What data do California HMOs use to select hospitals for contracting?

OBJECTIVE To explore whether health maintenance organization (HMO) executives in a mature market are familiar with hospital report cards, whether they find the report cards useful (and if not, why not), and how they weight such data relative to other factors. STUDY DESIGN Cross-sectional survey of HMO executives in 1999. PATIENTS AND METHODS We contacted all 47 licensed HMOs and the sponsors of all 90 employee medical benefit plans in California with at least 1000 participants. Thirty of the 47 (63.8%) eligible HMOs provided usable responses: 19 in writing, 11 by telephone. RESULTS HMO executives reported basing their contracting decisions primarily on hospital accreditation, location, and price. Although hospital quality is considered important, HMO executives rely primarily on accreditation, government disciplinary actions, reputation, and member satisfaction as measures of quality. Respondents voiced multiple concerns about the validity and usefulness of currently available process and outcome data. Accredited plans are more likely than unaccredited plans to perform independent analyses of hospital performance. CONCLUSIONS Although HMO executives are interested in information on hospital quality, and are confident that such information will improve care, they are concerned about the limitations of available data and uncomfortable weighting these data heavily in selecting network hospitals. Prior empirical evidence suggests that HMOs may rely on surrogate quality measures and informal evaluation mechanisms to steer their members toward better-performing hospitals. Policy makers and producers of hospital report cards will need to address these problems by providing more timely data with longitudinal follow-up and external validation.