The logic of transaction cost economics in health care organization theory.

Health care is, at its core, comprised of complex sequences of transactions among patients, providers, and other stakeholders; these transactions occur in markets as well as within systems and organizations. Health care transactions serve one of two functions: the production of care (i.e., the laying on of hands) or the coordination of that care (i.e., scheduling, logistics). Because coordinating transactions is integral to care delivery, it is imperative that they are executed smoothly and efficiently. Transaction cost economics (TCE) is a conceptual framework for analyzing health care transactions and quantifying their impact on health care structures (organizational forms), processes, and outcomes.

Marketplace reforms and primary care career decisions.

A dramatic shift in the postgraduate career choices of medical school graduates toward primary care occurred during the mid-1990s. While some attributed this shift to changes in medical school curricula, perceptions stemming from marketplace reforms were probably responsible. For the most part, these perceptions were probably generated through informal communications among medical students and through the media. More recently, additional marketplace influences, such as the consumer backlash toward managed care and unrealized gains in primary care physicians' personal incomes, may have fostered contrasting perceptions among medical students, leading to career choices away from primary care, particularly family practice. The authors offer two recommendations for enhancing the knowledge of medical students concerning workforce supply and career opportunities: an educational seminar in the second or third year of medical school, and a public-private partnership between the Bureau of Health Professions and the Association of American Medical Colleges to create a national database about the shape of the primary care and specialty workforces, accessible through the Internet for educators, students, and policymakers. The authors conclude that appropriate career counseling through these efficient methods could avoid future abrupt swings in specialty choices of medical school graduates and may facilitate a more predictable physician workforce supply.

Going the distance: the evolution of VCU's Executive Distance Learning Program over 12 years.

Drawing upon the twelve-year history of Virginia Commonwealth University's (VCU) online distance learning Executive Program, this article identifies factors important to the success of online distance learning and major changes in distance learning over time. It discusses curriculum, instructional design, technology infrastructure and support, educational strategy and pedagogy, faculty, and student program dimensions. As one of the oldest online health administration or business programs, the Executive Program at VCU and this examination thereof are particularly suited to identify significant lessons learned from experience with online education. The article concludes with a summary of challenges facing this and other distance learning programs in health administration.

Medical schools, affirmative action, and the neglected role of social class.

Medical schools' affirmative action policies traditionally focus on race and give relatively little consideration to applicants' socioeconomic status or "social class." However, recent challenges to affirmative action have raised the prospect of using social class, instead of race, as the basis for preferential admissions decisions in an effort to maintain or increase student diversity. This article reviews the evidence for class-based affirmative action in medicine and concludes that it might be an effective supplement to, rather than a replacement for, race-based affirmative action. The authors consider the research literature on (1) medical students' socioeconomic background, (2) the impact of social class on medical treatment and physician-patient communication, and (3) correlations between physicians' socioeconomic origins and their service patterns to the disadvantaged. They also reference sociological literature on distinctions between race and class and Americans' discomfort with "social class."

Variations in geographical distribution of foreign and domestically trained physicians in the United States: 'safety nets' or 'surplus exacerbation'?

In the United States, a debate has existed for decades about whether foreign-trained physicians (known in the US as 'international medical graduates' or 'IMGs') and US medical graduates (USMGs) have been differentially distributed such that IMGs were more likely to be found in locales characterized as high in need or medical underservice. This 'safety net' hypothesis has been countered by the IMG 'surplus exacerbation' argument that IMGs have simply swelled an already abundant supply of physicians without any disproportionate service to areas in need. Through an analysis of the American Medical Association Physician Masterfile and the Area Resource File, we classified post-resident IMGs and USMGs into low and high need counties in each of the US states, compared the percentage distributions, and determined whether IMGs were found disproportionately in high need or underserved counties. Using four measures (infant mortality rate, socio-economic status, proportion non-white population, and rural county designation), we show that there were consistently more states having IMG disproportions than USMG disproportions. The magnitude of the differences was greater for IMGs than for USMGs, and there was a correlation between IMG disproportions and low doctor/100,000 population ratios. These findings are shown to exist simultaneously with two empirical facts: first, not all IMGs were located in high new or underserved counties; second, IMGs were more likely than USMGs to be located in states with a large number of physicians. The juxtaposition of an IMG presence in 'safety net' locales and of IMGs' contribution to a physician abundance is discussed within the context of the current debate about a US physician 'surplus' and initiatives to reduce the number of IMGs in residency training.

International and US medical graduates in US cities.

