Specialty and full-service hospitals: a comparative cost analysis

Economies of scope in the Norwegian public hospital sector

This study investigates the potential economies of scope in the Norwegian public hospital sector after a major structural and organizational reform. Economies of scope refers to potential cost savings occurring from the scope of production rather than the scale. We use a data driven approach to distinguish between relatively specialized and differentiated hospitals. Using registry data spanning the period 2013-2019, we use non-parametric data envelopment analysis with bootstrapping procedures to investigate the potential presence of economies of scope. This is done separately for three different dimensions of which hospital production can be either specialized or differentiated. The findings suggest that economies of scope are present in the Norwegian hospital sector, meaning that there are cost savings related to the optimal differentiation of the activity. It is difficult to conclude on how these findings relate to the reform.

Efficiency and Resource Allocation in Government Hospitals in Saudi Arabi: A Casemix Index Approach

In Saudi Arabia, the evaluation of healthcare institutions' performance and efficiency is gaining prominence to ensure effective resource utilization. This study aims to assess the efficiency of government hospitals in Saudi Arabia using the case mix index (CMI) approach. Comprehensive data from 67 MoH hospitals were collected and analyzed. The CMI was calculated by assigning weights to different patient groups based on case complexity and resource requirements, facilitating comparisons of hospital performance in terms of resource utilization and patient outcomes. The findings reveal variations in the CMI across hospitals in relation to size and type. The average CMI was 1.26, with the highest recorded at 1.67 and the lowest at 1.02. Medical cities demonstrated the highest CMI (1.47), followed by specialized hospitals (1.32), and general hospitals (1.21). The study highlights opportunities for enhancing productivity and efficiency, particularly in hospitals with lower CMI, by benchmarking against peer institutions with similar capacities and patient case mix. These findings have significant implications for hospital operations and resource allocation policies, supporting ongoing efforts to improve the efficiency of government hospitals in Saudi Arabia. By incorporating these insights into healthcare strategies, policymakers can work towards enhancing the overall performance and effectiveness of the healthcare system.

Healthcare reform and productivity of Hospital: a DEA-based analysis from South West of Iran

BACKGROUND

Different healthcare reforms could affect the productivity of hospitals. The aim of this study was to track hospital productivity before and after the recent Iranian healthcare reform in Khuzestan province, South West of Iran.

METHODS

Hospital productivity was evaluated through data envelopment analysis (DEA) and Malmquist productivity index (MPI) from 2011 to 2015 for 17 Iranian public hospitals before and after the health sector transformation plan. We assumed an output-oriented model with variable returns to scale (VRS) to estimate the productivity and efficiency of each hospital. The DEAP V.2.1 software was used for data analysis.

RESULTS

After the transformation plan, the averages of technical efficiency, managerial efficiency and scale efficiency in the studied hospitals had negative changes, but technology efficiency had positive changes.44.4% of general hospitals, 25% of multi-specialized hospitals, and 100% of specialized hospitals had positive productivity changes after implementing the health sector evolution plan. The Malmquist productivity index (MPI) had low positive changes from 2013 to 2016 (MPI = 0.13 out of 1) but the mean productivity score had no change after the health sector evolution plan.

CONCLUSIONS

The total productivity before and after the health sector evolution plan had no change in Khuzestan province. This and the increase in the utilization of impatient services seemed to be a sign of good performance. But apart from technology efficiency, other efficiency indices had negative changes. It is suggested that in health reforms in Iran, more attention should be paid to the allocation of resources in the hospital.

Reasons for transfer and subsequent outcomes among patients undergoing elective spine surgery at an orthopedic specialty hospital

Objective

To evaluate the reasons for transfer as well as the 90-day outcomes of patients who were transferred from a high-volume orthopedic specialty hospital (OSH) following elective spine surgery.

Materials and Methods

All patients admitted to a single OSH for elective spine surgery from 2014 to 2021 were retrospectively identified. Ninety-day complications, readmissions, revisions, and mortality events were collected and a 3:1 propensity match was conducted.

Results

Thirty-five (1.5%) of 2351 spine patients were transferred, most commonly for arrhythmia (n = 7; 20%). Thirty-three transferred patients were matched to 99 who were not transferred, and groups had similar rates of complications (18.2% vs. 10.1%; P = 0.228), readmissions (3.0% vs. 4.0%; P = 1.000), and mortality (6.1% vs. 0%; P = 0.061).

Conclusion

Overall, this study demonstrates a low transfer rate following spine surgery. Risk factors should continue to be optimized in order to decrease patient risks in the postoperative period at an OSH.

Key Indicators Affecting Hospital Efficiency: A Systematic Review

Background

Measuring hospital efficiency is a systematic process to optimizing performance and resource allocation. The current review study has investigated the key input, process, and output indicators that are commonly used in measuring the technical efficiency of the hospital to promote the accuracy of the results.

Methods

To conduct this systematic review, the electronic resources and databases MEDLINE (via PubMed), Scopus, Ovid, Proquest, Google Scholar, and reference lists of the selected articles were used for searching articles between 2010 and 2019. After in-depth reviews based on the inclusion and exclusion criteria, among 1,537 studies, 144 articles were selected for the final assessment. Critical Appraisal Skills Programme (CASP) Checklist was used for evaluating the quality of the articles. The main findings of studies have been extracted using content analysis.

Results

After the final analysis, the Context/Input indicators that were commonly considered by studies in analyzing hospital technical efficiency include different variables related to Hospital Capacity, Structure, Characteristics, Market concentration, and Costs. The Process/Throughput indicators include different variables related to Hospital Activity or services-oriented process Indicators, Hospital Quality-oriented process indicators, and Hospital Educational processes. Finally, the Output/Outcome indicators include different variables related to Hospital Activity-related output variables and Quality-related output/outcomes variables.

