Integrating network theory into the study of integrated healthcare.

Healthcare policy in the United States (U.S.) has focused on promoting integrated healthcare to combat fragmentation (e.g., 1993 Health Security Act, 2010 Affordable Care Act). Researchers have responded by studying coordination and developing typologies of integration. Yet, after three decades, research evidence for the benefits of coordination and integration are lacking. We argue that research efforts need to refocus in three ways: (1) use social networks to study relational coordination and integrated healthcare, (2) analyze integrated healthcare at three levels of analysis (micro, meso, macro), and (3) focus on clinical integration as the most proximate impact on patient outcomes. We use examples to illustrate the utility of such refocusing and present avenues for future research.

Hospital purchasing alliances: Ten years after.

BACKGROUND: Most hospitals outsource supply procurement to purchasing alliances, or group purchasing organizations (GPOs). Despite their early 20th century origin, we lack both national and trend data on alliance utilization, services, and performance. The topic is important as alliances help hospitals control costs, enjoy tailwinds from affiliated regional/local alliances, and face headwinds from hospital self-contracting and criticism of certain business practices. PURPOSE: We compare the utilization, services, and performance of alliances in 2004 and 2014. APPROACH: We analyze alliances using two comparable surveys of hospitals. We use significance tests to assess changes in alliance utilization, services, and performance (e.g., cost savings). We also assess the use of regional/local alliances affiliated with national GPOs. RESULTS: Purchasing through national alliances has somewhat diminished. Over 10 years, hospitals have diversified GPO memberships to include regional/local alliances (many affiliated with their national GPO) and engaged in self-contracting. At the same time, hospitals have increased purchases of many categories of supplies/services through national GPOs and endorsed their value-added functions and increasingly important role. Hospitals report greater satisfaction with several GPO functions; performance on most dimensions has not changed. CONCLUSIONS: National alliances still play important roles that hospitals find valuable. PRACTICE IMPLICATIONS: Purchasing alliances continue to play an important role in helping hospitals with both cost savings and new services. Their growing complexity, along with growing use of self-contracting, poses managerial challenges for hospital purchasing staff that may require greater hospital investment.

How different governance models may impact physician-hospital alignment.

BACKGROUND: Hospitals utilize three ideal type models for governing relationships with their physicians: the traditional medical staff, strategic alliances, and employment. Little is known about how these models impact physician alignment. PURPOSE: The study compares the level of physician-hospital alignment across the three models. APPROACH: We used survey data from 1,895 physicians in all three models across 34 hospitals in eight systems to measure several dimensions of alignment. We used logistic equations to predict survey nonresponse and differential physician selection into the alliance and employment models. Controlling for these selection effects, we then used multiple regression to estimate the effects of alliance and employment models on alignment. RESULTS: Physicians in employment models express greater alignment with their hospital on several dimensions, compared to physicians in alliances and the traditional medical staff. There were no differences in physician alignment between the latter two models. CONCLUSIONS: Employment models promote greater alignment on some (but not all) dimensions, controlling for physician selection. The impact of employment on alignment is not large, however. PRACTICE IMPLICATIONS: Hospitals and accountable care organizations that rely on employment may achieve higher physician alignment compared to the other two models. It is not clear that the gain in alignment is worth the cost of employment. Given the small impact of employment on alignment, it is also clear that they are not identical. Hospitals may need to go beyond structural models of integration to achieve alignment with their physicians.

Electronic Health Record Adoption and Nurse Reports of Usability and Quality of Care: The Role of Work Environment.

