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Number of HMOs Dropping Nationwide, PPOs Increasing MCIC Finds


MANASQUAN, NJ - The number of health maintenance organizations (HMOs) has been dropping nationwide, while the number of preferred provider organizations (PPOs) has been increasing, according to data compiled by the Managed Care Information Center’s research staff.

MCIC found that while the number of HMOs throughout the country stood at 849 in 2000, that number has since dropped to 716, a 16 percent decline, according to MCIC statistics.

However, the number of PPOs has increased dramatically over the past two years, MCIC found.

The number of PPOs nationwide has soared from 456 in 2000 to 756 in 2002, an increase of 65.6 percent, according to MCIC statistics.

The decline in HMOs and rise in PPOs is understandable, said Robert K. Jekins, CEO of Managed Care Information Center.

Some of the decrease in HMOs can be traced to consolidation and acquisitions over the past 18 to 24 months. Other plans went out of business, he said.

There were plenty of opportunities in the early days of managed care to reduce costs by “rigidly” managing care, Jenkins said.

“Once the care and costs are managed to a certain degree, there is not much more tweaking an HMO can do,” he said. “And providers will tell you then can no longer afford to accept lower reimbursement contracts from HMOs.”

“A good question for all interested parties to debate is have HMO model managed care plans wrung out all the opportunities for costs savings?” Jenkins said.

MCIC also found that the number of California HMOs dropped from 59 in 2000 to 53 in 2002.

The number of HMOs servicing Medicare patients nationwide dropped from 359 in 2000 to 298 in 2002, while those servicing Medicaid patients dropped from 334 in 2000 to 298 in 2002, according to MCIC.

The data was gathered in connection with the compilation of the new edition of the National Directory of Managed Care Organizations and database.

For additional information about Managed Care Information Center, contact MCIC,

PO Box 456, Allenwood, NJ 08720; call toll-free (800) 516-4343, fax toll-free (888) 329-6242, e-mail info@themcic.com, or visit http://www.themcic.com.

The Managed Care Information Center (MCIC) gathers, compiles, analyzes, studies and distributes business information on the managed care industry. The MCIC delivers this strategic business information to its clients via executive newsletters, yearbooks, leading industry databases and directories, management reports, and client research studies. The information is available in print, on CD-ROM and via the Internet at www.themcic.com.