Sylvia Hsingwen Hsu

Accounting Performance and Capacity Investment Decisions: Evidence from California Hospitals

Capacity decisions involve tradeoffs between the cost of capacity and the opportunity costs of lost sales. Accounting researchers posit that accounting performance provides sufficient information about these tradeoffs and thus can be used to formulate simple rules to assist capacity decisions. Empirical research has not examined the role of accounting information in capacity investment decisions at the department level in a multi-product firm in the presence of social costs. Empirical analyses using department-level data from California hospitals for the period 1998-2005 show that hospitals are more likely to make capacity investments in departments with high accounting performance. However, in the presence of demand variability, the association between accounting performance and capacity investment is attenuated because of the resulting increase in noise in accounting performance measures. Thus the weight on accounting performance as a decision tool for capital investments reduces when there is demand variability. Another factor that reduces the weight on accounting performance is capacity utilization. Higher capacity utilization can lead to turning away or rerouting of patients to other hospitals and negatively impacts reputation and quality of care, which increases the hospital’s social costs. Hence, hospitals do not require high accounting performance before investing in a department with high capacity utilization. This empirical evidence of the role of accounting performance in capacity investment decisions fills a gap in the capacity investment literature and furthers our understanding of the interactions between accounting performance and the operational determinants of firms’ capacity investment behavior.

Health care utilization and health outcomes: a population study of Taiwan

Facing escalating health care expenditures, the governments of countries with national health insurance programs are trying to control or even to reduce health care utilization. Little research has examined the effects of decreased health care utilization on health outcomes. Applying a natural experiment design to the Taiwan population between 2000 and 2004, which includes the 2003 SARS epidemic when an average 20% decline in health care utilization occurred, this study examines the association between a decline in health care utilization and health outcomes measured by cause-specific mortality rates. We analyse the monthly mortality rates caused by infectious diseases, cancer, diabetes mellitus, nervous system diseases, cerebrovascular diseases, heart and other vascular diseases, respiratory system diseases, digestive system diseases, genitourinary system diseases and accidents. Models control for age, sex, month and year effects. Results show the heterogeneous effect of reduced health care utilization on health outcomes. Patients with diabetes mellitus or cerebrovascular diseases are vulnerable to short-term reductions in health care; compared with the non-SARS period, mortality caused by diabetes mellitus and cerebrovascular diseases significantly increased during the SARS epidemic by 8.4% and 6.2%, respectively. No significant change in mortality rates caused by the other diseases or accidents is found. This study suggests that governments of countries where health care utilization and spending are similar to or inferior to those in Taiwan should carefully evaluate the impact of policies that attempt to reduce health care utilization. Furthermore, when an area encounters an epidemic, governments should be aware of the negative consequences of voluntary restraints on access to health care that accompany decreases in utilization.

Regional Practice Patterns and Racial/Ethnic Differences in Intensity of End-of-Life Care

OBJECTIVE To examine whether regional practice patterns impact racial/ethnic differences in intensity of end-of-life care for cancer decedents. DATA SOURCES The linked Surveillance, Epidemiology, and End Results (SEER)-Medicare database. STUDY DESIGN We classified hospital referral regions (HRRs) based on mean 6-month end-of-life care expenditures, which represented regional practice patterns. Using hierarchical generalized linear models, we examined racial/ethnic differences in the intensity of end-of-life care across levels of HRR expenditures. PRINCIPAL FINDINGS There was greater variation in intensity of end-of-life care among Hispanics, Asians, and whites in high-expenditure HRRs than in low-expenditure HRRs. CONCLUSIONS Local practice patterns may influence racial/ethnic differences in end-of-life care.