Quality assessment in contracting for tertiary care services by HMOs: a case study of three markets

Hospital Competition, Managed Care, and Mortality after Hospitalization for Medical Conditions: Evidence from Three States

This study assessed the effect of hospital competition and HMO penetration on mortality after hospitalization for six medical conditions in California, New York, and Wisconsin. We used linked hospital-discharge and vital-statistics data to study adults hospitalized for myocardial infarction, hip fracture, stroke, gastrointestinal hemorrhage, congestive heart failure, or diabetes. We estimated logistic regression models with death within 30 days of admission as the dependent variable and hospital competition, HMO penetration, and hospital and patient characteristics as explanatory variables. Higher hospital competition was associated with lower mortality in California and New York but not Wisconsin. Higher HMO penetration was associated with lower mortality in California but higher mortality in New York. These findings suggest that hospitals in highly competitive markets compete on quality even in the absence of mature managed-care markets. The findings also underscore the need to consider geographic effects in studies of market structure and hospital quality.

Do Cardiac Surgery Report Cards Reduce Mortality? Assessing the Evidence

Provider report cards feature prominently in ongoing efforts to improve patient quality. A well-known example is the cardiac surgery report-card program started in New York, which publicly compares hospital and surgeon performance. Public report cards have been associated with decreases in cardiac surgery mortality, but there is substantial disagreement over the source(s) of the improvement. This article develops a conceptual framework to explain how report-card-related responses could result in lower mortality and reviews the evidence. Existing research shows that report cards have not greatly changed referral patterns. How much providers increased their quality of care and altered their selection of patients remains unresolved, and alternative explanations have not been well studied. Future research should expand the number of states and years covered and exploit the variation in institutional features to improve our understanding of the relationship between report cards and outcomes.

Managing care? Medicare managed care and patient use of cardiologists

OBJECTIVE

To examine the impact of Medicare managed care (MMC) versus Medicare fee for service (MFFS) on stent patients' use of physicians with lower resource use and better outcomes.

DATA SOURCES/STUDY SETTING

Retrospective secondary data from 2003 through 2006 for 67,476 patients without acute myocardial infarction, staying 2 or more days in hospital, and treated by 486 physicians in Florida performing 10 or more cases per quarter.

STUDY DESIGN

Analysis was at the patient level. Multivariate logistic models estimated the probability of an MMC patient using a physician with a particular risk-adjusted profile rank with respect to hospital peers.

PRINCIPAL FINDINGS

No differences were found in usage of physicians with shorter admissions. Compared with MFFS, MMC patients were significantly less likely to use physicians whose average mortality was the lowest/lowest quartiles/below median among facility peers, and more likely to use a physician ranked below median on live discharges directly home (not needing home health care, skilled nursing care, or a subacute hospital convalescence). Similar results were found with emergency admissions, and where physicians both attended and treated.

CONCLUSIONS

Florida percutaneous coronary interventions patients insured by MMC used physicians with worse outcome profiles than those of MFFS patients. Results were not consistent with hospital care differences, physician-patient, or payor-physician selection, but they were consistent with selection of unobservably sicker members into MMC and concentration of MMC among physicians.

Hospital competition, managed care, and mortality after hospitalization for medical conditions in California

OBJECTIVE

To assess the effect of hospital competition and health maintenance organization (HMO) penetration on mortality after hospitalization for six medical conditions in California.

DATA SOURCE

Linked hospital discharge and vital statistics data for short-term general hospitals in California in the period 1994-1999. The study sample included adult patients hospitalized for one of the following conditions: acute myocardial infarction (N=227,446), hip fracture (N=129,944), stroke (N=237,248), gastrointestinal hemorrhage (GIH, N=216,443), congestive heart failure (CHF, N=355,613), and diabetes (N=154,837).

STUDY DESIGN

The outcome variable was 30-day mortality. We estimated multivariate logistic regression models for each study condition with hospital competition, HMO penetration, hospital characteristics, and patient severity measures as explanatory variables.

PRINCIPAL FINDINGS

Higher hospital competition was associated with lower 30-day mortality for three to five of the six study conditions, depending on the choice of competition measure, and this finding was robust to a variety of sensitivity analyses. Higher HMO penetration was associated with lower mortality for GIH and CHF.

CONCLUSIONS

Hospitals that faced more competition and hospitals in market areas with higher HMO penetration provided higher quality of care for adult patients with medical conditions in California. Studies using linked hospital discharge and vital statistics data from other states should be conducted to determine whether these findings are generalizable.

From physician to consumer: the effectiveness of strategies to manage health care utilization

Many strategies are commonly used to influence physician behavior in managed care organizations. This review examines the effectiveness of three mechanisms to influence physician behavior: financial incentives directed at providers or patients, policies/procedures for managing care, and the selection/education of both providers and patients. The authors reach three conclusions. First, all health care systems use financial incentives, but these mechanisms are shifting away from financial incentives directed at the physician to those directed at the consumer. Second, heavily procedural strategies such as utilization review and gatekeeping show some evidence of effectiveness but are highly unpopular due to their restrictions on physician and patient choice. Third, a future system built on consumer choice is contradicted by mechanisms that rely solely on narrow networks of providers or the education of physicians. If patients become the new locus of decision making in health care, provider-focused mechanisms to influence physician behavior will not disappear but are likely to decline in importance.

