Hospital cost efficiency and system membership

Hospital efficiency in the eastern mediterranean region: A systematic review and meta-analysis

Background

Recent rising costs and shortages of healthcare resources make it necessary to address the issue of hospital efficiency. Increasing the efficiency of hospitals can result in the better and more sustainable achievement of their organizational goals.

Objective

The purpose of this research is to examine hospital efficiency in the Eastern Mediterranean Region (EMR) using data envelopment analysis (DEA).

Methods

This study is a systematic review and meta-analysis of all articles published on hospital efficiency in Eastern Mediterranean countries between January 1999 and September 2020, identified by searching PubMed through MEDLINE, Web of Science, Scopus, Science Direct, and Google Scholar. The reference lists of these articles were checked for additional relevant studies. Finally, 37 articles were selected, and data were analyzed through Comprehensive Meta-Analysis Software (v.2.2.064).

Results

Using the random-effects model, the mean hospital efficiency in Eastern Mediterranean hospitals was 0.882 ± 0.01 at 95% CI. Technical efficiency (TE) was higher in some countries such as Iraq (0.976 ± 0.035), Oman (0.926 ± 0.032), and Iran (0.921 ±0.012). A significant statistical correlation was observed between the hospital efficiency and the year of publication and sample size (p < 0.05).

Conclusion

Efficiency plays a significant role in hospital growth and development. Therefore, it is important for healthcare managers and policymakers in the EMR to identify the causes of inefficiency, improve TE, and develop cost-effective strategies.

Impact of Hospital Characteristics and Governance Structure on the Adoption of Tracking Technologies for Clinical and Supply Chain Use: Longitudinal Study of US Hospitals

Background

Despite the increasing adoption rate of tracking technologies in hospitals in the United States, few empirical studies have examined the factors involved in such adoption within different use contexts (eg, clinical and supply chain use contexts). To date, no study has systematically examined how governance structures impact technology adoption in different use contexts in hospitals. Given that the hospital governance structure fundamentally governs health care workflows and operations, understanding its critical role provides a solid foundation from which to explore factors involved in the adoption of tracking technologies in hospitals.

Objective

This study aims to compare critical factors associated with the adoption of tracking technologies for clinical and supply chain uses and examine how governance structure types affect the adoption of tracking technologies in hospitals.

Methods

This study was conducted based on a comprehensive and longitudinal national census data set comprising 3623 unique hospitals across 50 states in the United States from 2012 to 2015. Using mixed effects population logistic regression models to account for the effects within and between hospitals, we captured and examined the effects of hospital characteristics, locations, and governance structure on adjustments to the innate development of tracking technology over time.

Results

From 2012 to 2015, we discovered that the proportion of hospitals in which tracking technologies were fully implemented for clinical use increased from 36.34% (782/2152) to 54.63% (1316/2409), and that for supply chain use increased from 28.58% (615/2152) to 41.3% (995/2409). We also discovered that adoption factors impact the clinical and supply chain use contexts differently. In the clinical use context, compared with hospitals located in urban areas, hospitals in rural areas (odds ratio [OR] 0.68, 95% CI 0.56-0.80) are less likely to fully adopt tracking technologies. In the context of supply chain use, the type of governance structure influences tracking technology adoption. Compared with hospitals not affiliated with a health system, implementation rates increased as hospitals affiliated with a more centralized health system—1.9-fold increase (OR 1.87, 95% CI 1.60-2.13) for decentralized or independent hospitals, 2.4-fold increase (OR 2.40, 95% CI 2.07-2.80) for moderately centralized health systems, and 3.1-fold increase for centralized health systems (OR 3.07, 95% CI 2.67-3.53).

Conclusions

As the first of such type of studies, we provided a longitudinal overview of how hospital characteristics and governance structure jointly affect adoption rates of tracking technology in both clinical and supply chain use contexts, which is essential for developing intelligent infrastructure for smart hospital systems. This study informs researchers, health care providers, and policy makers that hospital characteristics, locations, and governance structures have different impacts on the adoption of tracking technologies for clinical and supply chain use and on health resource disparities among hospitals of different sizes, locations, and governance structures.

Vertical integration in healthcare: What does literature say about improvements on quality, access, efficiency, and costs containment?

INTRODUCTION

Vertical integration models involve integrating services from different levels of care (e.g., primary care, acute care, post-acute care). Therefore, one of their main objectives is to increase continuity of care, potentially improving outcomes like efficiency, quality, and access or even enabling cost containment.

OBJECTIVES

This study conducts a literature review and aims at contributing to the contentious discussion regarding the effects of vertical integration reforms in terms of efficiency, costs containment, quality, and access.

METHODS

We performed a systematic search of the literature published until February 2020. The articles respecting the conceptual framework were included in an exhaustive analysis to study the impact of vertical integration on costs, prices of care, efficiency, quality, and access.

RESULTS

A sample of 64 papers resulted from the screening process. The impact of vertical integration on costs and prices of care appears to be negative. Decreases in technical efficiency upon vertical integration are practically out of the question. Nevertheless, there is no substantial inclination to visualise a positive influence. The same happens with the quality of care. Regarding access, the lack of available articles on this outcome limits conjectures.

CONCLUSIONS

In summary, it is not clear yet whether vertically integrated healthcare providers positively impact the overall delivery care system. Nevertheless, the recent growing trend in the number of studies suggests a promising future on the analysis of this topic.

