Final answer:
The principal disadvantage of an HMO using the IPA model is the potential to lose a significant number of participating physicians if a contract with the IPA is lost, alongside increased administrative and utilization responsibilities.
Step-by-step explanation:
The main disadvantage of an HMO using the IPA model is that if a contract is lost, the HMO could lose a large number of participating physicians. An Independent Practice Association (IPA) model involves a network of individual private practice physicians who enter into contracts with the HMO. These physicians operate independently but are contractually obliged to see HMO patients. However, should the HMO fail to renew contracts or if disputes arise, there is a high risk of losing access to multiple providers, which directly impacts patient options and continuity of care.
Moreover, in the IPA model, the HMO is less integrated, which may lead to additional administrative and utilization control responsibilities. Coordinating care and managing costs effectively can become more complex with this less centralized approach as compared to a more integrated healthcare system. Such challenges can impose financial and operational strains on an HMO, potentially affecting its viability and the quality of care provided to its members.