Health insurance and imperfect competition in the health care market

We show that when health care providers have market power and engage in Cournot competition, a competitive upstream health insurance market results in over-insurance and over-priced health care. Even though consumers and firms anticipate the price interactions between these two markets - the price set in one market affects the demand expressed in the other - Pareto improvements are possible. The results suggest a beneficial role for Government intervention, either in the insurance or the health care market.     

Patient choice,entry, and the quality of primary care: Evidence from Swedish reforms

Policies aiming to spur quality competition among health care providers are ubiquitous, but their impact on quality is ex ante ambiguous, and credible empirical evidence is lacking in many contexts. This study contributes to the sparse literature on competition and primary care quality by examining recent competition enhancing reforms in Sweden. The reforms aimed to stimulate patient choice and entry of private providers across the country but affected markets differently depending on the initial market structure. We exploit the heterogeneous impact of the reforms in a difference‐in‐differences strategy, contrasting more and less exposed markets over the period 2005–2013. Although the reforms led to substantially more entry of new providers in more exposed markets, the effects on primary care quality were modest: We find small improvements of patients' overall satisfaction with care, but no consistently significant effects on avoidable hospitalisation rates or satisfaction with access to care. We find no evidence of economically meaningful quality reductions on any outcome measure.     

The effects of price competition and reduced subsidies for uncompensated care on hospital mortality

OBJECTIVE: To determine whether hospital mortality rates changed in New Jersey after implementation of a law that changed hospital payment from a regulated system based on hospital cost to price competition with reduced subsidies for uncompensated care and whether changes in mortality rates were affected by hospital market conditions. DATA SOURCES/STUDY SETTING: State discharge data for New Jersey and New York from 1990 to 1996. Study Design. We used an interrupted time series design to compare risk-adjusted in-hospital mortality rates between states over time. We compared the effect sizes in markets with different levels of health maintenance organization penetration and hospital market concentration and tested the sensitivity of our results to different approaches to defining hospital markets. DATA COLLECTION/EXTRACTION METHODS: The study sample included all patients under age 65 admitted to New Jersey or New York hospitals with stroke, hip fracture, pneumonia, pulmonary embolism, congestive heart failure, hip fracture, or acute myocardial infarction (AMI). PRINCIPAL FINDINGS: Mortality among patients in New Jersey improved less than in New York by 0.4 percentage points among the insured (p=.07) and 0.5 percentage points among the uninsured (p=.37). There was a relative increase in mortality for patients with AMI, congestive heart failure, and stroke, especially for uninsured patients with these conditions, but not for patients with the other four conditions we studied. Less competitive hospital markets were significantly associated with a relative decrease in mortality among insured patients. CONCLUSIONS: Market-based reforms may adversely affect mortality for some conditions but it appears the effects are not universal. Insured patients in less competitive markets fared better in the transition to price competition.     

Risk of Rehospitalization or Emergency Department Visit is Significantly Higher for Patients who Receive Their First Home Health Care Nursing Visit Later than 2 Days After Hospital Discharge

ObjectivesThis study explored the association between the timing of the first home health care nursing visits (start-of-care visit) and 30-day rehospitalization or emergency department (ED) visits among patients discharged from hospitals.DesignOur cross-sectional study used data from 1 large, urban home health care agency in the northeastern United States.Setting/ParticipantsWe analyzed data for 49,141 home health care episodes pertaining to 45,390 unique patients who were admitted to the agency following hospital discharge during 2019.MethodsWe conducted multivariate logistic regression analyses to examine the association between start-of-care delays and 30-day hospitalizations and ED visits, adjusting for patients’ age, race/ethnicity, gender, insurance type, and clinical and functional status. We defined delays in start-of-care as a first nursing home health care visit that occurred more than 2 full days after the hospital discharge date.ResultsDuring the study period, we identified 16,251 start-of-care delays (34% of home health care episodes), with 14% of episodes resulting in 30-day rehospitalization and ED visits. Delayed episodes had 12% higher odds of rehospitalization or ED visit (OR 1.12; 95% CI: 1.06–1.18) compared with episodes with timely care.Conclusions and ImplicationsThe findings suggest that timely start-of-care home health care nursing visit is associated with reduced rehospitalization and ED use among patients discharged from hospitals. With more than 6 million patients who receive home health care services across the United States, there are significant opportunities to improve timely care delivery to patients and improve clinical outcomes.     

