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Related Experiment Videos

HMO-hospital relationships: an exploratory study.

J E Kralewski, D S Doth, R G Rosenberg

    Health Care Management Review
    |January 1, 1983
    PubMed
    Summary
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    Health Maintenance Organizations (HMOs) often secure hospital discounts but rarely foster price competition. Hospital selection by HMOs prioritizes location and service availability over cost.

    Area of Science:

    • Health Economics
    • Healthcare Management
    • Hospital Administration

    Background:

    • Health Maintenance Organizations (HMOs) frequently negotiate discounted rates for hospital services.
    • The impact of these discounts on overall hospital price competition remains unclear.

    Purpose of the Study:

    • To evaluate whether HMOs' procurement of hospital service discounts translates into significant price competition among hospitals.
    • To identify the primary factors influencing hospital selection by HMOs.

    Main Methods:

    • Analysis of hospital service discount acquisition by HMOs.
    • Assessment of evidence for price competition among hospitals.
    • Identification of key criteria used by HMOs in hospital selection.

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    Main Results:

    • Despite widespread discount attainment, substantial evidence of HMOs driving hospital price competition is lacking.
    • Factors such as geographic location and the array of available services and specialists are more influential in HMO hospital choices than price.

    Conclusions:

    • HMOs' purchasing power, while securing discounts, does not appear to effectively stimulate price competition in the hospital market.
    • HMOs' strategic decisions in selecting hospitals are predominantly guided by non-price factors, including accessibility and service scope.