Health maintenance organizations and hospital quality for coronary artery bypass surgery

Hospital Competition, Managed Care, and Mortality after Hospitalization for Medical Conditions: Evidence from Three States

This study assessed the effect of hospital competition and HMO penetration on mortality after hospitalization for six medical conditions in California, New York, and Wisconsin. We used linked hospital-discharge and vital-statistics data to study adults hospitalized for myocardial infarction, hip fracture, stroke, gastrointestinal hemorrhage, congestive heart failure, or diabetes. We estimated logistic regression models with death within 30 days of admission as the dependent variable and hospital competition, HMO penetration, and hospital and patient characteristics as explanatory variables. Higher hospital competition was associated with lower mortality in California and New York but not Wisconsin. Higher HMO penetration was associated with lower mortality in California but higher mortality in New York. These findings suggest that hospitals in highly competitive markets compete on quality even in the absence of mature managed-care markets. The findings also underscore the need to consider geographic effects in studies of market structure and hospital quality.

The Effect of Insurance Status on Travel Time for Rural Medicare Patients

Managed care has been hypothesized to increase patient travel by directing patients toward network providers. The purpose of this study is to measure the effect of Medicare HMO enrollment on hospital travel time in rural areas. Hospital travel times were determined for 85,586 inpatient discharges among rural Pennsylvania residents admitted to Pennsylvania hospitals in 1998. Medicare HMO enrollees traveled up to 10.2 minutes further for acute care than Medicare fee-for-service patients (39 versus 29 minutes). Medicare HMO enrollees were 50 percent more likely to travel outside their own counties and 70 percent more likely to travel to urban areas for acute care. The distance premium associated with HMO enrollment was largest in counties with the lowest managed care penetration.

Health Effects of Managed Care Among the Near-Elderly

Objectives: The authors evaluate whether enrolling in a health maintenance organization (HMO) or preferred provider organization (PPO) affects the health of adults ages 55 to 64, relative to fee-for-service plans. Methods: A nationwide random sample of 4,044 adults with employer-sponsored health insurance is drawn from the 1994 to 2000 waves of the Health and Retirement Study. Multinomial logit regressions are estimated for self-reported general health status, first using a sample of all near-elders, then using subsamples of near-elders with and without longstanding chronic health conditions. The possibility of selection bias into managed care plans is considered and explicitly addressed in model estimation. Results: We find no ill effects of HMOs on health status, and older adults with a history of chronic health conditions actually fare better upon enrolling in these plans. Discussion: More research is needed to understand the reasons for the observed beneficial effects of managed care.

Modern Management Practices and Hospital Admissions

We investigate whether the modern management practices and publicly reported performance measures are associated with choice of hospital for patients with acute myocardial infarction (AMI). We define and measure management practices at approximately half of US cardiac care units using a novel survey approach. A patient's choice of a hospital is modeled as a function of the hospital's performance on publicly reported quality measures and the quality of its management. The estimates, based on a grouped conditional logit specification, reveal that higher management scores and better performance on publicly reported quality measures are positively associated with hospital choice. Management practices appear to have a direct correlation with admissions for AMI--potentially through reputational effects--and indirect association, through better performance on publicly reported measures. Overall, a one standard deviation change in management practice scores is associated with an 8% increase in AMI admissions.

Adverse events for hospitalized medicare patients: is there a difference between HMO and FFS enrollees?

The study examines the likelihood of adverse outcomes associated with selected hospital safety events for two groups of Medicare patients: those enrolled in health maintenance organizations (HMOs) versus those enrolled in fee-for-service (FFS) insurance plans. The authors hypothesize that HMO patients may receive different qualities of hospital services and/or physician services relative to FFS patients. Based on the Healthcare Cost and Utilization Project State Inpatient Database, the authors include discharge data on all hospitalized elderly Medicare patients in Florida in 2002 and use multivariate logistic regression models with adjustments for hospital-level clusters. The findings demonstrate that, after adjusting for hospital quality, Medicare HMO patients were at higher risk of adverse outcomes than Medicare FFS patients for iatrogenic pneumothorax, accidental puncture or laceration, and postoperative respiratory failure.

