Moving the Needle: How Transparency Could Lower Costs and Improve Quality in United States Hospitals

This thesis shows the limitations of price and quality information for improving the value of healthcare delivery in the United States. First, in four survey experiments to determine the impact of information on decision-making, consumers were more likely to choose the lower cost or higher quality option when relevant information was presented in straightforward ways with a minimized risk of information overload (n = 224, t = -3.7065, p = 0.0002). Second, hospitals on the U.S. News Best Hospital list between 2008 and 2011 were shown to be significantly more likely to be found in wealthy, highly populated areas, while unranked hospitals were more likely to be the sole community provider. Third, perceived quality (U.S. News-ranked hospitals) was shown to be out of alignment with actual quality (hospitals performing above the national average for readmission and mortality according to Medicare Hospital Compare): 36 hospitals performed well on both lists, constituting only 0.77% of total hospitals in the U.S. in 2011. Current efforts have not gone far enough toward complete transparency to lead to negative effects such as collusion, nor to positive effects such as better value. Fears held by economists and private sector participants will likely not be realized in the near future—but neither will the hopes of policymakers for demand-driven change in the healthcare system

The price ain’t right? hospital prices and healthspending on the privately insured

We use insurance claims data for 27.6 percent of individuals with private employer-sponsored insurance in the US between 2007 and 2011 to examine the variation in health spending and in hospitals’ transaction prices. We document the variation in hospital prices within and across geographic areas, examine how hospital prices influence the variation in health spending on the privately insured, and analyze the factors associated with hospital price variation. Four key findings emerge. First, health care spending per privately insured beneficiary varies by a factor of three across the 306 Hospital Referral Regions (HRRs) in the US. Moreover, the correlation between total spending per privately insured beneficiary and total spending per Medicare beneficiary across HRRs is only 0.14. Second, variation in providers’ transaction prices across HRRs is the primary driver of spending variation for the privately insured, whereas variation in the quantity of care provided across HRRs is the primary driver of Medicare spending variation. Consequently, extrapolating lessons on health spending from Medicare to the privately insured must be done with caution. Third, we document large dispersion in overall inpatient hospital prices and in prices for seven relatively homogenous procedures. For example, hospital prices for lower-limb MRIs vary by a factor of twelve across the nation and, on average, two-fold within HRRs. Finally, hospital prices are positively associated with indicators of hospital market power. Even after conditioning on many demand and cost factors, hospital prices in monopoly markets are 15.3 percent higher than those in markets with four or more hospitals

Relationship Between Health Care Costs and Type of Insurance

Continued escalation in health care expenditures in the United States has led to an unsustainable model that consumes almost 20% of GDP. Policymakers have recognized the need for industry reform and have taken action through the passage of the Affordable Care Act (ACA). The purpose of this quantitative, longitudinal study was to examine the relationship between the type of health insurance and health care costs. Mechanism theory and game theory provided the theoretical framework. The analysis of secondary data from the Healthcare Cost and Utilization Project included a sample of 1,956,790-inpatient hospital stays from 2007 to 2014. Results of one-way ANOVAs indicated that between 2% and 9% of health care costs could be attributed to type of health insurance, a statistically significant finding. Results also supported the effectiveness of the ACA in stabilizing health care costs. The average annual rate of health care cost increase was 38.6% from 2007 until 2010, decreasing to an average annual increase of 4.3% from 2011 until 2014. Results provide important information to generate positive social change for consumers, providers, and policymakers. This includes improving decisions related to health care costs, improved understanding of the costs of health care services, increased transparency, increased patient engagement, maximizing consumer utility, facilitation of reduction of waste within the industry, and increased understanding of the impact of health policy on health care costs and efficiencies within newly created health policies. Results may also improve transparency of health care costs, which allows consumers, providers, and policymakers to take specific action to reduce health care costs, resulting in a more just and sustainable health care model

Pay for performance in health care

This book provides a balanced assessment of pay for performance (P4P), addressing both its promise and its shortcomings. P4P programs have become widespread in health care in just the past decade and have generated a great deal of enthusiasm in health policy circles and among legislators, despite limited evidence of their effectiveness. On a positive note, this movement has developed and tested many new types of health care payment systems and has stimulated much new thinking about how to improve quality of care and reduce the costs of health care. The current interest in P4P echoes earlier enthusiasms in health policy—such as those for capitation and managed care in the 1990s—that failed to live up to their early promise. The fate of P4P is not yet certain, but we can learn a number of lessons from experiences with P4P to date, and ways to improve the designs of P4P programs are becoming apparent. We anticipate that a “second generation” of P4P programs can now be developed that can have greater impact and be better integrated with other interventions to improve the quality of care and reduce costs.Publishe

