How Do HMOs Reduce Health Care Costs?
Savings are accomplished by exclusive contracts, a very large membership base, and limitations on the range of treatments available. Each HMO contracts with specific doctors, hospitals, and other health care providers. By agreeing to exclusive arrangements with health care providers, the HMO is able to negotiate for lower prices. HMOs also deal with very large quantities of employers and individual members. By bringing a large amount of individuals to exclusively contracted health care providers, HMOs are able to negotiate for lower health care costs. Another way HMOs keep health care costs down is by limiting the kinds of treatments their contracted health care providers can provide. Some treatments are eliminated, while focusing on preventative and long-term care for their members. Higher-priced plans can cover more services, cover a larger portion of the costs, and possibly reduce your deductables and other out-of-pocket expenses.
