Abstract
This study, based on 163 HMOs, tests the hypothesis that the rates of return on assets (ROA) are not significantly different between for-profit and non-profit HMOs. It finds no statistical support for rejecting the hypothesis. The marked similarity in profitability is fully explained by analyzing methods of cost control and accounting, operational incentives and constraints, and price determination. The paper concludes that profitability is not a defining distinction in the operation of managed care.
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