HMO behavior and stock market valuation: what does Wall Street reward and punish?

This article analyzes the variation in returns to owning stock in investor-owned health maintenance organizations (IOHMOs) for the period 1994-1997. The average return (measured by the change in the market value of the stock plus dividends) was close to zero, but returns were positive and high for firms operating in local markets that were and remained less competitive, with large nationwide scope, and with less rapidly growing panels of contracted physicians. Indicators of a firm's strategic direction were abstracted from their annual reports; firms pursuing a merger or acquisition strategy, and those emphasizing a utilization review strategy, showed lower returns than those that did not. Other strategy and market variables were not related to stock market returns over this period, and were also generally not related to price-earnings ratios. This analysis supports the view that competitive HMO markets best constrain profits to investor-owned firms.

From hospital to drugstore: insurance and the shift to outpatient care

As policymakers consider whether and how to add prescription drug coverage to Medicare, they need to understand the relationship between insurance coverage and the adoption of new medical technologies, including drugs. Even the direction of these relationships is not always so clear. In this Issue Brief, Drs. Danzon and Pauly examine the shift from inpatient to outpatient care in the last 20 years,and ask two broad questions: to what extent was this shift encouraged by changes in insurance, and to what extent was insurance coverage influenced by this shift?

Insurance and new technology: from hospital to drugstore

This paper traces the relationship between insurance coverage and the technology-induced shift of the locus of medical care and medical spending from the inpatient to the outpatient setting. This shift was accompanied by an increase in the extent of private insurance coverage for outpatient treatments; technological change both caused the increase in coverage (for more costly treatments) and was affected by it (as lower user prices increased the demand for new types of care). Changes in insurance administration technology also facilitated the transformation. Some aspects of the change may have been inefficient, because of the presence of tax subsidy and legal requirements to cover costly new technologies of low effectiveness, but the transformation appears thus far to have worked better for private insurance than for Medicare.

Premium variation in the individual health insurance market

Recent proposals to decrease the number of uninsured in the U.S. indicate that the individual health insurance market's role may increase. Amid fears of possible risk-segmentation in individual insurance, there exists limited information of the functioning of such markets. This paper examines the relationship between expected medical expense and actual paid premiums for households with individual insurance in the 1996-1997 Community Tracking Study's Household Survey. We find that premiums vary less than proportionately with expected expense and vary only with certain risk characteristics. We also explore how the relationship between risk and premiums is affected by local regulations and market characteristics. We find that premiums vary significantly less strongly with risk for persons insured by HMOs and in markets dominated by managed care insurers.

Community benefits: how do for-profit and nonprofit hospitals measure up?

The rise of the for-profit hospital industry has opened a debate about the level of community benefits provided by non-profit hospitals. Do nonprofits provide enough community benefits to justify the community's commitment of resources to them, and the tax-exempt status they receive? If nonprofit hospitals convert to for-profit entities, would community benefits be lost in the transaction? This debate has highlighted the need to define and measure community benefits more clearly. In this Issue Brief, the authors develop a new method of identifying activities that qualify as community benefits, and propose a benchmark for the amount of benefit a nonprofit hospital should provide.

Measuring community benefits provided by for-profit and nonprofit hospitals

Nonprofit hospitals are expected to provide benefits to their community in return for being exempt from most taxes. In this paper we develop a new method of identifying activities that should qualify as community benefits and of determining a benchmark for the amount of community benefits a nonprofit hospital should be expected to provide. We then compare estimates of nonprofits' current level of community benefits with our benchmark and show that actual provision appears to fall short. Either nonprofit hospitals as a group ought to provide more community benefits, or they are performing activities that cannot be measured. In either case, better measurement and accounting of community benefits would improve public policy.

An efficient employer strategy for dealing with adverse selection in multiple-plan offerings: an MSA example

This paper outlines a feasible employee premium contribution policy, which would reduce the inefficiency associated with adverse selection when a limited coverage insurance policy is offered alongside a more generous policy. The "efficient premium contribution" is defined and is shown to lead to an efficient allocation across plans of persons who differ by risk, but it may also redistribute against higher risks. A simulation of the additional option of a catastrophic health plan (CHP) accompanied by a medical savings account (MSA) is presented. The efficiency gains from adding the MSA/catastrophic health insurance plan (CHP) option are positive but small, and the adverse consequences for high risks under an efficient employee premium are also small.

