Joseph P. Newhouse

Incidence of adverse events and negligence in hospitalized patients. Results of the Harvard Medical Practice Study I.

BACKGROUND As part of an interdisciplinary study of medical injury and malpractice litigation, we estimated the incidence of adverse events, defined as injuries caused by medical management, and of the subgroup of such injuries that resulted from negligent or substandard care. METHODS We reviewed 30,121 randomly selected records from 51 randomly selected acute care, nonpsychiatric hospitals in New York State in 1984. We then developed population estimates of injuries and computed rates according to the age and sex of the patients as well as the specialties of the physicians. RESULTS Adverse events occurred in 3.7 percent of the hospitalizations (95 percent confidence interval, 3.2 to 4.2), and 27.6 percent of the adverse events were due to negligence (95 percent confidence interval, 22.5 to 32.6). Although 70.5 percent of the adverse events gave rise to disability lasting less than six months, 2.6 percent caused permanently disabling injuries and 13.6 percent led to death. The percentage of adverse events attributable to negligence increased in the categories of more severe injuries (Wald test chi 2 = 21.04, P less than 0.0001). Using weighted totals, we estimated that among the 2,671,863 patients discharged from New York hospitals in 1984 there were 98,609 adverse events and 27,179 adverse events involving negligence. Rates of adverse events rose with age (P less than 0.0001). The percentage of adverse events due to negligence was markedly higher among the elderly (P less than 0.01). There were significant differences in rates of adverse events among categories of clinical specialties (P less than 0.0001), but no differences in the percentage due to negligence. CONCLUSIONS There is a substantial amount of injury to patients from medical management, and many injuries are the result of substandard care.

A Comparison of Alternative Models for the Demand for Medical Care

We have tested alternative models of the demand for medical care using experimental data. The estimated response of demand to insurance plan is sensitive to the model used. We therefore use a split-sample analysis and find that a model that more closely approximates distributional assumptions and uses a nonparametric retransformation factor performs better in terms of mean squared forecast error. Simpler models are inferior either because they are not robust to outliers (e.g., ANOVA, ANOCOVA), or because they are inconsistent when strong distributional assumptions are violated (e.g., a two-parameter Box-Cox transformation).

Does free care improve adults' health? Results from a randomized controlled trial.

Does free medical care lead to better health than insurance plans that require the patient to shoulder part of the cost? In an effort to answer this question, we studied 3958 people between the ages of 14 and 61 who were free of disability that precluded work and had been randomly assigned to a set of insurance plans for three or five years. One plan provided free care; the others required enrollees to pay a share of their medical bills. As previously reported, patients in the latter group made approximately one-third fewer visits to a physician and were hospitalized about one-third less often. For persons with poor vision and for low-income persons with high blood pressure, free care brought an improvement (vision better by 0.2 Snellen lines, diastolic blood pressure lower by 3 mm Hg); better control of blood pressure reduced the calculated risk of early death among those at high risk. For the average participant, as well as for subgroups differing in income and initial health status, no significant effects were detected on eight other measures of health status and health habits. Confidence intervals for these eight measures were sufficiently narrow to rule out all but a minimal influence, favorable or adverse, of free care for the average participant. For some measures of health in subgroups of the population, however, the broader confidence intervals make this conclusion less certain.

COMPARISON OF HEALTH OUTCOMES AT A HEALTH MAINTENANCE ORGANISATION WITH THOSE OF FEE-FOR-SERVICE CARE

To determine whether health outcomes in a health maintenance organisation (HMO) differed from those in the fee-for-service (FFS) system, 1673 individuals ages 14 to 61 were randomly assigned to one HMO or to an FFS insurance plan in Seattle, Washington for 3 or 5 years. For non-poor individuals assigned to the HMO who were initially in good health there were no adverse effects. Health outcomes in the two systems of care differed for high and low income individuals who began the experiment with health problems. For the high income initially sick group, the HMO produced significant improvements in cholesterol levels and in general health ratings by comparison with free FFS care. The low income initially sick group assigned to the HMO reported significantly more bed-days per year due to poor health and more serious symptoms than those assigned free FFS care, and a greater risk of dying by comparison with pay FFS plans.

The effects of excise taxes and regulations on cigarette smoking

We estimate a generalized linear model to examine adult and teenage cigarette demand. Out analysis focuses on the extent to which excise taxes and regulations restricting smoking in public places affect cigarette consumption. The adult results indicate that the price elasticity of demand is unstable over time, ranging from 0.06 in 1970 to -0.23 in 1985. These estimates are lower than most found in previous studies. The teenage price elasticity does not differ statistically from the estimates for adults. Additionally, regulations restricting smoking in public places have a significant effect on both adult and teenage cigarette demand.