The scale and structure of government financial investment in traditional medicine based on optimal efficiency: evidence from public traditional Chinese medicine hospitals (PTHs) of Henan province, China

BACKGROUND

Traditional medicine has been widely used to address relatively common illnesses. In this regard, Chinese government has been continually topping up its investments on public Traditional Chinese Medicine hospitals (PTHs) in recent years. This study aimed to assess the optimal scales and structure of the investments in Henan province by analyzing the contribution of Government Financial Investment (GFI) to the efficiency and revenue growth of PTHs as well as recommending proper investment strategies for implementation to policy-makers.

METHODS

This study was a panel data study, conducted in Henan Province, China. By collecting 143 PTHs' operational data from the year 2005 to 2017, Barro Economic Growth (BEG) model, Stochastic Frontier Analysis (SFA) and Vector Autoregressive (VAR) model were used to assess the efficiency and PTHs revenue.

RESULTS

The study observed the positive contribution of GFI to PTHs' revenue growth (average MPG = 2.84), indicating that the GFI had not reached the required optimal level of "Barro Law". In order to maximize the input-output efficiency, the scales of GFI on Grade III, Grade II A, Grade II B PTHs need to be increased by - 5.96, 4.88 and 11.51%, respectively. The third year following the first investment may be a more essential period for conducting an effective GFI evaluation in Henan Province.

CONCLUSIONS

GFI on PTHs usually has a long-term impact on PTHs. Governments can adjust its GFI policy so as to maximize the input-output efficiency.

A systematic review of vertical integration and quality of care, efficiency, and patient-centered outcomes

BACKGROUND

Small independent practices are increasingly giving way to more complex affiliations between provider organizations and hospital systems. There are several ways in which vertically integrated health systems could improve quality and lower the costs of care. But there are also concerns that integrated systems may increase the price and costs of care without commensurate improvements in quality and outcomes.

PURPOSE

Despite a growing body of research on vertically integrated health systems, no systematic review that we know of compares vertically integrated health systems (defined as shared ownership or joint management of hospitals and physician practices) to nonintegrated hospitals or physician practices.

METHODS

We conducted a systematic search of the literature published from January 1996 to November 2016. We considered articles for review if they compared the performance of a vertically integrated health system and examined an outcome related to quality of care, efficiency, or patient-centered outcomes.

RESULTS

Database searches generated 7,559 articles, with 29 articles included in this review. Vertical integration was associated with better quality, often measured as optimal care for specific conditions, but showed either no differences or lower efficiency as measured by utilization, spending, and prices. Few studies evaluated a patient-centered outcome; among those, most examined mortality and did not identify any effects. Across domains, most studies were observational and did not address the issue of selection bias.

PRACTICE IMPLICATIONS

Recent evidence suggests the trend toward vertical integration will likely continue as providers respond to changing payment models and market factors. A growing body of research on comparative health system performance suggests that integration of physician practices with hospitals might not be enough to achieve higher-value care. More information is needed to identify the health system attributes that contribute to improved outcomes, as well as which policy levers can minimize anticompetitive effects and maximize the benefits of these affiliations.

Productivity growth and quality changes of hospitals in Taiwan: does ownership matter?

As the competition in the Taiwanese medical industry becomes increasingly fierce, public hospitals are confronted with challenges in orientation and operations. This study measured changes in the operational efficiency of public and their competitors, non-public hospitals, in Taiwan. This study considered differences in technology and scale between public and non-public hospitals and adopted the quality-incorporating metafrontier Malmquist productivity index to analyze inputs, outputs, and quality achievements of hospitals. The data consisted of 40 public hospitals and 79 non-public hospitals in Taiwan during the period 2008-2014. This study measured productivity growth and quality changes. Moreover, it further identified technological gaps and quality gaps in different types of hospitals with respect to the metafrontier. At the same time, comparisons of changes in quality between public and non-public hospitals were also examined. The empirical results showed that public hospitals were better than non-public ones in terms of productivity. Meanwhile, it was also found that most of the decomposition in productivity was higher in public hospitals than in non-public ones, especially in terms of improvements in technology and quality. This paper presented public hospitals outperformed non-public ones during the research period in spite of the fact that private hospitals had become larger and group-oriented. Therefore, public hospitals and regulators made appropriate adjustments and responses in the face of the pressure of competition in the market.

Do All Hospital Systems Have Market Power? Association Between Hospital System Types and Cardiac Surgery Prices

OBJECTIVE

This study explores the price implications of hospital systems by analyzing the association of system characteristics with selected cardiac surgery pricing.

DATA SOURCE

Using a large private insurance claim database, the authors identified 11 282 coronary artery bypass graft (CABG) cases and 49 866 percutaneous coronary intervention (PCI) cases from 2002 to 2007.

STUDY DESIGN

We conducted a retrospective observational study using generalized linear models.

PRINCIPAL FINDINGS

We found that the CABG and PCI prices in centralized health and physician insurance systems were significantly lower than the prices in stand-alone hospitals by 4.4% and 6.4%, respectively. In addition, the CABG and PCI prices in independent health systems were significantly lower than in stand-alone hospitals, by 15.4% and 14.5%, respectively.

CONCLUSION

The current antitrust guidelines tend to focus on the market share of merging parties and pay less attention to the characteristics of merging parties. The results of this study suggest that antitrust analysis could be more effective by considering characteristics of hospital systems.

