title: The troubled HMO industry: what's next?
abstract: The fortunes of health maintenance organizations (HMOs) have been on a roller coaster ride for the last 15 years. Growth rates in the number and total enrollments of HMOs surged in 1973 and 1974 following passage of the federal HMO Act. Growth rates abated over the next 8 years. Several favorable factors converged in 1983 to push growth rates back up. Some 15 for-profit HMO companies went public with initial stock offerings during the 1983-85 period. Their stock prices soared as they compiled astounding records of enrollment, revenue and profit growth. In the next 2 years, however, stock prices dropped as quickly as they had risen. Intense price competition and inexperienced managers were important factors contributing to sharp descents in HMO earnings in 1986 and 1987. Some analysts now see positive signs pointing to an industry recovery. However, investors are not convinced of this as HMO stock prices remain severely depressed.
mesh_terms: D003625:Data Collection; D006279:Health Maintenance Organizations / Q000706:statistics & numerical data*; D007182:Income; D007449:Investments / Q000639:trends*; D006278:Medicare; D012306:Risk; D014481:United States