Health maintenance organization environments in the 1980s and beyond.

Abstract

Throughout the past decade, health maintenance organizations (HMOs) were buffeted by dramatic regulatory and competitive changes. In this article, literature of the 1980s is reviewed to update our knowledge on the HMO industry and to suggest future research. The influence of intensified competition on these organizations and the determinants of market entry, expansion, and exit are examined. These organizations are now beginning to require copayments and deductibles and to offer point-of-service choice, while indemnity plans are developing sophisticated utilization management techniques. Given these significant structural changes, past distinctions among HMO, preferred provider organization and fee-for-service medicine must be replaced with a distinction between degree of provider choice and level of benefits.