Eleonora Fichera

State and Self Investments in Health

In this paper we consider how State investments can crowd out or reinforce self-investments in health using a theoretical model of insurance and protection. We apply this model to the smoking cessation decision made by individuals diagnosed with a cardiovascular disease using data from the 1998, 2003 and 2006 waves of the Health Survey of England. Prescription of lipid-lowering drugs, which increased substantially over this period, is used as the measure of State investment. Using bivariate and trivariate probit models, we allow for the endogeneity of the doctors decision to prescribe and offer smoking cessation advice. We find that unobservable characteristics affecting the prescription of drugs are positively correlated with those affecting smoking advice and negatively correlated with those affecting the propensity to quit. Our results indicate that prescription of lipid-lowering drugs to individuals with cardiovascular disease increases the probability of smoking cessation by 20-28 percentage points.

The dynamics of physical and mental health in the older population

Mental and physical aspects are both integral to health but little is known about the dynamic relationship between them. We consider the dynamic relationship between mental and physical health using a sample of 11,203 individuals in six waves (2002–2013) of the English Longitudinal Study of Ageing (ELSA). We estimate conditional linear and non-linear random-effects regression models to identify the effects of past physical health, measured by Activities of Daily Living (ADL), and past mental health, measured by the Centre for Epidemiological Studies Depression (CES-D) scale, on both present physical and mental health. We find that both mental and physical health are moderately state-dependent. Better past mental health increases present physical health significantly. Better past physical health has a larger effect on present mental health. Past mental health has stronger effects on present physical health than physical activity or education. It explains 2.0% of the unobserved heterogeneity in physical health. Past physical health has stronger effects on present mental health than health investments, income or education. It explains 0.4% of the unobserved heterogeneity in mental health. These cross-effects suggest that health policies aimed at specific aspects of health should consider potential spill-over effects.

Can payers use prices to improve quality? Evidence from English hospitals

In most activity-based financing systems, payers set prices reactively based on historical averages of hospital reported costs. If hospitals respond to prices, payers might set prices proactively to affect the volume of particular treatments or clinical practice. We evaluate the effects of a unique initiative in England in which the price offered to hospitals for discharging patients on the same day as a particular procedure was increased by 24%, while the price for inpatient treatment remained unchanged. Using national hospital records for 205,784 patients admitted for the incentivised procedure and 838,369 patients admitted for a range of non-incentivised procedures between 1 December 2007 and 31 March 2011, we consider whether this price change had the intended effect and/or produced unintended effects. We find that the price change led to an almost six percentage point increase in the daycase rate and an 11 percentage point increase in the planned daycase rate. Patients benefited from a lower proportion of procedures reverted to open surgery during a planned laparoscopic procedure and from a reduction in long stays. There was no evidence that readmission and death rates were affected. The results suggest that payers can set prices proactively to incentivise hospitals to improve quality.

House Prices, Home Equity and Health

Home equity has a strong impact on individual health. In UK household panel data home equity lowers the likelihood of home owners exhibiting a broad range of medical conditions. This is due to increased use of private health care, reduced hours of work and increased exercise. Home equity, unlike income, does not increase risky health behaviours such as smoking and drinking. Home equity is highly pro-cyclical. The positive health effects of home equity gains on home owner health over the business cycle offset the negative effects of labour market conditions and work intensity as shown in US data by Ruhm (2000).

The relationship between physical and mental health: A mediation analysis

There is a strong link between mental health and physical health, but little is known about the pathways from one to the other. We analyse the direct and indirect effects of past mental health on present physical health and past physical health on present mental health using lifestyle choices and social capital in a mediation framework. We use data on 10,693 individuals aged 50 years and over from six waves (2002-2012) of the English Longitudinal Study of Ageing. Mental health is measured by the Centre for Epidemiological Studies Depression Scale (CES) and physical health by the Activities of Daily Living (ADL). We find significant direct and indirect effects for both forms of health, with indirect effects explaining 10% of the effect of past mental health on physical health and 8% of the effect of past physical health on mental health. Physical activity is the largest contributor to the indirect effects. There are stronger indirect effects for males in mental health (9.9%) and for older age groups in mental health (13.6%) and in physical health (12.6%). Health policies aiming at changing physical and mental health need to consider not only the direct cross-effects but also the indirect cross-effects between mental health and physical health.

How do individuals' health behaviours respond to an increase in the supply of health care? Evidence from a natural experiment

The efficacy of the management of long-term conditions depends in part on whether healthcare and health behaviours are complements or substitutes in the health production function. On the one hand, individuals might believe that improved health care can raise the marginal productivity of their own health behaviour and decide to complement health care with additional effort in healthier behaviours. On the other hand, health care can lower the cost of unhealthy behaviours by compensating for their negative effects. Individuals may therefore reduce their effort in healthier lifestyles. Identifying which of these effects prevails is complicated by the endogenous nature of treatment decisions and individuals’ behavioural responses. We explore whether the introduction in 2004 of the Quality and Outcomes Framework (QOF), a financial incentive for family doctors to improve the quality of healthcare, affected the population’s weight, smoking and drinking behaviours by applying a sharp regression discontinuity design to a sample of 32,102 individuals in the Health Survey for England (1997–2009). We find that individuals with the targeted health conditions improved their lifestyle behaviours. This complementarity was only statistically significant for smoking, which reduced by 0.7 cigarettes per person per day, equal to 18% of the mean. We investigate whether this change was attributable to the QOF by testing for other discontinuity points, including the introduction of a smoking ban in 2007 and changes to the QOF in 2006. We also examine whether medication and smoking cessation advice are potential mechanisms and find no statistically significant discontinuities for these aspects of health care supply. Our results suggest that a general improvement in healthcare generated by provider incentives can have positive unplanned effects on patients’ behaviours.

Specification of financial incentives for quality in health care contracts

We consider how purchasers and providers negotiate the quality element of contracts when the purchasers are required to link a fixed proportion of revenue to quality. A simple model predicts that the complexity of the quality element will depend on purchaser and provider characteristics. Using data extracted from 153 of the 169 contracts for acute hospital services in England in 2010/11, we find that the complexity of the quality element of the contract is determined by the type of provider, whether negotiation was passed to an agency, the regional contractual constraints and whether the provider had teaching status.

Quality target negotiation in health care: evidence from the English NHS

We examine how public sector third-party purchasers and hospitals negotiate quality targets when a fixed proportion of hospital revenue is required to be linked to quality. We develop a bargaining model linking the number of quality targets to purchaser and hospital characteristics. Using data extracted from 153 contracts for acute hospital services in England in 2010/2011, we find that the number of quality targets is associated with the purchaser’s population health and its budget, the hospital type, whether the purchaser delegated negotiation to an agency, and the quality targets imposed by the supervising regional health authority.

Is treatment "intensity" associated with healthier lifestyle choices? An application of the dose response function.

Highlights • Physical activity is negatively associated with the lagged number of doctor visits.• Using a Generalised Propensity Score halves this association.• This association is robust to using Fixed Effects and instrumental variable models.

Comparative performance evaluation:quality

The main challenge for patients and payers is the principal–agent problem caused by the asymmetry of information on the providers efforts. This is particularly acute in the case of quality. The agent must specify incentives for providers to deliver quality and can do so using various forms of comparative performance evaluation. A key choice is the comparator, which could be the agents own historical performance or the historical or contemporaneous performance of other agents. In practice, payers have steadily increased their use of comparative performance evaluation. Initially this focused on appealing to intrinsic motivation. Later attempts to link comparative performance evaluation to financial incentives have highlighted the uncertainties of the evidence base.