Curing Choice
Should patients use online reviews to pick their doctors and hospitals?
David Hyman, Jing Liu & Bernard Black
Journal of Empirical Legal Studies, December 2022, Pages 897-935
Abstract:
We compare the online reviews of 221 “Questionable” Illinois and Indiana physicians with multiple paid medical malpractice claims and disciplinary sanctions with matched control physicians with clean records. Across five prominent online rating services, we find small, mostly insignificant differences in star ratings and written reviews for Questionable versus control physicians. Only one rating service (Healthgrades) reports on paid medical malpractice claims and disciplinary actions and it misses more than 90% of these actions. We also evaluate the online ratings of 171 Illinois hospitals and find that their ratings are largely uncorrelated with the share of hospital-affiliated physicians with paid medical malpractice claims and disciplinary sanctions. Online ratings have limited utility in helping patients avoid physicians with troubled medical malpractice and disciplinary records, and steering patients away from hospitals at which more physicians have paid medical malpractice claims and disciplinary sanctions.
Regulatory Incentives for Innovation: The FDA's Breakthrough Therapy Designation
Amitabh Chandra et al.
NBER Working Paper, December 2022
Abstract:
Regulators of new products confront a tradeoff between speeding a new product to market and collecting additional product quality information. The FDA’s Breakthrough Therapy Designation (BTD) provides an opportunity to understand if a regulator can use new policy to innovate around this tradeoff -- i.e., whether it improved regulator productivity by allowing products to come to market more quickly without compromising quality. We find that the BTD program shortened clinical development times by 23 percent and did not impact the ex post safety profile of drugs with the designation. In exploring mechanisms, we find that the BTD program had the greatest impact on less experienced firms and was associated with reduced BTD clinical trial design complexity. The results suggest that targeted regulatory innovation can shorten R&D periods without compromising the quality of new products.
Regulating the Innovators: Approval Costs and Innovation in Medical Technologies
Parker Rogers
University of California Working Paper, November 2022
Abstract:
How does FDA regulation affect innovation and market concentration? I examine this question by exploiting FDA deregulation events that affected certain medical device types but not others. I use text analysis to gather comprehensive data on medical device innovation, device safety, firm entry, prices, and regulatory changes. My analysis of these data yields three core results. First, these deregulation events significantly increase the quantity and quality of new technologies in affected medical device types relative to control groups. These increases are particularly strong among small and inexperienced firms. Second, these events increase firm entry and lower the prices of medical procedures that use affected medical device types. Third, the rates of serious injuries and deaths attributable to defective devices do not increase measurably after these events. Perhaps counterintuitively, deregulating certain device types lowers adverse event rates significantly, consistent with firms increasing their emphasis on product safety as deregulation exposes them to more litigation.
The Productivity of Professions: Evidence from the Emergency Department
David Chan & Yiqun Chen
NBER Working Paper, October 2022
Abstract:
Professions play a key role in determining the division of labor and the returns to skilled work. This paper studies the productivity difference between physicians and nurse practitioners (NPs), two health care professions performing overlapping tasks but with stark differences in background, training, and pay. Using data from the Veterans Health Administration and quasi-experimental variation in the patient probability of being treated by physicians versus NPs in the emergency department, we find that, compared to physicians, NPs significantly increase resource utilization but achieve worse patient outcomes. We find evidence suggesting mechanisms relating to lower human capital among NPs relative to physicians and worker-task assignment responding to the lower skill of NPs. Counterfactual analysis suggests a net increase in medical costs with NPs, even when accounting for NPs’ wages that are half as much as physicians’. Despite large productivity differences between professions, we find even larger productivity differences within professions and substantial productivity overlap between professions. Yet there is little overlap in wages between NPs and physicians and, within professions, no significant correlation between productivity and wages.