The increased concentration of health plan markets can benefit consumers through lower hospital prices

The long-term trend of consolidation among US health plans has raised providers' concerns that the concentration of health plan markets can depress their prices. Although our study confirmed that, it also revealed a more complex picture. First, we found that 64 percent of hospitals operate in markets where health plans are not very concentrated, and only 7 percent are in markets that are dominated by a few health plans. Second, we found that in most markets, hospital market concentration exceeds health plan concentration. Third, our study confirmed earlier studies showing that greater hospital market concentration leads to higher hospital prices. Fourth, we found that hospital prices in the most concentrated health plan markets are approximately 12 percent lower than in more competitive health plan markets. Overall, our results show that more concentrated health plan markets can counteract the price-increasing effects of concentrated hospital markets, and that-contrary to conventional wisdom-increased health plan concentration benefits consumers through lower hospital prices as long as health plan markets remain competitive. Our findings also suggest that consumers would benefit from policies that maintained competition in hospital markets or that would restore competition to hospital markets that are uncompetitive.     

Improving the Home Health Acute-Care Hospitalization Quality Measure

Objectives. (1) To demonstrate average length of service (ALOS) bias in the currently used acute‐care hospitalization (ACH) home health quality measure, limiting comparability across agencies, and (2) to propose alternative ACH measures. Data Sources/Study Setting. Secondary analysis of Medicare home health service data 2004–2007; convenience sample of Medicare fee‐for‐service hospital discharges. Study Design. Cross‐sectional analysis and patient‐level simulation. Data Collection/Extraction Methods. We aggregated outcome and ALOS data from 2,347 larger Medicare‐certified home health agencies (HHAs) in the United States between 2004 and 2007, and calculated risk‐adjusted monthly ACH rates. We used multiple regression to identify agency characteristics associated with ACH. We simulated ACH during and immediately after home health care using patient and agency characteristics similar to those in the actual data, comparing the existing measure with alternative fixed‐interval measures. Principal Findings. Of agency characteristics studied, ALOS had by far the highest partial correlation with the current ACH measure (r²=0.218, p<.0001). We replicated the correlation between ACH and ALOS in the patient‐level simulation. We found no correlation between ALOS and the alternative measures. Conclusions. Alternative measures do not exhibit ALOS bias and would be appropriate for comparing HHA ACH rates with one another or over time.     

The impact of a complex care clinic in a children's hospital

Background The number of medically complex and fragile children (MCFC) cared for in children's hospitals is growing, necessitating the need for optimal care co‐ordination. The purpose of this study was to describe the impact of a nurse practitioner/paediatrician‐run complex care clinic in a tertiary care hospital on healthcare utilization, parental and primary care provider (PCP) perceptions of care and parental quality of life. Methods MCFC and their parents were recruited for ambulatory follow‐up by the hospital team to complement care provided by the PCP in this mixed methods single centre pre‐ or post‐evaluative study. Parents participated in semi‐structured interviews within 48 h of discharge; further data were collected at 6 and 12 months. Healthcare utilization was compared with equal time periods pre‐enrolment. Parental health was assessed with the SF‐36; parental perceptions of care were assessed using the Larsen's Client Satisfaction Questionnaire and the Measure of Processes of Care; PCPs completed a questionnaire at 12 months. Parental and PCP comments were elicited. Comparisons were made with baseline data. Results Twenty‐six children and their parental caregivers attended the complex care clinic. The number of days that children were admitted to hospital decreased from a median of 43 to 15 days, and outpatient visits increased from 2 to 8. Mean standardized scores on the SF‐36 increased (improved) for three domains related to mental health. A total of 24 PCPs responded to the questionnaire (92% response); most found the clinic helpful for MCFC and their families. Parents reported improvements in continuity of care, family‐centredness of care, comprehensiveness and thoroughness of care, but still experienced frustrations with access to services and miscommunication with the team. Conclusion A collaborative medical home focused on integrating community‐ and hospital‐based services for MCFC is a promising service delivery model for future controlled evaluative studies.     

