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Health Care Costs and Financing

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Greater HMO penetration in an area reduces the number of preventable hospitalizations

Timely and effective ambulatory (outpatient) care of certain conditions such as asthma and diabetes, called ambulatory care sensitive conditions (ACSCs), is thought to prevent hospitalizations for these conditions. A greater penetration in a market area of health maintenance organizations (HMOs), which tend to offer more comprehensive preventive services than other types of care plans, significantly reduces preventable hospitalizations due to some ACSCs, according to a recent study. The study was conducted by Chunliu Zhan, M.D., Ph.D., of the Center for Quality Improvement and Patient Safety, Agency for Healthcare Research and Quality, Herbert Wong, Ph.D., of AHRQ's Center for Delivery, Organization, and Markets, and other researchers.

The researchers found that a 10 percent increase in HMO penetration was associated with a 3.8 percent decrease in preventable hospitalizations. Advanced age, female sex, poor health, poverty, more hospital beds, and fewer primary care physicians per capita were significantly associated with more preventable hospitalizations. These findings suggest that HMOs may be more successful than other care models in managing ACSCs in outpatient settings, which leads to fewer hospitalizations.

As traditional HMO penetration gives way to less restrictive managed care plans that may not offer equally comprehensive benefits for preventive care and wellness programs, the effect of HMO penetration on reducing preventable hospitalizations may erode, caution the researchers. They analyzed hospital discharge abstracts for 932 urban counties in 22 States from the Healthcare Cost and Utilization Project State Inpatient Databases, hospital annual survey data, and 1998 Health Resources and Services Administration Area Resource Files to determine the association between preventable hospitalizations and HMO penetration.

More details are in "The effects of HMO penetration on preventable hospitalizations," by Dr. Zhan, Marlene R. Miller, M.D., M.Sc., Dr. Wong, and Gregg S. Meyer, M.D., M.Sc., in the April 2004 Health Services Research 39(3), pp. 345-361.

Reprints (AHRQ Publication No. 04-R038) are available from the AHRQ Publications Clearinghouse.

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