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.
Bibliographical noteFunding Information:
*Presented at the Fifth Annual Meeting of the Association for Health Services Research, June 26-28, 1988, San Francisco, CA. This research was supported by Contract No. 240-85-0053 from the Department of Health and Human Services, Health Resources and Service Administration.
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