The Medicare mix: efficient and inefficient combinations of social and private health insurance for U.S. elderly

This paper explores two theories about the reason why the United States provides mixed public (Medicare) and private (Medigap) insurance for the elderly: that this represents an efficient combination of financing methods for a public good, or that it represents public provision of a private good for distributional reasons. It is argued that the first theory has more support than the second, but that the current configuration of Medicare and Medigap is not optimal. Two main problems are identified: the absence of coordination between public and private insurers, and the provision of overly generous coverage to the well off. Recent Medicare reforms have helped with the first problem, but the second remains to be solved.

Association of dialyzer reuse and hospitalization rates among hemodialysis patients in the US

OBJECTIVES

To determine if reuse of hemodialyzers is associated with higher rates of hospitalization and their resulting costs among end-stage renal disease (ESRD) patients.

METHODS

Noncurrent cohort study of hospitalization rates among 27,264 ESRD patients beginning hemodialysis in the United States in 1986 and 1987.

RESULTS

Dialysis in free-standing facilities reprocessing dialyzers was associated with a greater rate of hospitalization than in facilities not reprocessing (relative rate (RR) = 1.08, 95% confidence interval (CI), 1.02-1.14). This higher rate of hospitalization was observed with dialyzer reuse using peracetic/acetic acids (RR = 1.11, CI 1. 04-1.18) and formaldehyde (RR = 1.07, CI 1.00-1.14), but not glutaraldehyde (p = 0.97). There was no difference among hospitalization rates in hospital-based facilities reprocessing dialyzers with any sterilant and those not reprocessing. Hospitalization for causes other than vascular access morbidity in free-standing facilities reusing dialyzers with formaldehyde was not different from hospitalization in facilities not reusing. However, reuse with peracetic/acetic acids was associated with higher rates of hospitalization than formaldehyde (RR = 1.08, CI 1.03-1.15).

CONCLUSIONS

Dialysis in free-standing facilities reprocessing dialyzers with peracetic/acetic acids or formaldehyde was associated with greater hospitalization than dialysis without dialyzer reprocessing. This greater hospitalization accounts for a large increment in inpatient stays in the USA. These findings raise important concerns about potentially avoidable morbidity among hemodialysis patients.

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.

Would you like suspenders to go with that belt? An analysis of optimal combinations of cost sharing and managed care

When and why would it be efficient for a managed care insurance plan using managerial limits to add patient cost sharing? This paper uses a diagrammatic model to indicate that the use of patient point-of-service cost sharing can cause the managerial limits or guidelines to be less restrictive in limiting high value care for cases of severe illness. The model shows that cost-sharing is more likely to improve efficiency the greater the variation in illness severity and the smaller the degree of moral hazard. The model is extended to the case in which provider cost sharing is also used.

Financial incentives and drug spending in managed care

Pharmaceutical costs have been rising dramatically since 1995, growing 16.6% in 1998 alone. This rate of increase is more than four times that of all health care spending. Employers, managed care organizations and consumers are looking anew for ways to stem these rising costs, without denying patients effective care. Therefore, this Issue Brief is especially timely because it investigates how patient copayments and financial incentives for physicians affect drug spending in managed care.

Financial incentives and drug spending in managed care

This study estimates the impact of patient financial incentives on the use and cost of prescription drugs in the context of differing physician payment mechanisms. A large data set was developed that covers persons in managed care who pay varying levels of cost sharing and whose physicians are compensated under two different models: independent practice association (IPA)-model and network-model health maintenance organizations (HMOs). Our results indicate that higher patient copayments for prescription drugs are associated with lower drug spending in IPA models (in which physicians are not at risk for drug costs) but have little effect in network models (in which physicians bear financial risk for all prescribing behavior).

Association of dialyzer reuse with hospitalization and survival rates among U.S. hemodialysis patients: do comorbidities matter?

The objective of this study was to determine whether the associations between reuse of hemodialyzers and higher rates of death and hospitalization persist after adjustment for comorbidity. This was a nonconcurrent cohort study of survival and hospitalization rates among 1491 U.S. chronic hemodialysis patients beginning treatment in 1986 and 1987. The impact of dialyzer reuse was compared across three survival models: an unadjusted model, a "base" model adjusted only for demographics and renal diagnosis, and an "augmented" model additionally adjusted for comorbidities. We found that reuse of dialyzers was associated with a similarly higher rate of death in analyses unadjusted for confounders (relative risk [RR] 1.25, 95% confidence interval [CI] 0.97-1.61), adjusted for demographics and renal diagnosis (RR 1.16, 95% CI 0.96-1.41), and analyses additionally adjusted for comorbidities (RR = 1.25, CI, 1.03, 1.52). Reusing dialyzers was also associated with a greater rate of hospitalization that was stable regardless of adjustment procedures. We conclude that higher rates of death and hospitalization associated with dialyzer reuse persist regardless of adjustment for demographic characteristics or baseline comorbidities. These findings amplify concerns that there exists elevated morbidity among hemodialysis patients treated in facilities that reuse hemodialyzers. Although the association we observed was not confounded by comorbidity, a cause-and-effect relationship between dialyzer reuse and morbidity could not be proved because of the inability to control for aspects of care other than dialyzer reuse.

