US hospitals experienced substantial productivity growth during 2002-11

A systematic examination of quality-adjusted price index alternatives for medical care using claims data

We investigate alternative methods for constructing quality-adjusted medical price indexes both theoretically and empirically using medical claims data. The methodology and assumptions applied in the formation of the index have substantive effects on the magnitude of the quality-adjusted price changes. A method based on utility theory produces the most robust and accurate results, while alternative methods used in recent work overstate inflation. Based on Medicare claims data for three medical conditions, we find declining prices across each condition when properly adjusted for quality.

A Satellite Account for Health in the United States

This paper develops a satellite account for the US health sector and measures productivity growth in health care for the elderly population between 1999 and 2012. We measure the change in medical spending and health outcomes for a comprehensive set of 80 conditions. Medical care has positive productivity growth over the time period, with aggregate productivity growth of 1.5% per year. However, there is significant heterogeneity in productivity growth. Care for cardiovascular disease has had very high productivity growth. In contrast, care for people with musculoskeletal conditions has been costly but has not led to improved outcomes.

Trends in the quality and cost of inpatient surgical procedures in the United States, 2002-2015

OBJECTIVES

This study documents trends in risk-adjusted quality and cost for a variety of inpatient surgical procedures among Medicare beneficiaries from 2002 through 2015, which can provide valuable insight on future strategies to improve public health and health care.

METHODS

We focused on 11 classes of inpatient surgery, defined by the Agency for Health Research and Quality's (AHRQ's) Clinical Classification System. The surgical classes studied included a wide range of surgeries, including tracheostomy, heart valve procedures, colorectal resection, and wound debridement, among others. For each surgical class, we assessed trends in treatment costs and quality outcomes, as defined by 30-day survival without unplanned readmissions, among Medicare beneficiaries receiving these procedures during hospital stays. Quality and costs were adjusted for patient severity based on demographics, comorbidities, and community context. We also explored surgical innovations of these 11 classes of inpatient surgery from 2002-2015.

RESULTS

We found significant improvements in quality for 7 surgical classes, ranging from 0.08% (percutaneous transluminal coronary angioplasty) to 0.74% (heart valve procedures) per year. Changes in cost varied by surgery, the significant decrease in cost ranged from -2.59% (tracheostomy) to -0.34% (colorectal resection) per year. Treatment innovation occurred with respect to surgical procedures utilized for heart valve procedures and colorectal resection, which may be associated with the decrease in surgical cost.

CONCLUSIONS

Our results suggest that there was significant quality improvement for 7 surgery categories over the 14-year study period. Costs decreased significantly for 6 surgery categories, and increased significantly for 3 other categories.

Have Dutch Hospitals Saved Lives and Reduced Costs? A longitudinal patient-level analysis over the years 2013-2017

The purpose of this paper is to shed light on the ongoing Dutch health system reforms and identify whether hospital costs and hospital outcomes have changed over time. We present an empirical analysis that is based on granular micro-costing data and focuses on conditions for which mortality is indicative of outcome quality, that is, acute myocardial infarction (AMI), chronic heart failure (CHF), and pneumonia (PNE). We deploy a dataset of more than 80,000 inpatient episodes over 5 years (2013-2017) to estimate regression models that control for variation between patients and hospitals. We have three main findings. First, our results do not indicate significant outcome improvements over the years; that is, there is no time trend for mortality. Second, there is heterogeneity in cost developments: for patients who survive their inpatient stay, our data indicate that costs increase significantly by 0.9% per year for AMI patients, while costs decrease significantly by 1.7% per year for CHF patients and by 1.9% per year for PNE patients. For patients who pass away during their inpatient stay, our data do not indicate significant time trends. Third and finally, our results suggest the existence of substantial cost variation between hospitals.

