Relating health care market characteristics to the effectiveness of utilization review programs

This paper presents an exploratory analysis of the relationships between several health care market characteristics and the effectiveness of utilization review programs directed at controlling hospital use and expenditures. The analysis is based on claims data from 223 insured groups over 12 quarters. Results indicate that UR is associated with larger reductions in utilization and expenditures in markets with low HMO enrollment, high admissions per capita, and low hospital occupancy rates. These results suggest that health care market conditions that permit unnecessary use are the ones under which UR programs can be most effective.