HMO penetration, hospital competition, and growth of ambulatory surgery centers

Using metropolitan statistical area (MSA) panel data from 1992-2001 constructed from the 2002 Medicare Online Survey Certification and Reporting (OSCAR) System, we estimate the market effects of health maintenance organization (HMO) penetration and hospital competition on the growth of freestanding ambulatory surgery centers (ASCs). Our regression models with MSA and year fixed effects suggest that a 10-percentage-point increase in HMO penetration is associated with a decrease of 3 ASCs per 1 million population. A decrease from 5 to 4 equal-market-shared hospitals in a market is associated with an increase of 2.5 ASCs per 1 million population.