Health System Affiliation and 30-Day Readmission After Heart Attack in Black Men

INTRODUCTION

Black patients who experience acute myocardial infarction and receive care in high minority-serving hospitals have higher readmission rates. This study explores how hospital system affiliation (centralized versus decentralized/independent) impacts 30-day readmissions after acute myocardial infarction in black men.

METHODS

In 2018, the Healthcare Cost and Utilization Project State Inpatient Database (2009-2013) was used to observe 30-day readmission for acute myocardial infarction by race, and data from the American Hospital Association Annual Survey of Hospitals (2009-2013) to determine hospital system affiliation for the states Arizona, California, North Carolina, and Wisconsin. A series of hierarchic logistic regressions were conducted to determine if hospital system affiliation mediates the relationship between race and 30-day readmission.

RESULTS

Of 63,743 hospitalizations for acute myocardial infarction among men between 2009 and 2013, black men accounted for 7.1% of hospitalizations and 8.0% of readmissions. In both models, race significantly predicted 30-day readmission (unadjusted OR=1.25, 95% CI=1.14, 1.37, p<0.001; AOR=1.13, 95% CI=1.03, 1.25, p=0.046). After controlling for system type, black men were more likely to be readmitted after acute myocardial infarction than white men in both models (unadjusted OR=1.25, 95% CI=1.14, 1.38, p<0.001; AOR=1.14, 95% CI=1.03, 1.25). There was no difference in odds of being readmitted by race and hospital system type (unadjusted OR=0.88, 95% CI=0.25, 3.07, p=0.84, AOR=1.02, 95% CI=0.21, 5.10, p=0.98).

CONCLUSIONS

Black men appear to be more likely to be readmitted after acute myocardial infarction. Centralization does not appear to mediate the relationship between race and 30-day readmissions for acute myocardial infarction.

SUPPLEMENT INFORMATION

This article is part of a supplement entitled African American Men's Health: Research, Practice, and Policy Implications, which is sponsored by the National Institutes of Health.

Raising quality whilst reducing cost in health care: A retrospective cohort study

OBJECTIVE

The objective of this study was to investigate the relationship between cost and quality within the health care sector and to establish which factors could influence this relationship. The aim was to investigate the dynamics of the relationship, in order to improve the quality whilst reducing the cost.

DESIGN

This is a retrospective cohort study, analysing quality, safety, and financial data from a 5-year period.

SETTING

A publicly funded tertiary hospital.

PARTICIPANTS

The dependent variable was cost saved, and the independent variables were patient safety, patient satisfaction, and clinical efficiency.

MAIN OUTCOME MEASURES

Financial savings and quality domains.

RESULTS

A statistically significant relationship between the variables was found. Multivariate analysis derived the equation Y = βX¹  + c, where Y is the cost saved, β is the beta coefficient, X¹ is the clinical efficiency, and c is a constant. R2 = 0.874 (coefficient of determination), which suggested that the cost saved by the unit varied due to clinical efficiency. Clinical efficiency accounted for 87.4% of the variation in the cost saved by the unit.

CONCLUSIONS

The results indicated that, after the trade-off value, an improvement in the quality would result in reduced costs for the unit. Clinical efficiency of the services was found to be the key factor determining this relationship. Therefore, strategies to increase clinical efficiency, and thus overall quality, above the trade-off level could result in significant financial savings. Patient safety and patient experience were positively correlated with clinical efficiency.

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.

Efficiency and optimal size of hospitals: Results of a systematic search

Background

National Health Systems managers have been subject in recent years to considerable pressure to increase concentration and allow mergers. This pressure has been justified by a belief that larger hospitals lead to lower average costs and better clinical outcomes through the exploitation of economies of scale. In this context, the opportunity to measure scale efficiency is crucial to address the question of optimal productive size and to manage a fair allocation of resources.

Methods and findings

This paper analyses the stance of existing research on scale efficiency and optimal size of the hospital sector. We performed a systematic search of 45 past years (1969–2014) of research published in peer-reviewed scientific journals recorded by the Social Sciences Citation Index concerning this topic. We classified articles by the journal’s category, research topic, hospital setting, method and primary data analysis technique. Results showed that most of the studies were focussed on the analysis of technical and scale efficiency or on input / output ratio using Data Envelopment Analysis. We also find increasing interest concerning the effect of possible changes in hospital size on quality of care.

Conclusions

Studies analysed in this review showed that economies of scale are present for merging hospitals. Results supported the current policy of expanding larger hospitals and restructuring/closing smaller hospitals. In terms of beds, studies reported consistent evidence of economies of scale for hospitals with 200–300 beds. Diseconomies of scale can be expected to occur below 200 beds and above 600 beds.

Metafrontier frameworks for studying hospital productivity growth and quality changes

Objective

The objective of this study was to evaluate productivity growth and quality changes among different levels of accredited hospitals.

Design

This study used an attribute-incorporating Malmquist productivity index (MPI) under the metafrontier framework. This is the first attempt to compare productivity changes among hospitals operating under different production frontiers.

Participants

The data consisted of 20 academic medical centers (AMCs), 61 metropolitan hospitals (MPs) and 112 local community hospitals (LCs) in Taiwan during the period 2007-2010.

Main outcome measures

This study measured productivity growth and further identified technological gaps and catch-ups in different groups of hospitals with respect to the metafrontier. At the same time, comparisons of changes in quality among different levels of hospitals were also examined.

