Benefits April 3, 2007

HMO Performance Efficiency Could be from Healthier Patients

April 3, 2007 (PLANSPONSOR.com) - There is no conclusive evidence to show health maintenance organizations (HMOs) are more financially efficient on a national basis, according to a new Hewitt Associates study.
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A Hewitt news release said that after analyzing 10 years of data collected from more than 400 large employers, HMOs have performed financially better than other health plans on a national basis. This was true after adjusting for known health care cost drivers – including geography, health plan design and demographics.

Hewitt found that the difference in financial efficiency could be entirely due to the types of employees who choose to enroll in an HMO (e.g. younger and healthier) and therefore cannot conclude that they are more financially efficient, according to the news release.

In California, however, the analysis found a larger gap between the financial efficiency levels of HMOs and non-HMOs than there was true nationally, even when considering all of these health risk factors.

Other study conclusions include:

  • Hewitt’s national data shows HMOs perform consistently better than other models and the difference in scores has not varied much over the decade.
  • There has been a recent move away from local HMOs and consolidating HMO plans into national, self-funded plans to gain financial efficiency from economies of scale.
  • Companies which are reviewing their health plan options should take health risk factors into consideration, as well as health plan offerings, overall health care management and their effects on productivity.

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