The observable determinants of cardiac surgery provider selection are related to hospital reputation, historical referral patterns, and patient proximity, not objective clinical or cost performance. The paradoxic behavior of commercial managed care probably results from unobserved choice factors that are not primarily based on objective provider performance.

Within the range of hospital size and case volume represented in this study, there is no evidence that either variable is related to the cost of performing coronary bypass surgery. Massachusetts hospitals appear to function on different segments of different average cost curves. It is not possible to predict the relative cost of coronary bypass grafting at a given hospital based primarily on volume.