Conclusion

This study has identified that it is necessary to mix and assess a set of input, process, and output indicators of the hospital with both quantitative and qualitative indicators for measuring the technical efficiency of hospitals comprehensively.

The contribution of resident physicians to hospital productivity

Resident physicians play a double role in hospital activity. They participate in medical practices and thus, on the one hand, they should be considered as an input. Also, they are medical staff in training and, on the other hand, must be considered as an output. The net effect on hospital activities should therefore be empirically determined. Additionally, when considering their role as active physicians, a natural hypothesis is that resident physicians are not more productive than senior ones. This is a property that standard logarithmic production functions (including Cobb-Douglas and Translog functional forms) cannot verify for the whole technology set. Our main contribution is the development of a Translog modification, which implies the definition of the input "doctors" as a weighted sum of senior and resident physicians, where the weights are estimated from the empirical application. This modification of the standard Translog is able, under suitable parameter restrictions, to verify our main hypothesis across the whole technology set while determining if the net effect of resident physicians in hospitals' production should be associated to an output or to an input. We estimate the resulting output distance function frontier with a sample of Spanish hospitals. Our findings show that the overall contribution of resident physicians to hospitals' production allows considering them as an input in most cases. In particular, their average productivity is around 37% of that corresponding to senior physicians.

Exploring characteristics of specialization as moderators of the link between specialization and patient experience of care

BACKGROUND

Hospitals are increasingly pursuing specialization as a strategy to operate efficiently while delivering high-quality care. To date, however, evidence is lacking on whether hospital specialization has a consistent effect on patients' experience of care or whether different specialization characteristics influence how specialization works.

PURPOSE

This study investigates whether specialization characteristics, that is, the within-specialty concentration and the within-specialty urgency score, moderate the link between hospital specialization and patient experience of care.

METHODOLOGY

We use patient-reported and administrative data from German hospitals between 2014 and 2017, with orthopedic and trauma care as the research setting. Our sample consists of 157,458 patient observations nested within 483 hospitals. We apply random-intercept multilevel modeling.

RESULTS

Our results indicate that the effect of specialization on patient experience of care (a) decreases as the within-specialty concentration increases and (b) increases as the within-specialty urgency score increases.

CONCLUSION

This study provides novel insights into the specialization characteristics that make hospital specialization in orthopedic and trauma care particularly effective at improving patient experiences.

PRACTICE IMPLICATIONS

Although specialization is gaining popularity as a strategy for pooling scarce resources and facilitating high-quality health care, hospital managers and policymakers should consider that certain characteristics of specialization can influence the way that specialization works and how effective it is in improving patient experiences. Within the scope of orthopedic and trauma care, our study suggests that a low concentration of diagnoses within a service area and a high average level of medical urgency make specialization particularly effective at improving patient experiences.

Orthopedic Specialty Hospitals Are Associated With Lower Rates of Deep Surgical Site Infection Compared With Tertiary Medical Centers

Orthopedic specialty hospitals may allow for more streamlined and efficient care, resulting in shorter lengths of stay, lower costs, and fewer complications. Surgical site infection can be a devastating complication of orthopedic procedures and is difficult to treat successfully, requiring substantial cost and resources. The goal of this study was to determine whether specialty hospitals had lower rates of infection than tertiary care institutions. Records were reviewed for patients undergoing primary total hip, knee, or shoulder arthroplasty and single-level lumbar fusion from 2010 to 2017 at 2 academic tertiary hospitals and 2 specialty hospitals. Patient demographic information, comorbidities, and the development of deep surgical site infection within 1 year of the index procedure were recorded and compared between the groups. Multivariate analysis identified variables that significantly correlated with infection rates. A total of 20,264 patients (73.9%) underwent surgery at a tertiary hospital, and 7169 (26.1%) underwent a procedure at a specialty hospital. Patients treated at orthopedic specialty hospitals had lower rates of infection at 1 year (0.6% vs 0.2%, P<.0001). Of the infections, 42 (32.3%) occurred in the knee, 50 (38.5%) in the hip, 24 (18.5%) in the spine, and 12 (10.8%) in the shoulder. When controlling for a healthier patient population, procedures performed at specialty hospitals were an independent predictor of infection within 1 year (odds ratio, 0.3693; P=.0012). Although tertiary hospitals care for older patients with more medical comorbidities, patients undergoing orthopedic procedures at a specialty hospital may be at lower risk for infection. Further study is needed to identify the processes associated with reduced infection rates and to determine whether they can be adopted at tertiary centers. [Orthopedics. 2021;44(4):e521-e526.].

Decreased costs with maintained patient satisfaction after total joint arthroplasty in a physician-owned hospital

Objective

Comparing total joint arthroplasty (TJA) costs and patient-reported outcomes between a physician-owned hospital (POH) and a non-POH.

Methods

Costs for each 90-day TJA episode at both facilities were determined, and patients were asked to complete a patient satisfaction questionnaire.

Results

Average TJA episode cost was $19,039 at the POH, compared to $21,302 at the non-POH, a difference of $2,263 (p = 0.03), largely driven by decreased skilled nursing facility utilization in the POH group. There were no differences between groups for patient satisfaction.

Conclusion

TJA can be performed at reduced cost with comparable patient satisfaction at POHs, compared to non-POH facilities.

On the relations between focus, experience, and hospital performance

BACKGROUND

In the United States, a long-standing debate has existed over advantages/disadvantages of general versus specialty hospitals. A recent stream of research has investigated whether general hospitals accrue performance benefits from a focus strategy; a strategy of specializing in certain clinical conditions while remaining a multiproduct firm. In contrast, a substantial and long-standing body of research on hospitals has been concerned with the absolute volume of cases in a service area as an indication of experience based largely on the idea that absolute volume confers learning opportunities.

