The Changing Effect of HMO Market Structure: An Analysis of Penetration, Concentration, ...

School of Policy, Planning, and Development SeminarTHE CHANGING EFFECT OF HMO MARKET STRUCTURE: AN ANALYSIS OF PENETRATION, CONCENTRATION, AND OWNERSHIP BETWEEN 1994-2005 Vivian Wu, Assistant ProfessorUniversity of Southern California, School of Policy, Planning, and Development, 650 Childs Way, RGL 305, Los Angeles, CA 90089, vwu@nber.orgABSTRACT: We analyze the role of three aspects of HMO market structure -- HMO penetration, HMO plan concentration, and HMO for-profit share on explaining hospital cost and revenue growth during the HMO expansion period (1994-1999) and backlash period (2000-2005). We find that HMO penetration effects differ over time: a 10 percentage point increase in HMO enrollment leads to 2.5 percent reduction in cost and revenues in the expansion period but only 0.4-1 percent reduction in the backlash period. Furthermore, this HMO backlash effect can be attributed to HMO dis-enrollment as well as the changing nature of HMO product. We find that revenue increases at a slower rate (by about 5 percent) in markets with relatively concentrated HMO markets power and more competitive hospital markets. Finally, increased for-profit HMO presence is associated with smaller cost and revenue growth, and the effect differs between low and high penetration markets.This work is joint with Yu-Chu Shen, Graduate School of Business and Public Policy, Naval Postgraduate School, 555 Dyer Road, Monterey, CA 93943, yshen@nps.edu and Glenn Melnick, University of Southern California, gmelnick@usc.eduWednesday, Febrary 20, 2008, RGL 219, Noon. RVSP required. Please contact Elsie Ang, eang@usc.edu.

Location: Ralph And Goldy Lewis Hall (RGL) - 219

Audiences: Everyone Is Invited

Contact: Georgia Lum