Quasi-market and cost-containment in Beveridge systems: the Lombardy model of Italy

In the very recent past, the Lombardy health care system - established in 1997 on the quasi market model - has caught the interest of researchers and politicians in different OECD countries(1). Its merits, compared to other Italian regional systems, are the control of health care spending and the balanced budget, in a frame of good quality of services and patient choice. From the theoretical point of view, an appealing aspect of the Lombardy model is its gradual shift from a quasi market (QM) to a "quasi administered" system, which maintains all the typical features of the QM orientation - separation between purchasers and providers, the co-presence of public, not for profit and public providers, and patient free choice - but has deliberately sacrificed competition in order to control health expenditure. Another aspect of the Lombardy model is the sharp presence of private providers: the evidence that private sector is mainly concentrated in the long term care, where risks of complications are lower and financial remuneration is higher, suggests that a closer control should be exerted on hospital activity. Furthermore, possible distortions such as cream skimming and cherry picking by the private providers need more consideration. Another concern is linked to health spending control: equity issues could arise when observing a still relatively high share of private (out of pocket) health care expenditure. The paper stems from a literature review and tries to analyse the evolution of this regional system, the institutional path that brought to the implementation of the model, its theoretical basis, its merits and criticism. The period considered ranges from 1997, when the reform was enacted, to 2010.

Managing care? Medicare managed care and patient use of cardiologists

OBJECTIVE

To examine the impact of Medicare managed care (MMC) versus Medicare fee for service (MFFS) on stent patients' use of physicians with lower resource use and better outcomes.

DATA SOURCES/STUDY SETTING

Retrospective secondary data from 2003 through 2006 for 67,476 patients without acute myocardial infarction, staying 2 or more days in hospital, and treated by 486 physicians in Florida performing 10 or more cases per quarter.

STUDY DESIGN

Analysis was at the patient level. Multivariate logistic models estimated the probability of an MMC patient using a physician with a particular risk-adjusted profile rank with respect to hospital peers.

PRINCIPAL FINDINGS

No differences were found in usage of physicians with shorter admissions. Compared with MFFS, MMC patients were significantly less likely to use physicians whose average mortality was the lowest/lowest quartiles/below median among facility peers, and more likely to use a physician ranked below median on live discharges directly home (not needing home health care, skilled nursing care, or a subacute hospital convalescence). Similar results were found with emergency admissions, and where physicians both attended and treated.

CONCLUSIONS

Florida percutaneous coronary interventions patients insured by MMC used physicians with worse outcome profiles than those of MFFS patients. Results were not consistent with hospital care differences, physician-patient, or payor-physician selection, but they were consistent with selection of unobservably sicker members into MMC and concentration of MMC among physicians.

Learning by doing, scale effects, or neither? Cardiac surgeons after residency

OBJECTIVE

To examine impacts of operating surgeon scale and cumulative experience on postoperative outcomes for patients treated with coronary artery bypass grafts (CABG) by "new" surgeons. Pooled linear, fixed effects panel, and instrumented regressions were estimated.

DATA SOURCES

The administrative data included comorbidities, procedures, and outcomes for 19,978 adult CABG patients in Florida in 1998-2006, and public data on 57 cardiac surgeons who completed residencies after 1997.

STUDY DESIGN

Analysis was at the patient level. Controls for risk, hospital scale and scope, and operating surgeon characteristics were made. Patient choice model instruments were constructed. Experience was estimated allowing for "forgetting" effects.

PRINCIPAL FINDINGS

Panel regressions with surgeon fixed effects showed neither surgeon scale nor cumulative volumes significantly impacted mortality nor consistently impacted morbidity. Estimation of "forgetting" suggests that almost all prior experience is depreciated from one quarter to the next. Instruments were strong, but exogeneity of volume was not rejected.

CONCLUSIONS

In postresidency surgeons, no persuasive evidence is found for learning by doing, scale, or selection effects. More research is needed to support the cautious view that, for these "new" cardiac surgeons, patient volume could be redistributed based on realized outcomes without disruption.

The CABG surgery volume-outcome relationship: temporal trends and selection effects in California, 1998-2004

OBJECTIVE

To investigate the temporal trends in the volume-outcome relationship in coronary artery bypass graft (CABG) surgery in California from 1998 to 2004, and to assess the selection effects on this relationship by using data from periods of voluntary and mandatory hospital reporting.

DATA SOURCES

We used patient-level clinical data collected for the California CABG Mortality Reporting Program (CCMRP, a voluntary reporting program with between 68 and 81 hospitals) from 1998 to 2002 and the California CABG Outcomes Reporting Program (CCORP, a mandatory reporting program with 121 and 120 hospitals) from 2003 to 2004.

