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The Rise of HMOs

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The purpose of this research is to determine factors associated with differential HMO enrollment growth across metropolitan statistical areas MSAs. The study examines 2 periods, 1973-1978 and 1988-1993, during which national HMO enrollment grew substantially. Results for the 2 periods are compared to determine the stability of statistical relationships. Data was collected for the 75 largest U.S. MSAs as of 1990. The study uses multiple regression to test several hypotheses concerning the association of independent variables with HMO enrollment growth. Hypotheses concerning medical supply variables, hospital costs, per capita income, unionization, employment concentration, net migration, education and location are tested. Because of concerns about endogeneity, the values for medical supply and cost variables at the beginning of each 5-year period are used to estimate HMO market share growth. The study finds that the availability of physicians and other physician related factors are strongly associated with HMO enrollment growth during the 1973-1978 period, but that is not the case for the 1988-1993 period. For the earlier period, the percent of physicians in the state who are in group practice shows the strongest association. On the MSA level, an increase in the number of physicians in group practice by 1 of the physician population is associated with a .17 increase in overall HMO market share. The overall proportion of MDs in the MSA population also generated a statistically significant positive association, as did the overall proportion of RNs. None of the associations found for the 1973-1978 period are found for 1988-1993.

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  • Medicine and Medical Research
  • Medical Facilities, Equipment and Supplies

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