HMOs: Non-Profits Struggle Despite Top Quality Ratings

      Top-rated, not-for-profit HMOs are facing a "startling reality" as they struggle to stay afloat: "High ratings don't help the bottom line ... [and] they're often hurt by for-profit rivals that charge lower premiums and pay doctors less," the AP/Tulsa World reports. Despite being ranked among the 40 best HMOs in the country, major not-for-profit health plans -- including Massachusetts' Harvard Pilgrim Health Care, Pennsylvania's Penn State Geisinger Health Plan and Kaiser Health Plans -- are operating at major losses. Harris Berman, CEO of the highly rated not-for-profit Tufts Health Plan in Massachusetts, said, "The real problem is people do not care about quality; the marketplace only cares about price." Not-for-profits have tried to hold down premium prices while maintaining quality-of-service, but the task proved to be difficult. Director of the Public Citizen Health Research Group Sidney Wolfe explained that not-for-profits "view themselves as more service-orientated" and thus tend to spend larger percentages of their revenue on medical care than for-profits. "We had been in a price war for years and could no longer support it," Berman noted. And while consumers in general favor not-for- profit HMOs over for-profits, they ultimately buy "according to what an HMO charges," rarely asking about profit status. The trouble keeping up financially has prompted some not-for-profits, such as Empire Blue Cross and Blue Shield of New York, to convert so that they can raise needed money through the stock market and public trading. Not-for-profits can only secure extra cash through selling bonds (1/27).