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Make or buy: HMOs' contracting arrangements for mental health care

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Administration and Policy in Mental Health and Mental Health Services Research Aims and scope Submit manuscript

Abstract

Many health maintenance organizations (HMOs) are contracting with external vendors for mental health care, rather than maintaining an internal mental health department. We develop a framework for analyzing HMOs' contracting choices, rooted in transaction cost economics. Applying this framework, external contracting seems most likely to appeal to smaller, newer HMOs and those located in areas with multiple vendors. Pressure from value-oriented buyers may make it harder for HMOs to provide mental health internally, without costly reforms to their product. HMO contracting arrangements deserve further study, given their implications for cost and the quality of care.

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Authors and Affiliations

  1. Heller School, Brandeis University, Mailstop 35, 02254, Waltham, MA

    Dominic Hodgkin Ph.D. (Senior Research Associate), Constance M. Horgan Sc.D. (Research Professor) & Deborah W. Garnick Sc.D. (Research Professor)

Authors
  1. Dominic Hodgkin Ph.D.
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  2. Constance M. Horgan Sc.D.
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  3. Deborah W. Garnick Sc.D.
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Additional information

Support for this research was provided by the NIMH training grant and by the Robert Wood Johnson Foundation. The authors thank Suzanne Gelber, Lucille C. Kihlstrom, Tom McGuire and Larry Southwick for helpful comments, and Richard Frank for useful discussions.

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Hodgkin, D., Horgan, C.M. & Garnick, D.W. Make or buy: HMOs' contracting arrangements for mental health care. Adm Policy Ment Health 24, 359–376 (1997). https://doi.org/10.1007/BF02042519

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