The Effect of Managed Care on Health Care Providers

Laurence C. Baker and Martin L. Brown

No 5987, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the effect of managed care on the health care system, focusing on the effects managed care could have on the number and types of health care providers and their efficiency. By influencing providers, managed care may change the structure and performance of the entire health care system in ways that influence care provided to all patients. We begin by discussing the mechanisms by which managed care influences health care providers, concentrating on shifts in market demand and increases in the amount of attention paid to price in provider choices. We develop a theoretical framework that illustrates these effects. We then empirically examine the relationship between managed care activity and mammography providers. We find evidence that increases in HMO activity are associated with changes in the number of providers, the volume of services produced by each provider, and the prices they charge. This evidence is consistent with the view that HMOs can have broad effects on health care providers.

JEL-codes: I1 (search for similar items in EconPapers)
Date: 1997-04
Note: EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published as RAND Journal of Economics, Vol. 30, no. 2 (Summer 1999): 351-374.

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