Doctor of Philosophy
Dolores G. Clement
The purpose of this study is to examine the determinants of the new entry of an HMO into a Medicare risk contract using a resource dependence—diversiﬁcation model. This study is conducted through a non-experimental, panel design With one year time lag. An HMO’s market is deﬁned as the service area. The primary sample for this study is composed of 440 HMOS that do not have a Medicare risk contract as of January 1994.
Data for the variables are extracted from the 1994 and 1995 InterStudy and Group Health Association of America (GHAA) directories, the 1996 Area Resource File, the 1994 County and City Data Book, the 1993 County Business Patterns. Additional supplementary data on adjusted average per capita cost (AAPCC) and county-level Medicare beneﬁciaries are obtained from the Health Care Financing Administration.
The dependent variable is discrete indicating an HMO’s market entry. Independent variables are grouped into four categories: market structure, resource muniﬁcence, market price, and organizational attributes. Twelve hypotheses are tested using multivariate logistic regression.
This analysis reveals that HMO enrollment size is a predominant, positive factor in predicting a new market entry. HMOs are also sensitive to the level of AAPCC rates in making a market entry decision. Results from hypothesis testing suggest that competition encourages a new market entry. The importance of resource muniﬁcence is not statistically supported.
This study demonstrates the appropriateness of a panel design to verify a cause-effect relationship and the applicability of the service area as an HMO’s market. This study also contributes to the theoretical understanding of an HMO’s market entry.
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