Medical care in a changing economic environment.
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Biomedical subjects
Publications and source records attributed to H S Luft.
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Some appealing aspects of a voucher program--promise of promoting efficiency while respecting individual preference, and capping federal expenditures--may be illusory. Adverse selection, administrative and regulatory complexity, and serious inequities are not likely to meet tests of feasibility or desirability.
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The authors suggest that new surgical procedures be carried out initially in selected institutions and that complex procedures for which it has been or can be demonstrated that mortality is inversely related to the volume of experience also be regionalized. Regionalization in the latter instance can have a small overall impact on surgical practice but a large impact on the adverse consequences of high risk operations that are performed only occasionally.
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Although it is recognized that many people have duplicate private health insurance coverage, either through separate purchase or as health benefits in multi-earner families, there has been little analysis of the factors determining duplicate coverage rates. A new data source, the Survey of Income and Education, offers a comparison with the only previous source of state level data, the estimates from the Health Insurance Association of America. The R2 between the two sets is only .3 and certain problems can be traced to the methodology underlying the HIAA figures. Using figures for gross and net coverage, the ratio of total policies to people with private coverage ranges from .94 in Utah to 1.53 in Illinois. Measures of industry distribution, per capita income and employment explain a large portion of the variance, but it appears that these factors operate in opposite directions for group and non-group policies. Similar sociodemographic variables also explain net coverage. These findings have substantial implications for research and the structuring of employee health benefits.
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It has been noticed recently that hospital use by Blue Cross enrollees has fallen substantially in the last decade and that this decline is in marked contrast to relatively stable utilization reported by hospitals. The trends in length of stay in the two data sources are almost identical--all the differential is attributable to differing trends in admission rates: a sharp increase for all persons under 65 years of age in contrast to a moderate decline for Blue Cross members. These two trends are diverging at the rate of 2 per cent per year. Household survey data for the under-65 population with private health insurance also indicates an increasing admission trend, in contrast to the Blue Cross figures, even though Blue Cross covers half the insured population. About half of the differential trend can be accounted for by the increasing rate of duplicate coverage, which artificially increases the enrollments reported by carriers. The increased duplicate coverage is a reflection of more multiple-earner families, a shifting occupation mix, better fringe benefits, higher unemployment and smaller families. Part of the increased admissions for the total under-65 population is due to Medicare coverage for the disabled and to Medicaid. Most important, it is apparent that existing data provide an inadequate and potentially misleading picture of the most crucial measures of utilization.
Total medical care expenses are generally lower for HMO enrollees than for comparable persons with other coverage. However, a rarely addressed question is whether HMO enrollees also experience a slower rate of growth in costs. This paper examines data from several sources (Federal Employees Health Benefits Program, California State Employees, and Kaiser-Oregon) to compare trends in utilization and costs for HMO enrollees and comparison groups over periods of up to twenty-five years. Total costs can be decomposed into cost per unit of service and the number of units, or utilization of services. Trends over time in cost per unit of service (e.g., per hospital patient day) in HMOs are generally comparable to national trends, as are measures of factor inputs (e.g., physician office visits per physician per year). Trends in utilization, such as hospital days per 1,000 enrollees, show slight reductions for HMO enrollees relative to persons with conventional coverage. Therefore, the rate of growth in total costs (including out-of-pocket expenses) is only slightly lower for persons in HMOs. While HMOs may offer lower costs at any point in time, they have not been able to substantially alter the national patterns of medical care inflation and increasing resource use.
A previous study of 12 procedures of varying complexity in 1,498 hospitals identified a strong negative curvilinear relationship between the volume of a particular operation and postoperative mortality. The current study uses multiple regression techniques to explore the role of other potentially important variable and alternative interpretations of the volume-mortality relationship. The dependent variable is the difference between the hospital's actual death rate and its expected death rate based upon the riskiness of its case mix. The inclusion of other variables, such as size of hospital, teaching status, geographic location and cost, improves the fit of the regression, but does not diminish the importance of volume. There is no evidence that volume accumulated over 2 years is a better measure than volume in 1 year. Experience and volume of related operations are important in some cases but not others. Several likely alternative explanations for the observed relationship were not supported: larger hospitals and those with more house staff had outcomes that were worse than expected. Large geographic differences in mortality rates remain unexplained. A simultaneous-equation model is used to test whether higher volume leads to better outcomes or better outcomes lead to higher volumes. Both causal paths are supported, but their relative importance varies with the procedure in ways that are consistent with anticipated referral patterns.