PURPOSE

We investigated whether hospital focus and experience in a service area have complementary effects or are largely substitutive for hospital performance.

METHODOLOGY/APPROACH

Key data sources were patient discharge records and hospital discharge profiles from California's Office of Statewide Health Policy and Development for years 2010-2014. We specified hospital focus as the proportion of total cardiology-related discharges and hospital experience as the cumulative volume of cardiology-related discharges for each hospital. Performance was specified using quality (inpatient mortality and 30-day readmission) and efficiency (length of stay and cost) patient-level performance metrics. We analyzed the data using logistic and log-linear ordinary least squares regression models.

RESULTS

Study results generally supported our hypotheses that focus and experience are related to better quality and efficiency performance and that the effects are largely substitutive for hospitals.

CONCLUSION

Our study extends the literature by finding that hospitals exhibit distinct and stable patterns regarding their positioning on focus and experience and that these patterns have important implications for hospitals' performance in terms of quality and efficiency.

PRACTICE IMPLICATIONS

Many general hospitals in the United States may be stretched too thin across service areas for which they lack necessary patient volumes for clinical proficiency. A viable alternative is to select a limited set of service areas on which to focus.

A Novel, Synergistic Model in Total Joint Arthroplasty: A Report of 2 Specialty Hospitals With Joint Ownership Between Physicians and Healthcare Systems

BACKGROUND

In 2010, the Affordable Care Act introduced new restrictions on the expansion of physician-owned hospitals (POHs) due to concerns over financial incentives and increased costs. The purpose of this study is to determine whether joint ventures between tertiary care and specialty hospitals (SHs) allowing physician ownership (POHs) have improved outcomes and lower cost following THA and TKA.

METHODS

After institutional review board approval, a retrospective review of consecutive series of primary THA and TKA patients from 2015 to 2016 across a single institution comprised of 14 full-service hospitals and 2 SHs owned as a joint venture between physicians and their health system partners. Ninety-day episode-of-care claims cost data from Medicare and a single private insurer were reviewed with the collection of the same demographic data, medical comorbidities, and readmission rates for both the SHs and non-SHs. A multivariate regression analysis was performed to determine the independent effect of the SHs on episode-of-care costs.

RESULTS

Of the 6537 patients in the study, 1936 patients underwent a total joint arthroplasty at an SH (29.6%). Patients undergoing a procedure at an SH had shorter lengths of stay (1.29 days vs 2.23 days for Medicare, 1.15 vs 1.86 for private payer, both P < .001), were less likely to be readmitted (4% vs 7% for Medicare, P = .001), and had lower mean 90-day episode-of-care costs ($16,661 vs $20,579 for Medicare, $26,166 vs $35,222 for private payers, both P < .001). When controlling for the medical comorbidities and demographic variables, undergoing THA or TKA at an SH was associated with a decrease in overall episode costs ($3266 for Medicare, $13,132 for private payer, both P < .001).

CONCLUSION

Even after adjusting for a healthier patient population, the joint venture partnership with health systems and physician-owned SHs demonstrated lower 90-day episode-of-care costs than non-SHs following THA and TKA. Policymakers and practices should consider these data when considering the current care pathways.

Are cost differences between specialist and general hospitals compensated by the prospective payment system?

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

Maximizing Physician-Hospital Alignment: Lessons Learned From Effective Models of Joint Arthroplasty Care

BACKGROUND

With recent healthcare reform efforts focusing on rewarding value instead of volume, it has become important for orthopedic surgeons to partner and align with their hospitals. We report our experience in aligning clinical and financial incentives with 6 health systems in our geographic area.

METHODS

By managing the entire episode-of-care continuum for total hip and total knee arthroplasty patients, our standardized, evidence-based protocols have improved the quality of care for our joint arthroplasty patients. While most studies focus on cost through insurance claims data, we have been able to accurately determine the costs to our practice and each facility through time-driven activity-based costing.

RESULTS

We have also achieved measureable claims and actual cost reduction by reducing unnecessary care, inappropriate variation in care, and avoidable complications through demand matching, risk stratification, and our nurse navigator program. Our joint ventures with our hospital partners in both specialty hospitals and our ambulatory surgery centers have also been critical to our success.

CONCLUSION

Our experience demonstrates that large private practice groups can successfully align both clinical and financial incentives with healthcare systems to provide quality joint arthroplasty care at a lower cost.

Specialization and production cost efficiency: evidence from ambulatory surgery centers

In the U.S. health care sector, the economic logic of specialization as an organizing principle has come under active debate in recent years. An understudied case is that of ambulatory surgery centers (ASCs), which recently have become the dominant provider of specific surgical procedures. While the majority of ASCs focus on a single specialty, a growing number are diversifying to offer a wide range of surgical services. We take a multiple output cost function approach to an empirical investigation that compares production economies in single specialty ASCs with those in multispecialty ASCs. We applied generalized estimating equation techniques to a sample of Pennsylvania ASCs for the period 2004-2014, including 73 ASCs that specialized in gastrointestinal procedures and 60 ASCs that performed gastrointestinal as well as other specialty procedures. Results indicated that both types of ASC had small room for expansion. In simulation analysis, production of GI services in specialized ASCs had a cost advantage over joint production of GI with other specialty procedures. Our results provide support for the focused factory model of production in the ASC sector.