Quality of cardiac surgeons and managed care contracting practices

OBJECTIVE

To evaluate the association between contracting practices of managed care organizations (MCOs) with cardiac surgeons and the quality of the cardiac surgeons.

DATA SOURCES/STUDY SETTING

The study included all cardiac surgeons offering coronary artery bypass graft (CABG) surgery and 78 percent of MCOs in New York State in 1998. Primary data: The MCOs' panel composition with respect to hospitals and cardiac surgeons. Secondary data: New York State (NYS) Cardiac Surgery Reports.

STUDY DESIGN

Statistical analyses of the probability of a contract between cardiac surgeons and MCOs conditional on the surgeon's risk-adjusted mortality rates (RAMR), outlier and low volume status, and controlling for other confounding variables, were performed.

PRINCIPAL FINDINGS

Contract probability exhibited a tendency to decrease with RAMR, low volume and low-quality outlier status and to increase with high-quality outlier status. These effects were statistically significant for RAMR and high-quality outliers in Downstate and for low volume in Downstate and Upstate.

CONCLUSIONS

In some, but not all cases, MCOs are seeking higher-quality providers. Further research is required to understand regional variability and the effect of market structure on the quality profile of MCOs.

The determinants of HMOs' contracting with hospitals for bypass surgery

OBJECTIVE

Selective contracting with health care providers is one of the mechanisms HMOs (Health Maintenance Organizations) use to lower health care costs for their enrollees. However, are HMOs compromising quality to lower costs? To address this and other questions we identify factors that influence HMOs' selective contracting for coronary artery bypass surgery (CABG).

STUDY DESIGN

Using a logistic regression analysis, we estimated the effects of hospitals' quality, costliness, and geographic convenience on HMOs' decision to contract with a hospital for CABG services. We also estimated the impact of HMO characteristics and market characteristics on HMOs' contracting decision.

DATA SOURCES

A 1997 survey of a nationally representative sample of 50 HMOs that could have potentially contracted with 447 hospitals.

PRINCIPAL FINDINGS

About 44 percent of the HMO-hospital pairs had a contract. We found that the probability of an HMO contracting with a hospital increased as hospital quality increased and decreased as distance increased. Hospital costliness had a negative but borderline significant (0.10 < p < 0.05) effect on the probability of a contract across all types of HMOs. However, this effect was much larger for IPA (Independent Practice Association)-model HMOs than for either group/staff or network HMOs. An increase in HMO competition increased the probability of a contract while an increase in hospital competition decreased the probability of a contract. HMO penetration did not affect the probability of contracting. HMO characteristics also had significant effects on contracting decisions.

CONCLUSIONS

The results suggest that HMOs value quality, geographic convenience, and costliness, and that the importance of quality and costliness vary with HMO. Greater HMO competition encourages broader hospital networks whereas greater hospital competition leads to more restrictive networks.

Quality of care for coronary heart disease in two countries

Coronary heart disease is the leading cause of death in the United States and England, and each country devotes substantial resources to its prevention and treatment. We review recent strategies for improving quality of care for coronary heart disease in each country, including clinical guidelines; national standards; performance reports; benchmarking, feedback, and professional leadership; and market-oriented approaches. These strategies highlight the importance of information systems, organizational culture, and incentives to improve the quality of care in both the decentralized health care system of the United States and England's more centralized system.

Health maintenance organizations and hospital quality for coronary artery bypass surgery

This study uses hospital discharge data for 1992-1994 to assess differences between HMO and insured non-HMO patients in California and Florida with regard to the quality of the hospitals used for coronary artery bypass graft (CABG) surgery. The authors found that commercially insured HMO patients in California used higher quality hospitals than commercially insured non-HMO patients, controlling for patient distance to the hospital. In contrast, commercially insured HMO and non-HMO patients in Florida were similarly distributed across hospitals of different quality levels, whereas Medicare HMO patients in Florida used lower quality hospitals than patients in the standard Medicare program. The authors conclude that the association between HMO coverage and hospital quality may differ across geographic areas and patient populations, possibly related to the maturity and structure of managed care markets.

Segmentation of hospital markets: where do HMO enrollees get care?

Commercially insured and Medicare patients who are not in health maintenance organizations (HMOs) tend to use different hospitals than HMO patients use. This phenomenon, called market segmentation, raises important questions about how hospitals that treat many HMO patients differ from those that treat few HMO patients, especially with regard to quality of care. This study of patients undergoing coronary artery bypass graft surgery found no evidence that HMOs in southeast Florida systematically channel their patients to high-volume or low-mortality hospitals. These findings are consistent with other evidence that in many areas of the country, incentives for managed care plans to reduce costs may outweigh incentives to improve quality.