Effect of HMO coverage on the choice of outpatient or inpatient surgery

This dissertation studies the effect of health maintenance organization (HMO) coverage and gatekeeping on the choice of surgery setting. The study population is people under age 65 who require a surgery that is feasible in either the outpatient or inpatient setting. This dissertation constructs a dataset using the pooled 1997, 1998, and 1999 Medical Expenditure Panel Survey (MEPS). The constructed dataset includes 814 cases; a subset of the data (391 cases) excludes surgeries that were primarily done in either the inpatient or outpatient setting, with few done in the other setting.; Because the dependent variable is dichotomous (outpatient or inpatient), logistic regression is specified to analyze the relationship between the likelihood of choosing an outpatient surgery (vs. inpatient surgery) and the primary independent variables (HMO coverage and gatekeeper plan coverage), controlling for severity, patient characteristics, and payer characteristics.; This dissertation found that having HMO coverage did not increase the odds of having an outpatient surgery. Rather, the interaction between HMO status and facility payment had a significant effect on the likelihood of choosing an outpatient surgery. When facility payment increased, the likelihood of having an outpatient surgery for HMO patients dropped more than that for non-HMO patients. For example, when facility payment was increased by {dollar}400, reduced the probability of having an outpatient surgery for HMO patients decreased by 2%, but for non-HMO patients by only 0.6%. Gatekeeping did not significantly affect the likelihood of having an outpatient surgery. For the subset of cases, HMO status did not show a stronger effect on the use of outpatient surgery than for all cases with surgeries in general.; These conclusions appear to be inconsistent with the general belief that HMOs control costs by directly controlling the use of care. Rather, this dissertation found that HMOs paid less for a surgery than non-HMOs. However, when payment for outpatient surgery increased, HMOs were more aggressive in controlling the use of this type of care. These findings on HMO utilization patterns may help to identify strategies that promote the appropriate use of care and reduce healthcare costs.