BACKGROUND: Despite evidence suggesting higher quality and safer care in hospitals with comprehensive electronic health record (EHR) systems, factors related to advanced system usability remain largely unknown, particularly among nurses. Little empirical research has examined sociotechnical factors, such as the work environment, that may shape the relationship between advanced EHR adoption and quality of care. OBJECTIVE: The objective of this study was to examine the independent and joint effects of comprehensive EHR adoption and the hospital work environment on nurse reports of EHR usability and nurse-reported quality of care and safety. METHODS: This study was a secondary analysis of nurse and hospital survey data. Unadjusted and adjusted logistic regression models were used to assess the relationship between EHR adoption level, work environment, and a set of EHR usability and quality/safety outcomes. The sample included 12,377 nurses working in 353 hospitals. RESULTS: In fully adjusted models, comprehensive EHR adoption was associated with lower odds of nurses reporting poor usability outcomes, such as dissatisfaction with the system (odds ratio [OR]: 0.75; 95% confidence interval [CI]: 0.61-0.92). The work environment was associated with all usability outcomes with nurses in better environments being less likely to report negatively. Comprehensive EHRs (OR: 0.83; 95% CI: 0.71-0.96) and better work environments (OR: 0.47; 95% CI: 0.42-0.52) were associated with lower odds of nurses reporting fair/poor quality of care, while poor patient safety grade was associated with the work environment (OR: 0.50; 95% CI: 0.46-0.54), but not EHR adoption level. CONCLUSION: Our findings suggest that adoption of a comprehensive EHR is associated with more positive usability ratings and higher quality of care. We also found that-independent of EHR adoption level-the hospital work environment plays a significant role in how nurses evaluate EHR usability and whether EHRs have their intended effects on improving quality and safety of care.

Magnet hospital recognition in hospital systems over time.

BACKGROUND: Magnet hospitals are recognized for nursing excellence and high-value patient outcomes, yet little is known about which and when hospitals pursue Magnet recognition. Concurrently, hospital systems are becoming a more prominent feature of the U.S. health care landscape. PURPOSE: The aim of the study was to examine Magnet adoption among hospital systems over time. APPROACH: Using American Hospital Association surveys (1998-2012), we characterized the proportion of Magnet hospitals belonging to systems. We used hospital level fixed-effects regressions to capture changes in a given system hospital's Magnet status over time in relation to a variety of conditions, including prior Magnet adoption by system affiliates and nonaffiliates in local and geographically distant markets and whether these relationships varied by degree of system centralization. RESULTS: The proportion of Magnet hospitals belonging to a system is increasing. Prior Magnet adoption by a hospital within the local market was associated with an increased likelihood of a given system hospital becoming Magnet, but the effect was larger if there was prior adoption by affiliates (7.4% higher likelihood) versus nonaffiliates (2.7% higher likelihood). Prior adoption by affiliates and nonaffiliates in geographically distant markets had a lesser effect. Hospitals belonging to centralized systems were more reactive to Magnet adoption of nonaffiliate hospitals as compared with those in decentralized systems. CONCLUSIONS: Hospital systems take an organizational perspective toward Magnet adoption, whereby more system affiliates achieve Magnet recognition over time. PRACTICE IMPLICATIONS: The findings are relevant to health care and nursing administrators and policymakers interested in the diffusion of an empirically supported organizational innovation associated with quality outcomes, particularly in a time of increasing hospital consolidation and system expansion. We identify factors associated with Magnet adoption across system hospitals and demonstrate the importance of considering diffusion of organizational innovations in relation to system centralization. We suggest that decentralized system hospitals may be missing potential benefits of such organizational innovations.

Transformation of the Health Care Industry: Curb Your Enthusiasm?

Policy Points: Policymakers seek to transform the US health care system along two dimensions simultaneously: alternative payment models and new models of provider organization. This transformation is supposed to transfer risk to providers and make them more accountable for health care costs and quality. The transformation in payment and provider organization is neither happening quickly nor shifting risk to providers. The impact on health care cost and quality is also weak or nonexistent. In the longer run, decision makers should be prepared to accept the limits on transformation and carefully consider whether to advocate solutions not yet supported by evidence. CONTEXT: There is a widespread belief that the US health care system needs to move "from volume to value." This transformation to value (eg, quality divided by cost) is conceptualized as a two-fold movement: (1) from fee-for-service to alternative payment models; and (2) from solo practice and freestanding hospitals to medical homes, accountable care organizations, large hospital systems, and organized clinics like Kaiser Permanente. METHODS: We evaluate whether this transformation is happening quickly, shifting risk to providers, lowering costs, and improving quality. We draw on recent evidence on provider payment and organization and their effects on cost and quality. FINDINGS: Data suggest a low prevalence of provider risk payment models and slow movement toward new payment and organizational models. Evidence suggests the impact of both on cost and quality is weak. CONCLUSIONS: We need to be patient in expecting system improvements from ongoing changes in provider payment and organization. We also may need to look for improvements in other areas of the economy or to accept and accommodate prospects of modest improvements over time.

Physician preference items: what factors matter to surgeons? Does the vendor matter?

