Alain Enthoven in today's SF Comical waxes poetic over the wonders of the HMO:

Health maintenance organizations used to be the most promising strategy for mitigating the growth of health care costs. The idea was inspired by Kaiser Permanente with its teams of salaried physicians and other professionals dedicated to helping patients stay well or curing their illness in effective and efficient ways. Instead of being paid fees for each service provided, with the inherent incentive to provide more and more services, health care professionals at Kaiser Permanente and other HMOs are paid a salary to provide or arrange the care that's needed.

Now this is a true description of Kaiser Permanente which combines a large multi-specialty medical group with a hospital and insurance organization. Doctors at the Permanente Medical Group are compensated with salaries and generous retirement benefits as well as shares of medical group operating profits. As a medical group they have significant say in the operations of the hospitals. Medical office expenditures are taken care of by the medical group.

Doctors in other HMOs are independent contractors for insurance companies which actually run the HMO. They are paid a flat fee per patient without benefits and they must use this fee to run their medical offices, provide treatment etc. They are in the same position as the large groups of lecturers and other "visiting" faculty that provide instruction services at Sanford and other major universities.

Doctors at Kaiser Permanente are really free to provide and arrange care that is needed. They are subject to peer review and supervision by other members of the medical group but their decisions are rarely questioned.

Doctors at other HMOs are managed by insurance company employees who do not work with them and who may not even be doctors. This abuse of the idea of care management is probably one of the more important reasons that the public has rejected HMOs.

Finally we should note that doctors practicing at Kaiser Permanente have been selected by a medical group that must maintain quality or lose its reputation. Doctors practicing at most HMOs and PPOs are selected if they meet two criteria. They are licensed to practice medicine and they are willing to accept the payments offered by the insurance company that controls the HMO.

Kaiser Permanente is hardly a perfect institution. As an insurance company it is all too willing to meet its competitors in the race to the bottom and its continued allegiance to the insurance model of health care delivery is a serious issue. Professor Enthoven's use of Kaiser Permanente as an example of an HMO in order to elevate the status of insurance company HMOs is simply not true.