Results

We found that the sample hospitals of AMCs and MPs experienced productivity improvements mainly due to technological progress, but their efficiency and technology gap ratio (TGR) deteriorated. As for LCs, progress in technology along with improvements in their efficiency and TGR led to the highest productivity upgrade among the three groups of hospitals. We also found that the sample hospitals among the three groups showed improvements in quality. Moreover, hospitals in the local community group exhibited greater quality progress than the AMCs and MPs over the sample period.

Conclusion

This paper presents a number of useful decompositions of the metafrontier MPI, which can provide useful insights into changes that are due to efficiency, quality improvements and/or technological changes in the healthcare sector.

Letters to the Editor

As part of marking Inquiry's 40th year of publication, we are introducing a new feature to the journal—a “Letters to the Editor” section. We invite interested readers to send their comments on research articles or opinion columns published in the journal. Letter topics may range from critiques of methods or models used in articles to presenting alternative views on subjects raised in opinion columns or in interpretations of research findings. Letters should be no longer than 750 words; Inquiry's editors reserve the right to edit the letters for clarity and length. Letters selected for publication will undergo our usual copyediting process; we cannot acknowledge receipt of letters that are not published. Submit letters to: Letters to the Editor, Inquiry, P.O. Box 25399, Rochester, NY 14625–0399.

Comparison between a multi-pavilion hospital and a single pavilion hospital

Background and aim

Defining and measuring hospital efficiency is a hard task, in spite of the agreement that hospitals need to be efficient. Thus, while research might focus on the relationship between costs and outcomes, measurements differ significantly across studies.

The aim of the present study is to compare a multi-pavilion hospital with a single hospital from Cluj-Napoca, Romania.

Methods

Statistical and financial (effective expenses, salaries, drugs, materials, reagents, food) indicators were used to compare two hospitals from Cluj-Napoca: the Adults’ Clinical Hospital in Cluj-Napoca, and the Rehabilitation Hospital from Cluj-Napoca respectively. Data related to these indicators were collected at each hospital level, between 2004 and 2010.

Results

When investigating the expenses on medicine, data showed the two hospitals had similar values in 2004, 13.09% and 14.43% for the multi-pavilion hospital and single hospital, respectively. After 2004, the expenses started to drop simultaneously, being around 11% in 2006 and 2007 for both hospitals. The mortality rate was significantly different for the two hospitals. The multi-pavilion had a much higher mortality rate, when compared to the single hospital. From 2004 until 2007 a steady increase was observed for the multi-pavilion hospital, from 1.09 to 2.57 respectively.

Conclusion

The significant differences found between the two hospitals look being unavoidable, as long as they seem to stem from the hospitals’ ownership, their addressability and their targeted diseases and associated procedures.

Two Decades of Organizational Change in Health Care: What Have we Learned?

The 1980s and 1990s witnessed a substantial wave of organizational restructuring among hospitals and physicians, as health providers rethought their organizational roles given perceived market imperatives. Mergers, acquisitions, internal restructuring, and new interorganizational relationships occurred at a record pace. Matching this was a large wave of study and discourse among health services researchers, industry experts, and consultants to understand the causes and consequences of organizational change. In many cases, this literature provides mixed signals about what was accomplished through these organizational efforts. The purpose of this review is to synthesize this diverse literature. This review examines studies of horizontal consolidation and integration of hospitals, horizontal consolidation and integration of physician organizations, and integration and relationship development between physicians and hospitals. In all, around 100 studies were examined to assess what was learned through two decades of research on organizational change in health care.

Cost-Efficiency Analysis of a Multi-Pavilion Hospital in Cluj County

Background and aim

Multi-hospital health systems have become the most popular administrative structure in healthcare, leading to both opportunities and challenges for hospital administrators. In government-funded healthcare systems, there is a balance between costs and the provision of health services.

The aim of the present study is to assess the efficiency in terms of costs of a multi-pavilion hospital from Cluj County, Romania.

Methods

The institution analyzed in this article is the Adults’ Clinical Hospital in Cluj-Napoca. A descriptive retrospective study collected data from January 2004 to December 2010. A set of indicators were compiled, divided into three main categories: personnel, statistics, and financial.

Results

Twenty-one financial indicators were investigated. Heterogeneity between different years was observed for the continuous hospitalization indicator and the wage budget indicator. The highest variability was observed between the budget and expenses indicators, while a smaller variability was observed at the average costs per patient. The costs per patient have increased at all pavilions in the studied time frame, the higher costs being at the Internal Medicine and Surgery pavilions: 10,203 RON in 2010 (1 euro ~ 4.4 RON)

Conclusion

The pavilions included in the Adults’ Clinical Hospital Cluj-Napoca have different expenses patterns, as each pavilion is focused on different specialties. Each pavilion serves different target groups, requiring different procedures. This in turn results in different expense patterns across each pavilion.

Hospital employment of physicians and supply chain performance: An empirical investigation

BACKGROUND

As hospital employment of physicians becomes increasingly common in the United States, much speculation exists as to whether this type of arrangement will promote hospital operating efficiency in such areas as supply chain management. Little empirical research has been conducted to address this question.

PURPOSE

The aim of this study was to provide an exploratory assessment of whether hospital employment of physicians is associated with better supply chain performance. Drawing from both agency and stewardship theories, we examined whether hospitals with a higher proportion of employed medical staff members have relatively better supply chain performance based on two performance measures, supply chain expenses and inventory costs.