Comprehensive discharge planning and home follow-up of hospitalized elders: a randomized clinical trial

CONTEXT

Comprehensive discharge planning by advanced practice nurses has demonstrated short-term reductions in readmissions of elderly patients, but the benefits of more intensive follow-up of hospitalized elders at risk for poor outcomes after discharge has not been studied.

OBJECTIVE

To examine the effectiveness of an advanced practice nurse-centered discharge planning and home follow-up intervention for elders at risk for hospital readmissions.

DESIGN

Randomized clinical trial with follow-up at 2, 6, 12, and 24 weeks after index hospital discharge.

SETTING

Two urban, academically affiliated hospitals in Philadelphia, Pa.

PARTICIPANTS

Eligible patients were 65 years or older, hospitalized between August 1992 and March 1996, and had 1 of several medical and surgical reasons for admission.

INTERVENTION

Intervention group patients received a comprehensive discharge planning and home follow-up protocol designed specifically for elders at risk for poor outcomes after discharge and implemented by advanced practice nurses.

MAIN OUTCOME MEASURES

Readmissions, time to first readmission, acute care visits after discharge, costs, functional status, depression, and patient satisfaction.

RESULTS

A total of 363 patients (186 in the control group and 177 in the intervention group) were enrolled in the study; 70% of intervention and 74% of control subjects completed the trial. Mean age of sample was 75 years; 50% were men and 45% were black. By week 24 after the index hospital discharge, control group patients were more likely than intervention group patients to be readmitted at least once (37.1 % vs 20.3 %; P<.001). Fewer intervention group patients had multiple readmissions (6.2% vs 14.5%; P = .01) and the intervention group had fewer hospital days per patient (1.53 vs 4.09 days; P<.001). Time to first readmission was increased in the intervention group (P<.001). At 24 weeks after discharge, total Medicare reimbursements for health services were about $1.2 million in the control group vs about $0.6 million in the intervention group (P<.001). There were no significant group differences in post-discharge acute care visits, functional status, depression, or patient satisfaction.

CONCLUSIONS

An advanced practice nurse-centered discharge planning and home care intervention for at-risk hospitalized elders reduced readmissions, lengthened the time between discharge and readmission, and decreased the costs of providing health care. Thus, the intervention demonstrated great potential in promoting positive outcomes for hospitalized elders at high risk for rehospitalization while reducing costs.

Managed care, market power, and monopsony

OBJECTIVE

To examine the theoretical possibility of monopsony behavior under managed care insurance.

STUDY DESIGN

Use of microeconomic theory to examine how managed care plans with market power would be expected to behave, and effects of that behavior on consumer and supplier welfare.

PRINCIPAL FINDINGS

The article shows that, under managed care monopsony, the welfare of consumers may be increased but overall economic welfare will necessarily be reduced. It offers a test for whether the lower prices paid by managed care buyers with larger market share represent welfare-reducing monopsony or a welfare-increasing movement away from provider monopoly. The test says that, if the quantity of inputs (supplied under conditions of increasing long-run marginal cost) declines, monopsony is present. The article also argues that the translation of lower provider prices into lower premiums is consistent with welfare-reducing monopsony by nonprofit health plans. In contrast, for-profit health plans that obtain monopsony may reduce the welfare of consumers as well as that of input suppliers. These theoretical conclusions are shown to be consistent with recent empirical research indicating a negative relationship between buyer market power and cost per enrollee.

CONCLUSIONS

Traditional antitrust policy has not been able to deal well with monopsony. The article concludes that health plans that use their market power to reduce medical spending may harm the well-being both of specialized medical workers and of consumers of medical care. Antitrust policy may need to be modified to deal with this situation.