The Impact of Management on Clinical Performance: Evidence from Physician Practice Management Companies
Ambar La Forgia
Management Science, forthcoming
Abstract:
Mergers and acquisitions in healthcare are increasingly leading to changes in firm management. This paper studies how a change in firm management impacts clinical performance using data on an understudied phenomenon: medical practice acquisitions by physician practice management companies (PPMCs). PPMCs market themselves as offloading the administrative burden of running a medical practice without compromising physician autonomy over clinical decisions. However, a PPMC’s management strategy and practices, such as performance monitoring and financial incentives, could influence physician behavior. For example, some PPMCs advertise increasing revenue through better financial management, whereas others also advertise improving quality through better clinical management. In this paper, I collect data on three large PPMCs that manage the practices of more than 40% of obstetricians and gynecologists (Ob-Gyns) in Florida between 2006 and 2014. An Ob-Gyn’s main clinical decision in childbirth involves a tradeoff between financial and clinical outcomes: cesarean sections (C-sections) are often more highly reimbursed than vaginal births but pose risks to maternal and infant health when not medically necessary. Using difference-in-differences methods, I find heterogeneous effects on C-sections depending on a PPMC’s publicized management strategy. Physicians acquired by PPMCs that focus on financial management increase the use of C-sections, resulting in less clinically appropriate care and worse patient outcomes. The opposite result is found when PPMCs focus on clinical management. I provide qualitative and quantitative evidence that differences in firm management are the most likely driver of changes in C-sections. This paper informs how the corporatization of medicine can alter clinical performance outcomes.
Where Is All the Deviance? Liminal Prescribing and the Social Networks Underlying the Prescription Drug Crisis
Victoria (Shu) Zhang, Aharon Cohen Mohliver & Marissa King
Administrative Science Quarterly, forthcoming
Abstract:
The misuse of prescription drugs is a pressing public health crisis in the United States that is fueled by high-risk prescribing. We show that high-risk prescribing comprises two distinct practices: (1) routinely overprescribing to patients whose prescription-fill patterns are consistent with misuse or abuse, which conforms to the definition of deviance in sociology, and (2) routinely overprescribing to patients whose prescription-fill patterns are within possible bounds of medical use, which does not. We call the second practice “liminal prescribing,” a term that indicates it is legally and morally ambiguous. Using 213.9 million prescriptions to construct a four-year panel of the patient-sharing networks of 500,472 physicians, we find that deviant and liminal prescribers have starkly different social network structures and social influence processes; larger and more cohesive networks among prescribers are associated with more deviance but less liminality. Physicians’ ties to liminal prescribers increase liminal prescribing but do not increase deviance. Our results suggest that liminal prescribing is distinct from deviant prescribing and is not a milder form of deviant prescribing. Liminal prescribing is far more prevalent than deviance and accounts for most of the oversupplied benzodiazepines in our dataset (55.8 versus 8.7 percent, respectively). Our study highlights that the social structures supporting liminal practices differ from those that support either rule-abiding practices or deviance.
The Effects of Pregnancy-Related Medicaid Expansions on Maternal, Infant, and Child Health
Melanie Guldi & Sarah Hamersma
Journal of Health Economics, forthcoming
Abstract:
Prior research has examined how late 1980s pregnancy-related Medicaid eligibility expansions influenced outcomes around the time of birth and, more recently, adult outcomes. We offer a close examination of early childhood effects to better understand the mechanism(s) underlying the improved longer-term outcomes. The restricted-access National Maternal and Infant Health Survey allows us to explore the effects of these expansions on maternal and child outcomes near the time of birth as well as three years post-birth. Our evidence suggests earlier connection with prenatal care and possible modest improvements in birthweight and gestational age. In our follow-up data, we also identify evidence of persistent effects as measured by child developmental scores. However, the most consistent finding is our strong evidence of reduced levels of maternal depression—both during the child's infancy and three years later. We conclude that the alleviation of maternal stress is one likely mechanism for the longer-term improvements in later-life outcomes identified in studies of children exposed to Medicaid in-utero and in early infancy.