APPROACH

We conducted the study using a pooled, cross-sectional sample of hospitals located in California between 2007 and 2009. Key data sources were hospital annual financial reports from California's Office of Statewide Health Policy and Development and the American Hospital Association annual survey of hospitals. To examine the relationship between physician employment and supply chain performance, we specified physician employment as the proportion of total employed medical staff members as well as the proportion of employed medical staff members within key physician subgroups. We analyzed the data using generalized estimating equations.

FINDINGS

Study results generally supported our hypothesis that hospital employment of physicians is associated with better supply chain performance.

PRACTICAL IMPLICATIONS

Although the results of our study should be viewed as preliminary, the trend in the United States toward hospital employment of physicians may be a positive development for improved hospital operating efficiency. Hospital managers should also be attentive to training and educational resources that medical staff members may need to strengthen their role in supply chain activities.

Is the system really the solution? Operating costs in hospital systems

Hospital system formation has recently accelerated. Executives emphasize scale economies that lower operating costs, a claim unsupported in academic research. Do systems achieve lower costs than freestanding facilities, and, if so, which system types? We test hypotheses about the relationship of cost with membership in systems, larger systems, and centralized and local hub-and-spoke systems. We also test whether these relationships have changed over time. Examining 4,000 U.S. hospitals during 1998 to 2010, we find no evidence that system members exhibit lower costs. However, members of smaller systems are lower cost than larger systems, and hospitals in centralized systems are lower cost than everyone else. There is no evidence that the system's spatial configuration is associated with cost, although national system hospitals exhibit higher costs. Finally, these results hold over time. We conclude that while systems in general may not be the solution to lower costs, some types of systems are.

Cost effects of hospital mergers in Portugal

The Portuguese hospital sector has been restructured by wide-ranging hospital mergers, following a conviction among policy makers that bigger hospitals lead to lower average costs. Since the effects of mergers have not been systematically evaluated, the purpose of this article is to contribute to this area of knowledge by assessing potential economies of scale to explore and compare these results with realized cost savings after mergers. Considering the period 2003-2009, we estimate the translog cost function to examine economies of scale in the years preceding restructuring. Additionally, we use the difference-in-differences approach to evaluate hospital centres (HC) that occurred between 2004 and 2007, comparing the years after and before mergers. Our findings suggest that economies of scale are present in the pre-merger configuration with an optimum hospital size of around 230 beds. However, the mergers between two or more hospitals led to statistically significant post-merger cost increases, of about 8 %. This result indicates that some HC become too large to explore economies of scale and suggests the difficulty of achieving efficiencies through combining operations and service specialization.

Organizational factors influencing health information technology adoption in long-term-care facilities

Long-term care (LTC) is an important sector of the health care industry. However, the adoption of health information technology (HIT) systems in LTC facilities lags behind that in other sectors of health care. Previous literature has focused on the financial and technical barriers. This study examined the organizational factors associated with HIT adoption in LTC facilities. A survey of 500 LTC facilities in Texas enabled researchers to compile HIT indexes for further statistical analyses. A general linear model was used to study the associations between the clinical/administrative HIT indexes and organizational factors. The empirical outcomes show that the size of an LTC facility has a significant association with HIT adoption. Rural LTC facilities, especially freestanding ones, adopt less HIT than their urban counterparts, whereas freestanding LTC facilities have the lowest HIT adoption overall. There is not enough evidence to support ownership status as a significant factor in HIT adoption. Some implications are proposed, but further research is necessary.

The impact of accelerating electronic prescribing on hospitals' productivity levels: can health information technology bend the curve?

This paper examines how different strategies for implementing computerized prescriber order entry (CPOE) impact hospitals' productivity. We used the American Hospital Association's Annual Survey to construct hospital-level measures for 1,812 facilities and analyzed the productivity indices against CPOE use rates. The relationship between CPOE use rates and indices for "technical efficiency change" and "total factor productivity" was significant. Hospitals introducing CPOE facilitywide in a one-year period (where usage went from zero to more than 50%) experienced declines in both productivity indices. One implication is that hospitals achieving the goals of the "meaningful use" program promoted by the Centers for Medicare and Medicaid Services may do so at the expense of productivity.

Dynamic analysis of interhospital collaboration and competition: empirical evidence from an Italian regional health system

BACKGROUND

Policymakers stimulate competition in universalistic health-care systems while encouraging the formation of service provision networks among hospital organizations. This article addresses a gap in the extant literature by empirically analyzing simultaneous collaboration and competition between hospitals within the Italian National Health Service, where important procompetition reforms have been implemented.

PURPOSE

To explore how rising competition between hospitals relates to their propensity to collaborate with other local providers.

METHODS

Longitudinal data on interhospital collaboration and competition collected in an Italian region from 2003 to 2007 are analyzed. Social network analysis techniques are applied to study the structure and dynamics of interhospital collaboration. Negative binomial regressions are employed to explore how interhospital competition relates to the collaborative network over time.

RESULTS

Competition among providers does not hinder interhospital collaboration. Collaboration is primarily local, with resource complementarity and differentials in the volume of activity and hospital performance explaining the propensity to collaborate.

CONCLUSIONS

Formation of collaborative networks among hospitals is not hampered by reforms aimed at fostering market forces. Because procompetition reforms elicit peculiar forms of managed competition in universalistic health systems, studies are needed to clarify whether the positive association between interhospital competition and collaboration can be generalized to other health-care settings.

Understanding hospital performance: the role of network ties and patterns of competition

BACKGROUND

To improve efficiency and quality, a number of policies have recently been implemented to increase competition and cooperation within the health systems of many countries. We theorize how hospital performance, measured as productivity, is contingent upon network embeddedness, the extent to which a hospital is involved in a network of interconnected interorganizational relationships.