STUDY DESIGN

The patient was the primary unit of analysis, and in-hospital mortality was the primary outcome. We used hierarchical logistic regression models (generalized linear mixed models) to assess the association of hospital annual volume with hospital mortality while controlling for detailed patient-level covariates in each of the 7 years.

DATA COLLECTION METHODS

All data were systematically collected, reviewed for accuracy, and validated by the State of California's Office of Statewide Health Planning and Development (OSHPD).

PRINCIPAL FINDINGS

We found that during the period of voluntary hospital reporting (1998-2002), with the exception of 1998, higher volume hospitals had significantly lower risk-adjusted in-hospital mortality rates, on average, than lower volume hospitals (1998 odds ratio [OR] per 100 operations performed = 0.962, 95 percent confidence interval [CI]: 0.912-1.015; 1999 OR=0.955, 95 percent CI: 0.920-0.991; 2000 OR=0.942, 95 percent CI: 0.897-0.989; 2001 OR=0.935, 95 percent CI: 0.887-0.986; 2002 OR=0.946, 95 percent CI: 0.899-0.997). We also found that in the period of mandatory reporting (2003 and 2004) there was no volume-outcome relationship (2003 OR=0.997, 95 percent CI: 0.939-1.058; 2004 OR=0.984, 95 percent CI: 0.915-1.058) and that this lack of association was not due to a reporting bias from the addition of data from hospitals that did not originally contribute during the voluntary program.

CONCLUSIONS

In California, where no state regulations support regionalization of CABG surgeries, a weak volume-outcome relationship was present from 1998 to 2002, but was absent in 2003 and 2004. The disappearance of the volume-outcome association was temporally related to the implementation of a statewide mandatory CABG surgery reporting program.

Hospital Quality and Selective Contracting: Evidence from Kidney Transplantation

Most private health insurers offer a limited network of providers to enrollees. Critics have questioned whether selective contracting benefits patients. Plans counter that they take quality into account when choosing providers. Using data on five plans' networks for kidney transplant hospitals, this study shows that in-network hospitals have better outcomes than out-of-network facilities. Conditional logit estimates using patient level data confirm this result: compared to Medicare patients, privately-insured patients are more likely to register at hospitals with higher survival rates. Restricting choice has the potential to improve patient welfare if plans steer uninformed patients to high quality hospitals and physicians.

Hospital competition, managed care, and mortality after hospitalization for medical conditions in California

OBJECTIVE

To assess the effect of hospital competition and health maintenance organization (HMO) penetration on mortality after hospitalization for six medical conditions in California.

DATA SOURCE

Linked hospital discharge and vital statistics data for short-term general hospitals in California in the period 1994-1999. The study sample included adult patients hospitalized for one of the following conditions: acute myocardial infarction (N=227,446), hip fracture (N=129,944), stroke (N=237,248), gastrointestinal hemorrhage (GIH, N=216,443), congestive heart failure (CHF, N=355,613), and diabetes (N=154,837).

STUDY DESIGN

The outcome variable was 30-day mortality. We estimated multivariate logistic regression models for each study condition with hospital competition, HMO penetration, hospital characteristics, and patient severity measures as explanatory variables.

PRINCIPAL FINDINGS

Higher hospital competition was associated with lower 30-day mortality for three to five of the six study conditions, depending on the choice of competition measure, and this finding was robust to a variety of sensitivity analyses. Higher HMO penetration was associated with lower mortality for GIH and CHF.

CONCLUSIONS

Hospitals that faced more competition and hospitals in market areas with higher HMO penetration provided higher quality of care for adult patients with medical conditions in California. Studies using linked hospital discharge and vital statistics data from other states should be conducted to determine whether these findings are generalizable.

Patient characteristics and hospital quality for colorectal cancer surgery

OBJECTIVE

To assess associations of patient characteristics with quality-related characteristics of the hospitals where they were treated for colorectal cancer and the role of these associations in disparities in treatment quality affecting vulnerable patient groups or variations across health plans.

SETTING

Population-based cancer registry in California.

PARTICIPANTS

A total of 38 237 patients diagnosed with stage I-III (non-metastatic) colorectal cancer in California between 1994 and 1998.

