Harold S Luft

The impact of hospital market structure on patient volume, average length of stay, and the cost of care.

A variety of recent proposals rely heavily on market forces as a means of controlling hospital cost inflation. Sceptics argue, however, that increased competition might lead to cost-increasing acquisitions of specialized clinical services and other forms of non-price competition as means of attracting physicians and patients. Using data from hospitals in 1972 we analyzed the impact of market structure on average hospital costs, measured in terms of both cost per patient and cost per patient day. Under the retrospective reimbursement system in place at the time, hospitals in more competitive environments exhibited significantly higher costs of production than did those in less competitive environments.

A comparison of administrative versus clinical data: coronary artery bypass surgery as an example

Health services researchers rely heavily on administrative data bases, but incomplete or incorrect coding may bias risk models based on administrative data. The best method for validating administrative data is to collect detailed information about the same cases from independent sources, but this approach may be too costly or technically difficult. We used data on coronary artery bypass surgery from four sites (Duke University; Minneapolis--St Paul; California; and Manitoba) to demonstrate an alternative approach for assessing diagnostic coding and to explore the implications of miscoding. The first two sites have clinical data; the second two have administrative data. The prevalences of 14 comorbidities and the associated risk ratios for short-term mortality were compared across data sets. Some comorbidities could not be precisely mapped to ICD-9-CM. Chronic or asymptomatic conditions such as mitral insufficiency, cardiomegaly, previous myocardial infarction, tobacco use, and hyperlipidemia were far less prevalent in administrative data than in clinical data. The prevalence of diabetes, unstable angina, and congestive heart failure were similar in administrative and clinical data. Estimates of relative risk derived from clinical data equalled or surpassed those derived from administrative data for all conditions. Hospitals should be encouraged to improve reporting of coexisting conditions on discharge abstracts and claims. In the meantime, researchers using administrative data should assess the vulnerability of their risk models to bias caused by selective underreporting.

The impact of financial incentives on quality of health care.

Purchasers of health care could offer financial incentives to plans or providers in order to increase quality. Unfortunately, the current health care market, in which quality is rarely measured and there is no risk adjustment, actively discourages both plans and providers from maximizing quality, resulting in a poor overall level of quality, both in fee-for-service arrangements and health maintenance organizations. Health plans and providers will not focus on quality until mechanisms to correct for risk differences among enrollees can be developed. Although such risk adjustment will be the most important stimulus for quality, it should also be linked to improvements in information systems and agreement on a minimum benefits package, quality reporting standards, and financial solvency requirements.

Coronary angioplasty. Statewide experience in California.

BackgroundThis report describes the in-hospital experience with percutaneous transluminal coronary angioplasty (PTCA) for the state of California in 1989. Data are derived from the statewide hospital discharge abstracts. Methods and ResultsA total of 24 883 PTCAs were performed; most patients (701%) were men and most procedures were single vessel (87%). About one fifth (19%o) of patients had a principal diagnosis of acute myocardial infarction (AMI). Overall mortality was 1.4% and was higher in the AMI group (4.2%) versus the non-AMI group (0.8%, P=.0001). Mortality was higher for AMI patients having PTCA on the day of or day after admission (5.5%) versus those treated later (2.6%, P=.0001). Five percent of patients had coronary artery bypass surgery (CABG) after PTCA; CABG was performed on the same day as PTCA in 61.7% of cases. Patients presenting with AMI were more likely to have CABG (7.1%) than non-AMI patients (4.5%, P=.0001). Mortality associated with CABG was 7.3% and was higher in the AMI group (12.0%) than in the non-AMI group (5.5%, P=.0001). Factors predictive of increased mortality by bivariate analysis included age >63 years (2.1% mortality versus 0.8%o <63, P=.01), female sex (1.9% versus 1.2% for men, p>.01), and the presence of diabetes (1.9%o versus 1.3% for nondiabetics, p>.05). Multiple logistic regression showed that timings of PICA with respect to admission (P=.004) and age (P=.05) were predictors of mortality, but female sex was predictive only in the non-AMI group (P=.03). Mean hospital charges were

Managed care in transition.

19 597 (±SD,

The sensitivity of conditional choice models for hospital care to estimation technique.

18 213). Forty-two percent of the 110 hospitals performed more than the recommended minimum of 200 cases per year. The requirement for CABG during the same admission or the combined adverse outcome of CABG and/or death was increased in the lower-volume centers for both AMI and non-AMI patients (P<.001), although mortality alone was not. ConclusionsThe mortality and need for CABG surgery in the statewide California PTCA experience is higher than that generally reported in the literature. In patients with an admitting diagnosis of AMI, the overall mortality was higher, as was the need for CABG and the associated CABG mortality. Most hospitals performed fewer than 200 PICAs per year. Rates of CABG surgery and the combination of CABG and/or mortality, adjusted only for the presence or absence of AMI, were increased at the low-volume institutions.

WILLINGNESS TO PAY FOR POISON CONTROL CENTERS

Managed care now dominates health care in the United States. By 1999, only 8 percent of persons with employer-sponsored health insurance coverage had traditional indemnity insurance.1 This reflects...

Hospital Behavior in a Local Market Context

It is plausible that distance, quality, and hospital charges all influence which hospital patients (and their referring physicians) choose. Several researchers have estimated conditional choice models that explicitly incorporate the existence of competing hospitals. To be useful for hospital administrators, health planners and insurers, however, estimates must be made for specific types of patients and include entire market areas. Data sets meeting these requirements have many combinations of hospitals and locations with zero patients. This raises computational difficulties with the linear estimation techniques used previously. In this paper, we use data on patients undergoing cardiac catheterization in several market areas to assess alternative estimation techniques. First, we estimate the conditional choice model with the two techniques used previously to transform the non-linear choice model. These involve using as a reference (1) a single hospital, or (2) the geometric mean of all the hospitals in the market. When there are many zeros, these techniques require extensive adjustments to the data which may lead to biased estimators. We then compare these results with maximum likelihood estimates. The latter results are substantively and significantly different from those using traditional techniques. More importantly, the linear estimates are much more sensitive to the proportion of zeros. We thus conclude that maximum likelihood estimates are preferable when there are many zeros.

Why Are Physicians So Upset about Managed Care

We used the willingness-to-pay (WTP) method to value the benefits of poison control centers when direct access was blocked, comparing WTP among: (1) blocked callers (n = 396), (2) callers after access was restored (n = 418), and (3) the general population (n = 119). Mean monthly WTP was

Better for whom? Policy implications of acting on the relation between volume and outcome in coronary artery bypass grafting*

6.70 (blocked callers),