Kathleen Carey

Specialty and Full-Service Hospitals: A Comparative Cost Analysis

OBJECTIVE To compare the costs of physician-owned cardiac, orthopedic, and surgical single specialty hospitals with those of full-service hospital competitors. DATA SOURCES The primary data sources are the Medicare Cost Reports for 1998-2004 and hospital inpatient discharge data for three of the states where single specialty hospitals are most prevalent, Texas, California, and Arizona. The latter were obtained from the Texas Department of State Health Services, the California Office of Statewide Health Planning and Development, and the Agency for Healthcare Research and Quality Healthcare Cost and Utilization Project. Additional data comes from the American Hospital Association Annual Survey Database. STUDY DESIGN We identified all physician-owned cardiac, orthopedic, and surgical specialty hospitals in these three states as well as all full-service acute care hospitals serving the same market areas, defined using Dartmouth Hospital Referral Regions. We estimated a hospital cost function using stochastic frontier regression analysis, and generated hospital specific inefficiency measures. Application of t-tests of significance compared the inefficiency measures of specialty hospitals with those of full-service hospitals to make general comparisons between these classes of hospitals. PRINCIPAL FINDINGS Results do not provide evidence that specialty hospitals are more efficient than the full-service hospitals with whom they compete. In particular, orthopedic and surgical specialty hospitals appear to have significantly higher levels of cost inefficiency. Cardiac hospitals, however, do not appear to be different from competitors in this respect. CONCLUSIONS Policymakers should not embrace the assumption that physician-owned specialty hospitals produce patient care more efficiently than their full-service hospital competitors.

Hospital Cost Efficiency and System Membership

Using a recently developed taxonomy of hospital organizations, this paper estimates a stochastic frontier cost function to test for inefficiency differences among system hospitals having common strategic and/or structural characteristics. System hospitals that centralized around physician arrangements and insurance products display the smallest deviations from the least cost locus. This suggests efficiency benefits from organization of physician and insurance activities at the system level, with discretion over the array of service offerings left to individual members. Policymakers should be mindful of potential efficiency gains from hospital consolidations and be aware that common ownership alone may be too general a rubric for evaluating those gains usefully.

Hospital competition and financial performance: the effects of ambulatory surgery centers.

Ambulatory surgery centers (ASCs), limited-service alternatives for treating surgery patients not requiring an overnight stay, are a health-care service innovation that has proliferated in the U.S. and other countries in recent years. This paper examines the effects of ASC competition on revenues, costs, and profit margins of hospitals that also provided these services as a subset of their general services in Arizona, California, and Texas during the period 1997-2004. We identified all ASCs operating during the period in the 49 Dartmouth Hospital Referral Regions in the three states. The results of fixed effects models suggested that ASCs are meaningful competitors to general hospitals. We found downward pressure on revenues, costs, and profits in general hospitals associated with ASC presence.

Excess Costs Attributable to Postoperative Complications

This article estimates excess costs associated with postoperative complications among inpatients treated in Veterans Health Administration (VA) hospitals. The authors conducted an observational study on 43,822 hospitalizations involving inpatient surgery in one of 104 VA hospitals during fiscal year 2007. Hospitalization-level cost regression analyses were performed to estimate the excess cost of each of 18 unique postoperative complications. The authors used generalized linear modeling techniques to account for the heavily skewed cost distribution. Costs were measured using an activity-based cost accounting system and complications were assessed based on medical chart review conducted by the VA ‘National Surgical Quality Improvement Program. The authors found excess costs associated with postoperative complications ranging from

Readmissions To New York Hospitals Fell For Three Target Conditions From 2008 To 2012, Consistent With Medicare Goals

8,338 for “superficial surgical site infection” to

Hospital Length of Stay and Cost: A Multilevel Modeling Analysis

29,595 for “failure to wean within 24 hours in the presence of respiratory complications.” The results obtained suggest that quality improvement efforts aimed at reducing postoperative complications can contribute significantly to lowering of hospital costs.

Measuring the cost of hospital adverse patient safety events.

The Medicare Hospital Readmissions Reduction Program (HRRP), an initiative of the Affordable Care Act, imposes considerable financial penalties on hospitals with excess thirty-day readmissions for patients with selected high-volume conditions. We investigated the intended impact of the program by examining changes in thirty-day readmissions among Medicare patients admitted for three conditions targeted by the program in New York State, compared to Medicare patients with other conditions and with privately insured patients, before and after the programs introduction. We also examined potential unintended strategic responses by hospitals that might allow them to continue to treat target-condition patients while avoiding the readmission penalty. We found that thirty-day readmissions fell for the three conditions targeted by the HRRP, consistent with the goals of the program. Second, there also was a substantial fall in readmissions for a comparison group although not as large as for the target group, which suggests modest spillover effects in Medicare for other conditions. We did not find strong evidence of unintended effects associated with the program. These early findings suggest that the HRRP is affecting hospitals in the direction intended by the Affordable Care Act.

Hospital length of stay and readmission: an early investigation.

Despite concern over compromised medical care resulting from a recent decline in the length of hospitalizations, little attention has been given to the extent to which this strategy has led to cost savings for hospitals. This article examines this issue using a multilevel modeling methodology that examines patient costs as they relate to both patient and hospital level characteristics. The analysis reveals an estimated elasticity of patient length of stay of 0.755 and of 0.326 for hospital level average length of stay. It appears from these results that the strategy of reducing the lengths of hospitalizations has saved considerably on hospital costs.

Measuring the Hospital Length of Stay/Readmission Cost Trade‐Off Under a Bundled Payment Mechanism

This paper estimates the excess cost of hospital inpatient care due to adverse safety events in the U.S. Department of Veterans Affairs (VA) hospitals during fiscal year 2007. We measured adverse events according to the Patient Safety Indicator (PSI) algorithms of the Agency for Healthcare Research and Quality. Patient level cost regression analyses were performed using generalized linear modeling techniques. Accounting for the heavily skewed distribution of costs among patients having adverse safety events, results suggested that the excess cost of nine different PSIs for VA patients are much higher than previously estimated. We tested sensitivity of results to whether costs were measured by VAs Decision Support System (DSS) that uses local costs of specific inputs, or by the average costing system developed by VAs Health Economics Resource Center. DSS costing appeared to better characterize the high cost patients.

Controlling for quality in the hospital cost function

This article is an investigation into the relationship between length of stay and readmission within 30 days of discharge from an acute care hospitalization. We estimated probability models for heart attack and for heart failure patients using generalized estimating techniques applied to hospital administrative data from California for calendar year 2008. The key independent variable was length of stay in the initial hospitalization. We found negative associations between length of stay and readmission probability, particularly in the case of heart attack. Simulated values of predicted readmissions based on a 1-day increase in length of stay yielded estimated reductions in readmission rates in the 7% to 18% range for heart attack patients and the 1% to 8% range for heart failure patients. Increasing length of stay for some patients may be a means of improving quality of care by reducing readmission during the 30-day postdischarge period.