A Comparison of Length of Stay and Costs for Health Maintenance Organization and Fee-for-service Patients

Enrollees of health maintenance organizations (HMOs) are less frequently hospitalized than are patients cared for by fee-for-service physicians. To determine if care provided to HMO and fee-for-service patient is different once they are hospitalized, we compared length of stay, total costs, and severity of illness for 617 HMO and fee-for-service patients hospitalized during the period 1983 through 1985 at a major teaching hospital. Severity was gauged in the following two ways: the Severity of Illness Index developed by Horn, and ratings by two physicians who were given all records from the first day of each patient's hospitalization. Length of stay was shorter and total costs were less for HMO patients in 7 of 11 diagnosis related groups. Using regression analysis to adjust for age, sex, emergency ward admission, diagnosis related group, and severity, we found that overall length of stay was 14% shorter for HMO patients than for fee-for-service patients (6.2 vs 5.3 days, P less than .01), whereas total costs were only 4% less ($4251 vs $4090, P greater than .2). These findings indicate that while patterns of utilization may vary by diagnosis related groups, HMO patients had shorter lengths of stay but comparable overall costs. Whether shorter lengths of stay represent greater efficiency, substitution of outpatient for inpatient care, or diminution in the quality of care is not clear.