Pay for performance in health care: Methods and approaches

This book provides a balanced assessment of pay for performance (P4P), addressing both its promise and its shortcomings. P4P programs have become widespread in health care in just the past decade and have generated a great deal of enthusiasm in health policy circles and among legislators, despite limited evidence of their effectiveness. On a positive note, this movement has developed and tested many new types of health care payment systems and has stimulated much new thinking about how to improve quality of care and reduce the costs of health care. The current interest in P4P echoes earlier enthusiasms in health policy—such as those for capitation and managed care in the 1990s—that failed to live up to their early promise. The fate of P4P is not yet certain, but we can learn a number of lessons from experiences with P4P to date, and ways to improve the designs of P4P programs are becoming apparent. We anticipate that a “second generation” of P4P programs can now be developed that can have greater impact and be better integrated with other interventions to improve the quality of care and reduce costs

Strategies for Improving Healthcare Efficiency While Reducing Costs

In comparison to the European healthcare system, the U.S. healthcare system has lower quality care, higher costs, and covers a smaller percentage of the population. Despite the high costs, the U.S. healthcare system remains dysfunctional. The purpose of this exploratory single case study was to identify the strategies that some healthcare managers in a hospital setting in the midwestern region of the United States use to improve efficiency while decreasing healthcare costs. Complex adaptive systems theory was used to frame this study that included face-to-face interviews with 6 highly experienced healthcare managers. Data were collected from audio recorded interviews and publicly available documents, and the audio recordings were transcribed and analyzed using deductive and open coding techniques to identify themes regarding strategies used by managers to find effective ways for improvement. Three strategies emerged as themes, including improving the accuracy of information and reports, implementing precise and accurate information, and improving quality. The findings of this study may directly benefit healthcare managers and compel positive social change by facilitating successful strategies to improve efficiency and reduce costs. The successful strategies identified in the study might provide a new direction to healthcare managers attempting to adopt new methods. The findings may also contribute to social change by providing solutions that may improve overall organizational performance in a hospital setting

Measuring Health Care Quality and Value: Theory and Empirics

Imperfect information is a pervasive feature of health care markets. Therefore, measuring the quality and value of health care services may inform efforts to improve health care delivery. This dissertation explores several applications of performance measurement in health care: describing national practice patterns, evaluating the effects of payment reforms, and contributing to policies that reward providers for measured performance. Chapter one describes the use of low-value services in fee-for-service Medicare. Drawing from evidence-based lists of services that provide minimal clinical benefit, I develop 26 claims-based measures of low-value services. Applying these measures to Medicare claims, I demonstrate that 42% of beneficiaries received at least one of these services in a year, which constituted 2.7 % of overall annual spending. When more specific and less sensitive versions of the measures were used, I detected low-value service use for 25% of beneficiaries, constituting 0.6% of overall spending. In adjusted analyses, spending on low-value services was substantial even in regions at the 5th percentile of the regional distribution of low-value spending. Adjusted regional use was positively correlated among five of six categories of low-value services. These findings are consistent with the view that wasteful practices are pervasive in the US health care system. The results also suggest that the performance of claims-based measures in supporting policies to reduce overuse may depend heavily on how the measures are defined. Chapter two examines the role of provider organizations in influencing the delivery of low-value services. In Part I of this chapter, I assess whether provider organizations exhibit distinct profiles of low-value service use in fee-for-service Medicare. In one sample of 3,137 large provider organizations and another sample of 250 provider organizations that entered the Medicare Pioneer Accountable Care Organization (ACO) Program or the Medicare Shared Savings Program, I demonstrate that provider organizations’ use of low-value services exhibits considerable variation, substantial persistence over time, and modest consistency across service types. In Part II of this chapter, I evaluate the effects of the Pioneer ACO Program on the use of low-value services. In a difference-in-differences analysis, I compare the use of low-value services between beneficiaries attributed to Pioneer ACOs and beneficiaries attributed to other providers, before (2009-2011) vs. after (2012) Pioneer ACO contracts began. During its first year, the Pioneer ACO program was associated with modest reductions in low-value services, with greater reductions for organizations that had provided more low-value services. The findings in this chapter suggest that provider organizations can influence the use of low-value services by affiliated physicians, and that organization-level incentives can reduce low-value practices. Chapter three analyzes the economic properties of performance measures used in both health care and education policy. Because observable outcomes constitute a noisy signal of performance in these settings, shrinkage estimators are often used to improve measurement accuracy. I demonstrate that these improvements in accuracy come at the cost of reducing a measure’s responsiveness to agent behavior, thereby diluting incentives for performance improvement. In a model of consumers sorting between agents, I show that welfare depends on two components: (1) accuracy of performance signals, which promotes efficient consumer sorting, and (2) incentives for performance improvement, which promote efficient agent effort. Using Monte Carlo simulation, I evaluate the accuracy and incentive properties of various techniques for estimating hospital performance in heart attack mortality. Shrinkage estimators entail substantial incentive distortions, particularly for smaller hospitals, which experience an approximate 50-70% “tax” on improvement. Several estimation techniques, including the methods currently used by Medicare, are dominated on the basis of both accuracy and incentive criteria. I discuss various policy alternatives to shrinkage estimation, such as increasing the timespan of measuring performance.  Health Polic

The Value Driven Pharmacist: Basics of Access, Cost and Quality

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