istinguished by the "organization that provides services and the exclusivity of the relationship between the intermediary and large medical groups" (Miller & Luft, 1994, pp. 1512-1518). For one, the prepaid group practice (PGP) involves an exclusive relationship between the intermediary and the large medical group (e.g., Kaiser Foundation Health Plan and the Permanente Medical Group). Second, with network HMOs, the relationship is not exclusive (e.g., Pacificcare Health Systems). Third, staff HMOs--such as Group Health Cooperative--directly employ physicians. The fourth type of HMO consists of the individual practice association (IPA) (e.g., U.S. Healthcare, Inc.). With an IPA, the health benefit intermediary contracts with either solo or small-group practitioners. Lastly, the mixed-model HMO (e.g., Prudential Health Care Plans, Inc.) involves different relationships between the intermediary and the providers. Such a plan might, for instance, involve exclusive contracts with small medical groups and nonexclusive arrangements with individual physicians (Miller & Luft, 1994, pp. 1512-1518).
In recent years, managed care health plans have attracted more patients than both fee-for-service physicians and indemnity insurers. However, managed care has also undergone some fundamental changes. According to Iglehart (1994), the system is gradually consolidating and evolving towards increased commercialization. The original PGPs were largely nonprofit organizations with a sense of social mission. Increasingly, these HMOs find themselves in competition with profit-oriented health care businesses. In 1988, nonprofit plans had a total enrollment of 17.2 million; whereas, 15.4 million people belonged to for-profit plans. By 1993, enrollment in nonprofit plans had climbed to 20.4 million; however, membership in for-profit plans skyrocketed to 24.8 million (Iglehart, 1994, pp. 63-67).
The success of managed care plans may be due to ...