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

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  • Douglas Wholey

    ()

  • John Engberg

    ()

  • Cindy Bryce

    ()

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

Suggested Citation

  • Douglas Wholey & John Engberg & Cindy Bryce, 2006. "A descriptive analysis of average productivity among health maintenance organizations, 1985 to 2001," Health Care Management Science, Springer, vol. 9(2), pages 189-206, May.
  • Handle: RePEc:kap:hcarem:v:9:y:2006:i:2:p:189-206
    DOI: 10.1007/s10729-006-7666-7
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    References listed on IDEAS

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    1. 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.
    2. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    3. 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.
    4. Robert Town & Roger Feldman & Douglas Wholey, 2004. "The Impact of Ownership Conversions on HMO Performance," International Journal of Health Economics and Management, Springer, vol. 4(4), pages 327-342, December.
    5. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
    6. 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.
    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. 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.
    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. 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.
    11. McClellan, Mark & Cutler, David & Newhous, Joseph P., 2000. "How Does Managed Care Do It?," Scholarly Articles 2643884, Harvard University Department of Economics.
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    Cited by:

    1. Pirozek, Petr & Komarkova, Lenka & Leseticky, Ondrej & Hajdikova, Tatana, 2015. "Corporate governance in Czech hospitals after the transformation," Health Policy, Elsevier, vol. 119(8), pages 1086-1095.

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