Product-line extensions and pricing strategies of brand-name drugs facing patent expiration

OBJECTIVE

This study proposed an alternative to brand loyalty as the explanation for the continued price rigidity of patent-expired brand-name prescription drugs despite the increase in market entry of generic drugs facilitated by the 1984 Drug Price Competition and Patent Term Restoration Act. Study hypotheses were to test (1) whether market entries of new-product extensions are associated with market success of original brand-name drugs before generic drug entry, and (2) whether original brand-name drugs exhibit price rigidity to generic entry only when they are extended.

METHODS

The design is a retrospective follow-up study for the prescription drug brands that lost their patents between 1987 and 1992. The drug brands were limited to nonantibiotic, orally administered drugs containing only 1 active pharmaceutical ingredient. Information on patent expiration, entry of a product extension, and market success were determined from the U.S. Food and Drug Administration.s Orange Book, First DataBank, and American Druggist, respectively. Market success was defined as whether an original drug brand was listed in the top 100 prescriptions most frequently dispensed before facing generic entry. Product-line extension was defined as the appearance of another product that a company introduces within the same market after its existing product. Drug prices were average wholesale prices from the Drug Topics Red Book. The relationship between product-line extension and market success was examined using a logistic regression analysis. The price rigidity to entry was tested using a panel regression analysis.

RESULTS

A total of 27 drug brands lost their patents between 1987 and 1992. Drug brands that achieved market success were 16 times more likely to be extended than were those that did not (OR=16, 95% confidence interval, 2.12-120.65). The price rigidity to entry existed in drug brands with extensions (beta=2.65%, P <0.033), but not in those brands without extensions (beta=-2.40%, P <0.001).

CONCLUSION

This study provided some support for the alternative explanation to brand loyalty that a new product-line extension introduced for an original brand helps the original price be rigid despite the entry of generic drugs facilitated by the 1984 Drug Price Competition and Patent Term Restoration Act.

Ambulatory care visits and quality of care: does the volume-control policy matter?

Using claims data from the Bureau of National Health Insurance (BNHI) in Taiwan and primary data collected from 940 patients who visited their physicians at out-patient clinics to complete questionnaire, we investigated the effects of the hospital volume control policy on the frequency of visits, medical expenses and patient satisfaction. We found that the volume control policy on ambulatory care decreased physician fees and increased both the number of visits and co-payments. However, it did not result in any change in the total medical expenses. A shift in ambulatory care expenditure from BNHI to patients did not improve patient satisfaction. While the patients were comfortable with the waiting line, they were not satisfied with the providers’ strategy of limiting quota of visits during a period of time.

The Measurement of Nursing Home Quality: Multilevel Confirmatory Factor Analysis of Panel Data

This study examined the validity of a measurement model of nursing home quality by using multilevel confirmatory factor analysis. Based on Mullan and Harrington's (2001) facility-level quality measurement model, a two-level analysis (facility and state) of the measurement model were performed. Two research questions were asked: (1) Can the measurement model developed at the facility-level be applied to state-level nursing home quality measurement? (2) Is the measurement model of nursing home quality stable over time? Panel data of 1997 and 2001, from the national OSCAR database, were used to test the assumptions. The results show that the state-level measurement model fits the data better than the facility-level model does. When the indicator "assessment" was removed from the state-level measurement model, a better-fitted measurement model was found. The two-level measurement model is relatively stable over time, demonstrating the construct validity of this measurement model.

Factors Influencing Health Information System Adoption in American Hospitals

OBJECTIVES

To study the number of health information systems (HISs), applicable to administrative, clinical, and executive decision support functionalities, adopted by acute care hospitals and to examine how hospital market, organizational, and financial factors influence HIS adoption.

METHODS

A cross-sectional analysis was performed with 1441 hospitals selected from metropolitan statistical areas in the United States. Multiple data sources were merged. Six hypotheses were empirically tested by multiple regression analysis.

RESULTS

HIS adoption was influenced by the hospital market, organizational, and financial factors. Larger, system-affiliated, and for-profit hospitals with more preferred provider organization contracts are more likely to adopt managerial information systems than their counterparts. Operating revenue is positively associated with HIS adoption.

CONCLUSION

The study concludes that hospital organizational and financial factors influence on hospitals' strategic adoption of clinical, administrative, and managerial information systems.