Use of cardiac procedures and outcomes in elderly patients with myocardial infarction in the United States and Canada

BACKGROUND Acute myocardial infarction is a leading cause of morbidity and mortality in the United States and Canada. We performed a population-based study to compare the use of cardiac procedures and outcomes after acute myocardial infarction in elderly patients in the two countries. METHODS We compared the use of invasive cardiac procedures and the mortality rates among 224,258 elderly Medicare beneficiaries in the United States and 9444 elderly patients in Ontario, Canada, each of whom had a new acute myocardial infarction in 1991. RESULTS The U.S. patients were significantly more likely than the Canadian patients to undergo coronary angiography (34.9 percent vs. 6.7 percent, P< 0.001), percutaneous transluminal coronary angioplasty (11.7 percent vs. 1.5 percent, P<0.001), and coronary-artery bypass surgery (10.6 percent vs. 1.4 percent, P<0.001) during the first 30 days after the index infarction. These differences in the use of cardiac procedures narrowed but persisted through 180 days of follow-up. The 30-day mortality rates were slightly but significantly lower for the U.S. patients than for the Canadian patients (21.4 percent vs. 22.3 percent, P=0.03). However, the one-year mortality rates were virtually identical (34.3 percent in the United States vs. 34.4 percent in Ontario, P= 0.94). CONCLUSIONS Short-term mortality after an acute myocardial infarction was slightly lower in the United States than in Ontario, but these differences did not persist through one year of follow-up. The strikingly higher rates of use of cardiac procedures in the United States, as compared with Canada, do not appear to result in better long-term survival rates for elderly U.S. patients with acute myocardial infarction.

The demand for prescription drugs as a function of cost-sharing

This paper estimates how cost-sharing affects the use of prescription drugs. The data for this analysis are derived from the Rand Health Insurance Experiment (HIE), a randomized controlled trial that randomly assigned participants to insurance plans with varying coinsurance rates and deductibles. Therefore, the cost-sharing they faced was independent of their health and demographic characteristics. The paper used HIE data from four sites to estimate how drug expenditures vary by insurance plan, and to compare the plan response for drugs with that for all ambulatory expenses. The findings show that: (1) individuals with more generous insurance buy more prescription drugs; (2) the cost-sharing response for drugs is similar to the response for all ambulatory medical services; (3) the Dayton, Ohio site had significantly greater drug expenditures per capita than the other sites studied and a significantly higher proportion of drugs sold by physicians; and (4) the proportion of brand-name drugs among all drugs purchased in pharmacies was not a function of insurance plan. In the Dayton, Ohio site, a significantly higher proportion of the drugs purchased in pharmacies were brand-name rather than generic.

Choosing Between the Sample-Selection Model and the Multi-Part Model

Hay and Olsen (1984) incorrectly argue that a multi-part model, the two-part model used in Duan et al. (1982,1983), is nested within the sample-selection model. Their proof relies on an unmentioned restrictive assumption that cannot be satisfied. We provide a counterexample to show that the propensity to use medical care and the level of expense can be positively associated in the two-part model, contrary to their assertion. The conditional specification in the multi-part model is preferable to the unconditional specification in the selection model for modeling actual (v. potential) outcomes. The selection model also has poor statistical and numerical properties and relies on untestable assumptions. Empirically the multi-part estimators perform as well as or better than the sample selection estimator for the data set analyzed in Duan et al. (1982, 1983).

The Costs of Poor Health Habits

Conceptual framework data and statistical methods the external costs of smoking the external costs of heavy drinking the external costs of sedentary life-styles conclusions, limitations and implications. Appendices: literature review of the costs of smoking and drinking survival parameters from the HRA model HIE habit batteries statistical methods comparability of HIE and NHIS excise taxes and demand parameters used in the cost model a note on the alcohol tax.

Frontier estimation: how useful a tool for health economics?

The Journal is pleased to publish in this issue three papers that apply frontier estimation techniques to hospitals and nursing homes, together with an exchange over the usefulness of those techniques in the health care context. The papers represent the current state-of-the-art with respect to applications of frontier estimation in health care. Because of the growing popularity of the technique, no doubt in part from its availability in standard software packages, it seems useful to take this opportunity to appraise its usefulness. One might begin by asking usefulness for what? Assuming one could define a frontier with certainty, how would one use such knowledge? A straightforward application in health care appears to be to reimbursement. Because both Data Envelopment Analysis (DEA) and stochastic frontier estimation specify the least cost mix of inputs for a given output, both methods can in principle be used to determine whether a given firm (hospital or nursing home) is efficient, and, if the answer to that question is no, the magnitude of any inefficiency. It is not a large step from that information to the notion that a regulator should reduce the firm’s budget by the amount of the measured inefficiency. ’ Indeed, Vitaliano and Toren mention the Boren Amendment’s requirement that the Medicaid program reimburse hospitals and nursing homes at the cost incurred by an efficiently operated