Effects of competition and bundled payment on the performance of hip replacement surgery in Stockholm, Sweden: results from a quasi-experimental study.

OBJECTIVE: To evaluate the effects of competition and a bundled payment model on the performance of hip replacement surgery. DESIGN: A quasi-experimental study where a difference-in-differences analytical framework is applied to analyse routinely collected patient-level data from multiple registers. SETTING: Hospitals providing hip replacement surgery in Sweden. PARTICIPANTS: The study included patients who underwent elective primary total hip replacement due to osteoarthritis from 2005 to 2012. The final study sample consisted of 85 275 hip replacement surgeries, where the exposure group consisted of 14 570 surgeries (n=6380 prereform and n=8190 postreform) and the control group consisted of 70 705 surgeries (n=32 799 prereform and n=37 906 postreform). INTERVENTION: A reform involving patient choice, free entry of new providers and a bundled payment model for hip replacement surgery, which came into force in 2009 in Region Stockholm, Sweden. OUTCOME MEASURES: Performance is measured as length of stay of the surgical admission, adverse event rate within 90 days following surgery and patient satisfaction 1 year postsurgery. RESULTS: The reform successfully improved the adverse event rate (1.6 percentage reduction, p<0.05). Length of stay decreased less in the more competitive market than in the control group (0.7 days lower, p<0.01). These effects were mainly driven by university and central hospitals. No effects of the reform on patient satisfaction were found (no significance). CONCLUSIONS: The study concludes that the incentives of the reform focusing on avoidance of adverse events have a predictable impact. Since the payment for providers is fixed per case, the impact on resource use is limited. Our findings contribute to the general knowledge about the effects of financial incentives and market-oriented reforms.

The effects of competition and bundled payment on patient reported outcome measures after hip replacement surgery.

BACKGROUND: Competition-promoting reforms and economic incentives are increasingly being introduced worldwide to improve the performance of healthcare delivery. This study considers such a reform which was initiated in 2009 for elective hip replacement surgery in Stockholm, Sweden. The reform involved patient choice of provider, free establishment of new providers and a bundled payment model. The study aimed to examine its effects on hip replacement surgery quality as captured by patient reported outcome measures (PROMs) of health gain (as indicated by the EQ-5D index and a visual analogue scale (VAS)), pain reduction (VAS) and patient satisfaction (VAS) one and six years after the surgery. METHODS: Using patient-level data collected from multiple national registers, we applied a quasi-experimental research design. Data were collected for elective primary total hip replacements that were carried out between 2008 and 2012, and contain information on patient demography, the surgery and PROMs at baseline and at one- and six-years follow-up. In total, 36,627 observations were included in the analysis. First, entropy balancing was applied in order to reduce differences in observable characteristics between treatment groups. Second, difference-in-difference analyses were conducted to eliminate unobserved time-invariant differences between treatment groups and to estimate the causal treatment effects. RESULTS: The entropy balancing was successful in creating balance in all covariates between treatment groups. No significant effects of the reform were found on any of the included PROMs at one- and six-years follow-up. The sensitivity analyses showed that the results were robust. CONCLUSIONS: Competition and bundled payment had no effects on the quality of hip replacement surgery as captured by post-surgery PROMs of health gain, pain reduction and patient satisfaction. The study provides important insights to the limited knowledge on the effects of competition and economic incentives on PROMs.

The productivity development of total hip arthroplasty in Sweden: a multiple registry-based longitudinal study using the Malmquist Productivity Index.