Markets for hospital services in Zambia

Hospital reforms involving the introduction of measures to increase competition in hospital markets are being implemented in a range of low and middle-income countries. However, little is understood about the operation of hospital markets outside the USA and the UK. This paper assesses the degree of competition for hospital services in two hospital markets in Zambia (Copperbelt and Midlands), and the implications for prices, quality and efficiency. We found substantial differences among different hospital types in prices, costs and quality, suggesting that the hospital service market is a segmented market. The two markets differ significantly in their degree of competition, with the high cost inpatient services market in Copperbelt relatively more competitive than that in the Midlands market. The implications of these differences are discussed in terms of the potential for competition to improve hospital performance, the impact of market structure on equity of access, and how the government should address the problem of the mine hospitals.     

Effects of payment reform in more versus less competitive markets

Policymakers are increasingly interested in reducing healthcare costs and inefficiencies through innovative payment strategies. These strategies may have heterogeneous impacts across geographic areas, potentially reducing or exacerbating geographic variation in healthcare spending. In this paper, we exploit a major payment reform for home health care to examine whether reductions in reimbursement lead to differential changes in treatment intensity and provider costs depending on the level of competition in a market. Using Medicare claims, we find that while providers in more competitive markets had higher average costs in the pre-reform period, these markets experienced larger proportional reductions in treatment intensity and costs after the reform relative to less competitive markets. This led to a convergence in spending across geographic areas. We find that much of the reduction in provider costs is driven by greater exit of “high-cost” providers in more competitive markets.     

Changes in Regional Variation of Medicare Home Health Care Utilization and Service Mix for Patients Undergoing Major Orthopedic Procedures in Response to Changes in Reimbursement Policy

Background. Significant variation in regional utilization of home health (HH) services has been documented. Under Medicare's Home Health Interim and Prospective Payment Systems, reimbursement policies designed to curb expenditure growth and reduce regional variation were instituted.
Objective. To examine the impact of Medicare reimbursement policy on regional variation in HH care utilization and type of HH services delivered.
Research Design. We postulated that the reimbursement changes would reduce regional variation in HH services and that HH agencies would respond by reducing less skilled HH aide visits disproportionately compared with physical therapy or nursing visits. An interrupted time-series analysis was conducted to examine regional variation in the month-to-month probability of HH selection, and the number of and type of visits among HH users.
Subjects. A 100 percent sample of all Medicare recipients undergoing either elective joint replacement (1.6 million hospital discharges) or surgical management of hip fracture (1.2 million hospital discharges) between January 1996 and December 2001 was selected.
Results. Before the reimbursement changes, there was great variability in the probability of HH selection and the number of HH visits provided across regions. In response to the reimbursement changes, though there was little change in the variation of probability of HH utilization, there were marked reductions in the number and variation of HH visits, with greatest reductions in regions with highest baseline utilization. HH aide visits were the source of the baseline variation and accounted for the majority of the reductions in utilization after implementation.
Conclusions. The HH interim and prospective payment policies were effective in reducing regional variation in HH utilization.     

Can competition improve hospital quality of care? A difference-in-differences approach to evaluate the effect of increasing quality transparency on hospital quality

Public reporting on the quality of care is intended to guide patients to the provider with the highest quality and to stimulate a fair competition on quality. We apply a difference-in-differences design to test whether hospital quality has improved more in markets that are more competitive after the first public release of performance data in Germany in 2008. Panel data from 947 hospitals from 2006 to 2010 are used. Due to the high complexity of the treatment of stroke patients, we approximate general hospital quality by the 30-day risk-adjusted mortality rate for stroke treatment. Market structure is measured (comparatively) by the Herfindahl–Hirschman index (HHI) and by the number of hospitals in the relevant market. Predicted market shares based on exogenous variables only are used to compute the HHI to allow a causal interpretation of the reform effect. A homogenous positive effect of competition on quality of care is found. This effect is mainly driven by the response of non-profit hospitals that have a narrow range of services and private for-profit hospitals with a medium range of services. The results highlight the relevance of outcome transparency to enhance hospital quality competition.

     

The effect of hospital discharge price increases on publicly reported measures of quality

Objective

To determine if increases in hospital discharge prices are associated with improvements in clinical quality or patient experience.

Data Sources

This study used Medicare cost report data and publicly available Medicare.gov Care Compare quality measures for approximately 3000 short-term care general hospitals between 2011 and 2018.