Specialization as an Organizing Principle: The Case of Ambulatory Surgery Centers

Ambulatory surgery centers (ASCs) recently have grown to become the dominant provider of specific surgical procedures in the United States. While the majority of ASCs focus primarily on a single specialty, many have diversified to offer a wide range of surgical specialties. We exploited a unique data set from Pennsylvania for the years 2004 to 2014 to conduct an empirical investigation of the relative cost of production in ASCs over varying degrees of specialization. We found that for the majority of ASCs, focus on a specialty was associated with lower facility costs. In addition, ASCs appeared to be capturing economies of scale over a broad range of service volume. In contrast to studies of cost efficiency in specialty hospitals, our results provide evidence that supports the focused factory model of production in the ASC sector.

Reconsidering the Affordable Care Act's Restrictions on Physician-Owned Hospitals: Analysis of CMS Data on Total Hip and Knee Arthroplasty

BACKGROUND

Concerns about financial incentives and increased costs prompted legislation limiting the expansion of physician-owned hospitals in 2010. Supporters of physician-owned hospitals argue that they improve the value of care by improving quality and reducing costs. The purpose of the present study was to determine whether physician-owned and non-physician-owned hospitals differ in terms of costs, outcomes, and patient satisfaction in the setting of total hip arthroplasty (THA) and total knee arthroplasty (TKA).

METHODS

With use of the U.S. Centers for Medicare & Medicaid Services (CMS) Inpatient Charge Data, we identified 45 physician-owned and 2,657 non-physician-owned hospitals that performed ≥11 primary TKA and THA procedures in 2014. Cost data, patient-satisfaction scores, and risk-adjusted complication and 30-day readmission scores for knee and hip arthroplasty patients were obtained from the multiyear CMS Hospital Compare database.

RESULTS

Physician-owned hospitals received lower mean Medicare payments than did non-physician-owned hospitals for THA and TKA procedures ($11,106 compared with $12,699; p = 0.002). While the 30-day readmission score did not differ significantly between the 2 types of hospitals (4.48 compared with 4.62 for physician-owned and non-physician-owned, respectively; p = 0.104), physician-owned hospitals had a lower risk-adjusted complication score (2.83 compared with 3.04; p = 0.015). Physician-owned hospitals outperformed non-physician-owned hospitals in all patient-satisfaction categories, including mean linear scores for recommending the hospital (93.9 compared with 87.9; p < 0.001) and overall hospital rating (93.4 compared with 88.4; p < 0.001). When controlling for hospital demographic variables, status as a non-physician-owned hospital was an independent risk factor for being in the upper quartile of all inpatient payments for Medicare Severity-Diagnosis Related Group (MS-DRG) 470 (odds ratio, 3.317; 95% confidence interval, 1.174 to 9.371; p = 0.024), which may be because of a difference in CMS payment methodology.

CONCLUSIONS

Our findings suggest that physician-owned hospitals are associated with lower mean Medicare costs, fewer complications, and higher patient satisfaction following THA and TKA than non-physician-owned hospitals. Policymakers should consider these data when debating the current moratorium on physician-owned hospital expansion.

LEVEL OF EVIDENCE

Therapeutic Level III. See Instructions for Authors for a complete description of levels of evidence.

What Role Does Efficiency Play in Understanding the Relationship Between Cost and Quality in Physician Organizations?

BACKGROUND

The belief that there is inefficiency, or the potential to improve patient health at current levels of spending, is driving the push for greater value in health care. Previous studies demonstrate overuse of a narrow set of services, suggesting provider inefficiency, but existing studies neither quantify inefficiency more broadly nor assess its variation across physician organizations (POs).

DATA AND METHODS

We used data on quality of care and total cost of care from 129 California POs participating in a statewide value-based pay-for-performance program. We estimated a production function with quality as the output and cost as the input, using a stochastic frontier model, to develop a measure of relative efficiency for each PO. To validate the efficiency measure, we examined correlations of PO efficiency estimates with indicators representing overuse of services.

RESULTS

The estimated production function showed that PO quality was positively associated with costs, although there were diminishing marginal returns to spending. A certain minimum level of spending was associated with high quality even among efficient POs. Most strikingly, however, POs had substantial variation in efficiency, producing widely differing levels of quality for the same cost.

CONCLUSIONS

Differences among POs in the efficiency with which they produce quality suggest opportunities for improvements in care delivery that increase quality without increasing spending.

Determinants of transient and persistent hospital efficiency: The case of Italy

In this paper, we extend the 4-random-component closed skew-normal stochastic frontier model by including exogenous determinants of hospital persistent (long-run) and transient (short-run) inefficiency, separated from unobserved heterogeneity. We apply this new model to a dataset composed by 133 Italian hospitals during the period 2008-2013. We show that average total inefficiency is about 23%, higher than previous estimates; hence, a model where the different types of inefficiency and hospital unobserved characteristics are not confounded allows us to get less biased estimates of hospital inefficiency. Moreover, we find that transient efficiency is more important than persistent efficiency, as it accounts for 60% of the total one. Last, we find that ownership (for-profit hospitals are more transiently inefficient and less persistently inefficient than not-for-profit ones, whereas public hospitals are less transiently inefficient than not-for-profit ones), specialization (specialized hospitals are more transiently inefficient than general ones; i.e., there is evidence of scope economies in short-run efficiency), and size (large-sized hospitals are better than medium and small ones in terms of transient inefficiency) are determinants of both types of inefficiency, although we do not find any statistically significant effect of multihospital systems and teaching hospitals.

Are the Affordable Care Act Restrictions Warranted? A Contemporary Statewide Analysis of Physician-Owned Hospitals

BACKGROUND

The Affordable Care Act placed a moratorium on physician-owned hospital (POH) expansion. Concern exists that POHs increase costs and target healthier patients. However, limited historical data support these claims and are not weighed against contemporary measures of quality and patient satisfaction. The purpose of this study was to investigate the quality, costs, and efficiency across hospital types.

