Do HMO and its for-profit expansion jeopardize the survival of hospital safety net services?

This study examines the effect of health maintenance organizations (HMOs) and for-profit HMO share on the survival of safety net services in hospitals between 1990 and 2004. The primary data sources are the American Hospital Association Annual Surveys, the Medicare hospital cost reports, and the HMO enrollment and ownership data from Interstudy. I analyze the risks of shutting down each safety net service separately using the proportional hazard models. I find that the risks of shutting down hospital safety net services do not vary by different levels of overall HMO penetration. However, conditional on the overall HMO penetration level, increasing for-profit presence of HMO does increase the risks of shutting down several safety net services. Policies evaluating the for-profit expansion or ownership conversion of health plans should take this potential adverse effect into consideration.