Study Design

We separately regressed quality measure scores on a lag of case mix adjusted discharge price, hospital fixed effects, and year indicators. Clinical quality measures included 30-day readmission rates for acute myocardial infarction, chronic obstructive pulmonary disease, heart failure, hip and knee replacement, and pneumonia; risk-adjusted 30-day mortality rates for acute myocardial infarction, chronic obstructive pulmonary disease, heart failure, and stroke; and 90-day complication rate for hip and knee replacement. Patient experience measures included the summary star rating and 10 domain measures reported through the Hospital Consumer Assessment of Healthcare Providers and Systems survey. We tested for heterogeneous effects by hospital ownership, number of beds, the commercial share of overall discharges, and market concentration.

Data Collection/Extraction Methods

We linked hospitals identified in Medicare cost reports to Medicare.gov Care Compare quality measures. We excluded hospitals for which we could not identify a discharge price or that had an unrealistic price.

Principal Findings

There was no positive association between lagged discharge price and any clinical quality measure. For patient experience measures, a 2% increase in discharge price was not associated with overall patient satisfaction but was associated with small, statistically significant increases ranging from 0.01% to 0.02% (relative to mean scores) for seven of ten domain measures. There was a positive association for five of ten patient experience measures in competitive markets and one measure in both moderately concentrated and heavily concentrated markets.

Conclusions

We found no evidence that hospitals use higher prices to make investments in clinical quality; patient experience improved, but only negligibly.     

Do competition and managed care improve quality?

In recent years, the US health care industry has experienced a rapid growth of managed care, formation of networks, and an integration of hospitals. This paper provides new insights about the quality consequences of this dynamic in US hospital markets. I empirically investigate the impact of managed care and hospital competition on quality using in-hospital complications as quality measures. I use random and fixed effects, and instrumental variable fixed effect models using hospital panel data from up to 16 states in the 1992-1997 period. The paper has two important findings: First, higher managed care penetration increases the quality, when inappropriate utilization, wound infections and adverse/iatrogenic complications are used as quality indicators. For other complication categories, coefficient estimates are statistically insignificant. These findings do not support the straightforward view that increases in managed care penetration are associated with decreases in quality. Second, both higher hospital market share and market concentration are associated with lower quality of care. Hospital mergers have undesirable quality consequences. Appropriate antitrust policies towards mergers should consider not only price and cost but also quality impacts.     

Quality competition in local hospital markets: some econometric evidence from the period 1982-1988.

This study examines whether American hospitals continued to engage in non-price or quality competition over the recent past as health care markets underwent fundamental structural changes and the economic incentives facing hospital managers were correspondingly altered. It also investigates the degree to which such rivalrous behavior contributes to losses in economic welfare. An econometric model of quality competition is specified that tests, among other things, for the effect of spending by the hospital to enhance the quality of output on annual changes in its share of the local (inpatient) market as well as the effects of competitive conditions in the local market on the annual sum spent on quality enhancement. The model is estimated with panel data on 195 acute care hospitals in the State of Florida for the years 1982-1988. The results suggest that quality competitive behavior continued unabated over this period and that it was stimulated as much by the growth in physician supply and alternative delivery mechanisms as it was by other competing hospitals in the local market. Furthermore, the results show that quality competition yields some inefficiency or waste, but much of it also meets the test of the market.     

Incidence of four adverse outcomes in the elderly population: implications for home care policy and research

The cost-effective allocation of home care resources requires knowledge of the incidence of institutionalization, hospitalization, functional impairment, and mortality. We therefore assembled a database containing 176 rates abstracted from 71 longitudinal studies published between 1985 and 1998 that examine one or more of these outcomes in the 65 and over population in the United States. Where possible we calculate median values for the estimated annual rate of each outcome for different types of studies-nationally representative, sub-national probability, and convenience sample-and specific subgroups-community residents, hospital admissions and discharges, and nursing home admissions and discharges. We find comparatively low rates of institutionalization and mortality, relatively high rates of hospitalization and functional impairment, similar rates for national and sub-national probability samples, and rates from convenience samples, which greatly exceed probability-based rates. While the rates for institutionalization, hospitalization and mortality are quite stable, the rates for functional impairment display considerably more variability. We conclude by discussing the implications of our findings for researchers and policymakers.     