OBJECTIVE: The increasing demand for total hip arthroplasty (THA) combined with limited resources in healthcare puts pressure on decision-makers in orthopaedics to provide the procedure at minimum costs and with good outcomes while maintaining or increasing access. The objective of this study was to analyse the development in productivity between 2005 and 2012 in the provision of THA. DESIGN: The study was a multiple registry-based longitudinal study. SETTING AND PARTICIPANTS: The study was conducted among 65 orthopaedic departments providing THA in Sweden from 2005 to 2012. OUTCOME MEASURES: The development in productivity was measured by Malmquist Productivity Index by relating department level total costs of THA to the number of non-cemented, hybrid and cemented THAs. We also break down the productivity change into changes in efficiency and technology. RESULTS: Productivity increased significantly in three periods (between 1.6% and 27.0%) and declined significantly in four periods (between 0.8% and 12.1%). Technology improved significantly in three periods (between 3.2% and 16.9%) and deteriorated significantly in two periods (between 10.2% and 12.6%). Significant progress in efficiency was achieved in two periods (ranging from 2.6% to 8.7%), whereas a significant regress was attained in one period (3.9%). For the time span as a whole, an average increase in productivity of 1.4% per year was found, where changes in efficiency contributed more to the improvement (1.1%) than did technical change (0.2%). CONCLUSIONS: We found a slight improvement of productivity over time in the provision of THA, which was mainly driven by changes in efficiency. Further research is, however, needed where differences in quality of care and patient case mix between departments are taken into account.

Productivity growth, case mix and optimal size of hospitals. A 16-year study of the Norwegian hospital sector.

BACKGROUND AND OBJECTIVES: This paper analyses productivity growth in the Norwegian hospital sector over a period of 16 years, 1999-2014. This period was characterized by a large ownership reform with subsequent hospital reorganizations and mergers. We describe how technological change, technical productivity, scale efficiency and the estimated optimal size of hospitals have evolved during this period. MATERIAL AND METHODS: Hospital admissions were grouped into diagnosis-related groups using a fixed-grouper logic. Four composite outputs were defined and inputs were measured as operating costs. Productivity and efficiency were estimated with bootstrapped data envelopment analyses. RESULTS: Mean productivity increased by 24.6% points from 1999 to 2014, an average annual change of 1.5%. There was a substantial growth in productivity and hospital size following the ownership reform. After the reform (2003-2014), average annual growth was <0.5%. There was no evidence of technical change. Estimated optimal size was smaller than the actual size of most hospitals, yet scale efficiency was high even after hospital mergers. However, the later hospital mergers have not been followed by similar productivity growth as around time of the reform. CONCLUSIONS: This study addresses the issues of both cross-sectional and longitudinal comparability of case mix between hospitals, and thus provides a framework for future studies. The study adds to the discussion on optimal hospital size.

Assessing physician productivity following Norwegian hospital reform: A panel and data envelopment analysis.

BACKGROUND: Although health care reforms may improve efficiency at the macro level, less is known regarding their effects on the utilization of health care personnel. Following the 2002 Norwegian hospital reform, we studied the productivity of the physician workforce and the effect of personnel mix on this measure in all nineteen Norwegian hospitals from 2001 to 2013. METHODS: We used panel analysis and non-parametric data envelopment analysis (DEA) to study physician productivity defined as patient treatments per full-time equivalent (FTE) physician. Resource variables were FTE and salary costs of physicians, nurses, secretaries, and other personnel. Patient metrics were number of patients treated by hospitalization, daycare, and outpatient treatments, as well as corresponding diagnosis-related group (DRG) scores accounting for differences in patient mix. Research publications and the fraction of residents/FTE physicians were used as proxies for research and physician training. RESULTS: The number of patients treated increased by 47% and the DRG scores by 35%, but there were no significant increases in any of the activity measures per FTE physician. Total DRG per FTE physician declined by 6% (p < 0.05). In the panel analysis, more nurses and secretaries per FTE physician correlated positively with physician productivity, whereas physician salary was neutral. In 2013, there was a 12%-80% difference between the hospitals with the highest and lowest physician productivity in the differing treatment modalities. In the DEA, cost efficiency did not change in the study period, but allocative efficiency decreased significantly. Bootstrapped estimates indicated that the use of physicians was too high and the use of auxiliary nurses and secretaries was too low. CONCLUSIONS: Our measures of physician productivity declined from 2001 to 2013. More support staff was a significant variable for predicting physician productivity. Personnel mix developments in the study period were unfavorable with respect to physician productivity.

A Window on Geographic Variation in Health Care: Insights from EuroHOPE.

