Skip to main content
NCBI home page
Health Services Research logoLink to Health Services Research
. 2001 Dec;36(6 Pt 1):1019–1035.

HMO penetration, competition, and risk-adjusted hospital mortality.

D B Mukamel 1, J Zwanziger 1, K J Tomaszewski 1
PMCID: PMC1089276  PMID: 11775665

Abstract

OBJECTIVE: HMOs have been shown to have an effect on the care provided directly to their enrollees. They may also influence the care provided to individuals in fee-for-service plans through a spill-over effect. The objective of this study was to investigate the associations among HMO market penetration, HMO and hospital competition, and the quality of care received by Medicare fee-for-service patients measured by risk-adjusted hospital mortality rates. DATA SOURCES: The 1990 data for 1,927 hospitals in 134 metropolitan statistical areas (with five or more hospitals) included Medicare fee-for-service risk-adjusted mortality rates from the Medicare Hospital Information Reports, hospital characteristics from the American Hospital Association annual survey, and HMO market penetration and competition calculated from InterStudy and Group Health Association of America data. STUDY DESIGN: Statistical regression techniques were used to identify the associations between HMO market penetration, competition, and risk-adjusted mortality, controlling for other hospital characteristics and region. PRINCIPAL FINDINGS: Higher HMO market penetration and to a lesser degree increased HMO competition were associated with better mortality outcomes for fee-for-service Medicare enrollees. Competition between hospitals did not exhibit a significant association. CONCLUSIONS: HMOs may have a spill-over effect on quality of care received by individuals enrolled in fee-for-service plans. These findings may be explained by a positive effect on local practice styles or a preferential selection by HMOs for areas with better hospital care.

Full text

PDF
1019

Selected References

These references are in PubMed. This may not be the complete list of references from this article.

