Staff Reporter

Health maintenance organizations, viewed only five years ago as the saviors of the nation's health care industry, find themselves under fire from all fronts.

"HMOs have become the lightning rods of criticism for everything that people think is wrong with health care," said James Turner, a principal in the San Francisco office of Milliman & Robertson Inc., a national insurance consulting firm based in Seattle.

HMOs face an especially aggressive attack from Sacramento lawmakers, who have repeatedly tried to push through dozens of reform bills. In the wake of a report recommending significant regulatory overhaul, 50 bills are on tap for the year and the deadline for new state legislation is still a month away.

Two HMO reform initiatives are in the works for the November ballot, even though two similar initiatives in 1996 were both defeated.

On the national front, giant hospital chains like Columbia/HCA Corp. have borne the brunt of federal investigations into health care fraud. The resulting uproar resulted in changes in Medicare billing practices that will hit HMOs as well as hospitals.

HMOs are also coming under fire from Wall Street, as they face increasing difficulty in reaching expected profit levels. Several HMO stocks have been pummeled in recent months, including those of New York-based Oxford Health Plans Inc. and Santa Ana-based PacifiCare Corp.

HMOs also face criticism from consumer advocates, who claim that the health plans are profiting by denying needed care.

Doctors, nurses and other health care workers are taking their shots too primarily at the cost-control techniques used by HMOs.

Even Hollywood has gotten into the act, as evidenced by a scene from the current hit comedy "As Good As It Gets," in which the character played by Helen Hunt launches into a tirade against HMOs a scene that repeatedly draws applause from movie audiences.

Myra Snyder, executive director of the California Association of Health Plans, which represents the industry in California, said HMOs have in effect become the "political poster child" for problems with the nation's health care system.

"The politicians, in their zeal to respond to this, may end up unraveling the ability of the health plans to deliver the care that people receive," Snyder said.

Ironically, the public perception of HMOs is mixed. When asked in a recent Field Research Corp. poll whether they are satisfied with their own health plan, 83 percent of 1,200 respondents said they are "very satisfied" or "satisfied." Most multibillion-dollar industries have nowhere near that level of public approval.


For reprint and licensing requests for this article, CLICK HERE.