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9/19/2000

Hospitals Cancel HMO Contracts

Kate Traynor

A recent study finds acute care hospitals, in response to budget pressures, canceling unprofitable managed care contracts while turning to alternative medicine as a new source of revenue.

The eighth biennial report "U.S. Hospitals and the Future of Health Care," conducted by the consulting firm Deloitte & Touche and cosponsored by Modern Healthcare, surveyed executives at 5,015 acute care hospitals. 

About 30 percent of hospitals have canceled an HMO contract, according to the 20 percent of queried executives who responded to the survey. Among hospitals with more than 500 beds, the cancellation rate is much higher—nearly 60 percent. The executives overwhelmingly cited poor financial performance as the reason for canceling a contract. 

Intense consumer interest in nontraditional medicine has created a market for alternative therapies, Deloitte & Touche found. 

Large and inner city hospitals have responded to this demand. Some 25 percent of inner city hospitals and 32 percent of large hospitals offer alternative therapies. The use of alternative medicine extends to hospital executives, too: 24 percent of survey participants reported using herbal substances as therapy. 

To obtain a free copy of the study by mail or in PDF format, contact Erika DeStefano at 513-412-8333.