Adverse Selection and Network Design Under Regulated Plan Prices: Evidence from Medicaid
Amanda Kreider et al.
NBER Working Paper, December 2022
Abstract:
Health plans for the poor increasingly limit access to specialty hospitals. We investigate the role of adverse selection in generating this equilibrium among private plans in Medicaid. Studying a network change, we find that covering a top cancer hospital causes severe adverse selection, increasing demand for a plan by 50% among enrollees with cancer versus no impact for others. Medicaid’s fixed insurer payments make offsetting this selection, and the contract distortions it induces, challenging, requiring either infeasibly high payment rates or near-perfect risk adjustment. By contrast, a small explicit bonus for covering the hospital is sufficient to make coverage profitable.
The Impact of Recent State and Local Minimum Wage Increases on Nursing Facility Employment
Peter McHenry & Jennifer Mellor
Journal of Labor Research, December 2022, Pages 345–368
Abstract:
Various U.S. states and municipalities raised their mandated minimum wages between 2017 and 2019. In some areas, minimum wages became high enough to bind for more professional workers, such as lower paid staff at nursing facilities. We add to the small prior literature on the effects of minimum wages on nursing facility staffing using novel establishment-level data on daily hours worked; these data allow us to examine changes in staffing hours along margins previously unexplored in the minimum wage literature. We find no evidence that minimum wage increases reduced hours worked among lower-paid nurses in nursing facilities. In contrast, we find that increases in state and local minimum wages increased hours worked per resident day by nursing assistants; increases occurred for the average of all days throughout the month and on weekend days. We also find that a higher minimum wage increased the share of days in the month that facilities meet at least 75% of the minimum recommended levels of staffing for nursing assistants. These results lessen concerns that minimum wage hikes may reduce the quality of resident care at nursing facilities.
The Effect of Performance Pay Incentives on Market Frictions: Evidence from Medicare
Atul Gupta, Guy David & Lucy (Kunhee) Kim
NBER Working Paper, November 2022
Abstract:
Medicare has increased the use of performance pay incentives for hospitals, with the goal of increasing care coordination across providers, reducing market frictions, and ultimately to improve quality of care. This paper provides new empirical evidence by using novel operations and claims data from a large, independent home health care firm with the Hospital Readmissions Reduction Program (HRRP) penalty on hospitals providing identifying variation. We find that the penalty incentive to reduce re-hospitalizations passed through from hospitals to the firm at least for some types of patients, since it provided more care inputs for heart disease patients discharged from hospitals at greater penalty risk and that contributed more patients to the firm. This evidence suggests that HRRP helped increase coordination between hospitals and home health firms without formal integration. Greater home health effort does not appear to have led to lower patient readmissions.
Understanding the relationship between nonprofit hospital community benefit spending and system membership: An analysis of independent hospital acquisitions
Kelsey Owsley & Richard Lindrooth
Journal of Health Economics, December 2022
Abstract:
The Internal Revenue Service (IRS) requires nonprofit hospitals to report community benefit spending to justify their nonprofit tax exemption. We examined whether nonprofit hospital acquisitions influence the amount and type community benefit spending. We analyzed 2011–2018 data on urban, nonprofit hospitals. The analysis dataset included 57 hospitals that were acquired and a matched control group. We estimated difference-in-differences specifications to measure the effect of acquisitions on total community benefit spending, and three subcategories – clinical, population health, and other spending types. We found that acquisitions led to decreased population health spending (−$0.32 million, p < 0.01) and other spending categories (−$1.5 million, p < 0.05), but no significant change in total or clinical spending. If the acquirer was located out-of-state, total community benefit spending declined by $2.4 million (p < 0.10). Our findings support the need for community benefit spending to be considered, along with quality, efficiency, and prices, when evaluating the welfare impact of acquisitions.