Risk, Trust, and the HMO: An Editorial

Abstract

"Trust Me: I'm a Doctor"; Sleeper, Wholey, Hamer, Schwartz, and Inoferio's title for their article in this issue clearly plays off this old saying as they investigate the patterns of how Health Maintenance Organizations (HMOs) pay providers for their services. The development and evolution of HMOs over the past few decades-in terms of the complexity of ways they can structure the insurance side as well as the delivery side of prepaid care, the spread of these forms geographically, and the magnitude of lives covered is a fascinating and important story for policy-makers, researchers, employers, and patients to understand. Part of the promise of HMOs and managed care has to do with reducing costs by rationalizing the delivery of services, i.e., producing health with the most efficient amount of health care. This side of HMOs suggests that their growth and structures are governed by technical considerations that should be responsive to typical market pressures. Sleeper and colleagues acknowledge these pressures but use institutional theory to go beyond these ideas. They show why the simple but vital issue of trust prevents some structural forms that might be most advantageous to HMOs pushing financial risk onto physicians in particular from being as widespread as market pressures alone would predict. They argue that, in order to attract customers, HMOs have to prove their trustworthiness and, by implication, have to be particularly wary of interfering with the patients' assumption that they can trust their doctor. "Insurance companies are not in the business to accept financial risk; they simply spread risk across a population and make money providing this service:" Several years ago, a Chief Executive Officer for a large health insurance company made this blunt but accurate observation that sometimes gets overlooked in our enthusiasm to find the best way to pay for health care (Jones 1988). For several decades, HMOs and now managed care more broadly have been heralded as the "only practical solution to the soaring cost of medical care" (Enthoven 1980), particularly because it was supposed to link financial risk to the providers. But HMOs were rarely a perfect marriage between financial risk and providers, and there were still many reasons to give away financial risk to "others." Let us look more closely at some of these "others": patients and their employers. Patients like the one-price-buys-me-everything side of prepaid care. This type of insurance initially seemed to offer the next best thing to free care for the patient, largely because their employer took on most or all of the financial risk. For a golden moment, employers seemed willing to accept the full burden of the financial risk associated with HMO care without needing to have that risk borne or shared by the users or providers of care, partly because it was cheaper than the alternatives. However, they soon began to resist buying HMO insurance, and HMOs sought to spread the risk to others to keep their costs down. Patients who used the care were among the first to be targeted with incentives to change their behavior. Patients' initial mistrust of HMOs was focused on the increasingly restrictive set of structural and financial mechanisms aimed to curb their utilization, such as by limiting their choice of providers, requiring primary care oversight before gaining access to specialists, or having copayments for each visit to the provider. These mechanisms, annoying as they were to patients, still seemed to permit an apparently unfettered relationship with their physician, once they got to the office or hospital. "My doctor" could still be expected to order whatever health care was needed. Instead, if services were limited, it was the HMO administration's rules which had caused the problem by having fewer choices for prescribing drugs, fewer or less convenient laboratory services, fewer specialists, and rules which restricted access to these services.