OBJECTIVES: This study examines the comparative distributions of postresident international medical graduates (IMGs) and US medical graduates (USMGs) in high and low poverty areas of US cities. Existing research has established that IMGs are more likely than USMGs to practice in urban areas, yet there is the question whether IMGs locate more frequently than USMGs in urban poverty areas. METHODS: Data from the 1997 AMA Physician Masterfile and 1990 US Census were merged to classify physicians' practices into low- and high-poverty areas in selected cities. RESULTS: In 14 cities with populations of 2.5 million or more, IMGs were located in a statistically significant disproportion in poverty areas of 7 cities. Of 36 cities with populations of 1,000,000 to 2,499,999, there were 5 cities that had significant IMG disproportions in poverty areas. Of a random sample of 27 cities with populations of 250,000 to 999,999, there were 2 cities that had significant IMG disproportions. Many cities in all three size categories had a large proportionate IMG complement of the total physician workforce located within high-poverty areas. CONCLUSIONS: IMGs were found in disproportionate numbers in poverty areas in a number of US cities, especially the very largest ones. These findings are discussed in light of the current debate about a physician surplus and initiatives to reduce the number of IMGs in residency training.

Are there need-based geographical differences between international medical graduates and U.S. medical graduates in rural U.S. counties?

The objectives of this study are to compare the rural location of international medical graduates (IMGs) and U.S. medical graduates (USMGs) by specialty (primary care vs. specialty care) according to geographical measures of need. This study utilized a cross-sectional survey using the 1997 American Medical Association Physician Masterfile for all active post-resident allopathic physicians and the Area Resource File (ARF) (Bureau of Health Professions, 1996) for all active post-resident osteopathic physicians in 1995 in the rural U.S. physician work force (N = 69,065). Allopathic physician ZIP code location was matched to county data using the ARF. The key measure was the difference in proportions between USMGs and IMGs in each state's rural counties characterized by need: high infant mortality, low socioeconomic status, high proportion of nonwhite population, high proportion of population 65 years and older, and low physician-to-population ratio. Primary care and specialty care rural physicians were studied separately. A disproportion of IMGs were located in needy rural counties of more states than were USMGs. Further, IMG disproportions were generally larger than USMG disproportions when they existed. Disproportions of IMGs tended to be located more often in the central and south census regions. Disproportions of specialty care IMGs were more frequent and of greater magnitude than those of primary care IMGs. Variations in the relative and absolute numbers of IMGs and USMGs among the states was wide. Services delivered by active post-resident primary care and specialty care IMGs appeared to be disproportionate to their overall number compared with USMGs in numerous needy rural counties. The extent of the IMG "safety net" presence differed, however, by the criteria used. Still, proposed limits on IMG entry into U.S. residency training may create long-term problems of access to rural physician services absent policies to induce USMGs or midlevel practitioners to locate in such areas. State-by-state assessments of the potential impact of IMG restrictions are called for because of the wide state-level variation that existed in comparative IMG-USMG distributions.

The market for pediatric surgeons: a survey of recent graduates.

PURPOSE: The aim of this study was to identify the demand for pediatric surgeons as perceived and experienced by recent graduates of North American training programs. METHODS: A survey questionnaire was mailed to every pediatric surgeon who had completed a certified training program in the United States or Canada between 1992 and 1997; 84% of the 165 responded. The data were then analyzed using univariate and bivariate statistics and content analysis. RESULTS: The number trained has risen since 1992 from 21 to 35 per year, exceeding previous definitions of need. However, recently trained pediatric surgeons found positions, and their first-year incomes had risen oven the 6-year period. In contrast, just 54% found first positions in the type of hospital desired, and the percent working in a children's hospital dropped from 65% in 1992 to 32% in 1997; 34% cover between four and ten hospitals. The majority of those in practice for more than 2 years expressed the perception of a decline in market demand with just 30% of those 1996 to 1997 graduates perceiving a strong market. The clinical scope of practice was less than that for which they were trained. Three specified complex cases were managed by fewer than 30% of recent graduates during practice despite more than 60% having had fellowship experience. The scope of practice, as measured by variables of index procedures, was strongly associated with hospital type (children's or general) and by practice region. Although satisfaction with practice is lower for each successive class, 96% of the graduates were satisfied with their training programs, and 98% believed they had been well prepared, although 46% indicated they desired some additional training. Sixty-one percent believed the role of pediatric surgeons will change over the next 5 years. CONCLUSIONS: The market demand was strong as measured by employment and income. This was in contrast to the striking recent changes in the market for new pediatric surgeons, including a migration of practice from children's to general hospitals, a reduced scope of practice, a more negative perception of the pediatric surgery market, and concerns for narrowing of the specialty.

