Providers
Marissa King & Peter Bearman
Social Science & Medicine, January 2017, Pages 153-162
Abstract:
The pharmaceutical industry spends roughly 15 billion dollars annually on detailing - providing gifts, information, samples, trips, honoraria and other inducements - to physicians in order to encourage them to prescribe their drugs. In response, several states in the United States adopted policies that restrict detailing. Some states banned gifts from pharmaceutical companies to doctors, other states simply required physicians to disclose the gifts they receive, while most states allowed unrestricted detailing. We exploit this geographic variation to examine the relationship between gift regulation and the diffusion of four newly marketed medications. Using a dataset that captures 189 million psychotropic prescriptions written between 2005 and 2009, we find that uptake of new costly medications was significantly lower in states with marketing regulation than in areas that allowed unrestricted pharmaceutical marketing. In states with gift bans, we observed reductions in market shares ranging from 39% to 83%. Policies banning or restricting gifts were associated with the largest reductions in uptake. Disclosure policies were associated with a significantly smaller reduction in prescribing than gift bans and gift restrictions. In states that ban gift-giving, peer influence substituted for pharmaceutical detailing when a relatively beneficial drug came to market and provided a less biased channel for physicians to learn about new medications. Our work suggests that policies banning or limiting gifts from pharmaceutical representatives to doctors are likely to be more effective than disclosure policies alone.
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Drug Shortages, Pricing, and Regulatory Activity
Christopher Stomberg
NBER Working Paper, December 2016
Abstract:
This study examines the patterns and causes of shortages in generic non-injectable drugs (e.g., tablets and topicals) in the United States. While shortages for injectable drugs have garnered more attention, shortages of other forms of prescription drugs have also been on the increase. In fact, they follow a strikingly similar trend with a number of important tablet drugs having recently been affected by shortage. This poses important questions about the root causes of these trends since most explanations found in the literature are specific to generic injectable drugs. Using a simple heuristic framework, three contributing factors are explored: regulatory oversight, potential market failures in pricing/reimbursement, and competition. This paper features an empirical examination of the contribution of changes in regulatory oversight to drug shortages. A pooled dynamic regression model using FDA data on inspections and citations reveals a statistically significant relationship between FDA regulatory activity (inspections and citations) and drug shortage rates. This result cuts across both injectable and non-injectable drugs, and could reveal a transition in equilibrium quality that should be transitory in nature, but it should also be interpreted with care given the other factors likely affecting shortage rates.
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Damage Caps and Defensive Medicine, Revisited
Myungho Paik, Bernard Black & David Hyman
Journal of Health Economics, forthcoming
Abstract:
Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic or total damages ("damage caps"), during the "second" reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the "third reform wave," from 2002-2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.
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The Effect of Tort Reform on Medical Malpractice Insurance Market Trends
Patricia Born & Bradley Karl
Journal of Empirical Legal Studies, December 2016, Pages 718-755
Abstract:
In this article, we examine the extent to which the timing of reforms to the tort liability system coincides with changes in medical malpractice insurance market conditions. Our research is motivated by the fact that, while policy discussions and academic research pertaining to the merits of tort reform often center on ex post effects, it is unclear whether reforms to the tort liability system are responsible for softening conditions in a medical malpractice insurance market that was previously deteriorating. Our analysis of tort reforms in the mid-2000s finds little evidence that state-level medical malpractice insurance losses incurred, premiums earned, or incurred loss ratios were increasing in the years immediately prior to the enactment of various tort reforms, making it difficult to attribute the observed softening of the medical malpractice insurance market that occurred in the mid to late 2000s to the enactment of tort reforms. Our conclusion is that, while tort reforms are effective policy tools for lowering levels of medical malpractice insurance losses incurred and improving insurer profitability, there is little evidence to suggest that reforms are an effective method for softening a medical malpractice insurance marketplace that is otherwise steadily deteriorating.
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Bernard Black, Amy Wagner & Zenon Zabinski
American Journal of Health Economics, forthcoming
Abstract:
According to tort law theory, medical malpractice liability may deter negligence by healthcare providers. However, advocates of malpractice reform often argue that most malpractice claims are unrelated to provider performance. We study the connection between hospital adverse events and malpractice claim rates in the two states with public datasets on med mal claim rates: Florida and Texas. We use Patient Safety Indicators ("PSIs"), developed by the Agency for Healthcare Research and Quality, to measure rates for 17 types of adverse events. Hospitals with high rates for one PSI usually have high rates for other PSIs. We find a strong association between PSI rates and malpractice claim rates with extensive control variables and hospital fixed effects (in Florida) or county fixed effects (in Texas). Our results, if causal, provide evidence that malpractice claims leading to payouts are not random events. Instead, hospitals that improve patient safety can reduce malpractice payouts. We also study local variation in adverse event rates, in the spirit of the Dartmouth Atlas work on variation in treatment intensity. We find large variations, both across counties and across hospitals within counties. This suggests that many adverse hospital events are avoidable at reasonable cost, since some hospitals are avoiding them.