The aim of EuroHOPE was to provide new evidence on the performance of healthcare systems, using a disease-based approach, linkable patient-level data and internationally standardized methods. This paper summarizes its main results. In the seven EuroHOPE countries, the Acute Myocardial Infarction (AMI), stroke and hip fracture patient populations were similar with regard to age, sex and comorbidity. However, non-negligible geographic variation in mortality and resource use was found to exist. Survival rates varied to similar extents between countries and regions for AMI, stroke, hip fracture and very low birth weight. Geographic variation in length of stay differed according to type of disease. Regression analyses showed that only a small part of geographic variation could be explained by demand and supply side factors. Furthermore, the impact of these factors varied between countries. The findings show that there is room for improvement in performance at all levels of analysis and call for more in-depth disease-based research. In using international patient-level data and a standardized methodology, the EuroHOPE approach provides a promising stepping-stone for future investigations in this field. Still, more detailed patient and provider information, including outside of hospital care, and better data sharing arrangements are needed to reach a more comprehensive understanding of geographic variations in health care.

Costs and Quality at the Hospital Level in the Nordic Countries.

This article develops and analyzes patient register-based measures of quality for the major Nordic countries. Previous studies show that Finnish hospitals have significantly higher average productivity than hospitals in Sweden, Denmark, and Norway and also a substantial variation within each country. This paper examines whether quality differences can form part of the explanation and attempts to uncover quality-cost trade-offs. Data on costs and discharges in each diagnosis-related group for 160 acute hospitals in 2008-2009 were collected. Patient register-based measures of quality such as readmissions, mortality (in hospital or outside), and patient safety indices were developed and case-mix adjusted. Productivity is estimated using bootstrapped data envelopment analysis. Results indicate that case-mix adjustment is important, and there are significant differences in the case-mix adjusted performance measures as well as in productivity both at the national and hospital levels. For most quality indicators, the performance measures reveal room for improvement. There is a weak but statistical significant trade-off between productivity and inpatient readmissions within 30 days but a tendency that hospitals with high 30-day mortality also have higher costs. Hence, no clear cost-quality trade-off pattern was discovered. Patient registers can be used and developed to improve future quality and cost comparisons.

International hospital productivity comparison: experiences from the Nordic countries.

This article focuses on describing the methodological challenges intrinsic in international comparative studies of hospital productivity and how these challenges have been addressed within the context of hospital comparisons in the Nordic countries. The hospital sectors in the Nordic countries are suitable for international comparison as they exhibit similar structures in the organisation for hospital care, hold administrative data of good quality at the hospital level, apply a similar secondary patient classification system, and use similar definitions of operating costs. The results of a number of studies have suggested marked differences in hospital cost efficiency and hospital productivity across the Nordic countries and the Finnish hospitals have the highest estimates in all the analyses. Explanatory factors that were tested and seemed to be of limited importance included institutional, structural and technical. A factor that is yet to be included in the Nordic hospital productivity comparison is the quality of care. Patient-level data available from linkable national registers in each country enable the development of quality indicators and will be included in the forthcoming hospital productivity studies within the context of the EuroHOPE (European health care outcomes, performance and efficiency) project.

Climate change: impacts on electricity markets in Western Europe.

This paper studies some impacts of climate change on electricity markets, focusing on three climate effects. First, demand for electricity is affected because of changes in the temperature. Second, changes in precipitation and temperature have impact on supply of hydro electric production through a shift in the inflow of water. Third, plant efficiency for thermal generation will decrease because the temperature of water used to cool equipment increases. To find the magnitude of these partial effects, as well as the overall effects, on Western European energy markets, we use the multi-market equilibrium model LIBEMOD. We find that each of the three partial effects changes the average electricity producer price by less than 2%, while the net effect is an increase of only 1%. The partial effects on total electricity supply are small, and the net effect is a decrease of 4%. The greatest effects are found for Nordic countries with a large market share for reservoir hydro. In these countries, annual production of electricity increases by 8%, reflecting more inflow of water, while net exports doubles. In addition, because of lower inflow in summer and higher in winter, the reservoir filling needed to transfer water from summer to winter is drastically reduced in the Nordic countries.

Cost efficiency of university hospitals in the Nordic countries: a cross-country analysis.

