The Effects of HMO Ownership on Hospital Costs and Revenues

Is There a Difference Between For-Profit and Nonprofit Plans?

Published in: Inquiry, v. 41, no. 3, Fall 2004, p. 255-267

Posted on on January 01, 2004

by Yu-Chu Shen, Glenn Melnick

Read More

Access further information on this document at

This article was published outside of RAND. The full text of the article can be found at the link above.

The authors conducted multivariate analyses to examine whether high health maintenance organization (HMO) penetration and large share of for-profit health plans in a market reduced hospital cost and revenue growth rates between 1989 and 1998. They found that hospitals in high HMO areas experienced revenue and cost growth rates that were 21 and 18 percentage points, respectively, below hospitals in low HMO areas. The authors also found that, conditional on overall HMO penetration level, hospitals in areas with high for-profit HMO penetration experienced revenue and cost growth rates that were 10 percentage points below hospitals in areas with low for-profit penetration areas; the difference was especially evident within high HMO penetration areas.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.