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Competition among HMOs may have a negative impact on quality

Research Activities, June 2009, No. 346

Competition among health maintenance organizations (HMOs) has been promoted as a means to lower costs and improve care quality. Yet a new study suggests that such competition has little impact on various measures of health plan performance and may have a negative impact on care quality.

Researchers conducted a longitudinal analysis of 5-year data from the Healthcare Effectiveness Data and Information Set (HEDIS) and the Consumer Assessment of Health Plans Survey (CAHPS®). Both databases form the basis for most health plan report cards. The researchers used quality measures from both of these databases to measure the quality of health plans from 1998 to 2002. They found no consistent relationship between HMO competition and care quality.

Estimates of CAHPS® measures suggested that more competition actually resulted in worse plan ratings, but better ratings for physicians. The pressure for lower premiums from consumers appears to dominate. However, such pricing competition may be at the expense of improving quality in these HMOs, suggest the researchers. They also note that the fragmentation associated with competition may hinder quality improvement. The study was supported in part by the Agency for Healthcare Research and Quality (HS10771).

See "Does competition improve health care quality?," by Dennis P. Scanlon, Ph.D., Shailender Swaminathan, Ph.D., Woolton Lee, M.S., and Michael Chernew, Ph.D., in the December 2008 HSR: Health Services Research 43(6), pp. 1931-1951.

Current as of June 2009
Internet Citation: Competition among HMOs may have a negative impact on quality: Research Activities, June 2009, No. 346. June 2009. Agency for Healthcare Research and Quality, Rockville, MD. http://archive.ahrq.gov/news/research-activities/jun09/0609RA38.html