How resource allocation decisions are made in the health care market.

This paper describes how economists view resource allocation decisions in health care markets. The basic economic decisions that must be made in any economic system and the resource allocation decisions in a perfectly competitive market are described. An idealized market can achieve an efficient allocation of resources and is contrasted with a more realistic description of the numerous ways in which health care markets depart from the perfectly competitive ideal. The implications of these departures for health care policy are discussed, along with key controversies concerning reliance upon markets for resource allocation in health care. In particular, the failure of competitive markets to achieve what many consider an equitable distribution of health care is emphasized. The paper concludes with some practical observations on how pharmacists can use the increasing emphasis on economic efficiency to the advantage of their profession.

Multidimensionality of oral health in dentate adults.

OBJECTIVES: An understanding of the validity and usefulness of self-reported measures (as distinct from clinically determined measures) of oral health is emerging. These self-reported measures include self-rated oral health (SROH). Three objectives were to: (1) describe self-rated oral health in dentate adults, (2) quantify associations between self-rated oral health and other measures of oral health (oral disease and tissue damage, pain and discomfort, functional limitation, and disadvantage), and (3) assess the construct validity of a model of oral health proposed herein. METHODS: The Florida Dental Care Study is a longitudinal study of oral health, which included at baseline 873 subjects who had at least one tooth, were 45 years or older, and who participated for an interview and clinical examination. RESULTS: The prevalence of self-rated oral health decrements was substantial; approximately one fourth of subjects reported their oral health as only fair or poor. Bivariate and multivariate results provided consistent evidence of the construct validity of the proposed model of oral health. Additionally, the salience of one measure of dental appearance suggests that persons may use esthetic cues when rating their oral health. CONCLUSIONS: The proposed multidimensional model of oral health has construct validity. Self-rated oral health is affected by oral disease and tissue damage, oral pain and discomfort, oral functional limitation, and oral disadvantage. These self-reported measures and the proposed model should provide useful information for dental care effectiveness research. General health status has been disaggregated into the "physical" and the "mental;" an additional separation into the "oral" aspects of health seems warranted.

Differences in characteristics of hospitals with sustained high and sustained low profitability.

The organizational and operational characteristics of 140 private Florida hospitals with sustained high profitability and sustained low profitability were compared using pretax operating margin (PTOM) and pretax return on assets (PROA) measures. Approximately 15 to 20 percent of hospitals were defined as PTOM or PROA high-profit or low-profit for the years 1990, 1991, and 1992. The PTOM or PROA high-profit groups had a lower adjusted average length of stay and debt utilization, and a higher labor yield, occupancy rate, and percent with high hospital accreditation ratings (p < .05). In addition, the PROA high-profit group had a higher case-mix index and Medicare mix (p < .05). Characteristics that were different for high-profit and low-profit groups were within the scope of management.

Should intrastate funding formulae for the Older Americans Act include a rural factor?

Most states maintain an Intrastate Funding Formula (IFF) to allocate Older Americans Act funds to planning and service areas within their state. The intention of these formulae is to target resources to those elders in the greatest economic and social need. To achieve this objective, the vast majority of states include measures of age, income, and race in their IFFs. In contrast, the inclusion of a geographic or rural factor is much more controversial. This research was initiated to determine if there was empirical support for the argument that residence influences the need for services after controlling for those factors commonly used by most states in their IFFs. Using data from the Supplement on Aging to the 1984 National Health Interview Survey, the results demonstrate that residing in a nonmetropolitan area increases the likelihood of poor health and the need for services after controlling for age, income, and race. Results also indicate that collectively the four predictor variables account for a very small proportion of the variance in need.

Variations in rural hospital costs: effects of market concentration and location.

This article explores two neglected questions: (1) Does the relationship between hospital concentration and costs vary between urban and rural markets? and (2) Do hospital costs in non-metropolitan areas vary with rurality? Covariance model results using 1992 data reveal that: (1) Although metropolitan and urban markets exhibit a negative relationship between hospital average costs and market concentration, non-metropolitan and rural markets fail to exhibit any relationship between costs and concentration; and (2) among non-metropolitan hospitals, only hospitals located in single-hospital communities have lower costs than their counterparts in multiple-hospital communities, once other factors are held constant.