Do market-level hospital and physician resources affect small area variation in hospital use?

This study evaluates the effect of market-level physician and hospital resources on hospital use. It is anticipated that higher hospital discharges are associated with (1) greater hospital and physician resources, (2) more differentiated hospital and physician resources, and (3) higher levels of teaching intensity in the community. Data on 14 modified diagnostically related groups (DRGs) and 58 hospital market communities in Michigan are analyzed during a 7-year period. Findings indicate that physician resources, hospital resources, differentiation of hospital and physician resources, and teaching intensity contribute only modestly to discharges, holding constant the socioeconomic attributes of the community and adjusting for the variation in hospital use over time. With the inclusion of hospital and physician resource variables, socioeconomic factors remain important determinants of the variation across market communities. Findings are discussed in terms of their implications for health care organizations, managed care programs, and cost control efforts in general.

Do international medical graduates reduce rural physician shortages?

OBJECTIVES: The authors examined whether international medical graduates (IMGs) constitute a greater percentage of the US physician workforce in rural underserved areas than in rural non-underserved areas. Research findings could help policymakers determine whether the role of international medical graduates in compensating for local physician shortages counterbalances international medical graduates' potential for exacerbating a national oversupply. METHODS: This research was based on data from the American Medical Association Physician Masterfile and the Bureau of Health Professions' Area Resource File. The authors calculated the percentage international medical graduates of all US primary care physicians in rural areas, stratified by the Health Professional Shortage Area (HPSA) designation of underservice. RESULTS: The study showed that international medical graduates do constitute a greater percentage of US primary care physicians in rural areas with physician shortages than in rural areas without physician shortages. This finding held true at the national, Census region, and state scales of analysis, but to varying degrees. The finer the scale of analysis, the greater the variation in international medical graduates' practice in rural, underserved areas. There was substantial interstate variation in the extent to which international medical graduates practice in rural underserved areas. CONCLUSIONS: International medical graduates do help reduce rural physician shortages, but interstate variation points to the role of state policies in influencing international medical graduates' distribution in rural, underserved areas. Such variation also can come about from many different causes, so there is a need for further research to determine why international medical graduates help compensate for physician shortages more so in some states than in others.

Emigration of New Zealand and Australian physicians to the United States and the international flow of medical personnel.

One in five physicians practising in the US received their initial medical qualifications in another country. Contrary to expectations, a large cadre come from developed nations such as New Zealand and Australia. In particular, these two countries provide a unique prism with which to view the international flow of medical talent. While they differ from developing nations that primarily export physicians without attracting others in return, they are distinguished from importing nations such as the US which rarely export. Our analysis is based on a unique dataset collected from three cross-sectional sources. We found that, compared to post-resident physicians remaining at home, New Zealand medical graduates (NZMGs) and Australian medical graduates (AMGs) in the US are typically older, more likely to be male, more likely to have received their initial medical qualifications from certain schools, less likely to be employed in a public hospital setting, more likely to work in a medical school and more likely to practice in a specialty than primary care. Additional findings show that NZMGs and AMGs in the US are more likely than other US physicians to have established themselves in areas with 50,000 or more people and are therefore more likely to serve a population with sociodemographic characteristics typical of the nation's urban centers. It appears then, that NZMGs and AMGs may be emigrating to the US for educational and professional opportunities that may be unavailable at home. In short, the emigration of NZMGs and AMGs may be an instance of what has come to be called the 'international equity problem' or 'brain drain'. However, losses resulting from the disproportionate migration of New Zealand and Australian physicians to the US may be compensated for by the importation of foreign trained physicians from other nations. Future analysis must be extended to take this facet of the international flow phenomena into account.

[The dream of the Far West: French physicians in the United States]. / Le rêve du Far West: les médecins français aux Etats-Unis.

At the end of 1996, there were 115,484 foreign medical graduates in the US. More than one quarter of the US physician workforce were FMGs, among them 973 came from a French medical school (nearly 0.6% of the French physician workforce). French-trained doctors in the US are mainly located in New York, New Jersey, California and Florida, i.e. in the urban areas. However, their membership to the medical learned societies is less frequent than their American colleagues. In general, their ways of practice evidence a lower level of professional status. Based on training costs, the loss for France, due to migration to the US of these 973 doctors could be estimated between 1.2 billion and 8.5 billion French Francs. One has to remind that, at the same time, France "imports" doctors trained in other countries for fulfilling medical posts in hospitals in remote areas. The process occurs in a context of oversupply of physicians in France. A large-scale study of international migration of physicians and nurses was undertaken under the aegis of the World Health Organization in the early 70's. It seems now of interest to re-examine again the issue.

