What is a health maintenance organization (HMO)?

A health maintenance organization (HMO) is a type of managed care plan that requires members to use a specific network of healthcare providers for their medical services. This structured approach typically involves a primary care physician (PCP) who coordinates all healthcare needs and referrals to specialists within the network. By utilizing a set network of providers, HMOs can manage costs effectively, emphasizing preventive care and reducing out-of-pocket expenses for their members.

The requirement to use network providers means that members usually need to seek care from chosen doctors and facilities, which fosters efficiency and continuity of care. This characteristic of HMOs helps in managing both healthcare costs and patient outcomes by focusing on preventative services and routine check-ups, which can mitigate the need for more extensive and expensive treatments in the long run.