METHODS

One hundred forty-five hospitals in a single state were analyzed: 8 POHs; 16 proprietary hospitals (PHs); and 121 general, full-service acute care hospitals (ACHs). Multiyear data from the Centers for Medicare and Medicaid Services Medicare Cost Report and the statewide Health Care Cost Containment Council were analyzed.

RESULTS

ACHs had a higher percentage of Medicare patients as a share of net patient revenue, with similar Medicare volume. POHs garnered significantly higher patient satisfaction: mean Hospital Consumer Assessment of Healthcare Providers and Systems summary rating was 4.86 (vs PHs: 2.88, ACHs: 3.10; P = .002). POHs had higher average total episode spending ($22,799 vs PHs: $18,284, ACHs: $18,856), with only $1435 of total spending on post-acute care (vs PHs: $3867, ACHs: $3378). Medicare spending per beneficiary and Medicare spending per beneficiary performance rates were similar across all hospital types, as were complication and readmission rates related to hip or knee surgery.

CONCLUSION

POHs had better patient satisfaction, with higher total costs compared to PHs and ACHs. A focus on efficiency, patient satisfaction, and ratio of inpatient-to-post-acute care spending should be weighted carefully in policy decisions that might impact access to quality health care.

Healthcare Spending and Performance of Specialty Hospitals: Nationwide Evidence from Colorectal-Anal Specialty Hospitals in South Korea

PURPOSE

Aim of this study is to investigate the characteristics and performance of colorectal-anal specialty vs. general hospitals for South Korean inpatients with colorectal-anal diseases, and assesses the short-term designation effect of the government's specialty hospital.

MATERIALS AND METHODS

Nationwide all colorectal-anal disease inpatient claims (n=292158) for 2010-2012 were used to investigate length of stay and inpatient charges for surgical and medical procedures in specialty vs. general hospitals. The patients' claim data were matched to hospital data, and multi-level linear mixed models to account for clustering of patients within hospitals were performed.

RESULTS

Inpatient charges at colorectal-anal specialty hospitals were 27% greater per case and 92% greater per day than those at small general hospitals, but the average length of stay was 49% shorter. Colorectal-anal specialty hospitals had shorter length of stay and a higher inpatient charges per day for both surgical and medical procedures, but per case charges were not significantly different. A "specialty" designation effect also found that the colorectal-anal specialty hospitals may have consciously attempted to reduce their length of stay and inpatient charges. Both hospital and patient level factors had significant roles in determining length of stay and inpatient charges.

CONCLUSION

Colorectal-anal specialty hospitals have shorter length of stay and higher inpatient charges per day than small general hospitals. A "specialty" designation by government influence performance and healthcare spending of hospitals as well. In order to maintain prosperous specialty hospital system, investigation into additional factors that affect performance, such as quality of care and patient satisfaction should be carried out.

Access, quality, and costs of care at physician owned hospitals in the United States: observational study

OBJECTIVE

To compare physician owned hospitals (POHs) with non-POHs on metrics around patient populations, quality of care, costs, and payments.

DESIGN

Observational study.

SETTING

Acute care hospitals in 95 hospital referral regions in the United States, 2010.

PARTICIPANTS

2186 US acute care hospitals (219 POHs and 1967 non-POHs).

MAIN OUTCOME MEASURES

Proportions of patients using Medicaid and those from ethnic and racial minority groups; hospital performance on patient experience metrics, care processes, risk adjusted 30 day mortality, and readmission rates; costs of care; care payments; and Medicare market share.

RESULTS

The 219 POHs were more often small (<100 beds), for profit, and in urban areas. 120 of these POHs were general (non-specialty) hospitals. Compared with patients from non-POHs, those from POHs were younger (77.4 v 78.4 years, P<0.001), less likely to be admitted through an emergency department (23.2% v. 29.0%, P<0.001), equally likely to be black (5.1% v 5.5%, P=0.85) or to use Medicaid (14.9% v 15.4%, P=0.75), and had similar numbers of chronic diseases and predicted mortality scores. POHs and non-POHs performed similarly on patient experience scores, processes of care, risk adjusted 30 day mortality, 30 day readmission rates, costs, and payments for acute myocardial infarction, congestive heart failure, and pneumonia.

CONCLUSION

Although POHs may treat slightly healthier patients, they do not seem to systematically select more profitable or less disadvantaged patients or to provide lower value care.

Governmental designation of spine specialty hospitals, their characteristics, performance and designation effects: a longitudinal study in Korea

OBJECTIVES

This study compares the characteristics and performance of spine specialty hospitals versus other types of hospitals for inpatients with spinal diseases in South Korea. We also assessed the effect of the government's specialty hospital designation on hospital operating efficiency.

SETTING

We used data of 823 hospitals including 17 spine specialty hospitals in Korea.

PARTICIPANTS

All spine disease-related inpatient claims nationwide (N=645 449) during 2010-2012.

INTERVENTIONS

No interventions were made.

OUTCOME MEASURES

Using a multilevel generalised estimating equation and multilevel modelling, this study compared inpatient charges, length of stay (LOS), readmission within 30 days of discharge and in-hospital death within 30 days of admission in spine specialty versus other types of hospitals.

RESULTS

Spine specialty hospitals had higher inpatient charges per day (27.4%) and a shorter LOS (23.5%), but per case charges were similar after adjusting for patient-level and hospital-level confounders. After government designation, spine specialty hospitals had 8.8% lower per case charges, which was derived by reduced per day charge (7.6%) and shorter LOS (1.0%). Rates of readmission also were lower in spine specialty hospitals (OR=0.796). Patient-level and hospital-level factors both played important roles in determining outcome measures.