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HMOs contract to provide physician and hospital services to enrolled populations in return for fixed periodic payments. Total costs for HMO members are shown to be lower than for those enrolled in conventional insurance plans. But the explanation for this and related differences cannot be attributed solely to matters of efficiency, quality, or even consumer self-selection or physician satisfaction. Although public policy assumes that HMOs will encourage beneficial competitive responses by traditional health care providers, too little is known to predict the nature and extent of such probabilities.
Among the many factors that may explain lower costs for enrollees in Health Maintenance Organizations (HMOs) is the possibility that the HMO provides inpatient services more efficiently. While direct cost comparisons are in appropriate, it is reasonable to examine whether the Kaiser program in the San Francisco Bay Area regionalizes services among its ten hospitals. The presence of each of 43 facilities/services reported is examined in a regression model that includes type of hospital, size, a size-type interaction, and the distance to the nearest competing facility. When the generally smaller size of the Kaiser hospitals was controlled for, Kaiser hospitals had fewer technologically based services and concentrated these services in larger hospitals. Kaiser had more outpatient-oriented services. Among non-Kaiser hospitals, some specialized facilities were competitively distributed.
This study examines mortality rates for 12 surgical procedures of varying complexity in 1498 hospitals to determine whether there is a relation between a hospital's surgical volume and its surgical mortality. The mortality of open-heart surgery, vascular surgery, transurethral resection of the prostate, and coronary bypass decreased with increasing number of operations. Hospitals in which 200 or more of these operations were done annually had death rates, adjusted for case mix, 25 to 41 per cent lower than hospitals with lower volumes. For other procedures, the mortality curve flattened at lower volumes. For example, hospitals doing 50 to 100 total hip replacements attained a mortality rate for this procedure almost as low as that of hospitals doing 200 or more. Some procedures, such as cholecystectomy, showed no relation between volume and mortality. The results may reflect the effect of volume or experience on mortality, or referrals to institutions with better outcomes, as well as a number of other factors, such as patient selection. Regardless of the explanation, these data support the value of regionalization for certain operations.
Health Systems Agencies (HSAs), the new regional health planning agencies established by the National Health Planning and Resources Development Act of 1974, have as their major goals quality, accessibility, continuity and cost containment. One of the tools for cost containment available to HSAs is their active participation in the statewide certificate-of-need (CON) program. To help anticipate how HSAs may play their CON roles, this article reviews the CON decisionmaking processes of two Comprehensive Health Planning (CHP) agencies, the predecessors of HSAs. While most CHPs lacked specific health plans and powers. the two California agencies examined have had both regional plans and roles in CON programs comparable to the present HSAs'. Our focus is on the decisionmaking process rather than the effectiveness of CON programs. A simple descriptive model is developed based on the assumptions that the planners seek satisfactory, rather than optimal solutions and that the data available are extremely limited. The cases analyzed suggest that, while most projects exceed the bed need standards, institutions were almost always able to demonstrate a need through various special circumstances. Once a need has been shown, the agency was able to deny an application only if a better alternative were available. This study suggests two approaches to improving regional health planning decisionmaking. First, identified needs can be better met either by increasing the agency's ability to generate alternatives or by encouraging health facilities to submit competing applications. Second, a regional health care budget would force the agency to make choices among competing needs.
Health-maintenance organizations have been suggested as a way to stop spiraling medical costs. Although many of the arguments have been largely rhetorical, theoretical considerations suggest that the shift from fee for service to a fixed budget for the providers (physicians and hospitals) will result in substantial savings. Total costs (premium and out-of-pocket) for enrollees are 10 to 40 per cent lower than those for comparable people with health insurance. Enrollees in health-maintenance organizations have about as many ambulatory visits as comparison groups. Most of the cost differences are attributable to hospitalization rates about 30 per cent lower than those of conventionally insured populations. These lower hospitalization rates, in turn, are due almost entirely to lower admission rates; the average lenth of stay shows little difference. There is no evidence that health-maintenance organizations reduce admissions in discretionary or "unnecessary" categories; instead, the data suggest lower admission rates across the board.