Health maintenance organization penetration and the practice location choices of new physicians: a study of large metropolitan areas in the United States

OBJECTIVES

The rapid growth of health maintenance organizations is reshaping the practice opportunities available to physicians. The practice location decisions of new physicians provide a sensitive bellwether of these changes. This study assessed the effect of health maintenance organization penetration on practice location for physicians completing graduate medical education (GME).

METHODS

Conditional logit regression analysis was used to determine the effect of health maintenance organization penetration on practice location, controlling for other market characteristics. Subjects were physicians who finished GME between 1989 and 1994 and who located in one of the 98 US metropolitan areas with more than 500,000 population. The outcome measure was the particular metropolitan area chosen by each new physician.

RESULTS

Early in the study period, new generalists were significantly more likely to locate in metropolitan areas with high health maintenance organization penetration than in low penetration areas, whereas new specialists' practice location choices were not associated with health maintenance organization penetration. The likelihood of choosing a high penetration relative to a low penetration area declined with time, however, for both generalists and specialists. Consequently, by the end of the study period, health maintenance organization penetration had a weak but significant negative effect on practice location for generalists and a strong negative influence on practice location for specialists.

CONCLUSIONS

New generalists who completed graduate medical education between 1989 and 1994 were more likely than new specialists to locate in market areas with high health maintenance organization penetration; however, the proportions of both generalists and specialists who chose high penetration areas decreased during the study period. This finding may reflect reduced practice opportunities in high penetration areas relative to low penetration areas as health maintenance organizations' systems for controlling utilization began to yield results. Alternatively, new physicians may have become more hesitant to accept available positions in high penetration areas.

Modeling the cost-effectiveness of granulocyte colony-stimulating factor use in early-stage breast cancer

PURPOSE

To model the cost-effectiveness (CE) of granulocyte colony-stimulating factor (G-CSF) in early-stage breast cancer when its use is directed to those most in need of the medication.

METHODS

A conditional CE model was developed for the use of G-CSF based on a ranking of patient need as determined by patient blood counts during the first cycle of chemotherapy. In the base case, no G-CSF was used. In the alternative case, G-CSF was used in the following manner. If the risk of a neutropenic event (as defined by a predictive model based on nadir absolute neutrophil count [ANC] and hemoglobin decrease in cycle 1) was equal to or exceeded a predetermined critical value "T," then patients would receive G-CSF in cycles 2 through 6 of chemotherapy. If the risk of an event was less than T, patients would not use G-CSF unless an event occurred, at which time G-CSF would be administered with every subsequent cycle.

RESULTS

A decision rule (T) that would allow the most needy 50% of early-stage breast cancer patients to receive G-CSF after the first cycle of chemotherapy resulted in a CE ratio of $34,297 dollars per life-year saved (LYS). If only the most needy 10% of patients received G-CSF, then the associated CE ratio was $23,748/LYS; if 90% of patients could receive the medication, the CE ratio would be $76,487/LYS. These estimates were relatively insensitive to inpatient hospital cost estimates (inpatient costs for fever and neutropenia of $3,090 to $7,726 per admission produced dollar per LYS figures of $34,297 to $32,415, respectively). However, the model was sensitive to assumptions about the shape of the relationship between dose reduction and disease-free survival (DFS) at 3 years.

CONCLUSION

Providing G-CSF to the neediest 50% of early-stage breast cancer patients (as defined by first-cycle blood counts) starting after the first cycle of chemotherapy is associated with a CE ratio of $34,297/LYS, which is well in the range of CE ratios for treatment of other common medical conditions. Furthermore, conditional CE studies, based on predictive models that incorporate individual patient risk, allow one to define populations for which therapy is, or is not, cost-effective. Limitations of our present understanding of the shape of the chemotherapy dose-response curve, especially at low levels of dose reductions, affect these results. Further work is required to define the shape of the dose-response curve in early-stage breast cancer.

First-cycle blood counts and subsequent neutropenia, dose reduction, or delay in early-stage breast cancer therapy

PURPOSE

If patients could be ranked according to their projected need for supportive care therapy, then more efficient and less costly treatment algorithms might be developed. This work reports on the construction of a model of neutropenia, dose reduction, or delay that rank-orders patients according to their need for costly supportive care such as granulocyte growth factors.

