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HMO Hospital Quality May Depend on Where Members Live

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Press Release Date: September 1, 1999

A new study of hospitals used for heart bypass surgery by privately insured HMO patients suggests that plan members in some areas of the country get good quality hospital care, while those in other areas may use poorer quality facilities. The authors of the study, which was made possible by a grant from the U.S. Agency for Health Care Policy and Research (AHCPR), used expected-to-actual death rate ratios for heart bypass surgery—a commonly performed operation—as a measure of hospital quality.

The authors' conclusion is based on their findings showing that privately insured HMO patients in California who underwent heart bypass surgery in 1994 were more likely to be directed to hospitals with lower-than-expected death rates for the operation than those used by non-HMO patients for the surgery. California has long-established managed care markets which are mostly dominated by large HMOs.

But in Florida, a state in which managed care arrived more recently and where market areas tend to be smaller and not dominated by large HMOs, the researchers found that privately insured HMO patients were no less likely to use hospitals with average and high heart bypass surgery rates than non-HMO patients—persons insured through indemnity and preferred provider organization (PPO) plans.

The study also found that beneficiaries of the traditional Medicare program in Florida used hospitals with lower mortality rates for heart bypass surgery to a greater extent than did Medicare HMO patients. The researchers were not able to examine the hospital use pattern of Medicare HMO and traditional program patients in California.

Commercial and Medicare HMOs generally pay for hospital care only if it is provided in contract facilities. Patients in indemnity insurance and PPO plans, and those in traditional fee-for-service Medicare are freer to choose their hospitals. The findings take into account the distance between where patients lived and the location of available hospitals.

Jose J. Escarce, M.D., of RAND, who led the study, said, "Whether HMO patients in states other than California and Florida use higher- or lower-quality hospitals for heart bypass surgery is likely to depend on whether their plans use objective data to measure health care quality when selecting facilities, and on the degree to which plans trade off higher quality for lower prices."

Dr. Escarce observed that HMO behavior appears to be influenced by the structure and maturity of managed care markets, and by whether employers seek good quality of care from the companies they want to insure their workers.

John M. Eisenberg, M.D., AHCPR's administrator, said, "The Nation's employers have the power to boost health care quality by selecting health plans that pay attention to information about quality. To exercise that power, they first need to act on what they already know—that price should not be the only bottom line when it comes to the health and productivity of their workers."

Dr. Eisenberg said the study adds to the understanding that quality can be measured, and that purchasers should make decisions based on the results of quality measurement. "There are many managed care plans that deliver on their promise of quality. But the issue is not just managed care or not. The issue is high-quality care or not."

For details of the study, see "Health Maintenance Organizations and Hospital Quality of Care for Coronary Artery Bypass Surgery," in the September issue of Medical Care Research and Review.

Note to Reporters: For interviews of Dr. Escarce, contact Jess Cook, director of RAND's public affairs office, at (310) 451-6913.

For additional information, contact AHCPR Public Affairs, (301) 427-1364; Karen Migdail, (301) 427-1855 (

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