News Bits from MichUHCAN September 1999 Newsletter

In July, Physicians for a National Health Program released a study showing that for-profit HMOs provide worse care than non-profits. PNHP compared plans on according to14 recognized quality indicators, such as rates of child immunizations, prenatal care, pap smears, and care for certain serious illnesses.

According to PNHP, for-profit HMOs had a 27% lower rate of eye examinations for diabetics (to prevent blindness); a 16% lower rate of appropriate drug treatment for heart attack survivors; and a 9% lower rate of follow-up for patients released from mental hospitals. Childhood immunization rates were 12% lower.

Total costs in investor-owned and non-profit plans were similar at around $128 per member per month. But for-profit HMOs spent 48% more of their revenues on administrative costs and profits (19.4% of revenues vs. 13.1% for non-profits). Hence, says PNHP, for-profit HMOs spent significantly less for patient care.

According to Crain's Detroit Business, most HMOs in Southeast Michigan showed a profit (or "net income") in the first quarter of 1999 after losing money in 1998. Those plans with large Medicaid memberships, like Wellness Plan and OmniCare, made the biggest gains. Each of those companies laid off about one-third of their workers last year and renegotiated the rates they pay hospitals .