Geographic variation in surgical outcomes and cost between the United States and Japan.

OBJECTIVES: Unwarranted geographic variation in spending has received intense scrutiny in the United States. However, few studies have compared variation in spending and surgical outcomes between the United States healthcare system and those of other nations. In this study, we compare the geographic variation in postsurgical outcomes and cost between the United States and Japan. STUDY DESIGN: This retrospective cohort study uses Medicare Part A data from the United States (2010-2011) and similar inpatient data from Japan (2012). Patients 65 years or older undergoing 1 of 5 surgeries (coronary artery bypass graft, abdominal aortic aneurysm repair, colectomy, pancreatectomy, or gastrectomy) were selected in the United States and Japan. METHODS: Reliability- and case-mix-adjusted coefficient of variation (COV) values were calculated using hierarchical modeling and empirical Bayes techniques for the following 5 outcomes: postoperative mortality, the development of a complication, death after complication (failure to rescue), length of stay, and the cost of the hospitalization. Sensitivity analyses were also performed by calculating patient demographic-and case-mix-adjusted COV values for each outcome using weighted age- and sex-standardized values. RESULTS: The variability of the postsurgical outcomes was uniformly lower in the United States compared with Japan. Cost variation was consistently higher in the United States for all surgeries. CONCLUSIONS: Although the US healthcare system may be more inefficient regarding costs, the presence of higher geographic variation in postoperative care in Japan, relative to the United States, suggests that the observed geographic variation in the United States-both for health expenditures and outcomes-is not a unique manifestation of its structural shortcomings.

Medicaid cost control measures aimed at second-generation antipsychotics led to less use of all antipsychotics.

"Atypical" or second-generation antipsychotics are a class of drug introduced in the 1990 s for the treatment of schizophrenia. Given their growing use and rising cost, these and other psychotherapeutic drugs are increasingly subject to prior authorization and other restrictions in state Medicaid programs. To evaluate the effects of these policies, we collected drug-level information on their use and on utilization management strategies--for example, requirements for prior authorization, quantity limits, and so-called step therapy--in thirty state Medicaid programs between 1999 and 2008. In the eleven states that instituted prior authorization during that period, use of atypicals per enrollee rose by 14 percent, versus 19 percent in the other nineteen states. Prior authorization also had spillover effects, in that reduced use of drugs subject to this requirement was not fully offset by the substitution of other atypicals or of typical antipsychotics. To understand the impact on patients and the resulting use of health services, studies should be undertaken of a large, national sample of Medicaid enrollees being treated with atypical antipsychotics. Comparative effectiveness research should guide physicians and health plans on appropriate first treatments, while prior authorization policies should focus on moving patients to appropriate second-line therapies when necessary.

Hospital prices and market structure in the hospital and insurance industries.

There has been substantial consolidation among health insurers and hospitals, recently, raising questions about the effects of this consolidation on the exercise of market power. We analyze the relationship between insurer and hospital market concentration and the prices of hospital services. We use a national US dataset containing transaction prices for health care services for over 11 million privately insured Americans. Using three years of panel data, we estimate how insurer and hospital market concentration are related to hospital prices, while controlling for unobserved market effects. We find that increases in insurance market concentration are significantly associated with decreases in hospital prices, whereas increases in hospital concentration are non-significantly associated with increases in prices. A hypothetical merger between two of five equally sized insurers is estimated to decrease hospital prices by 6.7%.

Beta-blocker compliance, mortality, and reinfarction: validation of clinical trial association using insurer claims data.

Although randomized controlled trials show that long-term beta-blocker use post acute myocardial infarction (AMI) reduces mortality and subsequent cardiovascular events, and that increased compliance lowers mortality, there is limited published research on the effects of long-term beta-blocker compliance in observational community settings. The authors retrospectively study the effect of beta -blocker compliance on mortality and repeat reinfarction using claims records from a major health insurer of all patients who were discharged alive after AMI between January 2003 and June 2004, covered by that health insurer's prescription drug coverage, and prescribed beta-blockers (n = 3923). Using Cox proportional hazards regressions, they estimate both survival and AMI-free survival rates by compliance quartile. Both survival and AMI-free survival rates diverge rapidly and are robust to adjustments for demographics, DxCG risk score, and other baseline risk factors. Results suggest that patients whose post-AMI compliance with beta-blocker therapy is above average experience lower mortality and reinfarction. This is especially true for high-risk patients.

Medicare part D after 2 years.

OBJECTIVE: To assess the broad impacts of Medicare Part D and the extent to which prior concerns have been realized. METHODS: We used administrative data to summarize beneficiary enrollment and plan participation in Part D, and compared pharmaceutical use and out-of-pocket spending before and after the introduction of Part D. We characterized the benefit designs of the 10 largest Part D plans in 2006 and compared them with the benefit designs of 7 non-Part D plans often cited as examples of low-cost or comprehensive drug benefits. RESULTS: By 2008, nearly 90% of seniors had drug coverage at least as generous as the standard Part D benefit. Excluding premiums, annual out-of-pocket spending in the 10 largest Part D plans was comparable to that of other private and public drug benefits, with the most prominent differences attributable to out-of-pocket spending on drugs not covered in the plan. Poorer beneficiaries have gained the most from Part D in terms of increased access to medications and reduced out-of-pocket spending. CONCLUSIONS: Coverage under Part D is comparable to that under non-Part D plans with respect to key features that are likely to be important to Medicare beneficiaries--access to medications and out-of-pocket costs. Nonetheless, concerns remain over drug pricing and gaps in coverage. The government should continue to monitor the competitiveness of the Part D market to ensure it meets the diverse needs of Medicare beneficiaries.

Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry.

We examine the evolving structure of the US hospital industry since 1970, focusing on how ownership form influences entry and exit behavior. We develop theoretical predictions based on the model of Lakdawalla and Philipson, in which for-profit and not-for-profit hospitals differ regarding their objectives and costs of capital. The model predicts for-profits would be quicker to enter and exit than not-for-profits in response to changing market conditions. We test this hypothesis using data for all US hospitals from 1984 to 2000. Examining annual and regional entry and exit rates, for-profit hospitals consistently have higher entry and exit rates than not-for-profits. Econometric modeling of entry and exit rates yields similar patterns. Estimates of an ordered probit model of entry indicate that entry is more responsive to demand changes for for-profit than not-for-profit hospitals. Estimates of a discrete hazard model for exit similarly indicate that negative demand shifts increase the probability of exit more for for-profits than not-for-profits. Finally, membership in a hospital chain significantly decreases the probability of exit for for-profits, but not not-for-profits.

How has hospital consolidation affected the price and quality of hospital care?

During the 1990s, the hospital industry was transformed by mergers and acquisitions. This synthesis looks at why this rapid consolidation occurred and what impact it had on the price and quality for patients, and the cost of care for hospitals. Key findings include: Managed care was not a main driver of consolidation, but fear of managed care may have played a part. Other factors, including technological advances that reduced inpatient demand, and an antitrust environment that was receptive to consolidation contributed to consolidation. Research suggests hospital prices increased by 5 percent or more as a result of consolidation. When two hospitals merge, not only does the surviving hospital raise prices but so do its competitors. Evidence of the impact of consolidation on quality of care is limited and mixed, but the strongest studies show a reduction in quality. Hospital consolidation does modestly reduce the cost to hospitals of providing care.

How do households choose their employer-based health insurance?

Using the 1996 Medical Expenditure Panel Survey, this study estimates a model of household demand for employer-based health insurance to investigate the set of plan and household characteristics that influence coverage choices. Overall, we find that households are sensitive to price with respect to their coverage decisions, and that price sensitivity varies by marital status, wealth, and the number of offers of employer coverage available to the household. We also find that lower-income households are less likely to select an option that provides coverage for all household members. Using our model estimates, we simulate the effect of employers offering various levels of "opt-out" payments on changes in workers' probabilities of not taking up coverage and on expected costs.

Economics of nerve block pain management after anterior cruciate ligament reconstruction: potential hospital cost savings via associated postanesthesia care unit bypass and same-day discharge.

BACKGROUND: Anterior cruciate ligament reconstruction is a complex outpatient surgical procedure often associated with pain. Traditionally, the procedure is performed under general anesthesia and often requires the use of the PACU. Refractory pain and/or nausea/vomiting occasionally leads to an unplanned hospital admission. In this study, the authors examine the associations of nerve block analgesia for these patients and its associated reductions in PACU use, hospital admission, and hospital costs. METHODS: This was an observational, nonrandomized study in which existing data regarding patients' day-of-surgery outcomes were merged with hospital cost data. We reviewed a consecutive sample of 948 men and women who were in good health and underwent anterior cruciate ligament reconstruction in an outpatient surgery unit between July 1995 and June 1999. RESULTS: The use of nerve block analgesia was associated with reduced PACU admissions to 18% and decreased unplanned hospital admission rates from 17% to 4%. Multivariate linear regression analysis showed that patients bypassing the PACU had an associated hospital cost reduction of 12% (P = 0.0001), whereas patients who needed hospital admission had an associated hospital cost increase of 11% (P = 0.0003). CONCLUSIONS: The use of nerve blocks for acute pain management in patients undergoing anterior cruciate ligament reconstruction is associated with PACU bypass and reliable same-day discharge. Although the cost savings for this one procedure are unlikely to generate sufficient cost savings via staffing reductions, extrapolating these results to a large volume of all types of invasive outpatient orthopedic procedures may have the potential to create significant hospital cost savings.

Competition among hospitals.

We examine competition in the hospital industry, in particular the effect of ownership type (for-profit, not-for-profit, government). We estimate a structural model of demand and pricing in the hospital industry in California, then use the estimates to simulate the effect of a merger. California hospitals in 1995 face an average price elasticity of demand of -4.85. Not-for-profit hospitals face less elastic demand and act as if they have lower marginal costs. Their prices are lower than those of for-profits, but markups are higher. We simulate the effects of the 1997 merger of two hospital chains. In San Luis Obispo County, where the merger creates a near monopoly, prices rise by up to 53%, and the predicted price increase would not be substantially smaller were the chains not-for-profit.