OBJECTIVE: To determine if an association exists between managed care penetration and perinatal deregionalization in Washington State. METHODS: The proportions of low birth weight (LBW) and very low birth weight (VLBW) deliveries were tabulated for each hospital in Washington State for the years 1989, 1993 and 1996. Level of perinatal care, degree of health maintenance organization (HMO) penetration, and maternal demographic characteristics including age, race, smoking, and Medicaid status were derived from state and national databases. Multiple linear regression analysis was performed for each hospital level to evaluate the association between change in proportion of LBW and VLBW deliveries and change in HMO penetration per hospital between each of the 3 years. RESULTS: From 1989 through 1993, the proportion of LBW deliveries significantly declined at level III hospitals and rose at level I and II hospitals. This trend reversed between 1993 and 1996. Very low birth weight deliveries demonstrated more limited and somewhat contrary results, significantly decreasing, then increasing in level I hospitals, and significantly increasing in level III hospitals from 1989 to 1993. After controlling for changes in maternal characteristics over time, changes in HMO penetration at the hospital level were not significantly associated with an increasing proportion of LBW or VLBW deliveries at nonlevel III hospitals. In some analyses, increasing HMO penetration actually was significantly associated with decreasing LBW and VLBW deliveries at nonlevel III hospitals. CONCLUSION: Despite continued growth in HMOs throughout the state, the trend toward deregionalization in Washington State noted in the early 1990s has not continued. At the hospital level, the increasing presence of HMOs is not significantly associated with perinatal deregionalization.