HMO, Health Maintenance Organizations and AIDS/HIV & Hepatitis C

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Because of the rising costs of health insurance rates, the American public and governmental agencies turned to HMO's in the hope of controlling the increases in healthcare. They accomplished this task by limiting access to health care. By having primary physicians determine the validity of a medical need to see a specialist. The patient could not have immediate access to these specialized healthcare professionals HMOs had listings of physicians that patients could use and if the insured was to go outside of this listing-a higher co-pay would result. This practice also applied to hospitals.

Hospitals in order to be included with an HMO insurance company had to negotiate with the HMO on the amount of remittance it was to receive for services. Many times this cost would be reduced substantially for the going rate of charges for other insurance companies.

This price competitiveness between hospitals for patients was used against hospitals (by the HMO)…pitting one against the other-for the privilege of this
HMO contract. This in turn resulted in each insurance carrier wanting and demanding a better contact than the other

Because of this competitive nature of business, hospitals would slash prices for their services to the point that they were losing money. They believed that if they had the volume of patients that this practice would offset the low prices.

Other insurance carriers and governmental agencies began to use this same leverage tactics against the hospitals. Pitting one against the other in order to reduce costs. This practice help reduce the cost in the short term; however, this practice also reduces profit margins and margins to cover lost monies from bad debts.

This loss of profitability for many hospitals has resulted in closures of many of the smaller rural hospitals. Some professionals believe that by the year 2010, that only the larger metropolitan areas will have hospitals. Smaller towns will see the closure of their local hospitals and the opening up of medical clinics to replace those lost hospitals. Depending on the demand for these services, many of these clinics will only be open on specific days and hours. (If an acute health emergency case may end up traveling several miles for vital hospital care.)

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