Nonprofit HMOs Offer Better Care, Study Finds
Supporting the public’s suspicion that pleasing shareholders and delivering high-quality care may be clashing goals in the world of managed care, a study released today reports that for-profit HMOs, which dominate the health care market, deliver lower quality care than not-for-profit HMOs.
The findings, published in the Journal of the American Medical Assn., substantiate previous work suggesting a negative influence of investor-ownership on the quality of HMOs.
The authors of the new study, however, present a detailed picture of the lower performance rates of for-profit HMOs: Investor-owned HMOs gave fewer immunizations, fewer mammograms, fewer Pap smear tests and fewer eye exams for diabetics and filled fewer prescriptions of drugs to lower blood pressure for heart attack victims than not-for-profit HMOs. In fact, for-profit HMOs scored lower in every one of the 14 categories of care currently used as standard indicators of an HMO’s caliber.
The findings are of particular importance because the numbers of for-profit HMOs are increasing across the country. Between 1985 and 1998, the proportion of people enrolled in for-profit plans rose from 26% to 62%.
California is the nation’s largest market for managed care health plans, with more than 20 million residents enrolled as of September 1998. The state’s largest HMO is Kaiser Permanente--a not-for-profit organization--with 33% of the market, according to Walter Zelman, president and chief executive of the California Assn. of Health Plans. But the second-, third- and fourth-largest HMOs are for-profit.
“This study documents the big mistake that health care is just another business to be sold like any other commodity. These are meaningful, large differences,†said Dr. Kevin Grumbach, professor of family and community medicine at UC San Francisco and director of the UC Center for California Health Work Force Studies.
But according to Ria Marie Carlson, a spokeswoman for Health Net, one of the biggest for-profit HMOs in California, for-profit and not-for-profit HMOs have an interest in financial stability. The public should realize, she said, that regardless of the type of HMO, “The quality of care is higher now than when there was no accountability, back in the days of fee for service.â€
Dr. David Hummelstein of the Center for National Health Program Studies at Boston’s Cambridge Hospital and colleagues analyzed quality-of-care data for 329 HMOs in 1996, of which 248 were investor-owned and 81 were not-for-profit. This amounted to more than half of the total HMO enrollment in the United States at the time.
The authors looked at “quality indicators†used by the National Committee for Quality Assurance, a private agency that accredits health plans. The 14 quality indicators are measures of care--such as the rate of immunization, or the rate of follow-up for patients hospitalized with a mental disorder--that allow a direct comparison of the characteristics and performance of health plans.
For each of the indicators, for-profit HMOs had lower rates. The biggest differences appeared in care for serious illnesses.
For example, 59.2% of patients in for-profit HMOs were prescribed drugs to lower blood pressure after a heart attack, a recommended course of action. In contrast, doctors in not-for-profit HMOs filled the prescription for 70.6% of the patients.
For-profit HMOs also exhibited lower rates for routine preventive services. The rate of completed immunizations for 2-year-olds was 63.9%, compared with 72.3% in not-for-profit HMOs; rates of mammograms being given at least once every two years for women ages 52 to 69 were 69.4% versus 75.1% in not-for-profit organizations, and rates of Pap smear tests being administered at least once every three years were 69.2% for women 21 to 64 years old in for-profit HMOs, contrasting with 77.1% for women in nonprofit plans.
Oliver Goldsmith, director for Kaiser Permanente in Southern California said: “This is not a surprise, but it is nice to see it measured, confirmed. I knew that nonprofit [HMOs] delivered better care.â€
For the consumer, total costs--roughly $128 per month--were similar in for-profit and not-for-profit HMOs, according to the study. But the for-profit groups spend 48% more than their nonprofit counterparts on administrative overhead and far less on hospital and medical services.
More important, the study controlled for variables already known to affect quality of care, like the health plan “model†used by each HMO.
Certain plan models, like staff models (where physicians are salaried and are part of a centralized facility), are known to perform better in the quality-of-care indicators. Because many not-for-profit HMOs are based on a staff model, the difference in care could have been a reflection of the plan type, and not the profit status.
However, after controlling for these variables, the authors still found that for-profit status was strongly linked to lower quality of care.
Differences in quality care within HMOs might become increasingly difficult to document, the authors said. In 1997, when the figures for 1996 were analyzed, 41 HMOs refused to publicly disclose their information. By 1998, the number had more than tripled, and 155 plans refused release of their data.
“Almost one-third of HMOs do not want the public to find out [about their performance], and they can do that because they are private entities,†said Sindey Wolfe, one of the study’s authors and the director of the Public Citizens Health Research Group, a consumer advocacy organization.
For the public, the findings do not offer much leverage, because most people cannot choose their HMO; rather, the choice is made by their employer, said Dr. Steffie Woolhandler of Cambridge Hospital, also an author of the study.
“For those who do have a choice, they should know that, on average, not-for-profit HMOs will offer better quality of care,†she said of the study’s implications, which she believes should have a bigger impact at the policy level.
Zelman, of the California Assn. of Health Plans, cautioned that the study only compared HMOs with HMOs, and that consumers should be aware that for-profit HMOs might still perform better than fee-for-service care.
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Different Levels of Care
For-profit HMOs deliver a lower quality of care than not-for-profit HMOs, according to a study published in the Journal of the American Medical Assn. Following are the rates of treatment by both kinds of managed care.