BACKGROUND: The USA devotes roughly $200 billion (6%) of annual national health expenditures to medical devices. A substantial proportion of this spending occurs during orthopedic (eg, hip and knee) arthroplasties - two high-volume hospital procedures. The implants used in these procedures are commonly known as physician preference items (PPIs), reflecting the physician's choice of implant and vendor used. The foundations for this preference are not entirely clear. This study examines what implant and vendor characteristics, as evaluated by orthopedic surgeons, are associated with their preference. It also examines other factors (eg, financial relationships and vendor tenure) that may contribute to implant preference. METHODS: We surveyed all practicing orthopedic surgeons performing 12 or more implant procedures annually in the Commonwealth of Pennsylvania. The survey identified each surgeon's preferred hip/knee vendor as well as the factors that surgeons state they use in selecting that primary vendor. We compared the surgeons' evaluation of multiple characteristics of implants and vendors using analysis of variance techniques, controlling for surgeon characteristics, hospital characteristics, and surgeon-vendor ties that might influence these evaluations. RESULTS: Physician's preference is heavily influenced by technology/implant factors and sales/service factors. Other considerations such as vendor reputation, financial relationships with the vendor, and implant cost seem less important. These findings hold regardless of implant type (hip vs knee) and specific vendor. CONCLUSION: Our results suggest that there is a great deal of consistency in the factors that surgeons state they use to evaluate PPIs such as hip and knee implants. The findings offer an empirically derived definition of PPIs that is consistent with the product and nonproduct strategies pursued by medical device companies. PPIs are products that surgeons rate favorably on the twin dimensions of technology and sales/service.

Achieving Kaiser Permanente quality.

BACKGROUND: The Kaiser Permanente model of integrated health delivery is highly regarded for high-quality and efficient health care. Efforts to reproduce Kaiser's success have mostly failed. One factor that has received little attention and that could explain Kaiser's advantage is its commitment to and investment in nursing as a key component of organizational culture and patient-centered care. PURPOSE: The aim of this study was to investigate the role of Kaiser's nursing organization in promoting quality of care. METHODOLOGY: This was a cross-sectional analysis of linked secondary data from multiple sources, including a detailed survey of nurses, for 564 adult, general acute care hospitals from California, Florida, Pennsylvania, and New Jersey in 2006-2007. We used logistic regression models to examine whether patient (mortality and failure-to-rescue) and nurse (burnout, job satisfaction, and intent-to-leave) outcomes in Kaiser hospitals were better than in non-Kaiser hospitals. We then assessed whether differences in nursing explained outcomes differences between Kaiser and other hospitals. Finally, we examined whether Kaiser hospitals compared favorably with hospitals known for having excellent nurse work environments-Magnet hospitals. FINDINGS: Patient and nurse outcomes in Kaiser hospitals were significantly better compared with non-Magnet hospitals. Kaiser hospitals had significantly better nurse work environments, staffing levels, and more nurses with bachelor's degrees. Differences in nursing explained a significant proportion of the Kaiser outcomes advantage. Kaiser hospital outcomes were comparable with Magnet hospitals, where better outcomes have been largely explained by differences in nursing. IMPLICATIONS: An important element in Kaiser's success is its investment in professional nursing, which may not be evident to systems seeking to achieve Kaiser's advantage. Our results suggest that a possible strategy for achieving outcomes like Kaiser may be for hospitals to consider Magnet designation, a proven and cost-effective strategy to improve process of care through investments in nursing.

Do hospitals cross-subsidize?

Despite its salience as a regulatory tool to ensure the delivery of unprofitable medical services, cross-subsidization of services within hospital systems has been notoriously difficult to detect and quantify. We use repeated shocks to a profitable service in the market for hospital-based medical care to test for cross-subsidization of unprofitable services. Using patient-level data from general short-term hospitals in Arizona and Colorado before and after entry by cardiac specialty hospitals, we study how incumbent hospitals adjusted their provision of three uncontested services that are widely considered to be unprofitable. We estimate that the hospitals most exposed to entry reduced their provision of psychiatric, substance-abuse, and trauma care services at a rate of about one uncontested-service admission for every four cardiac admissions they stood to lose. Although entry by single-specialty hospitals may adversely affect the provision of unprofitable uncontested services, these findings warrant further evaluation of service-line cross-subsidization as a means to finance them.