CONCLUSIONS

Spine specialty hospitals had higher per day inpatient charges but a much shorter LOS than other types of hospitals due to their specialty volume and experience. In addition, their readmission rate was lower. Spine specialty hospitals also endeavoured to be more efficient after governmental 'specialty' designation.

Effects of physician-owned specialized facilities in health care: a systematic review

BACKGROUND

Multiple studies have investigated physician-owned specialized facilities (specialized hospitals and ambulatory surgery centres). However, the evidence is fragmented and the literature lacks cohesion.

OBJECTIVES

To provide a comprehensive overview of the effects of physician-owned specialized facilities by synthesizing the findings of published empirical studies.

METHODS

Two reviewers independently researched relevant studies using a standardized search strategy. The Institute of Medicine's quality framework (safe, effective, equitable, efficient, patient-centred, and accessible care) was applied in order to evaluate the performance of such facilities. In addition, the impact on the performance of full-service general hospitals was assessed.

RESULTS

Forty-six studies were included in the systematic review. Overall, the quality of the included studies was satisfactory. Our results show that little evidence exists to confirm the advantages attributed to physician-owned specialized facilities, and their impact on full-service general hospitals remains limited.

CONCLUSION

Although data is available on a wide variety of effects, the evidence base is surprisingly thin. There is no compelling evidence available demonstrating the added value of physician-owned specialized facilities in terms of quality or cost of the delivered care. More research is necessary on the relative merits of physician-owned specialized facilities. In addition, their corresponding impact on full-service general hospitals remains unclear. The development of physician-owned specialized facilities should thus be monitored carefully.

Assessing the relationships between hospital resources and activities: a systematic review

Face the challenge of minimizing their resource utilization without reducing the quality of healthcare. Achieving this aim requires precise analysis and optimization of various inputs and outputs. This paper presents a systematic review of the relationships between hospital resources (considered productivity inputs) and financial and activity outcomes (considered productivity outputs). Several electronic bibliographic databases and the Internet were searched for articles published between January 1990 and December 2013 that examined the relationships between hospital resources and financial and activity outcomes. We assessed the quality of the study design, the nature of the sample, input and output indicators, and the statistical methods used for each selected study. Thirty-eight original papers were selected. Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) were the most statistical methods used. Based on our analysis, we retained 18 input and 19 output indicators that could constitute the basis for hospital productivity benchmarking. Selecting a small set of shared economic and activity indicators is relevant for assessing the productivity of a hospital, measuring trends and performing national or international benchmarking. Such indicators should be combined with quality measures for a comprehensive evaluation approach.

The Association of Hospital Cost-Inefficiency With Certificate-of-Need Regulation

Certificate-of-need (CON) regulations can promote hospital efficiency by reducing duplication of services; however, there are practical and theoretical reasons why they might be ineffective, and the empirical evidence generated has been mixed. This study compares the cost-inefficiency of urban, acute care hospitals in states with CON regulations against those in states without CON requirements. Stochastic frontier analysis was performed on pooled time-series, cross-sectional data from 1,552 hospitals in 37 states for the period 2005 to 2009 with controls for variations in hospital product mix, quality, and patient burden of illness. Average estimated cost-inefficiency was less in CON states (8.10%) than in non-CON states (12.46%). Results suggest that CON regulation may be an effective policy instrument in an era of a new medical arms race. However, broader analysis of the effects of CON regulation on efficiency, quality, access, prices, and innovation is needed before a policy recommendation can be made.

An analysis of the inpatient charge and length of stay for patients with joint diseases in Korea: specialty versus small general hospitals

In 2011, the Korean government designated hospitals with certain structural characteristics as specialty hospitals. This study compared the inpatient charges and length of stay of patients with joint diseases treated at these specialty hospitals with those of patients treated at small general hospitals. In addition, the study investigated whether the designation of certain hospitals as specialty hospitals had an effect on inpatient charges and length of stay. Multi-level models were used to perform regression analyses on inpatient claims data (N=268,809) for 2010-2012 because of the hierarchical structure of the data. The inpatient charge at specialty hospitals was 19% greater than that at small general hospitals, but the length of stay was 21% shorter. After adjusting for patient and hospital level confounders, specialty hospitals had a higher inpatient charge (34.6%) and a reduced length of stay (31.7%). However, the effect of specialty hospital designation on inpatient charge (2.7% higher) and length of stay (2.3% longer) was relatively smaller. Among the patient characteristics, female gender, age, and severity of illness were positively associated with inpatient charge and length of stay. In terms of location, hospitals in metropolitan area had higher inpatient charges (5.5%), but much shorter length of stay (-14%). Several structural factors, such as occupancy rate, bed size, number of outpatients and nurses were positively associated with both inpatient charges and length of stay. However, number of specialists was positively associated with inpatient charges, but negatively associated with length of stay. In sum, this study found that specialty hospitals treating joint diseases tend to incur higher charges but produce shorter length of stay, compared to their counterparts. Specialty hospitals' overcharging behaviors, although shorter length of stay, suggest that policy makers could introduce bundled payments for the joint procedures. To promote a successful specialty hospital system, a broader discussion and investigation that includes quality measures as well as real cost of care should be initiated.