PATIENTS AND METHODS

A case series and consecutive sample of patients treated for breast cancer were studied. Patients had received standard-dose adjuvant chemotherapy for early-stage nonmetastatic breast cancer and were treated by four medical oncologists. Using 95 patients and validated with 80 additional patients, development models were constructed to predict one or more of the following events: neutropenia (absolute neutrophil count [ANC] < or = 250/microL), dose reduction > or = 15% of that scheduled, or treatment delay > or = 7 days. Two approaches to modeling were attempted. The pretreatment approach used only pretreatment predictors such as chemotherapy regimen and radiation history; the conditional approach included, in addition, blood count information obtained in the first cycle of treatment.

RESULTS

The pretreatment model was unsuccessful at predicting neutropenia, dose reduction, or delay (c-statistic = 0.63). Conditional models were good predictors of subsequent events after cycle 1 (c-statistic = 0.87 and 0.78 for development and validation samples, respectively). The depth of the first-cycle ANC was an excellent predictor of events in subsequent cycles (P = .0001 to .004). Chemotherapy plus radiation also increased the risk of subsequent events (P = .0011 to .0901). Decline in hemoglobin (HGB) level during the first cycle of therapy was a significant predictor of events in the development study (P = .0074 and .0015), and although the trend was similar in the validation study, HGB decline failed to reach statistical significance.

CONCLUSION

It is possible to rank patients according to their need of supportive care based on blood counts observed in the first cycle of therapy. Such rankings may aid in the choice of appropriate supportive care for patients with early-stage breast cancer.

Carrier screening for cystic fibrosis: costs and clinical outcomes

OBJECTIVES

To evaluate the costs and clinical effects of 16 alternative strategies for cystic fibrosis (CF) carrier screening in the reproductive setting; and to test the sensitivity of the results to assumptions about cost and detection rate, stakeholder perspective, DNA test specificity, chance of nonpaternity, and couples' reproductive plans.

METHOD

Cost-effectiveness analysis.

RESULTS

A sequential screening strategy had the lowest cost per CF birth avoided. In this strategy, the first partner was screened with a standard test that identifies 85% of carriers. The second partner was screened with an expanded test if the first partner's screen was positive. This strategy identified 75% of anticipated CF births at a cost of $367,000 each. This figure does not include the lifetime medical costs of caring for a patient with CF, and it assumes that couples who identify a pregnancy at risk will choose to have prenatal diagnosis and termination of affected pregnancies. The cost per CF birth identified is approximately half this figure when couples plan two children.

CONCLUSIONS

The cost-effectiveness of CF carrier screening depends greatly on couples' reproductive plans. CF carrier screening is most cost-effective when it is performed sequentially, when the information is used for more than one pregnancy, and when the intention of the couple is to identify and terminate affected pregnancies. These conclusions are important for policy considerations regarding population-based screening for CF, and may also have important implications for screening for less common diseases.

Physician opportunity costs in physician practice cost functions

Estimation of cost functions for physician firms is problematic because many physicians are self-employed, and the marginal opportunity cost of physician labor is not observed. In this paper, we show how to recover marginal costs and conventional measures of economies of scale from cost functions that condition on the amount of physician labor input. In addition, we introduce the new concepts of marginal nonphysician input costs and 'behavioral' economies of scale, which reflect the structure of costs when physician labor input moves along a utility-maximizing expansion path. Our results could be useful in the design of resource-based physician fee schedules.

Assessing the value of a new pharmaceutical. A feasibility study of contingent valuation in managed care

OBJECTIVES

The authors assessed the feasibility and construct validity of the contingent valuation method for measuring the monetary value to healthy enrollees in a health maintenance organization of a new drug, filgrastim, as prophylaxis against febrile neutropenia after chemotherapy treatment for cancer.

METHODS

A random sample of 220 enrollees from a closed-panel staff-model health maintenance organization who did not have cancer were interviewed. Chemotherapy, febrile neutropenia and filgrastim were described by video and decision board. Questions were asked in two different scenarios: (1) User-based: Assuming they were at the point of consumption and about to receive chemotherapy, what is the maximum they would be willing to pay to receive filgrastim? and (2) Insurance-based: Given they were at risk of cancer in the future, what is the maximum they would be willing to pay in additional monthly insurance premiums to add filgrastim to the plan? In a second insurance scenario where respondents were told that filgrastim was covered, what is the minimum reduction in premium that persons were willing to accept to relinquish coverage of the drug? A 2 x 2 factorial design was used to contrast two bidding algorithms to test for starting point bias and two 5-yearly prior risks of cancer, 1/200 versus 1/100. Main effects were tested by ANCOVA controlling for age, sex, health, and income.

