all of the medical services available within the HMO. Physicians must learn work within the framework of cost-containment procedures to provide patients the highest-quality care possible. Physicians, patients, and management must find ways to foster the patient-to-doctor relationship that is the foundation of the American health care system.
Tags: health care, care physician, care services, health care services, Kaiser Permanente
