Justin Keen

Transaction costs, externalities and information technology in health care

This paper discusses some of the economic issues which underpin the rationale for investment in information and communications technologies (ICTs). Information imperfections lead to significant transaction costs (search, negotiating and monitoring) which in turn confer a negative externality on parties involved in exchange. This divergence in private and social costs leads to a degree of resource misallocation (efficiency loss) which, uncorrected, results in a sub-optimal outcome. Traditional solutions to this problem are to rely upon direct government action to reduce the costs of transacting between market agents, or to employ tax/subsidy measures and other legislative action to achieve the desired market outcome. Three key policy questions are raised in the context of the NHS purchaser/provider relationship. Firstly, what is the optimum level of transaction costs; secondly, can ICTs assist in lowering the level of transaction costs to the optimum level; thirdly, who should bear the investment cost in reducing the level of transaction costs? The issue of property rights in different information systems is discussed and raises interesting policy questions about how much investment should be undertaken centrally rather than devolved to a more local level. In some ways this economic framework offers a post hoc justification of why different ICT systems have been introduced at various levels of the NHS. Essentially this reduces to the problem of externalities: providing good information confers a positive externality: not providing relevant, timely and accurate information confers a negative externality, by increasing further the level of transaction costs. The crucial role which ICT systems can play lies in attempting to reduce the level of transaction costs and driving the market towards what Dahlman has described as the transaction-cost-constrained equilibrium.

Process and structure: resource management and the development of sub-unit organisational structure.

Resource Management (RM) requires hospital units to manage their work in new ways, and the new management processes affect, and are affected by, organisation structure. This paper is concerned with these effects, reporting on the basis of a three-year evaluation of the national RM experiment that was commissioned by the DH. After briefly indicating some of the major characteristics of the RM process, the two main types of unit structures existing in the pilot sites at the beginning of the experiment, unit disciplinary structure and clinical directorates, are analysed. At the end of the experiment, while clinical directorates had become more popular, another variant, clinical grouping, had replaced the unit disciplinary structure. Both types of structure represent a movement towards sub-unit organisation, bringing the work and interests of the service providers and unit managers closer together. Their properties are likewise analysed and their implications, particularly in terms of training and organisational development (OD), ate then considered. The paper concludes by considering the causes for these structural changes, which, in the immediate time-scale, appear to owe as much to the NHS Review as to RM.

Issues in the evaluation of picture archiving and communication systems.

Picture archiving and communication systems (PACS) are an example of the application of computer technology in the medical field. PACS automates image handling in a hospital and has the potential to transform the way radiology is currently performed. This paper focuses on the evaluation of the PACS technology, and considers the claims that have been made for PACS, how these claims might be turned into questions to be addressed by evaluation and the appropriate methods for the evaluation of PACS. A distinction is drawn between evaluation questions for which the hospital is the appropriate focus and those for which the patient is the appropriate focus. The preferred research design is different for hospital focused PACS evaluation and patient-focused evaluation of small scale PACS systems. A contemporaneous experimental comparison within hospitals is the preferred design for the patient-focused evaluation of small scale PACS systems. The patient-focused evaluation of large scale systems and the hospital-focused evaluation of all PACS systems could feasibly be conducted as contemporaneous experimental comparisons between hospitals but the large research costs implied by such a design almost certainly mean that non-contemporaneous, non-experimental comparisons within hospitals are more realistic. The current situation for the PACS technology is that it has potential, but as yet unproven, benefits and a large capital cost. Thus, the primary purpose of funding additional PACS implementations must be to add to the currently small body of evaluation evidence.

Doctors and resource management: incentives and goodwill

The increasing pressure on resources available for health care in many countries has led to a re-examination of the way in which resources are allocated and committed. One important and innovative option is for managers and doctors to collaborate formally in decision-making. This paper draws on experience of this approach in the UK National Health Service, in the Resource Management Initiative and suggests that its success or failure depends on the nature and strength of the incentives to the two sides to collaborate.

Evaluation of a hospital-wide PACS: costs and benefits of the Hammersmith PACS installation

The unusual nature of sites chosen for hospital-wide PACS implementations and the very small number of proposed implementations make evaluation a complex task. The UK Department of Health is funding both the evaluation and implementation of a hospital-wide PACS. The Brunel University evaluation of the Hammersmith Hospital PACS has two main components: an economic evaluation of the costs and benefits of hospital-wide PACS installations and an exercise in monitoring the implementation process. This paper concentrates on the economic component.© (1992) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.

Information strategy in the NHS:: issues and challenges

There has been considerable discussion of the nature and scope of information that purchasers and providers must acquire and use in the post-review NHS. Somewhat surprisingly, this has not been complemented by discussion of the potential for computer systems to support information management. This in spite of the publication of the NHS Information Management and Technology Strategy, which seems set to shape the way in which purchasers and providers manage data into the next century, and expenditure on computer systems which will be in the order of hundreds of millions of pounds over the next few years. Discusses some of the key challenges involved in implementing an IT infrastructure across the NHS, and identifies five issues which will substantially determine the success of the strategy.

Technology assessment of PACS: measurement and analysis of radiologists' reporting times when reporting from film

This paper describes a research project which explored the reasons for variation in reporting time by senior radiologists. The objective was to identify factors which are important to control for in an assessment of the impact of the introduction of a PACS on reporting times. An observational study of reporting by senior radiologists at Hammersmith Hospital was initially undertaken for a period of 25 days. At all times during the working day on the days chosen for the study, an independent health service researcher observed the radiologist reporting on both urgent and non-urgent images. Data were collected on a variety of factors including the time taken to produce the report, the number and nature of the images viewed and the disturbances that occurred. Regression analysis techniques were used to analyze the data in order to identify the factors which explain variation in reporting times. The paper reports the research methods and results from the baseline data on working with conventional hard copy film at Hammersmith Hospital.

Costs and benefits of hospital-wide PACS networks: an overview of a comprehensive evaluation exercise

The experimental site for the evaluation reported was the Hammersmith Hospital, London. The study adopted an economic perspective in that the focus was on the change in various elements of cost and the change in various parameters of benefit following the implementation of a hospital-wide PACS. Comparison was made of hospital operation in a film-based situation with operation in a PACS-based situation. Some of the research activities focused on the radiology service itself at Hammersmith, others focused on other areas of the hospital where radiological information was seen as an important component in clinical decision-making, and others looked outside the hospital. In terms of operational, clinical and patient benefits, the evaluation found no significant indicators of disadvantages of PACS and many examples of significant actual measurable benefits or perceived advantages by users. However, as one might expect, these advantages come at a significant net cost.

How can the impact of PACS on inpatient length of hospital stay be established

Many have argued that the introduction of a large-scale PACS system into a hospital will bring about reductions in the length of inpatient hospital stays. There is currently no convicting empirical evidence to support such claims. As part of the independent evaluation exercise being undertaken alongside the Hammersmith Hospital PACS implementation, an assessment is being made of the impact of PACS on length of stay for selected patient groups. This paper reports the general research methods being employed to undertake this assessment and provides some baseline results from the analysis of total hip replacement patients and total knee replacement patients treated prior to the introduction of PACS.