What is a health maintenance organization (HMO)?

A health maintenance organization (HMO) is a type of managed care organization that is structured to provide a wide range of health services to its members for a fixed annual fee. This model encourages preventive care and regular check-ups by making primary care physicians (PCPs) the first point of contact for patients. Members typically select a PCP, who coordinates their care and provides referrals to specialists within the HMO network when necessary.

The fixed annual fee helps keep costs predictable for both the organization and its members, promoting a focus on cost-effective and efficient care. Since HMOs focus on maintaining the health of their members, they often encourage healthy lifestyle choices and preventive measures, thus reducing the need for more intensive (and costly) medical interventions in the future.

This approach contrasts with other healthcare models, where patients may face higher out-of-pocket costs or have broader access to a range of providers without requiring referrals. The structure of HMOs is intended to manage expenses while also providing comprehensive care to their members.