METHODS

Registry data were linked with hospital discharge abstracts, US census data, and Medicare enrollment data. The associations of patients' sociodemographic, clinical, and geographic covariates with treatment at high-volume institutions were assessed with logistic regression. The associations of patients' covariates with the risk-adjusted 30-day mortality rates of the hospitals where they received surgery were tested with linear regression.

RESULTS

Patients with more advanced tumor stage or more extensive comorbidity, those of Hispanic or Asian race/ethnicity, and those from less affluent communities were less likely to undergo surgery at high-volume institutions and were treated at hospitals with higher risk-adjusted 30-day postoperative mortality rates than those who were less severely ill, white, or more affluent, respectively (all P < 0.05). Black patients also received surgery at hospitals with above-average mortality. Among patients 65 years and older, Medicare managed-care enrollees underwent surgery in higher-volume hospitals than Medicare fee-for-service enrollees, and there was substantial variation in hospital volume and adjusted hospital mortality among Medicare managed-care plans.

CONCLUSION

Improving access of sicker, poorer, and minority patients to high-quality hospitals for cancer surgery may improve their outcomes. Further study of processes affecting hospital referral is warranted.

Are HMOs bad for health maintenance?

This study examines the impact of Health Maintenance Organization (HMO) coverage on the provision of preventive medicine. We investigate whether any association reflects selection effects on the part of patients and/or physicians or a causal impact of managed care itself. Causal effects may occur on the supply side or the demand side. Using a large national database of Medicare and non-Medicare patients, we investigate these issues for eight common preventive medical procedures. We find that preventive care is substantially higher with HMO coverage than with traditional fee-for-service reimbursement. Our findings also suggest that the impact of HMOs on preventive medicine is a causal one, and does not merely reflect selection effects. Both supply-side (e.g. provider) and demand-side (e.g. patient) factors appear to play a role in the higher incidence of preventive care among HMO enrollees. Patient demand effects are stronger for simple treatments such as physicals, while supply-side effects seem to dominate for relatively complex preventive care procedures such as mammograms.

Managed Care and Patient Safety

OBJECTIVE

Patient safety practices have primarily focused on providers, such as hospitals and ambulatory or long-term care. Based on the premise that most medical errors and patient safety problems arise from system issues, and that managed care constitutes the largest, most integrated system in health care, the authors examine the role of managed care in making patient care safer.

STUDY DESIGN

Review of the literature and analysis of the role of managed care in patient safety.

RESULTS

Authors find that although much has been written regarding managed care and quality, there is little research on managed care's relationship to patient safety. Research shows that managed care is not significantly different from indemnity insurance in terms of quality of care. However, managed care contracting, reimbursement, and management practices result in health care utilization changes that could pose potential risks for patient safety. Although managed care may pose possible risks to patient safety, practices can be monitored and adjusted to maintain quality and safety. At the same time, managed care provides opportunities for promoting patient safety at an integrated system level. Managed care organizations are in a unique position to influence patient safety by using safety strategies in selective contracting, financial incentives for performance, quality improvement programs, consumer education, and management and integration of care delivery. Our literature review reveals that health plans are starting to implement some of these strategies, but the practice is not widespread.

CONCLUSIONS

Authors conclude with a framework and recommendations for patient safety.

A wolf dressed in sheep's clothing: perhaps quality measures are just unmeasured severity

INTRODUCTION

While there has been much discussion in recent years concerning the construction of hospital quality indexes, researchers have often failed to adequately test these quality measures against testable hypotheses. Our objective is to create a quality index using a fixed-effects methodology (FE-score) and use the resulting index to explain price variation across hospitals and theoretically grounded hypotheses.

METHODS

Medicare data (MEDPAR) are used for the risk adjustment of patient characteristics and the calculation of a quality score using a fixed-effects methodology for all US hospitals that provide coronary artery bypass graft (CABG). The resulting FE-score then serves as an independent variable, among others, to explain market prices for patients treated at a subset of the hospitals who have health insurance supplied from a self-insured employer.

RESULTS

We find that the FE-score is positively correlated with prices, which is the opposite to the theory that hospitals with higher-than-expected adverse events would receive a lower price than higher quality hospitals. Other covariates such as insurance status and number of procedures do have the expected sign.

CONCLUSIONS

We conclude that the positive correlation between the FE-score and prices demonstrates that it is behaving more like a severity scale. This indicates either an inability to isolate true quality using administrative data (i.e. incomplete risk adjustment) or a possible market failure.

