Organization Size and Failure Among Health Maintenance Organizations

Abstract

We extend the organizational ecology literature by examining the relationship between organization size and failure. Contrary to the typical monotonically declining relationship between organization size and failure rates found in ecology research, we show that this relationship varies by type of organization. Using data from censuses of Health Maintenance Organizations in the United States, we find that the relationship assumes an inverted U-shape for one type of HMO and a monotonically declining shape for another type of HMO. These relationships result from differences between the two types of HMOs in level of commitment to the organization and to the "liability of the middle."

A descriptive analysis of average productivity among health maintenance organizations, 1985 to 2001

“…Non-IPA HMOs less than two years old have higher returns to administrative resources while IPA HMOs less than two years old have lower returns to administrative resources. The effect of age is consistent with the argument that new non-IPA HMOs borrow administrative resources from the group practices they are associated with [20]. For both IPA and non-IPA HMOs, HMO market structure has a significant effect on returns to administrative resources, but the effect differs by HMO type.…”

“…Another consequence of the greater interdependence between providers and health plan in non-IPA HMOs is that the interdependence may attenuate environmental effects and provide greater opportunities for changing provider behavior and modifying the production function. Third, research consistently supports these arguments, showing that IPAs and non-IPAs differ in a variety of HMO related phenomena [15,[17][18][19][20].…”

Beyond the Liability of Newness: Nonprofit Organizations in an Emerging Policy Domain

“…Within particular organizational niches, like social service agencies, new minicomputer firms and health maintenance organizations (HMOs), there are differences in the survival rates of specialist and generalist organizations and between different organizational forms (Romanelli, 1989;Tucker et al, 1990;Wholey, Christianson, & Sanchez, 1992).…”

New Size Measurements in Population Ecology

“…Carroll, 1987;Wholey, Christianson & Sanchez, 1992) and 3) it is a suitable indicator of concentration since it gives more importance to the disparity of sizes between organizations than to the number of organizations. This variable has been introduced into the models in lineal specification and quadratic specification multiplied by 10,000, and independently calculated for each population as with density and mass.…”