PURPOSE

The aim of this study was to explore the effects on hospital productivity resulting from both collaborative network ties and competitive relationships between providers.

METHODOLOGY

We used panel data collected between 2003 and 2007 from 35 hospitals in Abruzzo, one of the most populated regions of central Italy. We used secondary data of hospital activities regarding both clinical and administrative aspects. For each year, we examined the intensity of interhospital competition and the unique position each provider has within a larger network of relationships with other hospitals. Other idiosyncratic organizational characteristics were examined as well.

FINDINGS

Our results show that hospital productivity is negatively related to the degree of competition that a hospital faces and positively related to the degree with which hospitals establish collaborative relationships. We also found that the negative impact on hospital productivity due to competition was lessened when hospitals were more likely to create cooperative network ties.

PRACTICE IMPLICATIONS

Because interhospital collaboration and competition are related to hospital productivity, they should constitute a core element in the strategic planning of a hospital's operation. Health administrators should implement policies that favor collaborative network ties at the regional level and mitigate interorganizational rivalries when establishing collaborative relationships with local competitors.

The changing configuration of hospital systems: centralization, federalization, or fragmentation?

PURPOSE

Research on hospital system organization is dated and cross-sectional. We analyze trends in system structure during 2000-2010 to ascertain whether they have become more centralized or decentralized.

DESIGN/METHODOLOGY/APPROACH

We test hypotheses drawn from organization theory and estimate empirical models to study the structural transitions that systems make between different "clusters" defined by the American Hospital Association.

FINDINGS

There is a clear trend toward system fragmentation during most of this period, with a small recent shift to centralization in some systems. Systems decentralize as they increase their members and geographic dispersion. This is particularly true for systems that span multiple states; it is less true for smaller regional systems and local systems that adopt a hub-and-spoke configuration around a teaching hospital.

RESEARCH LIMITATIONS

Our time series ends in 2010 just as health care reform was implemented. We also rely on a single measure of system centralization.

RESEARCH IMPLICATIONS

Systems that appear to be able to centrally coordinate their services are those that operate in local or regional markets. Larger systems that span several states are likely to decentralize or fragment.

PRACTICAL IMPLICATIONS

System fragmentation may thwart policy aims pursued in health care reform. The potential of Accountable Care Organizations rests on their ability to coordinate multiple providers via centralized governance. Hospitals systems are likely to be central players in many ACOs, but may lack the necessary coherence to effectively play this governance role.

ORIGINALITY/VALUE

Not all hospital systems act in a systemic manner. Those systems that are centralized (and presumably capable of acting in concerted fashion) are in the minority and have declined in prevalence over most of the past decade.

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.

A systematic review of health care efficiency measures

OBJECTIVE

To review and characterize existing health care efficiency measures in order to facilitate a common understanding about the adequacy of these methods.

DATA SOURCES

Review of the MedLine and EconLit databases for articles published from 1990 to 2008, as well as search of the "gray" literature for additional measures developed by private organizations.

STUDY DESIGN

We performed a systematic review for existing efficiency measures. We classified the efficiency measures by perspective, outputs, inputs, methods used, and reporting of scientific soundness.

PRINCIPAL FINDINGS

We identified 265 measures in the peer-reviewed literature and eight measures in the gray literature, with little overlap between the two sets of measures. Almost all of the measures did not explicitly consider the quality of care. Thus, if quality varies substantially across groups, which is likely in some cases, the measures reflect only the costs of care, not efficiency. Evidence on the measures' scientific soundness was mostly lacking: evidence on reliability or validity was reported for six measures (2.3 percent) and sensitivity analyses were reported for 67 measures (25.3 percent).

CONCLUSIONS

Efficiency measures have been subjected to few rigorous evaluations of reliability and validity, and methods of accounting for quality of care in efficiency measurement are not well developed at this time. Use of these measures without greater understanding of these issues is likely to engender resistance from providers and could lead to unintended consequences.

Testing the hospital value proposition: an empirical analysis of efficiency and quality

PURPOSES

To assess the relationship between hospitals' X-inefficiency levels and overall care quality based on the National Quality Forum's 27 safe practices score and to improve the analytic strategy for assessing X-inefficiency.

METHODOLOGY

The 2005 versions of the American Hospital Association and Leapfrog Group's annual surveys were the basis of the study. Additional case mix indices and market variables were drawn from the Centers for Medicare and Medicaid Services data sources and the Area Resource File. Data envelopment analysis was used to determine hospitals' X-inefficiency scores relative to their market-level competitors. Regression was used to assess the relationship between X-inefficiency and quality, controlling for organizational and market characteristics. Expenses (total and labor expenditures), case-mix-adjusted admissions, length of stay, and licensed beds defined the X-inefficiency function. The overall National Quality Forum's safe practice score, health maintenance organization penetration, market share, and teaching status served as independent control variables in the regression.

FINDINGS

The National Quality Forum's safe practice scores are significantly and positively correlated to hospital X-inefficiency levels (beta = .105, p < or = .05). The analysis of the value proposition had very good explanatory power (adjusted R(2) = .414; p < or = .001; df = 7, 265). Contrary to earlier findings, health maintenance organization penetration and being a teaching hospital were positively related to X-inefficiency. Similar with others' findings, greater market share and for-profit ownership were negatively associated with X-inefficiency.

