Regionalization of services within a multihospital health maintenance organization

Among the many factors that may explain lower costs for enrollees in Health Maintenance Organizations (HMOs) is the possibility that the HMO provides inpatient services more efficiently. While direct cost comparisons are in appropriate, it is reasonable to examine whether the Kaiser program in the San Francisco Bay Area regionalizes services among its ten hospitals. The presence of each of 43 facilities/services reported is examined in a regression model that includes type of hospital, size, a size-type interaction, and the distance to the nearest competing facility. When the generally smaller size of the Kaiser hospitals was controlled for, Kaiser hospitals had fewer technologically based services and concentrated these services in larger hospitals. Kaiser had more outpatient-oriented services. Among non-Kaiser hospitals, some specialized facilities were competitively distributed.