Quality of Care in Investor-Owned vs Not-for-Profit HMOs

David U. Himmelstein, MD
Steffie Woolhandler, MD, MPH
Ida Hellander, MD
Sidney M. Wolfe, MD

Context  The proportion of health maintenance organization (HMO) members enrolled in investor-owned plans has increased sharply, yet little is known about the quality of these plans compared with not-for-profit HMOs.

Objective  To compare quality-of-care measures for investor-owned and not-for-profit HMOs.

Design, Setting, and Participants  Analysis of the Health Plan Employer Data and Information Set (HEDIS) Version 3.0 from the National Committee for Quality Assurance's Quality Compass 1997, which included 1996 quality-of-care data for 329 HMO plans (248 investor-owned and 81 not-for-profit), representing 56% of the total HMO enrollment in the United States.

Main Outcome Measures  Rates for 14 HEDIS quality-of-care indicators.

Results  Compared with not-for-profit HMOs, investor-owned plans had lower rates for all 14 quality-of-care indicators. Among patients discharged from the hospital after myocardial infarction, 59.2% of members in investor-owned HMOs vs 70.6% in not-for-profit plans received a beta-blocker (P<.001); 35.1% of patients with diabetes mellitus in investor-owned plans vs 47.9% in not-for-profit plans had annual eye examinations (P<.001). Investor-owned plans had lower rates than not-for-profit plans of immunization (63.9% vs 72.3%; P<.001), mammography (69.4% vs 75.1%; P<.001), Papanicolaou tests (69.2% vs 77.1%; P<.001), and psychiatric hospitalization (70.5% vs 77.1%; P<.001). Quality scores were highest for staff- and group-model HMOs. In multivariate analyses, investor ownership was consistently associated with lower quality after controlling for model type, geographic region, and the method each HMO used to collect data.

Conclusions  Investor-owned HMOs deliver lower quality of care than not-for-profit plans.

JAMA. 1999;282:159-163

INVESTOR-OWNED HMOS DELIVER LOWER QUALITY OF CARE THAN NOT-FOR-PROFIT HMOS
Difference found for all 14 quality-of-care indicators studied

CHICAGO — Investor-owned health maintenance organization (HMO) plans had lower rates for all 14 quality-of-care indicators studied when compared with not-for-profit HMO plans, according to an article in the July 14 issue of The Journal of the American Medical Association (JAMA).

David U. Himmelstein, M.D., from Cambridge Hospital/Harvard Medical School, Cambridge, Mass., and colleagues report on quality-of-care data from the National Committee for Quality Assurance's (NCQA's) Quality Compass 1997, which included the Health Plan Employer Data and Information Set (HEDIS) and HMO accreditation surveys. These data reflect 1996 plan characteristics and performance for 329 HMO plans (248 investor-owned and 81 not-for-profit) in 45 states, representing 56 percent of the total HMO enrollment in the United States. The authors examined all 14 of the NCQA's "Effectiveness of Care& e" variables and found that investor-owned HMO plans had lower rates for all 14 indicators. The largest differences in quality-of-care rates were in two indicators for patients with serious medical illnesses, namely treatment following hospitalization for myocardial infarction (heart attack) and diabetes mellitus.

The cost per HMO member, per month averaged $128.00 in investor-based owned plans versus $127.50 in not-for-profit plans, according to the authors. The percentage of revenues spent on medical and hospital services averaged 80.6 percent in investor-owned plans and 86.9 percent in not-for-profit plans. "Hence, spending on profit and administrative overhead was about 48 percent higher in investor-owned plans (19.4 percent versus 13.1 percent for non-profit plans), " according to the authors.

The data showed that investor-owned HMOs reported lower rates than not-for-profit HMOs for all 14 quality-of-care indicators:

• Beta-blocker use by patients discharged from the hospital after myocardial infarction with no evidence of contraindications to beta-blocker agents:
  59.2 percent of members in investor-owned HMOs
  70.6 percent of members in not-for-profit HMOs
• Of patients with diabetes who are receiving insulin or oral hypoglycemic (blood sugar lowering) agent:
  35.1 percent of members in investor-owned HMOs had annual eye exams
  47.9 percent of members in not-for-profit HMOs had annual eye exams
• Overall immunization completion rate for 2-year-olds (includes diphtheria pertussis tetanus, oral poliovirus, mumps measles rubella, Haemophilus influenza type B and hepatitis B immunizations):*
  63.9 percent of members in investor-owned HMOs
  72.3 percent of members in not-for-profit HMOs
• Immunization completion rate for 13-year-olds, if not already immune (includes mumps measles rubella, hepatitis B, tetanus diphtheria and varicella immunizations):
  51.9 percent of members in investor-owned HMOs
  59.1 percent of members in not-for-profit HMOs
• Mammography performed within 2 years for women aged 52- through 69-years-old:
  69.4 percent of members in investor-owned HMOs
  75.1 percent of members in not-for-profit HMOs
• Papanicolaou test performed within 3 years for women aged 21- through 64-years-old:
  69.2 percent of members in investor-owned HMOs
  77.1 percent of members in not-for-profit HMOs
• First trimester prenatal care rate:
  83.1 percent of members in investor-owned HMOs
  88.5 percent of members in not-for-profit HMOs
• Women receiving postpartum checkup within 42 days of delivery:
  56.9 percent of members in investor-owned HMOs
  59.6 percent of members in not-for-profit HMOs
• Rate of outpatient follow-up within 30 days for patients older than 6 years of age hospitalized with a mental disorder:
  70.5 percent of members in investor-owned HMOs
  77.1 percent of members in not-for-profit HMOs

(*Immunization completion rates for 2-year-olds for five immunization schedules were considered separately and as a total, bringing the total number of quality-of-care indicators to 14.)

"Most research on quality of care in HMOs has examined nonprofit group- and staff-model plans," the authors write. "Yet other types of HMOs have accounted for most of the recent increase in enrollment. Between 1985 and 1998 the proportion of HMO members enrolled in investor-owned plans increased from 26 percent to 62 percent; between 1980 and 1998 the market share of group- and staff-model plans decreased from 81 percent to 12 percent.

"The HEDIS quality indicators we analyzed have serious shortcomings, " the authors write. "No indicators appraise the outcomes of care. Most focus on relatively inexpensive preventive services and exclude patients who are not continuously enrolled. Few HEDIS measurements address care for seriously ill or chronically ill patients who are financially unattractive to HMOs and at risk for underservice. Medicare HMOs apparently encourage sick patients to disenroll and selectively recruit and enroll healthy individuals. Hence, our finding that the two quality indicators relevant to patients with serious medical illnesses showed the sharpest differences is particularly disturbing."

"The differences we observed in this study appear to be clinically significant," according to the authors. "For instance, if all 23.7 million American women between ages 50 and 69 years were enrolled in investor-owned, rather than not-for-profit plans, an estimated 5,925 additional breast cancer deaths would be expected (based on our finding of a 4.8 percent difference in screening rates, and previous estimates that biennial screening in this age group would result in 52 fewer breast cancer deaths by age 80 years per 10,000 women screened). Similarly, since [beta]-blockers reduce death rates in myocardial infarction survivors by 23 percent, their underuse in investor-owned plans suggests that many such patients may die needlessly. "

Note: Data analyzed in this study were from NCQA's Quality Compass and are published with the permission of the NCQA. The views expressed are those of the authors and not of NCQA.