PRACTICE IMPLICATIONS

Measurement of overall hospital quality is improving but can still be made better. Nevertheless, the National Quality Forum's measure is significantly related to efficiency and could be used to create differential pay-for-performance programs. A market-segmented analytic strategy for studying hospitals' efficiency yields results with a high degree of explanatory power.

Specialty and full-service hospitals: a comparative cost analysis

OBJECTIVE

To compare the costs of physician-owned cardiac, orthopedic, and surgical single specialty hospitals with those of full-service hospital competitors.

DATA SOURCES

The primary data sources are the Medicare Cost Reports for 1998-2004 and hospital inpatient discharge data for three of the states where single specialty hospitals are most prevalent, Texas, California, and Arizona. The latter were obtained from the Texas Department of State Health Services, the California Office of Statewide Health Planning and Development, and the Agency for Healthcare Research and Quality Healthcare Cost and Utilization Project. Additional data comes from the American Hospital Association Annual Survey Database.

STUDY DESIGN

We identified all physician-owned cardiac, orthopedic, and surgical specialty hospitals in these three states as well as all full-service acute care hospitals serving the same market areas, defined using Dartmouth Hospital Referral Regions. We estimated a hospital cost function using stochastic frontier regression analysis, and generated hospital specific inefficiency measures. Application of t-tests of significance compared the inefficiency measures of specialty hospitals with those of full-service hospitals to make general comparisons between these classes of hospitals.

PRINCIPAL FINDINGS

Results do not provide evidence that specialty hospitals are more efficient than the full-service hospitals with whom they compete. In particular, orthopedic and surgical specialty hospitals appear to have significantly higher levels of cost inefficiency. Cardiac hospitals, however, do not appear to be different from competitors in this respect.

CONCLUSIONS

Policymakers should not embrace the assumption that physician-owned specialty hospitals produce patient care more efficiently than their full-service hospital competitors.

Measuring hospital inefficiency: the effects of controlling for quality and patient burden of illness

OBJECTIVE

To assess the impact of employing a variety of controls for hospital quality and patient burden of illness on the mean estimated inefficiency and relative ranking of hospitals generated by stochastic frontier analysis (SFA).

STUDY SETTING

This study included urban U.S. hospitals in 20 states operating in 2001. DATA DESIGN/DATA COLLECTION: We took hospital data for 1,290 hospitals from the American Hospital Association Annual Survey and the Medicare Cost Reports. We employed a variety of controls for hospital quality and patient burden of illness. Among the variables we used were a subset of the quality indicators generated from the application of the Patient Safety Indicator and Inpatient Quality Indicator modules of the Agency for Healthcare Research and Quality, Quality Indicator software to the Healthcare Cost and Utilization Project (HCUP), State Inpatient Databases. Measures of a component of patient burden of illness came from the application of the Comorbidity Software to HCUP data.

DATA ANALYSIS

We used SFA to estimate hospital cost-inefficiency. We tested key assumptions of the SFA model with likelihood ratio tests.

PRINCIPAL FINDINGS

The measures produced by the Comorbidity Software appear to account for variations in patient burden of illness that had previously been masquerading as inefficiency. Outcome measures of quality can provide useful insight into a hospital's operations but may have little impact on estimated inefficiency once controls for structural quality and patient burden of illness have been employed.

CONCLUSIONS

Choices about controlling for quality and patient burden of illness can have a nontrivial impact on mean estimated hospital inefficiency and the relative ranking of hospitals generated by SFA.

The role of organizational factors in the adoption of healthcare information technology in Florida hospitals

This study examines whether specific organizational characteristics, such as hospital size, geographic location (urban versus rural), system membership (stand-alone versus system-affiliated), and tax status (for-profit versus non-profit), influence adoption of healthcare information technologies (HIT) in hospitals. We hypothesize the above organizational characteristics to be related to hospitals' adoption of clinical, administrative, and strategic HIT, as well as all HIT in general. Using survey data collected from 98 Florida hospitals, we demonstrate that hospital size, system membership, and tax status, but not geographic location, are systematically related to HIT adoption, and that such factors explain about 28-41% of the adoption variance. A mixed pattern of effects emerge for clinical, administrative, and strategic HIT. For instance, hospital size appears to be less relevant for administrative HIT, where its effect is compensated by those of system membership and tax status. Implications for future HIT research and practice are discussed.

The impact of health system membership on patient safety initiatives

BACKGROUND

Research in configurations and strategic groups has a rich history of revealing performance differences for hospitals and health care systems.

PURPOSES

To assess the relationship between hospital-led health system configurations and the adoption of patient safety practices. In particular, the adoption of computerized physician order entry (CPOE) and intensive care unit physician staffing (IPS) is analyzed.

METHODOLOGY

Analysis of variance was used to detect differences in patient safety measures based on health networks and systems' initial configuration clustering, and regression was used to assess group membership, controlling for hospital-level characteristics. The 2002 American Hospital Association survey and the first 3 years of the Leapfrog Group annual survey (2003-2005) are used for the analyses.

RESULTS

There were significant differences in CPOE and IPS adoption and implementation levels based on health systems' configurations. Centralized physician/insurance health systems and moderately centralized health systems were the highest configurations in terms of CPOE adoption. Group membership was not positively related to the use of IPS relative to hospitals that are not classified using the taxonomy. In fact, there is a significant and negative adoption rate for both patient safety measures in facilities classified in the independent hospital systems category.