This paper estimates cost efficiency scores using the bootstrap bias-corrected procedure, including variables for teaching and research, for the performance of university hospitals in the Nordic countries. Previous research has shown that hospital provision of research and education interferes with patient care routines and inflates the costs of health care services, turning university hospitals into outliers in comparative productivity and efficiency analyses. The organisation of patient care, medical education and clinical research as well as available data at the university hospital level are highly similar in the Nordic countries, creating a data set of comparable decision-making units suitable for a cross-country cost efficiency analysis. The results demonstrate significant differences in university hospital cost efficiency when variables for teaching and research are entered into the analysis, both between and within the Nordic countries. The results of a second-stage analysis show that the most important explanatory variables are geographical location of the hospital and the share of discharges with a high case weight. However, a substantial amount of the variation in cost efficiency at the university hospital level remains unexplained.

Measuring cost efficiency in the Nordic hospitals--a cross-sectional comparison of public hospitals in 2002.

The aim of this study was to compare the performance of hospital care in four Nordic countries: Norway, Finland, Sweden and Denmark. Using national discharge registries and cost data from hospitals, cost efficiency in the production of somatic hospital care was calculated for public hospitals. Data were collected using harmonized definitions of inputs and outputs for 184 hospitals and data envelopment analysis was used to calculate Farrell efficiency estimates for the year 2002. Results suggest that there were marked differences in the average hospital efficiency between Nordic countries. In 2002, average efficiency was markedly higher in Finland compared to Norway and Sweden. This study found differences in cost efficiency that cannot be explained by input prices or differences in coding practices. More analysis is needed to reveal the causes of large efficiency disparities between Nordic hospitals.

Productivity growth in outpatient child and adolescent mental health services: the impact of case-mix adjustment.

The performance of health service providers may be monitored by measuring productivity. However, the policy value of such measures may depend crucially on the accuracy of input and output measures. In particular, an important question is how to adjust adequately for case-mix in the production of health care. In this study, we assess productivity growth in Norwegian outpatient child and adolescent mental health service units (CAMHS) over a period characterized by governmental utilization of simple productivity indices, a substantial increase in capacity and a concurrent change in case-mix. We analyze the sensitivity of the productivity growth estimates using different specifications of output to adjust for case-mix differences. Case-mix adjustment is achieved by distributing patients into eight groups depending on reason for referral, age and gender, as well as correcting for the number of consultations. We utilize the nonparametric Data Envelopment Analysis (DEA) method to implicitly calculate weights that maximize each unit's efficiency. Malmquist indices of technical productivity growth are estimated and bootstrap procedures are performed to calculate confidence intervals and to test alternative specifications of outputs. The dataset consist of an unbalanced panel of 48-60 CAMHS in the period 1998-2006. The mean productivity growth estimate from a simple unadjusted patient model (one single output) is 35%; adjusting for case-mix (eight outputs) reduces the growth estimate to 15%. Adding consultations increases the estimate to 28%. The latter reflects an increase in number of consultations per patient. We find that the governmental productivity indices strongly tend to overestimate productivity growth. Case-mix adjustment is of major importance and governmental utilization of performance indicators necessitates careful considerations of output specifications.

Productivity growth in Norwegian psychiatric outpatient clinics for children and youths.