Decomposing area of residence differences in multiple regression studies: the relative contributions of independent variables and model coefficients.

When rural/urban differences are found in health status or health care use, it is often desirable to identify those factors (such as age, social structure, income, etc.) that influence such differences. To this end, researchers often test rural/urban differences in age, social structure, income, etc., for statistical significance. Also, researchers commonly perform multivariate analyses (such as multiple regressions) to examine rural-urban differences in the influence of various independent variables on the dependent variable of interest. Frequently, researchers discover: (1) statistically significant rural/urban differences in the independent variables (such as age, social structure, income, etc.) and (2) statistically significant rural/urban differences in the effects of these independent variables (i.e., statistically significant rural/urban differences in regression coefficients). The analysis typically stops here, without addressing the relative contributions of (1) and (2) to the rural/urban differences in the dependent variable. This paper argues that the relative contributions of (1) and (2) have important implications for the way policy-makers address rural health problems. This paper presents a method for assessing the relative contributions of differences in the independent variables and differences in regression coefficients to observed differences in the dependent variable, and illustrates the application of the method by analyzing rural/urban differences in the risk of institutionalization.

Area of residence and the risk of institutionalization.

Many of the sociodemographic, health status, and social support characteristics that predict the use of health services by elders vary by area of residence. Yet, little is known about how these factors affect the risk of institutionalization in rural, small city, and urban areas. The purpose of this research was to: (a) determine the rate of institutionalization over a two-year period for impaired community-dwelling elders in rural, small city, and urban areas; (b) test for residence differences in sociodemographic, health status, and social support characteristics likely to influence the risk of institutionalization; and (c) examine their effect on the probability of being institutionalized in each area of residence. Although rural elders are less likely to be placed in a nursing home than their small city or urban counterparts, race and level of impairment affect the risk of institutionalization more in rural than in urban areas.

The determinants of hospital profitability.

Although numerous studies related to hospital costs and financial condition have been conducted, no studies have specifically attempted to identify the underlying determinants of hospital profitability. If these factors are identified, hospital executives can focus their efforts on those aspects of operations that most affect profitability, and public policymakers can gain insights into the potential effects of alternative policy decisions on hospital financial viability. Our study uses multiple regression analysis with 22 hypothesized profitability determinants as independent variables and five profitability measures as dependent variables. The data set consists of 1989 data from 169 investor-owned and private not-for-profit general acute care hospitals in the state of Florida. The results provide evidence that selected managerial and patient-mix variables are predictors of profitability. Structural factors that are beyond the control of managers (organizational and community characteristics) appear to be less important in influencing profitability. These findings may be viewed positively by hospital executives since it appears profitability is not dictated by organizational or market factors but more strongly influenced by factors that, to some extent, can be influenced by hospital policies and practices.

Factors influencing high and low profitability among hospitals.

This article examines the determinants of exceptionally high and exceptionally low profitability among hospitals. Using 1989 data from a sample of 169 acute care hospitals in Florida, it reveals that debt load, labor intensity, and Medicare mix play important roles in exceptional profitability. Administrators can therefore take selected actions over the long run to alter their hospital's chance of exhibiting exceptionally high or exceptionally low profitability.

The effectiveness of Florida's "Improved Pregnancy Outcome" program.

The development of a national program to assure access to prenatal care for all women, regardless of income, is believed to be an effective means of reducing low birthweight and neonatal mortality in the U.S. Yet scarce empirical evidence concerning the effectiveness of large-scale prenatal care programs is available. This paper summarizes an evaluation of a statewide public prenatal care program which grew out of the federal Improved Pregnancy Outcome (IPO) project. Using linked birth and infant death-certificate data, and IPO program records from a four-year period (1985-1988), this study compares the neonatal mortality rates of participants of Florida's IPO program with those of a matched comparison group. The results indicate an inverse relationship between IPO participation and the risk of neonatal mortality in a low-income population. These findings suggest that large-scale prenatal care programs can be effective in improving birth outcomes.