Dynamics of ambulatory surgery centers and hospitals market entry

In this article, we investigate the diversity of healthcare delivery organizations by comparing the market determinants of hospitals entry rates with those of ambulatory surgery centers (ASCs). Unlike hospitals, ASCs is one of the growing populations of specialized healthcare delivery organizations. There are reasons to believe that firm entry patterns differ within growing organizational populations since these markets are characterized by different levels of organizational legitimacy, technological uncertainty, and information asymmetry. We compare the entry patterns of firms in a mature population of hospitals to those of firms within a growing population of ASCs. By using patient-level datasets from the state of Florida, we break down our explanatory variables by facility type (ASC vs. hospital) and utilize negative binomial regression models to evaluate the impact of niche density on ASC and hospital entry. Our results indicate that ASCs entry rates is higher in markets with overlapping ASCs while hospitals entry rates are less in markets with overlapping hospitals and ASCs. These results are consistent with the notion that firms in growing populations tend to seek out crowded markets as they compete to occupy the most desirable market segments while firms in mature populations such as general hospitals avoid direct competition.

In a niche of time: do specialty hospitals outperform general services hospitals?

Niche hospitals represent a growing segment in the health care industry. Niche facilities are primarily engaged in the treatment of cardiac or orthopedic conditions. The effectiveness of this strategy is of interest because niche hospitals focus on only the most profitable services. The purpose of this research was to assess the financial effectiveness of the niche strategy. We theorize that firm and market-level factors concomitantly with the strategy of the hospital-niche versus traditional-are associated with financial performance. This research used 2 data sources, the 2003 Medicare Cost Report and the 2003 Area Resource File. The sample was limited to only for-profit, urban, nongovernmental hospitals (n = 995). The data were analyzed using hierarchical least squares regression. Financial performance was operationalized using the hospital's return on assets. The principal finding of this project is that niche hospitals had significantly higher performance than traditional facilities. From the organizational perspective, the niche strategy leads to better financial performance. From a societal perspective, the niche strategy provides increased focus and efficiencies through repetition. Despite the limited focus of this strategy, patients who can access these providers may experience better outcomes than patients in more traditional hospitals.

Orthopedic specialty hospitals: centers of excellence or greed machines?

Orthopedic specialty hospitals have recently been the subject of debate. They are patient-centered, physician-friendly health care alternatives that take advantage of the economic efficiencies of specialization. Medically, they provide a higher quality of care and increase patient and physician satisfaction. Economically, they are more efficient and profitable than general hospitals. They also positively affect society through the taxes they pay and the beneficial aspects of the competition they provide to general hospitals. Their ability to provide a disruptive innovation to the existing hospital industry will lead to lower costs and greater access to health care. However, critics say that physician ownership presents potential conflicts of interest and leads to overuse of medical care. Some general hospitals are suffering as a result of unfair specialty hospital practices, and a few drastic medical complications have occurred at specialty hospitals. Specialty hospitals have been scrutinized for increasing the inequality of health care and continue to be a target of government regulations. In this article, the pros and cons are examined, and the Emory Orthopaedics and Spine Hospital is analyzed as an example. Orthopedic specialty hospitals provide excellent care and are great assets to society. Competition between specialty and general hospitals has provided added value to patients and taxpayers. However, physicians must take more responsibility in their appropriate and ethical leadership. It is critical to recognize financial conflicts of interest, disclose ownership, and act ethically. Patient care cannot be compromised. With thoughtful and efficient leadership, specialty hospitals can be an integral part of improving health care in the long term.

Physician-owned hospitals, neurosurgeons, and disclosure: lessons from law and the literature

Physician ownership of hospitals has been a subject of controversy for years. Opponents claim that physician ownership and the hospital profits that result from imaging, laboratory tests, and procedures create a conflict of interest for physicians in providing impartial patient care. Proponents argue that having an ownership stake in a hospital means that physicians can have control over all facets of the patient experience, which leads potentially to better patient satisfaction and outcomes. With passage of health reform legislation, physician-owned specialty hospitals have been under renewed attack and now face more restrictive limitations on their growth and expansion. The following review explores the history of physician-owned specialty hospitals, the controversy surrounding physician ownership, and the scope of neurosurgeon ownership in specialty hospitals and offers 2 models for disclosure of potential conflicts of interest.

Comorbidity and the limitations of volume and focus as organizing principles

Some scholars advocate for health care organizations designed around the principles of volume and focus, while others suggest that the complexity of patient care renders this approach to organizing care inefficient (and ineffective). This article attempts to reconcile these views, drawing on the idea of organizational capabilities as knowledge integration to motivate an empirical examination of the extent to which the efficiency benefits of hospital volume and focus depend on the degree of patient comorbidity. In doing so, the article has two aims: (a) to shed light on both the benefits and limitations of volume and focus as organizing principles and (b) to contribute to our understanding of the implications of comorbidity for the organization of health care delivery. Using data on U.S. hospitals, the author finds evidence that the efficiency benefits of volume and focus are diminishing in the level of patient comorbidity.

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.

Predialysis nephrology care and costs in elderly patients initiating dialysis

BACKGROUND

Access to nephrology care before initiation of chronic dialysis is associated with improved outcomes after initiation. Less is known about the effect of predialysis nephrology care on healthcare costs and utilization.

METHODS

We conducted retrospective analyses of elderly patients who initiated dialysis between January 1, 2000 and December 31, 2001 and were eligible for services covered by the Department of Veterans Affairs. We used multivariable generalized linear models to compare healthcare costs for patients who received no predialysis nephrology care during the year before dialysis initiation with those who received low- (1-3 nephrology visits), moderate- (4-6 visits), and high-intensity (>6 visits) nephrology care during this time period.