  1. Baker L. C., Corts K. S. HMO penetration and the cost of health care: market discipline or market segmentation? Am Econ Rev. 1996 May;86(2):389–394. [PubMed] [Google Scholar]
  2. Baker L. C., Wheeler S. K. Managed care and technology diffusion: the case of MRI. Health Aff (Millwood) 1998 Sep-Oct;17(5):195–207. doi: 10.1377/hlthaff.17.5.195. [DOI] [PubMed] [Google Scholar]
  3. Chernew M., Scanlon D., Hayward R. Insurance type and choice of hospital for coronary artery bypass graft surgery. Health Serv Res. 1998 Aug;33(3 Pt 1):447–466. [PMC free article] [PubMed] [Google Scholar]
  4. Chernew M. The impact of non-IPA HMOs on the number of hospitals and hospital capacity. Inquiry. 1995 Summer;32(2):143–154. [PubMed] [Google Scholar]
  5. Davis R. B., Iezzoni L. I., Phillips R. S., Reiley P., Coffman G. A., Safran C. Predicting in-hospital mortality. The importance of functional status information. Med Care. 1995 Sep;33(9):906–921. doi: 10.1097/00005650-199509000-00003. [DOI] [PubMed] [Google Scholar]
  6. Dranove D., Simon C. J., White W. D. Determinants of managed care penetration. J Health Econ. 1998 Dec;17(6):729–745. doi: 10.1016/s0167-6296(97)00045-3. [DOI] [PubMed] [Google Scholar]
  7. Epstein A. Performance reports on quality--prototypes, problems, and prospects. N Engl J Med. 1995 Jul 6;333(1):57–61. doi: 10.1056/NEJM199507063330114. [DOI] [PubMed] [Google Scholar]
  8. Escarce J. J., Shea J. A., Chen W. Segmentation of hospital markets: where do HMO enrollees get care? Health Aff (Millwood) 1997 Nov-Dec;16(6):181–192. doi: 10.1377/hlthaff.16.6.181. [DOI] [PubMed] [Google Scholar]
  9. Escarce J. J., Van Horn R. L., Pauly M. V., Williams S. V., Shea J. A., Chen W. Health maintenance organizations and hospital quality for coronary artery bypass surgery. Med Care Res Rev. 1999 Sep;56(3):340–372. doi: 10.1177/107755879905600304. [DOI] [PubMed] [Google Scholar]
  10. Gold M. R., Hurley R., Lake T., Ensor T., Berenson R. A national survey of the arrangements managed-care plans make with physicians. N Engl J Med. 1995 Dec 21;333(25):1678–1683. doi: 10.1056/NEJM199512213332505. [DOI] [PubMed] [Google Scholar]
  11. Hartz A. J., Gottlieb M. S., Kuhn E. M., Rimm A. A. The relationship between adjusted hospital mortality and the results of peer review. Health Serv Res. 1993 Feb;27(6):765–777. [PMC free article] [PubMed] [Google Scholar]
  12. Hartz A. J., Krakauer H., Kuhn E. M., Young M., Jacobsen S. J., Gay G., Muenz L., Katzoff M., Bailey R. C., Rimm A. A. Hospital characteristics and mortality rates. N Engl J Med. 1989 Dec 21;321(25):1720–1725. doi: 10.1056/NEJM198912213212506. [DOI] [PubMed] [Google Scholar]
  13. Hill S. C., Wolfe B. L. Testing the HMO competitive strategy: an analysis of its impact on medical resources. J Health Econ. 1997 Jun;16(3):261–286. doi: 10.1016/s0167-6296(96)00538-3. [DOI] [PubMed] [Google Scholar]
  14. Keeler E. B., Rubenstein L. V., Kahn K. L., Draper D., Harrison E. R., McGinty M. J., Rogers W. H., Brook R. H. Hospital characteristics and quality of care. JAMA. 1992 Oct 7;268(13):1709–1714. [PubMed] [Google Scholar]
  15. Krakauer H., Bailey R. C., Skellan K. J., Stewart J. D., Hartz A. J., Kuhn E. M., Rimm A. A. Evaluation of the HCFA model for the analysis of mortality following hospitalization. Health Serv Res. 1992 Aug;27(3):317–335. [PMC free article] [PubMed] [Google Scholar]
  16. Manheim L. M., Feinglass J., Shortell S. M., Hughes E. F. Regional variation in Medicare hospital mortality. Inquiry. 1992 Spring;29(1):55–66. [PubMed] [Google Scholar]
  17. Melnick G. A., Zwanziger J., Bamezai A., Pattison R. The effects of market structure and bargaining position on hospital prices. J Health Econ. 1992 Oct;11(3):217–233. doi: 10.1016/0167-6296(92)90001-h. [DOI] [PubMed] [Google Scholar]
  18. Melnick G. A., Zwanziger J., Bradley T. Competition and cost containment in California: 1980-1987. Health Aff (Millwood) 1989 Summer;8(2):129–136. doi: 10.1377/hlthaff.8.2.129. [DOI] [PubMed] [Google Scholar]
  19. Miller R. H., Luft H. S. Managed care plan performance since 1980. A literature analysis. JAMA. 1994 May 18;271(19):1512–1519. [PubMed] [Google Scholar]
  20. Morrisey M. A. Hospital pricing: cost shifting and competition. EBRI Issue Brief. 1993 May;(137):1–17. [PubMed] [Google Scholar]
  21. Mukamel D. B., Mushlin A. I., Weimer D., Zwanziger J., Parker T., Indridason I. Do quality report cards play a role in HMOs' contracting practices? Evidence from New York State. Health Serv Res. 2000 Apr;35(1 Pt 2):319–332. [PMC free article] [PubMed] [Google Scholar]
  22. Shortell S. M., Hughes E. F. The effects of regulation, competition, and ownership on mortality rates among hospital inpatients. N Engl J Med. 1988 Apr 28;318(17):1100–1107. doi: 10.1056/NEJM198804283181705. [DOI] [PubMed] [Google Scholar]
  23. Simon C. J., Born P. H. Physician earnings in a changing managed care environment. Health Aff (Millwood) 1996 Fall;15(3):124–133. doi: 10.1377/hlthaff.15.3.124. [DOI] [PubMed] [Google Scholar]
  24. Spector W. D., Mukamel D. B. Using outcomes to make inferences about nursing home quality. Eval Health Prof. 1998 Sep;21(3):291–315. doi: 10.1177/016327879802100301. [DOI] [PubMed] [Google Scholar]
  25. Sullivan K. Managed care plan performance since 1980: another look at 2 literature reviews. Am J Public Health. 1999 Jul;89(7):1003–1008. doi: 10.2105/ajph.89.7.1003. [DOI] [PMC free article] [PubMed] [Google Scholar]
  26. Tussing A. D., Wojtowycz M. A. Health maintenance organizations, independent practice associations, and cesarean section rates. Health Serv Res. 1994 Apr;29(1):75–93. [PMC free article] [PubMed] [Google Scholar]
  27. Ware J. E., Jr, Brook R. H., Rogers W. H., Keeler E. B., Davies A. R., Sherbourne C. D., Goldberg G. A., Camp P., Newhouse J. P. Comparison of health outcomes at a health maintenance organisation with those of fee-for-service care. Lancet. 1986 May 3;1(8488):1017–1022. doi: 10.1016/s0140-6736(86)91282-1. [DOI] [PubMed] [Google Scholar]
  28. Zwanziger J., Melnick G. A., Bamezai A. Costs and price competition in California hospitals, 1980-1990. Health Aff (Millwood) 1994 Fall;13(4):118–126. doi: 10.1377/hlthaff.13.4.118. [DOI] [PubMed] [Google Scholar]
  29. Zwanziger J., Melnick G. A. The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California. J Health Econ. 1988 Dec;7(4):301–320. doi: 10.1016/0167-6296(88)90018-5. [DOI] [PubMed] [Google Scholar]

Articles from Health Services Research are provided here courtesy of Health Research & Educational Trust

RESOURCES