The HMO idea first gained traction in the upper Midwest and ultimately spread across the nation by the mid-1980s. It consisted of payment of a lump sum of money to a group of physicians, who were typically salaried by the HMO. The doctors agreed to assume responsibility for a designated number of patients each year.The salaried doctors could either
benefit or lose financially at year's end, depending on the health status of their assigned patients and the volume of medical and surgical services they ordered. Annual bonuses were eroded or preserved on the basis of the number of expensive secondary or tertiary services, especially those that were ordered excessively. HMO logic predicted that
doctor and patient would work in collaboration to maximize the health of the patient while minimizing the use of expensive services.