The volume-outcome relationship: practice-makes-perfect or selective-referral patterns?

Various studies have demonstrated that hospitals with larger numbers of patients with a specific diagnosis or procedure have lower mortality rates. In some instances, these results have been interpreted to mean that physicians and hospital personnel with more of these patients develop greater skills and that this results in better outcomes--the "practice-makes-perfect" hypothesis. An alternative explanation is that physicians and hospitals with better outcomes attract more patients--the "selective-referral pattern" hypothesis. Using data for 17 categories of patients from a sample of over 900 hospitals, we examine the patterns of selected variables with respect to hospital volume. To explore the plausibility of each hypothesis, a simultaneous-equation model is also used to test the relative importance of the two explanations for each diagnosis or procedure. The results suggest that both explanations are valid, and that the relative importance of the practice or referral explanation varies by diagnosis or procedure, in ways consistent with clinical aspects of the various patient categories.

Selecting categories of patients for regionalization. Implications of the relationship between volume and outcome.

A growing number of researchers have demonstrated an inverse relation between the number of patients treated with specific diagnoses or procedures in a hospital and subsequent adverse outcomes. Such findings support the notion that policies should be explored to concentrate patients in selected hospitals to reduce preventable patient mortality or morbidity. The authors used data from 15 diagnoses and procedures demonstrating an inverse relation between volume and mortality to explore the different implications of regionalization policies across categories of patients. In some instances, concentrating patients in hospitals with high volumes of such patients could avert more than 60% of all deaths. For some procedures or diagnoses, however, such mortality savings are either medically infeasible because of the emergency nature of the problem or logistically impossible because of the extent of regionalization implied.

The role of specialized clinical services in competition among hospitals.

Because duplication of services among hospitals can be costly, it is important to understand the circumstances under which duplication occurs among hospitals within a region. In this sample of 3,584 community hospitals surveyed in 1972, we analyzed the impact of competition on the availability of specialized clinical services, with special focus on mammography, emergency services, cobalt therapy, heart surgery, and cardiac catheterization. We found that the presence of nearby institutions and services increases the availability of most of these services in neighboring hospitals. This supports the hypothesis that competition among hospitals within an open-ended reimbursement environment takes the form of nonprice competition for community-based physicians through the acquisition of expensive clinical facilities.