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6 Am. J.L. & Med. 29 (1980-1981)
HMO Development: Threat or Opportunity for Hospitals

handle is hein.journals/amlmed6 and id is 49 raw text is: HMO Development: Threat or Opportunity for Hospitals? Dustin L Mackie, D.Sc., M.B.A.* Robert L Biblo, M.P.H.** ABSTRACT Many hospitals presently find themselves at a vulnerable stage in their development. The increased efficacy of antibiotics, together with the popu- lation's increased life span and decreasing birth rate, have reduced the need for the kind of acute inpatient care that hospitals traditionally have provided. Moreover, hospitals now are feeling pressure from federal and state regulatory agencies to eliminate approximately 20 percent of the nation's acute-care beds. Concurrent with the population's changing health needs and with the increasing regulatory pressure, from government, the acute-care hospital also must contend with the advent of a rival medical care delivery organization-the health maintenance organization (HMO) -whose primary goal is to provide quality medical services in a cost- efficient manner. One of the most important ways in which HMOs contain costs is by attempting to reduce significantly the rate of hospitalization of their members, an approach that threatens the very livelihood of some hospitals. The authors describe five alternative strategies that hospitals can adopt to meet the potential threat of HMOs-filibustering, passive ac- ceptance, direct sponsorship, accommodation, or strong support. They maintain that the latter of these strategies, strong support, places hospitals in the most favorable position to convert the threat of HMO development into an opportunity to build a mutually beneficial relationship. I. INTRODUCTION Since the turn of the century, in the United States the hospital has been the predominant organizational structure employed for the delivery *Executive Director of Regional HMO, a developing HMO based in Framingham, Massachusetts, and Assistant Professor at Boston University School of Public Health. President of the Health Insurance Plan of Greater New York and Associate Pro- fessor, Boston University School of Public Health. The authors gratefully acknowledge the constructive comments and suggestions re- ceived from John J. Betjemann, President of University Hospital in Boston, and from the editors of the AMERICAN JOURNAL OF LAw & MEDICINE, who participated in several rewritings of the Article.

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