Jon B. Christianson

The effect of market structure on HMO premiums

We examine the effects of HMO market structure on HMO premiums from 1988 to 1991. More competition, measured by the number of HMOs in the market area, reduces HMO premiums. Although this effect does not appear for IPAs before the highest level of competition is reached, it appears throughout the competitive range for Group HMOs. More market penetration, measured by the percent of the market area population enrolled in HMOs, reduces premiums for IPAs. Since the goal of managed competition is to reduce health care costs by creating competition among managed health care plans, our results offer encouragement for managed competition advocates.

Lessons from evaluations of purchaser pay-for-performance programs: A review of the evidence

There has been a growing interest in the use of financial incentives to encourage improvements in the quality of health care. Several articles have reviewed past studies of the impact of specific incentive arrangements, but these studies addressed small-scale experiments, making their findings arguably of limited relevance to current improvement efforts. In this article, the authors review evaluations of more recent pay-for-performance initiatives instituted by health plans or by provider organizations in cooperation with health plans. Findings show improvement in selected quality measures in most of these initiatives, but the contribution of financial incentives to that improvement is not clear; the incentives typically were implemented in conjunction with other quality improvement efforts, or there was not a convincing comparison group. However, the literature relating to purchaser pay-for-performance initiatives does underscore several important issues that deserve attention going forward that relate to the design and implementation of pay-for-performance initiatives.

Penetrating the “Black Box”: Financial Incentives for Enhancing the Quality of Physician Services

This article addresses the impact of financial incentives on physician behavior, focusing on quality of care. Changing market conditions, evolving social forces, and continuing organizational evolution in health services have raised societal awareness and expectations concerning quality. This article proceeds in four parts. First, the authors place financial incentives in the context of broader forces shaping the quality of physician services. Second, the article reviews the literature on financial incentive effects on physician behavior. Third, a simple net income maximization model of physician choices is presented, from which are derived formal hypotheses regarding the effect of financial incentives on physician choices of quality per unit of physician service and the quantity of services per patient. The model is extended qualitatively to offer further hypotheses and research directions. Finally, gaps and limitations of the model and of the extant empirical research are articulated, and additional researchable questions are posed.

Scale and scope economies among health maintenance organizations

We examine scale and scope economics among Group and IPA Health Maintenance Organizations (HMOs) over the period 1988 to 1991 using a national sample of HMOs. We allow for the multiproduct nature of HMO production by estimating the cost of producing a member month of non-Medicare and Medicare coverage, and we examine the effect of HMO market structure on costs. We find that HMOs benefit from scale economies. There are scope diseconomies associated with providing both non-Medicare and Medicare products. Group HMOs in more competitive markets have lower costs but IPA costs are not affected by competition.

Is Percutaneous Coronary Angioplasty Less Expensive Than Bypass Surgery

Percutaneous transluminal coronary angioplasty is widely considered to be an acceptable and less expensive alternative to bypass surgery in carefully selected patients. We compared expenditures related to cardiac care for 79 unselected patients undergoing coronary angioplasty with expenditures for 89 unselected patients undergoing elective coronary bypass surgery without a previous attempt at angioplasty. All the patients had single-vessel disease. The mean aggregate one-year monetary outlay was 15 per cent lower in the angioplasty group than in the bypass-surgery group. A major component of the expense of angioplasty was the treatment of restenosis in the 33 per cent of patients in this group in whom this late complication occurred. We conclude that percutaneous transluminal coronary angioplasty has potential for reducing expenditures for cardiac revascularization and that a further reduction may be obtainable when the rates of restenosis are improved.

The Growing Power Of Some Providers To Win Steep Payment Increases From Insurers Suggests Policy Remedies May Be Needed

In the constant attention paid to what drives health care costs, only recently has scrutiny been applied to the power that some health care providers, particularly dominant hospital systems, wield to negotiate higher payment rates from insurers. Interviews in twelve US communities indicated that so-called must-have hospital systems and large physician groups--providers that health plans must include in their networks so that they are attractive to employers and consumers--can exert considerable market power to obtain steep payment rates from insurers. Other factors, such as offering an important, unique service or access in a particular geographic area, can contribute to provider leverage as well. Even in markets with dominant health plans, insurers generally have not been aggressive in constraining rate increases, perhaps because the insurers can simply pass along the costs to employers and their workers. Although government intervention--through rate setting or antitrust enforcement--has its place, our findings suggest a range of market and regulatory approaches should be examined in any attempt to address the consequences of growing provider market clout.

