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Monitoring Market Change: Findings from the Community Tracking Study:
Health Plan Competition in Local Markets
April 2000
Health Services Research, vol.35, no.1, Part 1 (April 2000): 17-36
Joy M. Grossman
lthough the competitive threat from national plans is pervasive in 12 communities studied as part of the Community Tracking Study, local plans in most sites continue to retain strong, often dominant, positions in historically concentrated markets. The author found three strategies to increase market share and market power were used in all sites in response to purchaser pressures for stable premiums and provider choice and the threat of entry and to plans: (1) consolidation/geographic expansion; (2) price competition; and (3) product line/segment diversification that focuses on broad networks and open-access products. In most markets, in response to the demand for provider choice, the trend is away from ownership and exclusive arrangements with providers. Although local plans are moving to become full-service regional players, this is uncertainty about the abilities of all plans to sustain growth strategies at the expense of margins and organizational stability, and to effectively manage care with broad networks.
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