RESULTS

Demographics of experimental cells were similar. No evidence was found of significant starting point bias. For user-based questions, as expected, willingness-to-pay increases with febrile neutropenia risk reduction, but at a declining marginal rate. Despite careful presentation of information to respondents, willingness-to-pay for insurance was higher in the lower prior risk group. Consistent with previous contingent valuation studies, the authors of the present study found evidence that willingness-to-accept exceeds willingness-to-pay for coverage of the same benefit.

CONCLUSIONS

An insurance-based contingent valuation study is feasible in a health maintenance organization. Construct validation evidence was encouraging, with the exception of the test for prior risk of cancer; however, this was a between-person contrast and may have been confounded by other factors.

Structural incentives and adoption of medical technologies in HMO and fee-for-service health insurance plans

Recent literature has argued that conventional fee-for-service (FFS) health insurance, as compared to managed care (HMO) insurance, may lead to the adoption of new technology that raises costs and reduces patient welfare. In this paper, we show that this result depends on an increasingly unrealistic key assumption-that FFS insurers cannot refuse to reimburse new technology. We also show that, when the assumption is changed, HMO insurers may adopt costly technologies that FFS insurers do not.

The effects of health insurance on access to new medical technologies

We examined the use of percutaneous transluminal coronary angioplasty, kidney stone lithotripsy, and bone marrow transplant among patients with different health insurance plans in California. HMO enrollees were less likely to receive these procedures compared with fee-for-service patients. Our results have implications for the inflationary effects of technology under managed care.

Health systems ownership: can regulation preserve community benefits?

This article addresses two questions. What determines the amount of community benefit a nonprofit firm will provide? What would be the expected effect of legal rules requiring nonprofit firms to provide more community benefit than they would otherwise have chosen? The amount of community benefit provided, it is argued, depends on the desires of the donors who endow the nonprofit firm with its equity capital and control its corporate board. The effect of a law requiring the provision of community benefit depends on the degree of competition in the local market. In competitive markets, such a rule is like a hidden tax. In markets in which nonprofit firms have market power, it may divert resources from types of benefit valued highly by the board toward activities valued highly by the political process. The definition of community benefit and the future of nonprofit hospitals are also discussed.

The impact of computer-assisted test interpretation on physician decision making: the case of electrocardiograms

This research investigated the effect of computer-assisted test interpretation (CATI) on physicians' readings of electrocardiograms (ECGs). The authors used an experimental method based on direct observations of 22 cardiologists, each reading 80 ECGs, for a total of 1,760 (of which 1,745 were used in the study). There were 40 sets of clinically-matched pairs of ECGs, one with CATI and one without. Reading time was observed and interpretation accuracy was measured by criterion-referenced aggregate scoring. To control for potential biases, the findings were subjected to multivariate analyses using ordinary least-squares regressions. The impact of CATI on cardiologists' readings of ECGs is demonstrably beneficial: the main empirical conclusion of this study is that, compared with conventional interpretation, the use of computer-assisted interpretation of ECGs cuts physician time by an average of 28% and significantly improves the concordance of the physician's interpretation with the expert benchmark, without increasing the false-positive rate. Moreover, CATI is the most accurate and saves the most time when the ECGs have many unambiguous diagnoses. Given that computers alone cannot perform the task of cardiovascular diagnosis, and that cardiologists' ECG interpretations are greatly enhanced by ubiquitous CATI technology, it appears that the best approach is one that combines person and machine.

Predictors of type of vascular access in hemodialysis patients

OBJECTIVE

Complications from vascular access account for 15% of hospital admissions among US hemodialysis patients. Complications are less frequent with arteriovenous fistulas than with synthetic grafts. We assessed clinical and nonclinical predictors of whether patients with end-stage renal disease (ESRD) starting hemodialysis receive a fistula or graft. We also investigated changes in practice between 1986-1987 and 1990.

DESIGN

Cross-sectional study.

SETTING

United States hemodialysis population.

PATIENTS

Random, national samples of ESRD patients who started hemodialysis in 1986-1987 (n=2741) or 1990 (n=1409) from United States Renal Data System Special Studies.

MAIN OUTCOME MEASURE

Type of permanent vascular access (arteriovenous fistula vs synthetic graft), analyzed using multivariate logistic regression.