RESULTS

There were 8022 patients meeting inclusion criteria: 37% received no predialysis nephrology care, while 24% received low, 16% moderate, and 23% high-intensity predialysis nephrology care. During the year after dialysis initiation, patients in these groups spent an average of 52, 40, 31, and 27 days in the hospital (P < 0.001), respectively, and accounted for an average of $103,772, $96,390, $93,336, and $89,961 in total healthcare costs (P < 0.001), respectively. Greater intensity of predialysis nephrology care was associated with lower costs even among patients whose first predialysis nephrology visit was ≤ 3 months before dialysis initiation. Patients with greater predialysis nephrology care also had lower mortality rates during the year after dialysis initiation (43%, 38%, 28%, and 25%, respectively, P < 0.001).

CONCLUSIONS

Greater intensity of predialysis nephrology care was associated with fewer hospital days and lower total healthcare costs during the year after dialysis initiation, even though patients survived longer.

Contribution of case-mix classification to profiling hospital characteristics and productivity

Case-mix classification has made it possible to analyze acute care delivery case volumes and resources. Data arising from observed differences have a role in planning health policy. Aggregated length of hospital stay (LOS) and total charges (TC) as measures of resource use were calculated from 34 case-mix groups at 469 hospitals (1,721,274 eligible patients). The difference between mean resource use of all hospitals and the mean resource use of each hospital was subdivided into three components: amount of variation attributable to hospital practice behavior (efficiency); amount attributable to hospital case-mix (complexity); and amount attributable to the interaction. Hospital characteristics were teaching status (academic or community), ownership, disease coverage, patients, and hospital volume. Multivariate analysis was employed to determine the impact of hospital characteristics on efficiency. Mean LOS and TC were greater for academic than community hospitals. Academic hospitals were least associated with LOS and TC efficiency. Low disease coverage was a predictor of TC efficiency while low patient volume was a predictor of unnecessarily long hospital stays. There was an inverse correlation between complexity and efficiency for both LOS and TC. Policy makers should acknowledge that differentiation of hospital function needs careful consideration when measuring efficiency.

Exploring types of focused factories in hospital care: a multiple case study

Background

Focusing on specific treatments or diseases is proposed as a way to increase the efficiency of hospital care. The definition of "focus" or "focused factory", however, lacks clarity. Examples in health care literature relate to very different organizations.

Our aim was to explore the application of the focused factory concept in hospital care, including an indication of its performance, resulting in a conceptual framework that can be helpful in further identifying different types of focused factories. Thus contributing to the understanding of the diversity of examples found in the literature.

Methods

We conducted a cross-case comparison of four multiple-case studies into hospital care. To cover a broad array of focus, different specialty fields were selected. Each study investigated the organizational context, the degree of focus, and the operational performance. Focus was measured using an instrument translated from industry. Data were collected using both qualitative and quantitative methods and included site visits. A descriptive analysis was performed at the case study and cross-case studies level.

Results

The operational performance per specialty field varied considerably, even when cases showed comparable degrees of focus. Cross-case comparison showed three focus domains. The product domain considered specialty based focused factories that treated patients for a single-specialty, but did not pursue a specific strategy nor adapted work-designs or layouts. The process domain considered delivery based focused factories that treated multiple groups of patients and often pursued strategies to improve efficiency and timeliness and adapted work-designs and physical layouts to minimize delays. The product-process domain considered procedure based focused factories that treated a single well-defined group of patients offering one type of treatment. The strategic focusing decisions and the design of the care delivery system appeared especially important for delivery and procedure based focused factories.

Conclusions

Focus in hospital care relates to limitations on the patient group treated and the range of services offered. Based on these two dimensions, we identified three types of focused factories: specialty based, delivery based, and procedure based. Focus could lead to better operational performance, but only when clear strategic focusing decisions are made.

What have we learned from the application of stochastic frontier analysis to U.S. hospitals?

This article focuses on the lessons learned from stochastic frontier analysis studies of U.S. hospitals, of which at least 27 have been published. A brief discussion of frontier techniques is provided, but a technical review of the literature is not included because overviews of estimation issues have been published recently. The primary focus is on the correlates of hospital inefficiency. In addition to examining the association of market pressures and hospital inefficiency, the authors also examined the relationship between inefficiency and hospital behavior (e.g., hospital exits) and inefficiency and other measures of hospital performance (e.g., outcome measures of quality). The authors found that consensus is emerging on the relationship of some factors to hospital efficiency; however, further research is needed to better understand others. The application of stochastic frontier analysis to specific policy issues is in its infancy; however, the methodology holds promise for being useful in certain contexts.

Single Specialty Hospitals and Service Competition

Advocates for physician-owned hospitals specializing in cardiac, orthopedic, and surgical services claim that these facilities induce healthy competition, stimulating improved performance among acute care hospitals. This paper examines the effect of specialty hospital entry on one indicator of competition among hospitals: changes in service provision by general hospitals in local markets. Results suggest that general hospitals are stepping up their own offerings of services that are in direct competition with those of specialty hospitals. Entry of specialty hospitals is also associated with significantly higher growth in high-technology diagnostic imaging services in the general hospitals in those markets.

Single Specialty Hospitals and Nurse Staffing Patterns

Advocates of physician-owned single specialty hospitals (SSHs) maintain that, through healthy competition, SSHs pressure competitor hospitals in local markets to improve performance. This paper investigates data trends on the effects of SSH entry on a potential indicator of quality of care in general hospital competitors: nurse staffing levels. We examined registered nurse (RN) staffing from 1997 to 2004 in ten states in which there was considerable SSH entry during this period. Regression estimates used longitudinal panel data models with hospital fixed effects to compare changes in numbers of RNs in general hospitals located in markets with SSHs with general hospitals located in markets where there were no SSHs. Results indicate that hospitals located in markets with orthopedic/surgical SSH presence raised their RN nurse staffing levels. Whether or not these changes are associated with improved patient outcomes is unknown.