The Internal Economics of HMOs: A Research Agenda

Abstract

As health maintenance organizations (HMOs) emerge as the dominant delivery system, the value of research on the fee-for-service sector will diminish. Health services researchers, purchasers, and HMOs will turn their attention to what makes some HMOs more effective than others. To understand this, researchers should take advantage of natural experiments that occur within an individual HMO. This strategy capitalizes on the diversity within an HMO; a single HMO offers different benefit packages, uses different methods for paying providers, and uses different utilization management programs with different employer groups. The authors reviewed the relatively few studies that take advantage of natural experiments. Findings indicate that patients and physicians respond to economic incentives, but no study has examined the relationship between changes in cost sharing or physician payment and quality of care. To achieve external validity, the authors recommend that funding organizations support consortia that replicate similar natural experiments at different HMOs.