RESULTS

Clinical and demographic factors as well as socioeconomic status, region of residence, and year starting hemodialysis predicted the type of vascular access. Overall, 56% of patients had grafts 30 days after starting dialysis, but graft use increased from 51% in 1986-1987 to 65% in 1990 (adjusted odds ratio [AOR], 1.67 for 1990 vs 1986-1987; 95% confidence interval [CI], 1.43-1.95; P<.001). Graft use (relative to fistula) varied by region of residence (ranging from AOR, 0.20; 95% CI, 0.14-0.28; P<.001 [New England], to AOR, 2.69; 95% CI, 2.03-3.58; P<.001 [East South Central]; both relative to the national average).

CONCLUSIONS

This national study documents large variations in the relative use of fistulas and grafts and a trend away from fistulas. The prevalence of comorbid conditions fails to explain these findings. Presentation and referral of patients early in the process of their ESRD, teaching surgeons to place fistulas, and training dialysis nurses to access fistulas may increase their use.

Measuring hospital outcomes from a buyer's perspective

This study reports lessons learned from a project to develop a flexible, generalizable, and valid method for corporate buyers of hospital care that would permit them to use available secondary data to rate the outcomes quality of all hospitals in a local market area. As hospitalization insurance has moved from coverage that applied equally to all licensed hospitals to arrangements which selected a certain preferred hospital or hospitals and rejected others, the need to determine the quality of different hospitals (as well as what they would cost the insurer or buyer) has become apparent. The product of this project was the development and demonstration of a set of rating methods that build on the strengths available in large hospital discharge data bases, such as (but by no means limited to) that of the Pennsylvania Health Care Cost Containment Council (PHC4). These measures, or others developed using these methods, deal with uncertainty in the data--its diagnosis and treatment--in a conceptually valid and practically useful way, illustrate a process that might be used in the general development of quality measures, and provide a useful critique of some other measures.

Effect of dialyzer reuse on survival of patients treated with hemodialysis

OBJECTIVE

To evaluate the impact of dialyzer reuse on the survival of US hemodialysis patients.

STUDY DESIGN AND PARTICIPANTS

Nonconcurrent cohort study of 27938 patients beginning hemodialysis in the United States in 1986 and 1987.

MAIN OUTCOME MEASURE

Patient survival.

RESULTS

Dialysis in freestanding facilities reprocessing dialyzers with the combination of peracetic and acetic acids was associated with greater mortality than treatment in facilities not reprocessing dialyzers (rate ratio [RR],1.10, 95% confidence interval [CI], 1.02-1.18; P=.02) In contrast, there was no significant difference between survival in freestanding facilities reprocessing dialyzers with either formaldehyde (RR,1.03, 95% CI, 0.96-1.10; P=.45) or glutaraldehyde (RR, 1.13, 95% CI, 0.95-1.35, P=.18) and survival in freestanding facilities not reprocessing dialyzers. Among freestanding facilities reprocessing dialyzers, use of peracetic/acetic acid was associated with a higher rate of death than use of formaldehyde (RR = 1.08, 95% CI, 1.01-1.14; P=.02). There was no statistical difference between survival in hospital-based facilities reprocessing dialyzers with either peracetic/acetic acid (RR=0.95, 95% CI, 0.85-1.06; P=.40), formaldehyde (RR=1.06, 95% CI, 0.98-1.15; P=.12), or glutaraldehyde (RR=1.09, 95% CI, 0.71-1.67; P=.70) and survival in hospital-based facilities not reprocessing dialyzers. In addition, choice of sterilant was not associated with a statistically significant difference in survival among hospital-based facilities reprocessing dialyzers.

CONCLUSIONS

Dialysis in freestanding facilities reprocessing dialyzers with peracetic/acetic acid may be associated with worse survival than dialysis in free-standing facilities not reprocessing dialyzers or in those reprocessing with formaldehyde. We were unable to determine whether these relationships arose from greater comorbidity among patients treated in facilities using peracetic/acetic acid, poor quality of dialysis procedures in these facilities, or direct toxicity of peracetic/acetic acid. These findings raise important concerns about potentially avoidable mortality among US hemodialysis patients treated in dialysis facilities reprocessing hemodialyzers.

Economics of multispecialty group practice

The number of physicians organized in multispecialty group practices is growing. Research does not suggest that such practices will achieve economies of scope. Rather, the primary economic advantage to multispecialty group practice may be its ability to coordinate the process of care in a managed care setting, a process for which relatively large practices may be necessary.