A systems framework for evaluating nursing care quality in nursing homes

Given the ongoing concerns about the quality of care in nursing homes, a theoretical framework to guide a systems approach to quality is important. Existing frameworks either do not model causality, or do so in a linear fashion in which the actual linkages between components of quality may not be well specified. Through a review of frameworks for nursing home quality, and empirical studies on the subject, the authors construct a framework for nursing home quality that links contextual components of quality with structure, structure with process, and process with outcomes, focusing on nursing care quality. Intrastructural relationships and feedback mechanisms are also modeled. The framework is matched with a discussion of multilevel structural equation analysis for statistical application. Future research should expand the framework to include non-nursing components of quality.

Nursing care quality in nursing homes: cross-sectional versus longitudinal analysis

This empirical study of the relationship between nursing care adequacy and nursing care quality demonstrates that a positive relationship exists between the process and outcome dimensions of quality of nursing care. The results from the analysis of national data on nursing homes' deficiencies highlight the importance of conducting a longitudinal study of the effect of nurse staffing and nursing care adequacy on the quality of care.

Integrated healthcare networks' performance: a growth curve modeling approach

This study examines the effects of integration on the performance ratings of the top 100 integrated healthcare networks (IHNs) in the United States. A strategic-contingency theory is used to identify the relationship of IHNs' performance to their structural and operational characteristics and integration strategies. To create a database for the panel study, the top 100 IHNs selected by the SMG Marketing Group in 1998 were followed up in 1999 and 2000. The data were merged with the Dorenfest data on information system integration. A growth curve model was developed and validated by the Mplus statistical program. Factors influencing the top 100 IHNs' performance in 1998 and their subsequent rankings in the consecutive years were analyzed. IHNs' initial performance scores were positively influenced by network size, number of affiliated physicians and profit margin, and were negatively associated with average length of stay and technical efficiency. The continuing high performance, judged by maintaining higher performance scores, tended to be enhanced by the use of more managerial or executive decision-support systems. Future studies should include time-varying operational indicators to serve as predictors of network performance.

Professional nursing practice: impact on organizational and patient outcomes

OBJECTIVE

To test a causal model of the impact of (a) nursing unit context on professional nursing practice; (b) professional practice on selected organizational (nurses' work satisfaction, nursing turnover, average length of patient stay) and patient outcomes (patient satisfaction, rate of reported medication errors, and falls); and (c) nursing unit context on these same organizational and patient outcomes.

SUMMARY BACKGROUND DATA

Professional nursing practice has been linked to positive outcomes for both nurses and patients. In contrast to other studies, this study focuses on professional nursing practice specifically at the nursing unit level, and uses a new analytic technique that permits examination of the simultaneous effects of professional nursing practice on both organizational and patient outcomes.

METHODS

Data were collected from 1682 registered nurses, and 1326 patients on 124 general medical-surgical nursing units in 64 general short-term acute care hospitals in the southeast. Multilevel structural equation modeling was used to analyze the data.

RESULTS

We found that professional nursing practice had consistent effects across model levels on nursing satisfaction, but very limited effects on other outcomes. Important differences in the hospital- and nursing unit level models support continued use of multilevel modeling techniques in the study of organizational and patient outcomes.

The effects of preparatory sensory information on ICU patients

Preparatory sensory information (PSI) has been found to have significant effects in reducing distress, tension, restlessness, negative moods, and anxiety, and also in reducing length of postoperative hospitalization during various threatening medical events, but no evidence has demonstrated the effect of PSI on a patient during ICU hospitalization. On the basis of Lazarus' theory, a structural equation model was developed to examine the role of the nursing intervention, PSI, as a significant factor influencing patients' processes of cognitive appraisals and coping, adaptational responses, and patient care outcomes during ICU hospitalization. The analytical model examined the net effect of PSI on outcomes, controlling for the effects of mastery, interpersonal trust, social support, socioeconomic status, severity of illness, age, and gender. A quasi-experiment was executed in four large acute care hospitals. Data were collected from 41 subjects in the control group and from 42 in the treatment group receiving PSI before ICU admission. Structural equation modeling was employed to test the proposed analytic model. The initial tests of model fit indicate that the original model did not fit the data well with GFI = 0.85, AGFI = 0.76, RMSEA = 0.059, p_close = 0.28, and critical N = 78. A revised model was developed, and the fit indices suggested an adequate fit with GFI = 0.90, AGFI = 0.84, RMSEA = 0.00, p_close = 0.89, and critical N = 109. These findings provide empirical support for Lazarus' theory on stress, appraisal, and coping. The findings also verify the beneficial effects of the nursing intervention of PSI on ICU patients.