Physician visits, hospitalizations, and socioeconomic status: ambulatory care sensitive conditions in a canadian setting

OBJECTIVE: To determine whether rates of physician visits for ambulatory care sensitive (ACS) conditions are lower for people of low-socioeconomic status than of high-socioeconomic status in an urban population with universal health care coverage. DATA SOURCES/STUDY SETTING: Physician claims and hospital discharge abstracts from fiscal years 1998 to 2001 for urban residents of Manitoba, Canada. The 1996 Canadian Census public use database provided neighborhood household income information. The study included all continuously enrolled urban residents in the Manitoba Health Services Insurance Plan. STUDY DESIGN: Twelve ACS conditions definable using 3-digit ICD-9-CM codes permitted cross-sectional and longitudinal comparison of ambulatory visits and hospitalizations. Neighborhood household income data provided a measure of socioeconomic status. DATA COLLECTION/EXTRACTION METHODS: Files were extracted from administrative data housed at the Manitoba Centre for Health Policy. PRINCIPAL FINDINGS: All conditions showed a socioeconomic gradient with residents of the lowest income neighborhoods having both more visits and more hospitalizations than their counterparts in higher income areas. Six of nine conditions with a sufficient N showed individuals living in the lowest income neighborhoods to have significantly more ambulatory visits before hospitalization for an ACS condition than did those in the most affluent neighborhoods. Many conditions showed a gradient in rate of hospitalization even after controlling for the number of ambulatory care visits. CONCLUSIONS: In the Canadian universal health care plan, the poor have reasonable access to ambulatory care for ACS conditions. Ambulatory care may be more effective in preventing hospitalizations among relatively affluent individuals than among the less well off.     

Societal costs of home and hospital end‐of‐life care for palliative care patients in Ontario,Canada

In Canada, health system restructuring has led to a greater focus on home‐based palliative care as an alternative to institutionalised palliative care. However, little is known about the effect of this change on end‐of‐life care costs and the extent to which the financial burden of care has shifted from the acute care public sector to families. The purpose of this study was to assess the societal costs of end‐of‐life care associated with two places of death (hospital and home) using a prospective cohort design in a home‐based palliative care programme. Societal cost includes all costs incurred during the course of palliative care irrespective of payer (e.g. health system, out‐of‐pocket, informal care‐giving costs, etc.). Primary caregivers of terminal cancer patients were recruited from the Temmy Latner Centre for Palliative Care in Toronto, Canada. Demographic, service utilisation, care‐giving time, health and functional status, and death data were collected by telephone interviews with primary caregivers over the course of patients' palliative trajectory. Logistic regression was conducted to model an individual's propensity for home death. Total societal costs of end‐of‐life care and component costs were compared between home and hospital death using propensity score stratification. Costs were presented in 2012 Canadian dollars ($1.00CDN = $1.00USD). The estimated total societal cost of end‐of‐life care was $34,197.73 per patient over the entire palliative trajectory (4 months on average). Results showed no significant difference (P > 0.05) in total societal costs between home and hospital death patients. Higher hospitalisation costs for hospital death patients were replaced by higher unpaid caregiver time and outpatient service costs for home death patients. Thus, from a societal cost perspective, alternative sites of death, while not associated with a significant change in total societal cost of end‐of‐life care, resulted in changes in the distribution of costs borne by different stakeholders.     

Quality improvement and its impact on the use and equality of outpatient health services in India

This paper examines the impact of quality improvements in conjunction with user fees on the utilization and equality of outpatient services at a range of public sector health facilities in India. Project impact on outpatient visits was estimated via the difference-in-difference method using pooled time series visit data from project and control facilities. The results indicate that the quality improvements significantly increased visits at all facility types. The project effect was largest at primary health center (PHC) and community health center (CHC), followed by district hospital (DH) and female district hospital (FDH). Pro-rich inequalities in outpatient visits increased at DHs and FDHs while at CHCs and PHCs the distribution remained equitable. This suggests that quality improvements at public sector health facilities can increase utilization of outpatient services in the presence of nominal user fees, but can also promote greater inequality favoring the better-off. At the referral hospital level, quality improvements should be made in conjuction with programs which encourage utilization by the poor. In contrast, the benefit of quality improvements at PHCs and CHCs is equitably distributed.