Do HMOs produce specific services more efficiently?

Previous research on the effects of HMOs on health care costs has concentrated on aggregate costs and resource use and has shown that HMOs result in lower costs. The only consistent sources of the cost savings are the lower hospital admission rates and hospital lengths of stay for HMO enrollees. This paper contains the results of an investigation of whether HMOs can more efficiently produce a given service. Four common inpatient procedures were analyzed to determine whether there were any differences in resource consumption and overall costs for HMO patients than for fee-for-service patients. Although significant levels of resource savings were found for various procedures for HMO enrollees, these savings did not always result in lower overall costs.