SCALE AND SCOPE ECONOMIES AMONG HEALTH MAINTENANCE ORGANIZATIONS

We examine scale and scope economies among Group and IPA Health Mainte nance Organizations (HMOs) over the period 1988 to 1991 using a nation al sample of HMOs. We allow for the multiproduct nature of HMO product ion by estimating the cost of producing a member month of non-Medicare and Medicare coverage, and we examine the effect of HMO market struct ure on costs. We find that HMOs benefit from scale economies. There ar e scope diseconomies associated with providing both non-Medicare and M edicare products. Group HMOs in more competitive markets have lower co sts but IPA costs are not affected by competition.