Mechanism of Action and Impact of a Cystitis Clinical Practice Guideline on Outcomes and Costs of Care in an HMO

BACKGROUND A study was conducted in 1995 at five primary care clinics of a staff-model health maintenance organization in the Midwest to assess the impact of a cystitis clinical guideline and to help elucidate the guideline implementation process. METHODOLOGY Two hundred one eligible women with uncomplicated cystitis were treated in a three-month period before the guideline, and 241 similar cases were treated in a three-month period after the guideline. Nursing supervisors and clinic managers at each clinic were interviewed about how the cystitis guideline was implemented at each clinic. RESULTS Use of a recommended three-day antibiotic treatment increased from 28% to 52% of cases (chi-square = 25.01, p < 0.001). Use of urine cultures decreased from 70% to 37% of cases (chi-square = 48.19, p < 0.001). The proportion of eligible cystitis cases coordinated primarily by the nurse increased from 21% to 78% (chi-square = 142.93, p < 0.001). However, desired changes in use of antibiotics and urine cultures were limited to nurse-coordinated cases. There was no increase in hospital admissions, emergency room visits, repeat office visits (p > 0.05), or repeat antibiotic courses (p > 0.05) after cystitis guideline implementation. Cost of cystitis care delivered after guideline implementation was 35% lower than before guideline implementation. CONCLUSIONS Use of the guideline was associated with desirable changes in antibiotic use, nurse coordination of care, costs of care, and comparable clinical outcomes. Clinics that used clinical systems and tools to support nurse-coordinated cystitis care had greater guideline adherence than clinics that did not support nurse-coordinated care.

Competition in the Delivery of Medical Care

One approach to reform of the medical-care-delivery system emphasizes the development of constructive competition among providers of health care. In this article we describe competition among providers in Minneapolis-St. Paul, one of the few areas that can provide information concerning the practicality of this type of reform. We have found that competition has helped to reduce hospitalization, contain costs and improve access to medical services. At the same time it has focused attention on consumer satisfaction with medical services, increased the range of consumer choice and given consumers better information about providers. Certain public and private measures could facilitate the development of similar competition in other communities.

Unintended Consequences of Implementing a National Performance Measurement System into Local Practice

ABSTRACTBACKGROUNDAlthough benefits of performance measurement (PM) systems have been well documented, there is little research on negative unintended consequences of performance measurement systems in primary care. To optimize PM systems, a better understanding is needed of the types of negative unintended consequences that occur and of their causal antecedents.OBJECTIVES(1) Identify unintended negative consequences of PM systems for patients. (2) Develop a conceptual framework of hypothesized relationships between PM systems, facility-level variables (local implementation strategies, primary care staff attitudes and behaviors), and unintended negative effects on patients.DESIGN, PARTICIPANTS, APPROACHQualitative study design using dissimilar cases sampling. A series of 59 in-person individual semi-structured interviews at four Veterans Health Administration (VHA) facilities was conducted between February and July 2009. Participants included members of primary care staff and facility leaders. Sites were selected to assure variability in the number of veterans served and facility scores on national VHA performance measures. Interviews were recorded, transcribed and content coded to identify thematic categories and relationships.RESULTSParticipants noted both positive effects and negative unintended consequences of PM. We report three negative unintended consequences for patients. Performance measurement can (1) lead to inappropriate clinical care, (2) decrease provider focus on patient concerns and patient service, and (3) compromise patient education and autonomy. We also illustrate examples of negative consequences on primary care team dynamics. In many instances these problems originate from local implementation strategies developed in response to national PM definitions and policies.CONCLUSIONSFacility-level strategies undertaken to implement national PM systems may result in inappropriate clinical care, can distract providers from patient concerns, and may have a negative effect on patient education and autonomy. Further research is needed to ascertain how features of centralized PM systems influence whether measures are translated locally by facilities into more or less patient-centered policies and processes.

A Report Card on Provider Report Cards: Current Status of the Health Care Transparency Movement

BACKGROUNDPublic reporting of provider performance can assist consumers in their choice of providers and stimulate providers to improve quality. Reporting of quality measures is supported by advocates of health care reform across the political spectrum.OBJECTIVETo assess the availability, credibility and applicability of existing public reports of hospital and physician quality, with comparisons across geographic areas.APPROACHInformation pertaining to 263 public reports in 21 geographic areas was collected through reviews of websites and telephone and in-person interviews, and used to construct indicators of public reporting status. Interview data collected in 14 of these areas were used to assess recent changes in reporting and their implications.PARTICIPANTSInterviewees included staff of state and local associations, health plan representatives and leaders of local health care alliances.RESULTSThere were more reports of hospital performance (161) than of physician performance (103) in the study areas. More reports included measures derived from claims data (mean, 7.2 hospital reports and 3.3 physician reports per area) than from medical records data. Typically, reports on physician performance contained measures of chronic illness treatment constructed at the medical group level, with diabetes measures the most common (mean number per non-health plan report, 2.3). Patient experience measures were available in more hospital reports (mean number of reports, 1.2) than physician reports (mean, 0.7). Despite the availability of national hospital reports and reports sponsored by national health plans, from a consumer standpoint the status of public reporting depended greatly on where one lived and health plan membership.CONCLUSIONSCurrent public reports, and especially reports of physician quality of care, have significant limitations from both consumer and provider perspectives. The present approach to reporting is being challenged by the development of new information sources for consumers, and consumer and provider demands for more current information.