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California HMOs rely on informal evaluations of quality, not hospital report cards, to select hospitals for contracting

Geographic convenience and price may be the dominant considerations in hospital contracting among California health maintenance organizations (HMOS), according to this survey of California HMO executives. The survey found substantial interest in hospital quality measures but little evidence that HMOs weigh such measures heavily in selecting hospitals for their members. To the extent that HMOs consider hospital quality, they tend to rely on measures that poorly discriminate levels of quality, such as accreditation, or poorly defined concepts such as reputation and commitment to quality improvement. These are the findings of a recent study that was supported by the Agency for Healthcare Research and Quality (HS08574).

HMOs find it more expedient to "flag" problematic hospitals based on the Joint Commission on Accreditation of Healthcare Organizations' widely accepted review process or rare disciplinary actions by public agencies than to use other available measures of quality, according to Julie A. Rainwater, Ph.D., and Patrick S. Romano, M.D., M.P.H., of the University of California, Davis. They contacted all 47 licensed HMOs and the sponsors of all 90 employee medical benefit plans in California that had at least 1,000 participants. Thirty of the 47 eligible HMOs responded.

HMO executives reported basing their contracting decisions primarily on hospital accreditation, location, and price. Although they considered hospital quality important, they relied primarily on accreditation, government disciplinary actions, reputation, and member satisfaction as measures of quality. HMO executives were concerned about the limitations of available data on hospital quality of care and uncomfortable weighting these data heavily in selecting network hospitals. Policymakers and producers of hospital quality report cards will need to address these problems by providing more timely data with longitudinal followup and external validation, conclude the researchers.

See "What data do California HMOs use to select hospitals for contracting?" by Drs. Rainwater and Romano, in the August 2003 American Journal of Managed Care 9(8), pp. 553-561.

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