This article studies factors of safety-net hospitals that affect contracting with managed-care organizations. Web-based data were used to identify the hospital networks of managed-care plans in 71 metropolitan statistical areas. We collected lists of hospitals from a national sample of managed-care plans. After combining these data with hospital, managed-care, and area characteristics, multivariate logistic regressions with random effects were estimated to determine hospital characteristics that influence the probability of a contract between the plan and hospital. Hospital characteristics included size, ownership, whether it was part of a system, teaching status, and safety-net activities. Managed-care plan characteristics included type of plan and ownership. Certain safety-net hospital measures and a cluster of related hospital characteristics are associated with a lower probability of contract. Hospitals accounting for a disproportionate share of safety-net activities are less likely to belong to managed-care networks, which may place them at a competitive disadvantage.
Ashby, J.2002. America’s hospitals: in danger or bouncing back. Agency for Healthcare Research and Quality. Retrieved September 1, 2004 from http://www.ahrq.gov/news/ulp/hospital/event3/ashbytxt.htm.
2.
Atkinson, G., W. D. Helms, and J. Needleman. 1997. State trends in hospital uncompensated care. Health Affairs16 (4): 233-241.
3.
Baxter, R. J., and R. E. Mechanic. 1997. The status of local health care safety nets. Health Affairs16 (4): 7-23.
4.
Breslow, N. E., and D. G. Clayton. 1993. Approximate inference in generalized mixed models. Journal of the American Statistical Association88: 9-25.
5.
Breslow, N. E., and X. Lin. 1995. Bias correction in generalized linear mixed models with a single component of dispersion. Biometrika82: 81-91.
6.
Brooks, J. M., A. Dor, and H. Wong. 1997. Hospital-insurer bargaining: An empirical investigation of appendectomy pricing. Journal of Health Economics16 (4): 417-434.
7.
Brooks, J. M., A. Dor, and H. Wong. 1998. The impact of physician payments on hospital-insurer bargaining. In The US in governments and health systems, edited by D. Chinitz and M. Cohen. London: John Wiley and Sons.
8.
Brown, E. R., M. R. Cousineau, and W. T. Price. 1985. Competing for Med-Cal business: Why hospitals did and did not, get contracts. Inquiry22: 237-250.
9.
Carpenter, D.2005. Health care’s new behemoths: As insurers consolidate, their prosperity and power grows—and so does the scrutiny. Hospitals and Health Networks79 (1): 38-46.
10.
Coughlin, T., and D. Liska. 1998. Changing state and federal payment policies for Medicaid disproportionate share hospitals. Health Affairs17 (3): 118-136.
11.
Feldman, R., H. C. Chan, J. Kralewski, B. Dowd, and J. Shapiro. 1990. Effects of HMOs on the creation of competitive markets for hospital services. Journal of Health Economics9 (2): 207-222.
12.
Feldman, R., B. Dowd, D. McCann, and A. Johnson. 1986. The competitive impact of health maintenance organizations on hospital finances: An exploratory study. Journal of Health Politics Policy and Law10 (4): 675-697.
13.
Fishman, L. E.1997. What types of hospitals form the safety net?Health Affairs16 (4): 215-222.
14.
Fishman, L. E., and J. D. Bentley. 1997. The evolution of support for safety-net hospitals. Health Affairs16 (4): 30-47.
15.
Gaskin, D., J. Escarce, J. Hadley, and K. Schulman. 2002. A model of HMOs contracting with hospitals for bypass surgery. Health Services Research37 (4): 963-984.
16.
Gaskin, D. J., and J. Hadley. 1999. Population characteristics of markets of safety-net and non-safety-net hospitals. Journal of Urban Health76 (3): 351-370.
17.
Gaskin, D., J. Hadley, and V. G. Freeman. 2001. Are urban safety-net hospitals losing low-risk Medicaid maternity patients?Health Services Research36 (1 pt. 1): 25-51.
18.
Harrison, M. G., and C. C. Montalvo. 2002. The financial health of California hospitals: A looming crisis. Health Affairs21 (1): 118-126.
19.
Herfindahl, O. C. 1950. Concentration in the US steel industry. Doctoral dissertation. New York: Columbia University.
20.
Hirschman, A.1945. National power and the structure of foreign trade. Berkeley: University of California Press.
21.
Hosmer D. W., and S. Lemeshow. 2000. Applied logistic regression. 2d ed.New York: John Wiley and Sons.
22.
Jensen, G. A., M. A. Morrisey, S. Gaffney, and D. K. Liston. 1997. The new dominance of managed care: Insurance trends in the 1990s. Health Affairs17: 125-136.
23.
Johns, L.1985. Selective contracting in California. Health Affairs4 (3): 32-48.
24.
Kralewski, J. E, T. D. Wingert, R. Feldman, G. J. Rahn, and T. H. Klassen. 1992. Factors related to the provision of hospital discounts for HMO inpatients. Health Services Research27 (2): 133-153.
25.
Laschober, M., M. Kitchman, P. Neuman, and A. A. Strabic. 2002. Trends in Medicare supplemental insurance and prescription drug coverage, 1996-1999. Health AffairsSupp. Web Exclusives: W127-W138.
26.
Lewin, M. E., and S. Altman, eds. 2000. America’s health care safety net: Intact but endangered. Washington, DC: National Academy Press.
27.
Littell R. C., G. A. Milliken, W. W. Stroup, and R. D. Wolfinger. 1996. SAS system for mixed models. Cary, NC: SAS Institute Inc.
28.
Mann, J. M., G. A. Melnick, A. Bamazei, and J. Zwanziger. 1997. A profile of uncompensated hospital care, 1983-1994. Health Affairs16 (4): 223-232.
29.
Medicare Payment Advisory Commission (MedPAC). 2002. Report to the Congress: Medicare Payment Policy. Washington, DC: MedPAC.
30.
Melnick, G. A., J. Zwanziger, A. Bamezai, and R. Pattison. 1992. The effects of market structure and bargaining position on hospital prices. Journal of Health Economics11 (3): 217-233.
31.
Mennemeyer, S. T., and L. Olinger. 1989. Selective contracting in California: Its effect on hospital finance. Inquiry26 (4): 442-457.
32.
Salit, S., S. Fass, and M. Nowak. 2002. Out of the frying pan: New York City hospitals in an age of deregulation. Health Affairs21 (1): 127-139.
33.
Smits, H. L., R. B. Fetter, and L. F. McMahon. 1984. Variation in resource use within diagnosis-related groups: The severity issue. Health Care Finance ReviewSupp: 71-78.
34.
Thomas J. W., and M. L. Ashcraft. 1991. Measuring severity of illness: Six severity systems and their ability to explain cost variations. Inquiry28 (1): 39-55.
35.
Wolfinger, R., and M. O’Connell. 1993. Generalized linear mixed models: A pseudo-likelihood approach. Journal of Statistical Computation and Simulation48: 233-243.
36.
Zuckerman, S., G. Bazzoli, A. Davidoff, and A. LoSasso. 2001. How did safety-net hospitals cope in the 1990s?Health Affairs20 (4): 159-168.
37.
Zwanziger, J., and A. Meirowitz. 1998. Strategic factors in hospital selection for HMO and PPO provider networks. In Managed care and changing health care markets, edited by M. Morrisey, 77-94. Washington, DC: The American Enterprise Institute Press.
38.
Zwanziger, J., and G. A. Melnick. 1988. The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California. Journal of Health Economics7 (4): 301-320.
39.
Zwanziger, J., G. A. Melnick, and A. Bamezai. 2000. Can cost shifting continue in a price competitive environment?Health Economics9 (3): 211-225.