Competition, payers, and hospital quality

OBJECTIVE

To estimate the effects of competition for both Medicare and HMO patients on the quality decisions of hospitals in Southern California.

DATA SOURCE

Secondary discharge data from the Office of Statewide Health Planning and Development for the State of California for the period 1989-1993.

STUDY DESIGN

Outcome variables are the risk-adjusted hospital mortality rates for pneumonia (estimated by the authors) and acute myocardial infarction (AMI) (reported by the state of California). Measures of competition are constructed for each hospital and payer type. The competition measures are formulated to mitigate the possibility of endogeneity bias. The relationships between risk-adjusted mortality and the different competition measures are estimated using ordinary least squares.

PRINCIPAL FINDINGS

The study finds that an increase in the degree of competition for health maintenance organization (HMO) patients is associated with a decrease in risk-adjusted hospital mortality rates. Conversely, an increase in competition for Medicare enrollees is associated with an increase in risk-adjusted mortality rates for hospitals.

CONCLUSIONS

In conjunction with previous research, the estimates indicate that increasing competition for HMO patients appears to reduce prices and save lives and hence appears to improve welfare. However, increases in competition for Medicare appear to reduce quality and may reduce welfare. Increasing competition has little net effect on hospital quality in our sample.

Variations in patterns of care and outcomes after acute myocardial infarction for Medicare beneficiaries in fee-for-service and HMO settings

OBJECTIVE

To assess revascularization and mortality after acute myocardial infarction (AMI) for all Medicare patients in fee-for-service (FFS) and health maintenance organization (HMO) settings in California.

DATA SOURCES/STUDY SETTING

Hospital discharge abstract and death certificate data linked with Medicare enrollment files for patients aged 65 and over with Medicare coverage (69,040) discharged from a California-licensed hospital in 1994-1996.

STUDY DESIGN

Risk-adjusted results were assessed for HMOs and FFS, as well as for FFS beneficiaries from areas served by each plan.

DATA COLLECTION/EXTRACTION METHODS

Risk models were based on all sampled patients. The HMO patients were aggregated into 17 pseudoplans: 5 individual plans, 4 large plans split geographically (10 observations), and 2 "pseudoplans" of small HMOs. Observed versus expected 30-day mortality rates, lengths-of-stay (LOS) during the index hospitalization and any transfers, revascularization (coronary artery bypass graft [CABG] surgery and/or percutaneous transluminal coronary angioplasty [PTCA]) during the index hospitalization or 30 days after admission, were calculated for each pseudoplan.

PRINCIPAL FINDINGS

Risk-adjusted death rate was slightly higher in FFS than in HMO settings (p < .01 with one risk adjustment model, n.s. with another). Three pseudoplans had significantly (p < .01) better than expected mortality rates. One pseudoplan was significantly worse (p < .05) with one risk adjustment model but not the other. The LOS and revascularization rates varied widely, but were not associated with outcomes. Plans with among the best results had the lowest LOS and revascularization rates. These pseudoplans were less likely to have their patients initially admitted to a hospital with revascularization capability, but the hospitals they used had higher CABG volumes. Even if CABG facilities were available during the index admission, in these plans with better than expected mortality rates, revascularization was often postponed or carried out elsewhere.

CONCLUSIONS

For Medicare patients having an AMI in the mid-1990s in California, risk-adjusted outcomes were no different, or slightly better on average, for those in HMOs than in FFS. Not all plans performed equally well, so understanding what leads to differences in quality is more important than simple comparisons of HMOs versus FFS.

Quality of cardiac surgeons and managed care contracting practices

OBJECTIVE

To evaluate the association between contracting practices of managed care organizations (MCOs) with cardiac surgeons and the quality of the cardiac surgeons.

DATA SOURCES/STUDY SETTING

The study included all cardiac surgeons offering coronary artery bypass graft (CABG) surgery and 78 percent of MCOs in New York State in 1998. Primary data: The MCOs' panel composition with respect to hospitals and cardiac surgeons. Secondary data: New York State (NYS) Cardiac Surgery Reports.

STUDY DESIGN

Statistical analyses of the probability of a contract between cardiac surgeons and MCOs conditional on the surgeon's risk-adjusted mortality rates (RAMR), outlier and low volume status, and controlling for other confounding variables, were performed.

PRINCIPAL FINDINGS

Contract probability exhibited a tendency to decrease with RAMR, low volume and low-quality outlier status and to increase with high-quality outlier status. These effects were statistically significant for RAMR and high-quality outliers in Downstate and for low volume in Downstate and Upstate.

