For all the talk of consolidation in the HMO industry, research suggests that the number of HMOs in the country is rising not falling. The number of HMOs grew by 16 percent from 1995 to 1997 the largest gain since the boom years of the 1980s. The rise corresponds with the sharpest gains in total HMO enrollment on record. It will remain to be seen, however, whether growth in the number of HMOs will continue. Researchers attribute the dropoff after 1987 to competitive pressures that led some HMOs to offer unprofitably low premiums eerily similar to developments that have contributed to poor HMO margins during the last two years.
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SOURCE: HMO TREND REPORT, INTERSTUDY PUBLICATIONS, MINNEAPOLIS, 1998