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A descriptive analysis of average productivity among health maintenance organizations, 1985 to 2001

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Author Info

  • Douglas Wholey

    ()

  • John Engberg

    ()

  • Cindy Bryce

    ()

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    Abstract

    This paper examines the evolution of average productivity among HMOs for 4,419 Health Maintenance Organizations (HMOs) from 1985 to 2001. For both IPA and non-IPA HMOs, HMO productivity increased from 1990 to 1996 and rapidly decreased from 1997 to 2001. In contrast to cost functions that show scale economies for IPA and non-IPA HMOs, production functions showed scale economies for IPA HMOs were constant and non-IPA HMOs having only slight scale economies. This suggests that much of the scale economies observed in cost functions are due to lower prices for resources used rather than improvements in production organization. Non-IPA HMOs and non-profit HMOs are more productive than IPA HMOs and for profit HMOs. Production organization for non-IPA HMOs appears to have improved over time, resulting in non-IPA HMOs being able to produce more member months of coverage with their production organization in 1997 to 2001 than they would have with their production organization in 1985 to 1990. Regulations requiring consumer involvement in HMO governance reduce productivity. Copyright Springer Science + Business Media, Inc. 2006

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    File URL: http://hdl.handle.net/10.1007/s10729-006-7666-7
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    Bibliographic Info

    Article provided by Springer in its journal Health Care Management Science.

    Volume (Year): 9 (2006)
    Issue (Month): 2 (May)
    Pages: 189-206

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    Handle: RePEc:kap:hcarem:v:9:y:2006:i:2:p:189-206

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    Web page: http://www.springerlink.com/link.asp?id=101767

    Related research

    Keywords: Health maintenance organizations; Managed care; Productivity;

    References

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    1. Wholey, Douglas & Feldman, Roger & Christianson, Jon B. & Engberg, John, 1996. "Scale and scope economies among health maintenance organizations," Journal of Health Economics, Elsevier, vol. 15(6), pages 657-684, December.
    2. Robert Town & Roger Feldman & Douglas Wholey, 2004. "The Impact of Ownership Conversions on HMO Performance," International Journal of Health Care Finance and Economics, Springer, vol. 4(4), pages 327-342, December.
    3. Robert Rosenman & Kris Siddharthan & Melissa Ahern, 1997. "Output Efficiency of Health Maintenance Organizations in Florida," Health Economics, John Wiley & Sons, Ltd., vol. 6(3), pages 295-302.
    4. Kris Siddharthan & Melissa Ahern & Robert Rosenman, 2000. "Data Envelopment Analysis to determine efficiencies of health maintenance organizations," Health Care Management Science, Springer, vol. 3(1), pages 23-29, January.
    5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    6. McClellan, Mark & Cutler, David & Newhous, Joseph P., 2000. "How Does Managed Care Do It?," Scholarly Articles 2643884, Harvard University Department of Economics.
    7. Roland Maude-Griffin & Roger Feldman & Douglas Wholey, 2004. "Nash bargaining model of HMO premiums," Applied Economics, Taylor & Francis Journals, vol. 36(12), pages 1329-1336.
    8. J. A. Hausman & W. E. Taylor, 1980. "Panel Data and Unobservable Individual Effects," Working papers 255, Massachusetts Institute of Technology (MIT), Department of Economics.
    9. Glied, Sherry, 2000. "Managed care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 13, pages 707-753 Elsevier.
    10. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
    11. Wholey, Douglas & Feldman, Roger & Christianson, Jon B., 1995. "The effect of market structure on HMO premiums," Journal of Health Economics, Elsevier, vol. 14(1), pages 81-105, May.
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