Effects of HMOs on the creation of competitive markets for hospital services

Why do health maintenance organizations (HMOs) use particular hospitals, and do they concentrate patients in hospitals where they obtain low prices? We answered these questions with a study of six HMOs in four large metropolitan areas in 1986. A two-part model was estimated for the probability that a hospital would be used and the demand for general inpatient admissions at hospitals that were used. Four staff-network plans in our study do shop for hospital services on the basis of price more than was generally believed. However, two independent practice association (IPAs) plans use more hospitals in the community and do not concentrate patients effectively at hospitals that offer the lowest prices.     

Serving distinct populations: performance in Medicaid HMOs and commercial HMOs

The objective of this study was to compare the preventable emergency department (ED) admissions of Medicaid health maintenance organization (HMO) beneficiaries and commercial HMO beneficiaries in the state of Florida, in addition to analyzing the effect of HMO market conditions in relation to these admissions. Paired and unpaired t tests and 10 regression equations were estimated using ED hospital admission data to examine the differences between Medicaid and commercial HMOs in 5 commonly recognized preventable hospitalization conditions. For the same preventable ED admissions, Medicaid and commercial HMO beneficiaries had statistically different rates of admission. In 3 of 5 conditions, Medicaid HMO beneficiaries had more preventable ED admissions than did commercial HMOs for the same conditions. HMO market conditions did not have a statistically significant association with preventable ED admissions for either beneficiary group, whereas teaching status and the percentage of females admitted to the hospital under a given HMO payer type had the greatest effect on preventable ED admissions. Whereas uncontrolled comparisons of preventable ED admissions are statistically different between Medicaid and commercial HMO beneficiaries, controlling for hospital and patient characteristics, market conditions do not affect the rate of preventable ED admissions.