What Are the Benefits of an HMO?

HMOs, or health maintenance organizations, use a managed-care system to provide health care insurance to consumers. With an HMO, subscribers are provided coverage only if they see a doctor or other professional covered within the network of the HMO to which they belong, and generally need a referral from their primary care physician before seeing any specialist. Although some customers find this restrictive, there are many benefits to an HMO for doctor and patient alike.

Oversight of Primary Care Physician

One of the hallmarks of an HMO is that typically a patient picks one primary care physician (PCP). This can be a general practitioner, an internist, or in the case of children, a pediatrician. That physician serves as the patient's primary contact for any medical care needed, and in some respects can be seen as a "gatekeeper" preventing unnecessary visits to specialists. Thus, if a patient wishes to see a specialist for, say, a skin condition, a digestive ailment or a mental health concern, he would make an appointment with the primary care physician first to discuss the problem. If the PCP agreed that a visit to a specialist was indicated, that doctor would provide the patient with a referral to a specialist within the same HMO. For the patient, the benefits are that he forms a close medical relationship with his chosen PCP, who is familiar with his entire battery of medical issues and can take a broad view of the patient's needs. For the HMO, this system cuts costs. And for doctors, it ensures a reliable supply of patient visits.

Cost Containment

When you belong to an HMO, you pay a monthly premium. Beyond this premium, you pay a small copayment for office visits, regardless of their purpose (as long as they fit into the referral system guidelines). Therefore, you are unlikely to be hit with unexpected or enormous medical costs: your out-of-pocket expenses are predictable and generally vary only by the number, and not type, of visits and procedures that your medical care entails.

Reduced Paperwork

With an HMO, the administration for your care is centralized. This reduces or eliminates the requirement typical with other forms of insurance that you file claim forms for individual visits, procedures and hospital stays. Normally when you join an HMO you receive a plastic card in the mail, and this is all you need at subsequent doctor visits to get all the paperwork taken care of.

Comprehensive Services

Because of their cost structure and the fact that any care that is covered for their patients garners a fixed fee, HMOs have a strong interest to keep patients healthy. It is far more economical for HMOs to pay for routine visits and care than to deny those services and then have to pay for more extreme illnesses or situations. Therefore, most HMO plans cover a battery of standardized visits and procedures, such as prenatal care, yearly checkups, mammograms, immunizations and frequent visits for babies during the first year.