Health Care Standards Lower in For-Profit HMOs

July 13, 1999

Health Care Standards Lower in For-Profit HMOs

JAMA Study Finds Quality of Care Disparity Between Investor-Owned and Non-Profit HMOs

?WASHINGTON — For-profit health maintenance organizations provide lower quality medical care than non-profit HMOs, according to a study published in the Journal of the American Medical Association (JAMA) today. The study examined 1996 quality of care data from 248 investor-owned and 81 not-for-profit HMOs that provided coverage to 56 percent of all Americans in HMOs.

The study analyzed all 14 quality indicators reported to the National Committee for Quality Assurance in 1997, ranging from routine care like pap smears to the treatment of seriously ill patients requiring lifesaving heart drugs, and found that for every quality measure, for-profit HMOs scored lower than not-for-profit ones.

It found that investor-owned HMOs had a 27 percent lower rate of eye examination for diabetic patients and a 16 percent lower rate of proper drug treatment (beta-blockers) for heart attack survivors. Child immunizations were 12 percent lower and mammography rates 8 percent lower than in non-profit HMOs.

“If all American women were enrolled in for-profit HMOs instead of non-profits, 5,925 more would die from breast cancer,” said Dr. David Himmelstein, Associate Professor of Medicine at Harvard and co-author of the study.

Between 1985 and 1998 the percentage of HMO members enrolled in investor-owned plans grew from 26 percent to 62 percent. The study found that although costs in for-profit and non-profit HMOs were almost identical ($128 per month for investor-owned, $127.50 per month for non-profit), the for-profit organizations had far higher administrative costs, leaving less for patient treatment.

“Spending on bureaucracy and profits was about 48 percent higher in for-profits HMOs. That’s where the money’s going instead of into care,” said Dr. Sidney Wolfe, Director of Public Citizen’s Health Research Group and co-author of the study, Quality of Care in Investor-Owned vs Not-for-profit HMOs, and Dr.Himmelstein.

“We found generally the more profit, the less care,” said Drs. Himmelstein and Wolfe. “The two sorts of HMOs treat sick people very differently. Your chances under a for-profit HMO are much worse if you are seriously ill. The decade-old experiment with market medicine is a failure,” they said. The study noted that market pressures are forcing non-profit HMOs into measures that copy investor-owned plans like increasing financial incentives and productivity pressure for physicians.

Read Statements by Drs. Wolfe and Himmelstein