Assessing Productivity Development of Public Hospitals: A Case Study of Shanghai, China

As the main provider of medical services for the general public, the productivity changes of public hospitals directly reflect the development of the healthcare system and the implementation effect of medical reform policies. Using the dataset of 126 public hospitals in China from 2013 to 2018, this paper improves the existing literature in both index selection and model formulation, and examines public hospitals' total factor productivity (TFP) growth. Empirical results not only demonstrate the trend of productivity development but also point out the directions in how to improve the current running status. Our study demonstrates that there were no obvious productivity fluctuations in public hospitals during the recent observing years, indicating that the performance of China's public health system was generally acceptable in coping with fast-growing medical demand. However, the effect of public hospital reform has not been remarkably shown; thus, no significant productivity improvement was observed in most hospitals. Tertiary hospitals witnessed a slight declining trend in TFP, while secondary hospitals showed signs of rising TFP. To effectively enhance the overall performance of public hospitals in China, practical suggestions are proposed from the government and hospital levels to further promote the graded medical treatment system.

Productivity growth of skilled nursing facilities in the treatment of post-acute-care-intensive conditions

BACKGROUND

Health care is believed to be suffered from a "cost disease," in which a heavy reliance on labor limits opportunities for efficiencies stemming from technological improvement. Although recent evidence shows that U.S. hospitals have experienced a positive trend of productivity growth, skilled nursing facilities are relatively "low-tech" compared to hospitals, leading some to worry that productivity at skilled nursing facilities will lag behind the rest of the economy.

OBJECTIVE

To assess productivity growth among skilled nursing facilities (SNFs) in the treatment of conditions which frequently involve substantial post-acute care after hospital discharge.

METHODS

We constructed an analytic file with the records of Medicare beneficiaries that were discharged from acute-care hospitals to SNFs with stroke, hip fracture, or lower extremity joint replacement (LEJR) between 2006 and 2014. We populated each record for 90 days starting at the time of SNF admission, detailing for each day the treatment site and all associated costs. We used ordinary least square regression to estimate growth in SNF productivity, measured by the ratio of "high-quality SNF stays" to total treatment costs. The primary definition of a high-quality stay was a stay that ended with the return of the patient to the community within 90 days after SNF admission. We controlled for patient demographics and comorbidities in the regression analyses.

RESULTS

Our sample included 1,076,066 patient stays at 14,394 SNFs with LEJR, 315,546 patient stays at 14,154 SNFs with stroke, and 739,608 patient stays at 14,588 SNFs with hip fracture. SNFs improved their productivity in the treatment of patients with LEJR, stroke, and hip fracture by 1.1%, 2.2%, and 2.0% per year, respectively. That pattern was robust to a number of alternative specifications. Regressions on year dummies showed that the productivity first decreased and then increased, with a lowest point in 2011. Over the study period, quality continued to rise, but dominated by higher costs at first. Costs then started to decrease, driving productivity to grow.

CONCLUSION

There has been substantial productivity growth in recent years among SNFs in the U.S. in the treatment of post-acute-care-intensive conditions.

Geographic variation in the delivery of high-value inpatient care

OBJECTIVES

To measure value in the delivery of inpatient care and to quantify its variation across U.S. regions.

DATA SOURCES / STUDY SETTING

A random (20%) sample of 33,713 elderly fee-for-service Medicare beneficiaries treated in 2,232 hospitals for a heart attack in 2013.

STUDY DESIGN

We estimate a production function for inpatient care, defining output as stays with favorable patient outcomes in terms of survival and readmission. The regression model includes hospital inputs measured by treatment costs, as well as patient characteristics. Region-level effects in the production function are used to estimate the productivity and value of the care delivered by hospitals within regions.

DATA COLLECTION / EXTRACTION METHODS

Medicare claims and enrollment files, linked to the Dartmouth Atlas of Health Care and Inpatient Prospective Payment System Impact Files.

PRINCIPAL FINDINGS

Hospitals in the hospital referral region at the 90th percentile of the value distribution delivered 54% more high-quality stays than hospitals at the 10th percentile could have delivered, after adjusting for treatment costs and patient severity.