CONCLUSION

There are systematic differences in the adoption of CPOE and IPS patient safety measures based on health system configurations. The configuration with an insurance company as part of its structure was more likely than other groups to be adopting CPOE. PRACTITIONER IMPLICATIONS: Given the durability of group membership, the Leapfrog Group and other patient safety initiatives could explicitly target configurations most likely to adopt and implement patient safety programs.

Hospital inefficiency: what is the impact of membership in different types of systems?

The primary objective of this study is to assess whether systematic differences in inefficiency are associated with hospital membership in different types of systems. We employed the Battese/Coelli simultaneous stochastic frontier analysis (SFA) technique to estimate hospital cost inefficiency. Mean estimated inefficiency was 8.42%. Membership in different types of systems was related to estimated cost inefficiency (p < .05). Compared to hospitals that were members of centralized health systems, membership in centralized physician/insurance or decentralized systems was associated with decreased inefficiency; membership in independent systems was associated with increased inefficiency.

Stochastic frontier analysis of hospital inefficiency: a review of empirical issues and an assessment of robustness

Twenty stochastic frontier analysis (SFA) studies of hospital inefficiency in the United States were analyzed. Results from best-practice methods were compared against previously used methods in hospital studies to ascertain the robustness of SFA in estimating cost inefficiency. To compare past studies and analyze new data, SFA methods were varied by (a) the assumptions of the structure of costs and distribution of the error term, (b) inclusion of quality and product descriptor measures, and (c) use of simultaneous and two-stage estimation techniques. SFA results were relatively insensitive to several model variations.

Hospital ownership and financial performance: what explains the different findings in the empirical literature?

This study applies meta-analytic methods to conduct a quantitative review of the empirical literature on hospital ownership since 1990. We examine four financial outcomes across 40 studies: cost, revenue, profit margin, and efficiency. We find that variation in the magnitudes of ownership effects can be explained by a study's research focus and methodology. Studies using empirical methods that control for few confounding factors tend to find larger differences between for-profit and not-for-profit hospitals than studies that control for a wider range of confounding factors. Functional form and sample size also matter. Failure to apply log transformation to highly skewed expenditure data yields misleadingly large estimated differences between for-profits and not-for-profits. Studies with fewer than 200 observations also produce larger point estimates and wide confidence intervals.

The effects of multi-hospital systems on hospital prices

US hospital prices are rising again after years of limited growth. We analyze trends in hospital prices during a period of significant price growth (1999-2003) to assess whether hospitals that are part of multi-hospital systems were able to increase their prices faster than non-system hospitals. We find hospitals that were members of multi-hospital systems were able to increase their prices substantially more than comparable non-systems hospitals (34% for large systems and 17% for small systems). Further, we find that the systems effect is not confined to hospitals that have other system member hospitals in their local markets. One possible explanation is that hospitals belonging to non-local multi-hospital systems have improved their bargaining position vis-à-vis health plans.

Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry

We examine the evolving structure of the US hospital industry since 1970, focusing on how ownership form influences entry and exit behavior. We develop theoretical predictions based on the model of Lakdawalla and Philipson, in which for-profit and not-for-profit hospitals differ regarding their objectives and costs of capital. The model predicts for-profits would be quicker to enter and exit than not-for-profits in response to changing market conditions. We test this hypothesis using data for all US hospitals from 1984 to 2000. Examining annual and regional entry and exit rates, for-profit hospitals consistently have higher entry and exit rates than not-for-profits. Econometric modeling of entry and exit rates yields similar patterns. Estimates of an ordered probit model of entry indicate that entry is more responsive to demand changes for for-profit than not-for-profit hospitals. Estimates of a discrete hazard model for exit similarly indicate that negative demand shifts increase the probability of exit more for for-profits than not-for-profits. Finally, membership in a hospital chain significantly decreases the probability of exit for for-profits, but not not-for-profits.

Reexamining organizational configurations: an update, validation, and expansion of the taxonomy of health networks and systems

OBJECTIVES

To (a) assess how the original cluster categories of hospital-led health networks and systems have changed over time; (b) identify any new patterns of cluster configurations; and (c) demonstrate how additional data can be used to refine and enhance the taxonomy measures. DATA SOURCES; 1994 and 1998 American Hospital Association (AHA) Annual Survey of Hospitals.

STUDY DESIGN

As in the original taxonomy, separate cluster solutions are identified for health networks and health systems by applying three strategic/structural dimensions (differentiation, integration, and centralization) to three components of the health service/product continuum (hospital services, physician arrangements, and provider-based insurance activities).

DATA EXTRACTION METHODS

Factor, cluster, and discriminant analyses are used to analyze the 1998 data. Descriptive and comparative methods are used to analyze the updated 1998 taxonomy relative to the original 1994 version.

PRINCIPAL FINDINGS

The 1998 cluster categories are similar to the original taxonomy, however, they reveal some new organizational configurations. For the health networks, centralization of product/service lines is occurring more selectively than in the past. For the health systems, participation has grown in and dispersed across a more diverse set of decentralized organizational forms. For both networks and systems, the definition of centralization has changed over time.

CONCLUSIONS

In its updated form, the taxonomy continues to provide policymakers and practitioners with a descriptive and contextual framework against which to assess organizational programs and policies. There is a need to continue to revisit the taxonomy from time to time because of the persistent evolution of the U.S. health care industry and the consequent shifting of organizational configurations in this arena. There is also value in continuing to move the taxonomy in the direction of refinement/expansion as new opportunities become available.