HMOs In California Shine In A New U-M Study

July 23, 1998

ANN ARBOR---Despite all the negative rhetoric we've heard about health maintenance organizations (HMO), a new study by an economist at the University of Michigan School of Public Health suggests that, on average, HMOs are doing a better job of choosing better hospitals for their patients.

The study shows that HMO patients received better care at these hospitals than they might have gotten otherwise, said Michael Chernew, a U-M assistant professor of health management and first author of an article in the August issue of Health Services Research, a journal published by the Health Research and Educational Trust.

In the study, Chernew and co-authors Dennis Scanlon, assistant professor in the Department of Health Policy and Administration at Pennsylvania State University, and Dr. Rod Hayard, director of the Center for Practice Management and Outcomes Research at the Ann Arbor VA Medical Center and associate professor of internal medicine at U-M, focussed on a sample of 5,854 patients who underwent coronary artery bypass graft surgery in 1991. The patients resided in one of three California markets: Los Angeles County, southern California (excluding Los Angeles County) and the San Francisco Bay Area (or Sacramento).

"I think the public commonly believes that HMOs choose lower quality care and choose lower quality providers. This study clearly shows that is not true in these three California markets. The media often unfairly portrays HMOs negatively.

The truth is that HMOs vary greatly from one another and vary across geographic regions, so generalizing about HMOs is probably not a good idea," Chernew said.

The results from the northern California market show that HMO enrollees were about 20 percent more likely to receive care from a hospital considered above average than from hospitals of average quality. Patients enrolled in other health insurance plans were less likely to fare as well. The same was true of other markets, Chernew said.

The researchers caution that HMOs vastly differ from each other in services and costs. Shopping for the best HMO is difficult because the information on outcomes, such as mortality rates and physician referral rates, is not often available. However, new information on outcomes is becoming available. Some employers, health plan accrediting organizations and the federal government are conducting research that will eventually help consumers chose health plans. Buyers should review that information as it becomes available, Chernew said.

Researchers focussed on patients who underwent coronary artery bypass graft surgery because more attention will likely be paid to hospital choice for this procedure than for many lower-profile procedures due to the immense cost of the procedure.

They also found that HMO patients travel farther for care in the three markets examined. They were 46 percent-53 percent less likely to receive care at a hospital 15 miles from their residence than a hospital with the same attributes five miles from home. Non-HMO patients were 60 percent-64 percent less apt to travel 15 miles if the same hospital was five miles away.

"I think most reputable HMOs try and find providers that are of good quality and they avoid providers that have particular problems. It's not clear the HMOs are sending their patients to the absolutely best hospitals, but I personally think they are doing a good job to avoid the worst," Chernew said.

University of Michigan

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