CONCLUSIONS

Variation in the delivery of high-value inpatient care points to opportunities for better quality and lower costs.

Assessing physician productivity following Norwegian hospital reform: A panel and data envelopment analysis

BACKGROUND

Although health care reforms may improve efficiency at the macro level, less is known regarding their effects on the utilization of health care personnel. Following the 2002 Norwegian hospital reform, we studied the productivity of the physician workforce and the effect of personnel mix on this measure in all nineteen Norwegian hospitals from 2001 to 2013.

METHODS

We used panel analysis and non-parametric data envelopment analysis (DEA) to study physician productivity defined as patient treatments per full-time equivalent (FTE) physician. Resource variables were FTE and salary costs of physicians, nurses, secretaries, and other personnel. Patient metrics were number of patients treated by hospitalization, daycare, and outpatient treatments, as well as corresponding diagnosis-related group (DRG) scores accounting for differences in patient mix. Research publications and the fraction of residents/FTE physicians were used as proxies for research and physician training.

RESULTS

The number of patients treated increased by 47% and the DRG scores by 35%, but there were no significant increases in any of the activity measures per FTE physician. Total DRG per FTE physician declined by 6% (p < 0.05). In the panel analysis, more nurses and secretaries per FTE physician correlated positively with physician productivity, whereas physician salary was neutral. In 2013, there was a 12%-80% difference between the hospitals with the highest and lowest physician productivity in the differing treatment modalities. In the DEA, cost efficiency did not change in the study period, but allocative efficiency decreased significantly. Bootstrapped estimates indicated that the use of physicians was too high and the use of auxiliary nurses and secretaries was too low.

CONCLUSIONS

Our measures of physician productivity declined from 2001 to 2013. More support staff was a significant variable for predicting physician productivity. Personnel mix developments in the study period were unfavorable with respect to physician productivity.

Adjusting the Measurement of the Output of the Medical Sector for Quality: A Review of the Literature

The Bureau of Economic Analysis recently created new price indexes for health care in its health care satellite account and now faces the problem of how to adjust them for quality. I review the literature on this topic and divide the articles that created quality-adjusted price indexes for individual medical conditions into those that use primarily outcomes-based adjustments and those that use only process-based adjustments. Outcomes-based adjustments adjust the indexes based on observed aggregate health outcomes, usually mortality. Process-based adjustments adjust the indexes based on the treatments provided and medical knowledge of their effectiveness. Outcomes-based adjustments are easier to implement, while process-based adjustments are more demanding in terms of data and medical knowledge. In general, the research literature shows adjusting for quality in the measurement of output in the medical sector to be quantitatively important.

Cost inefficiency under financial strain: a stochastic frontier analysis of hospitals in Washington State through the Great Recession

The importance of increasing cost efficiency for community hospitals in the United States has been underscored by the Great Recession and the ever-changing health care reimbursement environment. Previous studies have shown mixed evidence with regards to the relationship between linking hospitals' reimbursement to quality of care and cost efficiency. Moreover, current evidence suggests that not only inherently financially disadvantaged hospitals (e.g., safety-net providers), but also more financially stable providers, experienced declines to their financial viability throughout the recession. However, little is known about how hospital cost efficiency fared throughout the Great Recession. This study contributes to the literature by using stochastic frontier analysis to analyze cost inefficiency of Washington State hospitals between 2005 and 2012, with controls for patient burden of illness, hospital process of care quality, and hospital outcome quality. The quality measures included in this study function as central measures for the determination of recently implemented pay-for-performance programs. The average estimated level of hospital cost inefficiency before the Great Recession (10.4 %) was lower than it was during the Great Recession (13.5 %) and in its aftermath (14.1 %). Further, the estimated coefficients for summary process of care quality indexes for three health conditions (acute myocardial infarction, pneumonia, and heart failure) suggest that higher quality scores are associated with increased cost inefficiency.