Strategic Response by Providers to Specialty Hospitals, Ambulatory Surgery Centers, and Retail Clinics

Returns to specialization: Evidence from the outpatient surgery market

Technological changes in medicine have created new opportunities to provide surgical care in lower cost, specialized facilities. This paper examines patient outcomes in ambulatory surgery centers (ASCs), which were developed as a low-cost alternative to outpatient surgery in hospitals. Because we are concerned that selection into ASCs may bias estimates of facility quality, we use predicted changes in federally set Medicare facility payment rates as an instrument for ASC utilization to estimate the effect of location of treatment on patient outcomes. We find that patients treated in an ASC are less likely to be admitted to a hospital or visit an emergency room a short time after outpatient surgery. The findings in this paper indicate that factors other than patient and physician heterogeneity contribute to the observed returns to specialization in the ASC market.

A widening gap? Static and dynamic performance differences between specialist and general hospitals

This paper develops and tests a dynamic model of hospital focus. It does so by tracing the performance trajectories of specialist and general hospitals to identify whether a performance gap exists and whether it widens or shrinks over time. Our longitudinal analyses of all hospital organizations within the English National Health Service (NHS) reveal not only a notable performance gap between specialist and general hospitals in particular with regards to patient satisfaction that widens over time, but also the emergence of a gap especially with regards to hospital staff job satisfaction. These findings reflect the considerable potential of specialization as a means to enhance hospital effectiveness. However, they also alert health policy makers to the threat of a widening performance gap between specialist and general hospitals with potential negative repercussions at the patient and health system level.

How Do Hospitals Respond to Market Entry? Evidence from a Deregulated Market for Cardiac Revascularization

Regulatory entry barriers to hospital service markets, namely Certificate of Need (CON) regulations, are enforced in many US states. Policy makers in other states are considering reinstating CON policies in tandem with service expansions mandated under the Affordable Care Act. Although previous studies examined the volume effects of CON, demand responses to actual entry into local hospital markets are not well understood. In this paper, we empirically examine the demand-augmenting, demand-redistribution, and risk-allocation effects of hospital entry by studying the cardiac revascularization markets in Pennsylvania, a state in which dynamic market entry occurred after repeal of CON in 1996. Results from interrupted time-series analyses indicate demand-augmenting effects for coronary artery bypass graft (CABG) and business-stealing effects for percutaneous coronary intervention (PCI) procedures: high entrant market share mitigated the declining incidence of CABG, but it had no significant effect on the rising trend in PCI use, among patients with coronary artery disease. We further find evidence that entry by new cardiac surgery centers tended to sort high-severity patients into the more invasive CABG procedure and low-severity patients into the less invasive PCI procedures. These findings underscore the importance of considering market-level strategic responses by hospitals when regulatory barriers are rescinded.

Do hospitals cross-subsidize?

Despite its salience as a regulatory tool to ensure the delivery of unprofitable medical services, cross-subsidization of services within hospital systems has been notoriously difficult to detect and quantify. We use repeated shocks to a profitable service in the market for hospital-based medical care to test for cross-subsidization of unprofitable services. Using patient-level data from general short-term hospitals in Arizona and Colorado before and after entry by cardiac specialty hospitals, we study how incumbent hospitals adjusted their provision of three uncontested services that are widely considered to be unprofitable. We estimate that the hospitals most exposed to entry reduced their provision of psychiatric, substance-abuse, and trauma care services at a rate of about one uncontested-service admission for every four cardiac admissions they stood to lose. Although entry by single-specialty hospitals may adversely affect the provision of unprofitable uncontested services, these findings warrant further evaluation of service-line cross-subsidization as a means to finance them.

Pediatric providers' attitudes toward retail clinics

OBJECTIVE

To describe pediatric primary care providers' attitudes toward retail clinics and their experiences of retail clinics use by their patients.

STUDY DESIGN

A 51-item, self-administered survey from 4 pediatric practice-based research networks from the midwestern US, which gauged providers' attitudes toward and perceptions of their patients' interactions with retail clinics, and changes to office practice to better compete.

RESULTS

A total of 226 providers participated (50% response). Providers believed that retail clinics were a business threat (80%) and disrupted continuity of chronic disease management (54%). Few (20%) agreed that retail clinics provided care within recommended clinical guidelines. Most (91%) reported that they provided additional care after a retail clinic visit (median 1-2 times per week), and 37% felt this resulted from suboptimal care at retail clinics "most or all of the time." Few (15%) reported being notified by the retail clinic within 24 hours of a patient visit. Those reporting prompt communication were less likely to report suboptimal retail clinic care (OR 0.20, 95% CI 0.10-0.42) or disruption in continuity of care (OR 0.32, 95% CI 0.15-0.71). Thirty-six percent reported changes to office practice to compete with retail clinics (most commonly adjusting or extending office hours), and change was more likely if retail clinics were perceived as a threat (OR 3.70, 95% CI 1.56-8.76); 30% planned to make changes in the near future.

CONCLUSIONS

Based on the perceived business threat, pediatric providers are making changes to their practice to compete with retail clinics. Improved communication between the clinic and providers may improve collaboration.