CONCLUSIONS

In some, but not all cases, MCOs are seeking higher-quality providers. Further research is required to understand regional variability and the effect of market structure on the quality profile of MCOs.

Competition among hospitals for HMO business: effect of price and nonprice attributes

OBJECTIVE

To investigate patterns of competition among hospitals for the business of health maintenance organizations (HMOs). The study focused on the relative importance of hospital price and nonprice attributes in the competition for HMO business.

DATA SOURCES/STUDY SETTING

The study capitalized on hospital cost reports from Florida that are unique in their inclusion of financial data regarding HMO business activity. The time frame was 1992 to 1997.

STUDY DESIGN

The study was designed as an observational investigation of acute care hospitals.

PRINCIPAL FINDINGS

Results indicated that a hospital's share of HMO business was related to both its price and nonprice attributes. However, the importance of both price and nonprice attributes diminished as the number of HMOs in a market increased. Hospitals that were market share leaders in terms of HMO business (i.e., 30 percent or more market share) were superior, on average, to their competitors on both price and nonprice attributes.

CONCLUSIONS

Study results indicate that competition among hospitals for HMO business involves a complex set of price and nonprice attributes. The HMOs do not appear to focus on price alone. Hospitals likely to be the most attractive to HMOs are those that can differentiate themselves on the basis of nonprice attributes while being competitive on price as well.

The determinants of HMOs' contracting with hospitals for bypass surgery

OBJECTIVE

Selective contracting with health care providers is one of the mechanisms HMOs (Health Maintenance Organizations) use to lower health care costs for their enrollees. However, are HMOs compromising quality to lower costs? To address this and other questions we identify factors that influence HMOs' selective contracting for coronary artery bypass surgery (CABG).

STUDY DESIGN

Using a logistic regression analysis, we estimated the effects of hospitals' quality, costliness, and geographic convenience on HMOs' decision to contract with a hospital for CABG services. We also estimated the impact of HMO characteristics and market characteristics on HMOs' contracting decision.

DATA SOURCES

A 1997 survey of a nationally representative sample of 50 HMOs that could have potentially contracted with 447 hospitals.

PRINCIPAL FINDINGS

About 44 percent of the HMO-hospital pairs had a contract. We found that the probability of an HMO contracting with a hospital increased as hospital quality increased and decreased as distance increased. Hospital costliness had a negative but borderline significant (0.10 < p < 0.05) effect on the probability of a contract across all types of HMOs. However, this effect was much larger for IPA (Independent Practice Association)-model HMOs than for either group/staff or network HMOs. An increase in HMO competition increased the probability of a contract while an increase in hospital competition decreased the probability of a contract. HMO penetration did not affect the probability of contracting. HMO characteristics also had significant effects on contracting decisions.

CONCLUSIONS

The results suggest that HMOs value quality, geographic convenience, and costliness, and that the importance of quality and costliness vary with HMO. Greater HMO competition encourages broader hospital networks whereas greater hospital competition leads to more restrictive networks.

HMO plan performance update: an analysis of the literature, 1997-2001

This paper synthesizes results from peer-reviewed literature published from 1997 to mid-2001, on various dimensions of health maintenance organization (HMO) plan performance. Results from seventy-nine studies suggest that both types of plans provide roughly comparable quality of care, while HMOs lower use of hospital and other expensive resources somewhat. At the same time, HMO enrollees report worse results on many measures of access to care and lower levels of satisfaction, compared with non-HMO enrollees. Quality-of-care results in particular are heterogeneous, which suggests that quality is not uniform--that it varies widely among providers, plans (HMO and non-HMO), and geographic areas.

Patients and profits: the relationship between HMO financial performance and quality of care

This paper matches health plans' financial performance with information on quality ratings as measured by 1997 Health Plan Employer Data and Information Set (HEDIS) 3.0 data. We address three policy questions: (1) Is the quality of care delivered by a plan influenced by the plan's financial performance? (2) Do for-profit plans behave differently than nonprofits do? (3) What other factors are associated with variation in plan performance? We find, first, that more profitable plans achieve higher quality scores in subsequent years. Profits may enable a plan to pursue higher quality of care and invest in better management systems. Second, there is little systematic evidence that for-profit plans have different HEDIS scores than not-for-profits have.