A Review of Contracting Out in US Medicare HMOs: Theories and Hypotheses

Abstract

A striking feature of health policy in the United States is the heavy reliance of Medicare on private institutions including such as health maintenance organizations (HMOs). Medicare HMOs became attractive to the public sector for several reasons for because they seemed to be able to controlling program costs and improving improve beneficiaries' access to quality health care, and quality of care. However, as the number of HMOs increases, there is pressure on managed care entities to reduce their costs. This study, relying which relies on several theories of inter-organizational relationships and contracting out, develops some theories and hypotheses regarding on how Medicare HMOs' organizational factors influence their organizational performance. This study argues that the performance of Medicare HMOs depends on the capability of ability to both managing manage and implement contracting contracts, and implementing or providing contracted service.