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Are HMOs dead? (National Managed Health Care Conference)

Cost control and improved quality of care were the promises HMOs couldn't deliver. Now, experts say, the end is nigh.

By Robert Kazel, amednews staff. April 18, 2005.

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Reports from conferences important to physicians

Before he became an insurance executive in the early 1990s, Robert S. London, MD, was a practicing obstetrician-gynecologist. But at this year's National Managed Health Care Congress, as he looked down from his lectern upon a room of health plan managers and strategists, he sounded like a coroner delivering a pathology report.

Dr. London appeared at the conference, held in March in Washington, D.C., to join a panel whose title would have been unthinkable a few years ago: "Is Selling HMO Product Dead?" Dr. London, a former vice president of health care management with Anthem, who had held managerial jobs with Kaiser Permanente and UnitedHealth Group, said HMOs had left a legacy of "broken promises."

"The HMO promised us it would reduce the cost of care and improve the quality of care," he said. On both fronts, he said, it had failed. "The consumers," he said, "don't like it."

The result? The nation is witnessing "the demise of the HMO," he said. If this is not wholly apparent in the statistics -- tens of millions of patients are still enrolled in plans that are structured, or at least legally licensed, as HMOs -- numerous speakers at the conference agreed that the industry is seeing a general abandonment of the principles on which the HMO model was built.

Gene Huang, MD, a vice president of Health Net and another member of the NMHCC panel, likened HMOs to photographic film (steadily being replaced by digital cameras) and dial-up modems (gradually being supplanted by broadband, high-speed Web connections). What's more, he said, those HMOs still being marketed typically "look like PPOs," with open access to physician panels.