BACKGROUND: Norwegian government policy is to increase the supply of psychiatric services to children and young persons, both by increasing the number of personnel, and by increasing productivity in the psychiatric outpatient clinics. Increased accessibility is observed for the last years, measured as the number of children receiving services each year. AIMS OF THE STUDY: The paper aims to estimate change in productivity among outpatient clinics, and whether any change is related to personnel mix, budget growth or financial incentives. METHODS: We use a non-parametric method called Data Envelopment Analysis (DEA) to estimate a best-practice production frontier. A Malmquist output-based technical productivity index is calculated and decomposed in technical efficiency change, scale efficiency change and frontier shifts. Bootstrapping methods are used to estimate standard errors and confidence intervals for the technical productivity index and its decomposition. In a second stage, the technical productivity index is regressed on variables that may potentially be statistically associated with productivity growth. The paper analyses panel data for the period of 1996-2001. RESULTS: The results indicate increased overall technical productivity by about 4.5 per cent a year in the period, mostly due to frontier shift, but with important contribution from increased technical efficiency. Scale efficiency does not change. Personnel growth has a negative influence on productivity growth, whilst a growth in the portion of university educated personnel improves productivity. The financial reform of 1997 that gave greater weight to interventions per patient led to lower productivity growth in the subsequent period for those that had an initial budgetary gain from the reform. DISCUSSION: Technical productivity has increased substantially during the period of study, implying a degree of success in the government plan for increasing psychiatric health care. While the decomposition of technical productivity change is less robust to outliers than the Malmquist productivity index itself, the results indicate that both clinics that were previously efficient, and those that were inefficient, have increased their productivity, the latter somewhat more than the former. The size of the clinic is not related to its technical productivity growth. A growth in the budget affects technical productivity negatively. While the clinics seem to respond to "mild coercion'' by increasing productivity, this growth is slowed down by a policy that at the same time increases the availability of resources. IMPLICATIONS FOR HEALTH POLICY: The instruments used in the government psychiatric plan have been adequate in stimulating the productivity and availability of psychiatric services. On the other hand it may be difficult to maintain the pressure for increasing the service level without stronger financial incentives, especially since the service suppliers are receiving strong activity based financial incentives for somatic care. IMPLICATIONS FOR FURTHER RESEARCH: Further research should focus on the effects of various organisational models of outpatient-clinics on both the level of, and change in, productivity. In this context the positive effect of increasing the portion of university educated personnel could provide a fertile starting point. It is also of interest to study whether productivity growth is accompanied by increased availability or increased treatment intensity.

Scale, Efficiency and Organization in Norwegian Psychiatric Outpatient Clinics for Children.

BACKGROUND: It is generally believed that 5 percent of the population under 18 years is in need of specialist psychiatric care. In 1998, however, services were delivered to only 2.1 percent of the Norwegian population. Access to services can be improved by increasing capacity, but also by increasing the utilization of existing capacity. Changing financial incentives has so far not been considered. Based on a relatively low number of registered consultations per therapist (1.1 per therapist day) the ministry has stipulated that productivity should increase by as much as 50 percent. AIMS OF THE STUDY: Measuring productivity in psychiatric care is difficult, but we believe that studies of productivity should be an important input in policy making. The aim of this paper is to provide such an analysis of the productive efficiency of psychiatric outpatient clinics for children and youths, and in particular to focus on three issues: (i) is an increase in productivity of 50 percent a realistic goal, (ii) are there economies of scale in the sector, and (iii) to what extent can differences in productivity be explained by differences in staff-mix and patient-mix? METHODS: We utilize an approach termed Data Envelopment Analysis (DEA) to estimate a best-practice production frontier. The potential for efficiency improvement is measured as the difference between actual and best-practice performance, while allowing for trade-offs between different staff groups and different mixes of service production. The DEA method gives estimates of efficiency and productivity for each clinic without the need for prices, and thus avoids the pitfalls of partial productivity ratios. The Kolmogorov-Smirnov statistic is used to compare efficiency distributions, providing tests of variable specification and scale properties. RESULTS: Based on 135 observations for the years 1997 to 1999, the tests lead to a model with two inputs, two outputs and variable returns to scale. The outputs are number of hours spent on direct and indirect interventions, while neither the number of interventions nor the number of patients was found to be significant. The inputs are the number of university-educated staff and other staff, but disaggregation of the latter group was not significant. The average of estimated clinic efficiencies is 71%. The mean productivity is 64%, but many large clinics have considerably lower performance due mainly to scale inefficiency. DISCUSSION: There seems to be considerable room for improved performance in these clinics. It is interesting that the potential is not that far from the officially stipulated goal of 50% increased productivity. Staff composition does matter for clinic performance, but the different groups do not have significantly different marginal productivities, indicating a lack of ability to utilize specialized skills. It should be noted that these results to some extent depend on the assumptions that medical practice is efficient, and that the available data accurately captures the activities of the clinics. IMPLICATIONS FOR FURTHER RESEARCH AND HEALTH POLICY: More appropriate outcome measures, e.g. global assessment of functioning scores (GAF), will soon be available and will improve the policy value of this type of analysis, as will a more refined data set with information about the number of personnel in training positions. The analyses in this paper indicate that a lack of consensus on the issues of who should be treated, how they should be treated and by whom results in large variations in productive efficiency. These issues are being debated in Norway, and it should be interesting to see whether this in itself leads to higher efficiency or whether a change in the incentive structure will be needed.