Women in US medicine: the comparative roles of graduates of US and foreign medical schools.

The feminization of US medicine has occurred historically through two separate phenomena: the increase in the number of female graduates of US medical schools and the in-migration of female graduates of foreign medical schools. Reported here are the findings regarding gender on specialty choice, employment setting, and specialty board certification of 55,031 and 191,723 graduates of foreign medical schools and US medical schools, respectively. Graduates of foreign schools were subdivided into those who were foreign-national international medical graduates (IMGs), naturalized US citizen IMGs, and native-born US citizen IMGs at the time of entry into the US medical system. Statistically significant differences between women and men as well as among groups of medical graduates were found, with women in each medical graduate group proportionately overrepresented in primary care specialties, underrepresented in medical and surgical specialties, and underrepresented in both solo practice and group practice settings. Foreign-national IMG women were especially overrepresented in pathology, radiology, and anesthesiology, and in certain employment settings such as public hospitals and the Veterans Administration. The findings provide a basis for further study of the causes and consequences of the observed differences.

What is the cost of controlling quality? Activity-based cost accounting offers an answer.

Achieving high-quality outcomes in healthcare organizations requires effective systems of control. Such systems consist of formal and informal transactions between patients, providers, payors, and policymakers, among others (Shortell 1972; Stiles and Mick 1997). One method for evaluating the suitability of control-oriented transactions to tasks is to compare the costs of controlling the quality of the good or service produced to the cost of its material and labor inputs. Activity-based cost (ABC) accounting provides the methodology for explicating the causal relationship between healthcare organizations' control-oriented transactions, the services whose quality they ensure, and the costs of both control activities and services delivered. Understanding these relationships is of vital importance to those charged with evaluating the feasibility of proposed managed care contracts, new product lines, and existing service configurations. In this article, we explain why traditional accounting practices are poorly suited to accomplishing the control function in today's healthcare arena, highlight activity-based costing's potential to redress the shortcomings of conventional practice, and elaborate the strategic importance of adopting the new methodology.

Components of the costs of controlling quality: a transaction cost economics approach.

This article identifies the components that contribute to a healthcare organization's costs in controlling quality. A central tenet of our argument is that at its core, quality is the result of a series of transactions among members of a diverse network. Transaction cost economics is applied internally to analyze intraorganizational transactions that contribute to quality control, and questions for future research are posed.

International medical graduates in rural America: the 1987 distribution of physicians who entered the U.S. medical system between 1969 and 1982.

This study examines the differential location on Dec. 31, 1987, in nonmetropolitan U.S. counties of a cohort of international medical graduates (IMGs) (n = 246,754) certified by the Educational Commission for Foreign Medical Graduates between 1969 and 1982, and a matched group of U.S. medical graduates (USMGs). Analysis of counties grouped into categories of population size revealed disparities across certain U.S. census divisions. IMGs were distributed disproportionately in the West North Central and East South Central census divisions. The implications of the IMG presence in numerous rural counties is discussed from the perspective of recent policy proposals to reduce the number of IMGs in the United States.

[An American in Clamency: closing of small hospitals in France]. / Un Américain à Clamecy: la fermeture des petits hôpitaux en France.

This article chronicles events in 1993-1994 in the small rural town of Clamecy, located in the Burgundy region of France, stemming from proposals of regional planning authorities to close the maternity and emergency services of the local hospital. This possibility engendered a series of protests and maneuvers by town notables, hospital personnel, and local physicians to halt such plans. The situation provided an opportunity for a sociological examination of the role of the hospital in the social and economic life of a rural community. This included a series of unstructured interviews with various townspeople and health professionals conducted within a sociological framework and with the benefit of the author's status as a foreign observer, beholden to no particular French political affiliation or health policy position. The results of the study reveal profoundly held perceptions that the hospital was a key element in the social, cultural, and economic life of the community, far surpassing its "mere" role as a health delivery organization. These findings are placed in the French context of rural development on the one hand, and rationalization of the health delivery system on the other.

Downsizing and financial performance in rural hospitals.

This article examines the association between downsizing and financial performance in a national sample of 797 U.S. rural hospitals from 1983-1988. The results indicate that downsizing occurred in about 15 percent of all rural hospitals and that a positive association between downsizing and financial performance was unconfirmed.