Comorbidity-adjusted complication risk: a new outcome quality measure

The measurement of inpatient complications his received substantial attention in recent years because mortality rates and other outcome measures often appear unable to discriminate superior from inferior hospital care. Complication measurement holds out the promise of being more sensitive to variations in patient care because complications occur more frequently than do mortalities, and because complications are more direct consequences of the process of care. The authors developed a new measure of complications that seeks to give insight into the patient care given by different hospitals or physicians by using commonly available data. Specifically, this measure is based on a decision-theoretic model that estimates the probability of a complication for combinations of admitting and secondary International Classification of Diseases, 9th Revision, Clinical Modification diagnoses. The measure can be evaluated at the patient level, or aggregated and risk-adjusted for the population of a given care provider (eg, physician or hospital). When applied to a set of patient-level UB- 82/92 data, this measure estimates the risk of complication for any member of a population, controlling for comorbidity, and hence is designated comorbidity-adjusted complication risk (CACR). The authors describe the development of CACR and its testing and validation using data acquired from the states of Pennsylvania, California, and Florida, as well as facility data obtained directly from hospitals. The data set includes 480,000 patients from 50 Pennsylvania hospitals, 300,000 patients from 33 Florida hospitals, 370,000 patients from 35 California hospitals, and 37,000 patients from six validation hospitals. Comorbidity-adjusted complication risk is constructed from widely available data common to most patient cases. Comorbidity-adjusted complication risk can be adjusted for its case mix, but such risk adjustment has much less effect on CACR than on other adverse outcomes such as mortality and morbidity. Comorbidity-adjusted complication risk varies widely across the hospitals in this sample, yet it is stable across time and is correlated with other known quality outcomes, including such accepted "gold standards" as hospital-documented adverse event rates and chart review determinations of complications.

Genetic screening for reproductive planning: methodological and conceptual issues in policy analysis

OBJECTIVES

This paper explores several critical assumptions and methodological issues arising in cost-effectiveness analyses of genetic screening strategies in the reproductive setting.

METHODS

Seven issues that arose in the development of a decision analysis of alternative strategies for cystic fibrosis carrier screening are discussed. Each of these issues required a choice in technique.

RESULTS

The presentations of these analyses frequently mask underlying assumptions and methodological choices. Often there is no best choice. In the case of genetic screening in the reproductive setting, these underlying issues often touch on deeply felt human values.

CONCLUSIONS

Space limitations for published papers often preclude explaining such choices in detail; yet these decisions determine the way the results should be interpreted. Those who develop these analyses need to make sure that the implications of important assumptions are understood by the clinicians who will use them. At the same time, clinicians need to enhance their understanding of what these models truly mean and how they address underlying clinical, ethical, and economic issues.

Hospital adoption of medical technology: an empirical test of alternative models

OBJECTIVE

This study examines hospital motivations to acquire new medical technology, an issue of considerable policy relevance: in this case, whether, when, and why hospitals acquire a new capital-intensive medical technology, magnetic resonance imaging equipment (MRI).

STUDY DESIGN

We review three common explanations for medical technology adoption: profit maximization, technological preeminence, and clinical excellence, and incorporate them into a composite model, controlling for regulatory differences, market structures, and organizational characteristics. All four models are then tested using Cox regressions.

DATA SOURCES

The study is based on an initial sample of 637 hospitals in the continental United States that owned or leased an MRI unit as of 31 December 1988, plus nonadopters. Due to missing data the final sample consisted of 507 hospitals. The data, drawn from two telephone surveys, are supplemented by the AHA Survey, census data, and industry and academic sources.

PRINCIPAL FINDING

Statistically, the three individual models account for roughly comparable amounts of variance in past adoption behavior. On the basis of explanatory power and parsimony, however, the technology model is "best." Although the composite model is statistically better than any of the individual models, it does not add much more explanatory power adjusting for the number of variables added.

CONCLUSIONS

The composite model identified the importance a hospital attached to being a technological leader, its clinical requirements, and the change in revenues it associated with the adoption of MRI as the major determinants of adoption behavior. We conclude that a hospital's adoption behavior is strongly linked to its strategic orientation.

Practice guidelines: can they save money? Should they?

To achieve lower medical spending with as little reduction as possible in good outcomes, practitioners and policy makers alike have been experimenting with the use of practice guidelines. These guidelines both recommend certain types of therapies and proscribe others in the treatment of patients with particular conditions. This paper explores the question of whether guidelines which do reduce total resource costs of medical care to a population will (1) be feasible and (2) produce “acceptable” results. The definition ofacceptableis part of the policy problem, so it will be left open for a while, but the question of which outcomes match with which levels of resource cost will form the positive basis for the normative judgment of “acceptability.”