Effects of hospitals' structural clinical integration on efficiency and patient outcome

The objective of this study was to examine the relationships among structural clinical integration, average total charge, and adverse patient outcomes. The conceptual framework of this study is based on Donabedian's triadic model for outcomes research on structure, process, and outcome. Retrospective data were obtained from multiple sources: (1) the American Hospital Association (AHA) annual survey in 1997; (2) the Area Resource File (ARF) data set in 1997; (3) the Dorenfest IHDS + database (version 2); and (4) the National Inpatient Sample (NIS) data set in 1997. A cross-sectional study design was used. Outcomes indicators were risk-adjusted with logistic regression, and the Medicare case-mix index was used for the risk-adjustment of the efficiency indicator. LISREL (LInear Structural RELationship) was used to test the hypotheses that structural clinical integration is negatively related to average total charge, and that average total charge is positively related to adverse patient outcomes. The risk-adjustment models were successful in discriminating the patients who suffered adverse events. Significant associations were found between structural clinical integration and average total charge per admission, between average total charge per admission and surgical complication, and between surgical complication and in-hospital death. However, the implementation of structural clinical integration did not show the expected reduction in total charge per admission. This study confirms Donabedian's model for outcomes research. However, the study found that hospitals with highly integrated structures showed no immediate financial benefit. Structural clinical integration has only an indirect effect on patient care outcomes.

A structural equation modeling approach to examining the predictive power of determinants of individuals' health expenditures

Understanding the determinants of health expenditures is essential for a fair and effective utilization profiling, particularly in the setting of capitation rates in risk-adjustment models. The objective of the study was to examine the relative importance of determinants in predicting future health expenditures, using structural equation modeling. Based on Andersen's behavioral system model, individual determinants along with prior utilization and measures of health status from 1994 are evaluated in a longitudinal design for theirpredictive powerfor health expenditures in 1995. A total of 4,255 policy-holders enrolled in three health plans at Trigon BlueCross/BlueShield of Virginia who responded to a mail survey were included for analysis. Person-level annual charges for health services utilization were used as the dependent variable. Five health scales were excerpted from Health Survey SF-36 to represent an individual's health status. Excluding prior utilization in 1994, health status (gamma = -0.19, p < 0.001) and having diabetes (gamma = 0.08, p < 0.001) are two statistically significant predictors of health expenditures in 1995. Including prior utilization, both health status (gamma = -0.15, p < 0.001) and prior utilization (gamma = 0.15, p < 0.001) are the most important predictors, followed by having diabetes (gamma = 0.08, p < 0.001). Health status is a powerful predictor offuture health expenditures, even when prior utilization is controlled.

Exploring hospitals' adoption of information technology

This study explores the adoption of information technology (IT) and the association between organizational and market factors, and IT adoption in hospitals. Results suggest that a wide range of amounts and types of IT are adopted. Hospitals with higher overall IT adoption adopt strategic IT most often. Hospitals with lower IT adoption adopt administrative IT most often. Results also show hospital IT adoption to be positively associated with hospital size, location, system membership, ownership, and market competition.

Integration mechanisms and hospital efficiency in integrated health care delivery systems

This study analyzes integration mechanisms that affect system performances measured by indicators of efficiency in integrated delivery systems (IDSs) in the United States. The research question is, do integration mechanisms improve IDSs' efficiency in hospital care? American Hospital Association's Annual Survey (1998) and Dorenfest's Survey on Information Systems in Integrated Healthcare Delivery Systems (1998) were used to conduct the study, using IDS as the unit of analysis. A covariance structure equation model of the effects of system integration mechanisms on IDS performance was formulated and validated by an empirical examination of IDSs. The study sample includes 973 hospital-based integrated health care delivery systems operating in the United States, carried in the list of Dorenfests Survey on Information Systems in Integrated Health care Delivery Systems. The measurement indicators of system integration mechanisms are categorized into six related domains: informatic integration, case management, hybrid physician-hospital integration, forward integration, backward integration, and high tech medical services. The multivariate analysis reveals that integration mechanisms in system operation are positively correlated and positively affect IDSs' efficiency. The six domains of integration mechanisms account for 58.9% of the total variance in hospital performance. The service differentiation strategy such as having more high tech medical services have much stronger influences on efficiency than other integration mechanisms do. The beneficial effects of integration mechanisms have been realized in IDS performance. High efficiency in hospital care can be achieved by employing proper integration strategies in operations.

Technical efficiency of nursing units in a tertiary care hospital in Taiwan

The variation in productivity and cost efficiency has been observed among 57 nursing units in a large tertiary care hospital. The inefficient units can achieve the same level of efficiency as the efficient units by altering their inputs (either nursing hours or patient costs). The optimization can be achieved through proper reallocations of nursing resources such as nursing hours or costs. However, the resource reallocation to achieve high efficiency should not be at the expense of quality of care. Future efficiency studies should incorporate the nursing sensitive measures of quality in the analysis.