For several decades, competition in the health care industry has been touted as the way to curb rising prices by reducing inefficient practices and improving quality and safety, but a new study suggests that it may not be as effective as researchers once believed. The study of 341 HMOs shows that more competition may not automatically solve price and quality problems. Researchers examined HMO enrollment and the Health Plan Employer Data and Information Set and the Consumer Assessment of Health Plans Survey—the most widely used measures of HMO performance—in the study. It was published in the April issue of the industry journal Medical Care.

“Our findings show that less, not more, competition, was associated with better health plan performance in several—though not all—factors,” says Dennis Scanlon, lead author and associate professor of health policy administration at Penn State. “This finding seems counterintuitive, but it’s possible that more HMO competition many result in more providers finding it difficult to respond to competing quality initiatives. Also, competition may be focused more on driving down the plans’ premiums, resulting in less attention to quality.”

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