The strategic importance of open access for HMOs in a competitive environment

Abstract

Competition in the managed care industry has intensified as the industry has reached maturity. The current competitive environment of the industry and an increasing industry-wide ephasis on cost containment have resulted in declining profits, lower levels of member satisfaction, and increasing member disenrollment. Many health maintenance organizations (HMOs) have begun to reorient their approach to competitive advantage in the industry by offering theiry members open access to specialits. HMO executives believe that open access will reduce the degree of differentiation achieved by free-for-service (FFS) plans and thereby will allow HMOs to attract additional employers and members away from FFS plans and to improve overall member retention. Unfortunately, there is no empirical evidence to support this assumption. This study is the first empirical test of the strategic importance of member autonomy and open access in a managed care environment. The study expands the model of consumer satisfaction with a health care system proposed by Luft 1981 and tested by Mummalaneni and Gopalakrishna 1997 and incorporates Porter's 1980 theory of competition in mature industries. The model utilized in this study assesses the relative importance of autonomy in selecting specialists (open access), service convenience, value/pricing, and HMO resources on member satisfaction with care and intentions to remain with the HMO. Results show that all four factors significantly influence satisfaction and that subsequently, satisfaction influences intentions to remain enrolled in the plan. In addition, the importance of autonomy is demonstrated by significant direct and indirect paths to intentions to remain in the plan.

Citation

Icenogle, M.L., Gamble, J.E., Bryan, N.B. and Rickert, D.A. (2001), "The strategic importance of open access for HMOs in a competitive environment", Advances in Health Care Management (Advances in Health Care Management, Vol. 2), Emerald Group Publishing Limited, Leeds, pp. 161-185. https://doi.org/10.1016/S1474-8231(01)02026-2