Have HMOs broadened their hospital networks?: Changes in HMO hospital networks in California, 1999-2003

This study uses empirical data to study changes in the structure and use of HMO hospital provider networks in California.

Data from California HMOs are used to test whether there have been structural changes in HMO size, geographic coverage, hospital network design, and patient channeling for inpatient care over the period 1999-2003.

Three different measures of HMO network breadth, access, and channeling were analyzed between 1999 and 2003. Actual patient admission data linked to health plan code variables are used to identify inpatient hospital discharges covered by each HMO in California and to which hospital each HMO sends its patients in each year between 1999 and 2003.

Despite consolidation in the total number of HMOs, the share of all hospital admissions accounted for by HMOs remained substantial. In terms of network breadth, there were minimal changes over time in the percent of available hospitals included in HMO networks. There was a slight increase in distance traveled for HMO' patient who were admitted, the opposite of what would be expected if networks were being broadened. Finally, channeling, as measured by the concentration of a payers' patients within its network hospitals did not change significantly.

We found little evidence that there have been systematic changes in either the structure or use of HMO hospital networks in California between 1999 and 2003, suggesting that these factors played a limited role in explaining the return of growth in health care costs.