Evolving reimbursement and pricing policies for devices in Europe and the United States should encourage greater value.

Rising health care costs are an international concern, particularly in the United States, where spending on health care outpaces that of other industrialized countries. Consequently, there is growing desire in the United States and Europe to take a more value-based approach to health care, particularly with respect to the adoption and use of new health technology. This article examines medical device reimbursement and pricing policies in the United States and Europe, with a particular focus on value. Compared to the United States, Europe more formally and consistently considers value to determine which technologies to cover and at what price, especially for complex, costly devices. Both the United States and Europe have introduced policies to provide temporary coverage and reimbursement for promising technologies while additional evidence of value is generated. But additional actions are needed in both the United States and Europe to ensure wise value-based reimbursement and pricing policies for all devices, including the generation of better pre- and postmarket evidence and the development of new methods to evaluate value and link evidence of value to reimbursement.

Accountable care organizations may have difficulty avoiding the failures of integrated delivery networks of the 1990s.

Accountable care organizations are intended to improve the quality and lower the cost of health care through several mechanisms, such as disease management programs, care coordination, and aligning financial incentives for hospitals and physicians. Providers employed several of these mechanisms in forming the integrated delivery networks of the 1990s. The networks failed, however, because of heavy financial losses stemming from hospitals' purchase of physician practices and their inability to align incentives, garner capitated contracts, and develop the infrastructure to manage risk. Although the current mechanisms underlying accountable care organizations continue to evolve, whether and how they will have an impact on quality and costs remains open to question. Care coordination and information technology are proving more complicated and expensive to implement than anticipated, providers may lack the ability to implement these mechanisms, and primary care providers are in short supply. As in the 1990s, success depends on targeting specific populations, such as people with multiple chronic conditions who need and may benefit from coordinated care.

Accountable care organizations: back to the future?

Accountable Care Organizations (ACOs) are networks of providers that assume risk for the quality and total cost of the care they deliver. Public policymakers and private insurers hope that ACOs will achieve the elusive "triple aim" of improving quality of care, improving population health, and reducing costs. The model is still evolving, but the premise is that ACOs will accomplish these aims by coordinating care, managing chronic disease, and aligning financial incentives for hospitals and physicians. If this sounds familiar, it may be because the integrated care networks of the 1990s tried some of the same things, and mostly failed in their attempts. This Issue Brief summarizes the similarities and differences between the new ACOs and the integrated delivery networks of the 1990s, and presents the authors' analysis of the likely success of these new organizations in affecting the costs and quality of health care.

Strategic response by providers to specialty hospitals, ambulatory surgery centers, and retail clinics.

Radical innovation and disruptive technologies are frequently heralded as a solution to delivering higher quality, lower cost health care. According to the literature on disruption, local hospitals and physicians (incumbent providers) may be unable to competitively respond to such "creative destruction" and alter their business models for a host of reasons, thus threatening their future survival. However, strategic management theory and research suggest that, under certain conditions, incumbent providers may be able to weather the discontinuities posed by the disrupters. This article analyzes 3 disruptive innovations in service delivery: single-specialty hospitals, ambulatory surgical centers, and retail clinics. We first discuss the features of these innovations to assess how disruptive they are. We then draw on the literature on strategic adaptation to suggest how incumbents develop competitive responses to these disruptive innovations that assure their continued survival. These arguments are then evaluated in a field study of several urban markets based on interviews with both incumbents and entrants. The interviews indicate that entrants have failed to disrupt incumbent providers primarily as a result of strategies pursued by the incumbents. The findings cast doubt on the prospects for these disruptive innovations to transform health care.

Implant vendors and hospitals: competing influences over product choice by orthopedic surgeons.

