Health Medical Organization Concept

Health Medical Organization (HMO) is a medical organ that renders health services at a fee. The Services provided by the agency include health care for individuals and groups and health care plans among other services. Also, the organ connects members with health care medical providers on a pre-paid basis. Kongstvedt, (2012) postulates that the HMOs’ objectives are to reduce medical costs by lowering replication of benefits, reducing needless hospital admissions and stressing on preventive care than curative. In providing health insurance, HMO requires a patient to select a primary care physician. The physician selected acts as a “gatekeeper” responsible for the member’s medical needs.

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Open and Closed HMOs Panels

Open and closed HMOs panels differ in the mode they render their services. In open HMO, independent groups of physicians enter into a contract with an HMO to provide health care services to members. The agreement entered allows physicians to provide medical attention at their facilities at a cost chargeable to the HMO (Kongstvedt, 2012). A physician in an open HMO has more than one HMO contract besides receiving a monthly capitation payment for the number of enrollees. Consequently, the HMO disperses the capitation income to physicians based on the model entered into by the physician.

On the other hand, Kongstvedt (2012) explains that in a closed HMO, physicians provide medical services in HMOs facilities. The physicians offering health services at these facilities are specialized and separated legally from other medical entities that serve HMOs. The HMOs pays a monthly negotiated capitation fee to these physicians. Similarly, physicians practicing in the closed group are paid a monthly salary. However, they are restricted from rendering their services outside the HMO setting.

Similarities and Differences between Independent Practice Association (IPA) and Direct Contract Open HMOs

Both Independent Practice Association (IPA) and Direct Contract panels enter into an agreement with the association of physicians to render medical services to members. Consequently, they both contract with physicians with different specialties. Moreover, Kongstvedt (2012) explains that IPA and Direct Contract performs network, and credentialing management achieved through referral authorization.

Despite similarities, both IPA and Direct Contract differ in some aspects. In direct contract, independent physicians are allowed to negotiate as an entity with an HMO. On the other hand, IPA requires physicians to contract as a group. Also, the payment to a physician is direct in the direct model while in IPA; payment is disseminated to a panel of physicians (Wolper, 2004). Moreover, IPAs are protected from antitrust precincts on the group’s activities by physicians if they do not prohibit their member physician from contracting directly with an HMO. This is in contrast to the direct model.

Similarities and Differences between Group and Staff Model Closed HMOs Panels

Group and Staff Model have some aspects in common. They both employ physicians in with specialties to render health services effectively to its members. Also, both models share medical records, facilities, equipments and support staff. Robinson-Crowley (1997) points out that the medical offices for both models are equipped with X-rays and a laboratory, and some may have additional services such as space for physical therapy and pharmacies.

Despite sharing some similarities, group and staff model differs in a variety of aspects. One difference is in the contracting process. While the group model contracts with a multi-specialty medical entity, the staff model physicians are employed by HMOs.

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Advantages and disadvantages of Open and Open HMOs classification

The open panel model is easier to market and sell. This is because they involve private physicians. Similarly, physicians are located in various service locations where HMOs are found. Hence, it makes it easier for members to find one HMO that is convenient. Consequently, Open HMOs are more comfortable, affordable to establish and maintain (Wolper, 2004).

However, the disadvantages of open HMOs are that because it does not involve itself in providing medical care, it is hampered by its capacity to manage the medical care being provided. It solely relies on requisite criteria and fortitude. Also, its premiums are higher compared to those offered by closed panels.

Advantages and Disadvantages of Closed HMOs classification

The closed panel is managed prudently by medical care practitioners in the medical group. Similarly, closed HMOs can delegate some of its management functions to the group. This has an advantage of reducing costs associated with administration. Also, it embraces a “one stop shopping” where most staff model and group HMOs use same buildings that house procedure rooms and doctors offices among other services.

However, the model is difficult to market to new members in a case where a member has established a close relationship with a doctor. Consequently, the location of HMOs may not be favorable for some members. Robinson-Crowley (1997) illustrates that closed panels are costly and complicated to establish and maintain unlike other types of health plans.

Florida’s Closed Panel Model

Florida has been actively using the close panel HMOs to provide medical care for its citizen in the State. It has effectively achieved this initiative through reforms. Grove and Burns (2012) explain that since 1993, the State’s law requires insurers to guarantee small employers with sufficient insurance coverage. Through a multi-agency approach, that is involving non-profit and state-chartered organizations, Florida has brokered HMO medical insurance to cater for employees in the state. Grove and Burns (2012) explains that the State of Florida embraces the closed panel HMO because it is less costly and employees can access medical services at one roof reducing time wastage commuting to look for services elsewhere.


Grove, S.K., & Burns, N. (2012). The Practice of Nursing Research: Appraisal, Synthesis, and Generation of Evidence. New York, NY: Elsevier Health Sciences.

Kongstvedt, P.R. (2012). Essentials of Managed Health Care. Burlington, MA: Jones & Bartlett Publishers.

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Robinson-Crowley, C. (1997). Understanding Patient Financial Services. Burlington, MA: Jones & Bartlett Learning.

Wolper, L. F. (2004). Health Care Administration: Planning, Implementing, and Managing Organized Delivery Systems. Burlington, MA: Jones & Bartlett Learning.

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