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Medical Care Research and Review
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Market and Plan Characteristics Related to HMO Quality and Improvement

Dennis P. Scanlon

Pennsylvania State University

Shailender Swaminathan

University of Alabama, Birmingham

Michael Chernew

Harvard University

Woolton Lee

Pennsylvania State University

Existing research on health plan performance examines whether variation in plans’ scores is related to enrollee and health plan traits, primarily using cross-sectional research designs. This study extends that literature by incorporating data on market characteristics using a longitudinal framework. We estimate multivariate growth models that relate plan performance on standard measures to market and HMO characteristics using an unbalanced panel of data for 1998 to 2002. We find that HMO competition is not associated with better performance or greater rates of improvement in performance on the HEDIS chronic care measures. HMO penetration, on the other hand, is positively associated with HEDIS performance in several of the chronic care process-and-outcomes measures but not with a greater rate of improvement through time. Our analysis indicates that a significant percentage of the unexplained variation in quality improvement is because of permanent, unobserved plan-level characteristics that future research should strive to identify.

Key Words: managed care • health maintenance organizations (HMOs) • quality improvement • performance measurement • national committee for quality assurance • Health Employer Data and Information Set (HEDIS) • competition • markets • profit status

Medical Care Research and Review, Vol. 63, No. 6 suppl, 56S-89S (2006)
DOI: 10.1177/1077558706293835
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