BACKGROUND: Vendors of hip and knee implants court orthopedic surgeons to adopt their products. Hospitals, which have to pay for these products, now court the same surgeons to help reduce the number of vendors and contain implant costs. PURPOSES: This study measures the surgeon's perceived alignment of interests with both vendors and hospitals and gauges surgeons' exposure and receptivity to hospital cost-containment efforts. METHODOLOGY/APPROACH: We surveyed all practicing orthopedists performing 12 or more implant procedures annually in Pennsylvania. The survey identified the surgeon's preferred vendor, tenure with that vendor, use of the vendor during residency training, receipt of financial payments from the vendor, alignment of interests with both vendor and hospital stakeholders, and exposure and receptivity to hospital cost-containment efforts. FINDINGS: Surgeons have long-standing relationships with implant vendors, but only a small proportion receive financial payments. Surgeons align most closely with the vendor's sales representative and least closely with the hospital's purchasing manager. Paradoxically, surgeons support hospital efforts to limit the number of vendors but report that their own choice of vendor is not constrained. The major drivers of surgeons' alignment and stance toward cost containment are their tenure with and receipt of financial payments from the vendor. PRACTICE IMPLICATIONS: Hospitals face a competitive disadvantage in capturing the attention of orthopedists, compared with implant vendors. The vendors' advantage stems from historical, financial, and service benefits offered to surgeons. Hospital executives now seek to offer comparable benefits to surgeons.

Market entry and exit by biotech and device companies funded by venture capital.

Start-up companies in the biotechnology and medical device sectors are important sources of health care innovation. This paper describes the role of venture capital in supporting these companies and charts the growth in venture capital financial support. The paper then uses longitudinal data to describe market entry and exit by these companies. Similar factors are associated with entry and exit in the two sectors. Entries and exits in one sector also appear to influence entry in the other. These findings have important implications for developing innovative technologies and ensuring competitive markets in the life sciences.

Price transparency for medical devices.

Hospital buyers of medical devices contract with manufacturers with market power that sell differentiated products. The medical staff strongly influences hospitals' choice of devices. Sellers have sought to limit disclosure of transaction prices. Policy-makers have proposed legislation mandating disclosure, in the interest of greater transparency. We discuss why a manufacturer might charge different prices to different hospitals, the role that secrecy plays, and the consequences of secrecy versus disclosure. We argue that hospital-physician relationships are key to understanding what manufacturers gain from price discrimination. Price disclosure can catalyze a restructuring of those relationships, which, in turn, can improve hospital bargaining.

Hospital purchasing alliances: utilization, services, and performance.

BACKGROUND: Hospital purchasing alliances are voluntary consortia of hospitals that aggregate their contractual purchases of supplies from manufacturers. Purchasing groups thus represent pooling alliances rather than trading alliances (e.g., joint ventures). Pooling alliances have been discussed in the health care management literature for years but have never received much empirical investigation. They represent a potentially important source of economies of scale for hospitals. PURPOSES: This study represents the first national survey of hospital purchasing alliances. The survey analyzes alliance utilization, services, and performance from the perspective of the hospital executive in charge of materials management. This study extends research on pooling alliances, develops national benchmark statistics, and answers important issues raised recently about pooling alliances. METHODOLOGY/APPROACH: The investigators surveyed hospital members in the seven largest purchasing alliances (that account for 93% of all hospital purchases) and individual members of the Association of Healthcare Resource & Materials Management. The concatenated database yielded an approximate population of all hospital materials managers numbering 5,014. FINDINGS: Hospital purchasing group alliances succeed in reducing health care costs by lowering product prices, particularly for commodity and pharmaceutical items. Alliances also reduce transaction costs through commonly negotiated contracts and increase hospital revenues via rebates and dividends. Thus, alliances may achieve purchasing economies of scale. Hospitals report additional value as evidenced by their long tenure and the large share of purchases routed through the alliances. Alliances appear to be less successful, however, in providing other services of importance and value to hospitals and in mediating the purchase of expensive physician preference items. There is little evidence that alliances exclude new innovative firms from the marketplace or restrict hospital access to desired products. PRACTICE IMPLICATIONS: Pooling alliances appear successful in purchasing commodity and pharmaceutical products. Pooling alliances face the same issues as trading alliances in their efforts to work with physicians and the supply items they prefer.

The evolving role of third parties in the hospital physician relationship.

Hospital-physician relationships (HPRs) are a key concern for both parties. Hospital interest has been driven historically by the desire for the physician's clinical business, the need to combat managed care, and now the threats posed by single specialty hospitals, medical device vendors, and consumerism. Physician interest has been driven by fears of managed care and desires for new sources of revenue. The dyadic relationships between hospitals and physicians are thus motivated and influenced by the role of third parties. This article analyzes the history of HPRs and the succession of third parties. The analysis illustrates that the role of third parties has shifted from a unifying one to one that divides hospitals and physicians. This shift presents both opportunities and problems.