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William Sage, Molly Colvard Harding & Eric Thomas
Health Services Research, December 2016, Pages 2615-2633
Objective: To describe the litigation experience in a state with strict tort reform of a large public university health system that has committed to transparency with patients and families in resolving medical errors.
Data Sources/Study Setting: Secondary data collected from The University of Texas System, which self-insures approximately 6,000 physicians at six health campuses across the state. We obtained internal case management data for all medical malpractice claims closed during 1 year before and 6 recent years following the enactment of state tort reform legislation.
Principal Findings: Closed claims dropped from 244 in 2001-2002 to an annual mean of 96 in 2009-2015, closures following lawsuits from 136 in 2001-2002 to an annual mean of 28 in 2009-2015, and paid claims from 60 in 2001 to an annual mean of 20 in 2009-2015. Patterns of resolution suggest efforts by the university to provide some compensation to injured patients in cases that were no longer economically viable for plaintiffs' lawyers to litigate. The percentage of payments relating to cases in which lawsuits had been filed decreased from 82 percent in 2001-2002 to 47 percent in 2009-2012 and again to 29 percent in 2012-2015, although most paid claimants were represented by attorneys. Unrepresented patients received payment in 13 cases closed in 2009-2012 (22 percent of payments; mean amount $60,566) and in 24 cases closed in 2012-2015 (41 percent of payments; mean amount $109,410). Even after tort reform, however, claims that resulted in payment remained slow to resolve, which was worsened for claimants subject to Medicare secondary payer rules. Strict confidentiality became a more common condition of settlement, although restrictions were subsequently relaxed in order to further transparency and improve patient safety.
Conclusions: Malpractice litigation risk diminished substantially for a public university health system in Texas following legal changes that reduced rights to sue and available damages. Health systems operating in a low-tort environment should work with policy makers, plaintiffs' attorneys, and patient groups to assist unrepresented patients, facilitate early mediation, limit nondisclosure obligations following settlement, and expedite the resolution of Medicare liens.
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Hospital Competition, Quality, and Expenditures in the U.S. Medicare Population
Carrie Colla et al.
NBER Working Paper, November 2016
Abstract:
Theoretical models of competition with fixed prices suggest that hospitals should compete by increasing quality of care for diseases with the greatest profitability and demand elasticity. Most empirical evidence regarding hospital competition is limited to heart attacks, which in the U.S. generate positive profit margins but exhibit very low demand elasticity - ambulances usually take patients to the closest (or affiliated) hospital. In this paper, we derive a theoretically appropriate measure of market concentration in a fixed-price model, and use differential travel-time to hospitals in each of the 306 U.S. regional hospital markets to instrument for market concentration. We then estimate the model using risk-adjusted Medicare data for several different population cohorts: heart attacks (low demand elasticity), hip and knee replacements (high demand elasticity) and dementia patients (low demand elasticity, low or negative profitability). First, we find little correlation within hospitals across quality measures. And second, while we replicate the standard result that greater competition leads to higher quality in some (but not all) measures of heart attack quality, we find essentially no association between competition and quality for what should be the most competitive markets - elective hip and knee replacements. Consistent with the model, competition is associated with lower quality care among dementia patients, suggesting that competition could induce hospitals to discourage unprofitable patients.
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Association Between the Opening of Retail Clinics and Low-Acuity Emergency Department Visits
Grant Martsolf et al.
Annals of Emergency Medicine, forthcoming
Methods: We used data from the Healthcare Cost and Utilization Project State Emergency Department Databases for 2,053 EDs in 23 states from 2007 to 2012. We used Poisson regression models to examine the association between retail clinic penetration and the rate of ED visits for 11 low-acuity conditions. Retail clinic "penetration" was measured as the percentage of the ED catchment area that overlapped with the 10-minute drive radius of a retail clinic. Rate ratios were calculated for a 10-percentage-point increase in retail clinic penetration per quarter. During the course of a year, this represents the effect of an increase in retail clinic penetration rate from 0% to 40%, which was approximately the average penetration rate observed in 2012.
Results: Among all patients, retail clinic penetration was not associated with a reduced rate of low-acuity ED visits (rate ratio=0.999; 95% confidence interval=0.997 to 1.000). Among patients with private insurance, there was a slight decrease in low-acuity ED visits (rate ratio=0.997; 95% confidence interval=0.994 to 0.999). For the average ED in a given quarter, this would equal a 0.3% reduction (95% confidence interval 0.1% to 0.6%) in low-acuity ED visits among the privately insured if retail clinic penetration rate increased by 10 percentage points per quarter.
Conclusion: With increased patient demand resulting from the expansion of health insurance coverage, retail clinics may emerge as an important care location, but to date, they have not been associated with a meaningful reduction in low-acuity ED visits.
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Do Good Reports Mean Higher Prices? The Impact of Hospital Compare Ratings on Cardiac Pricing
Avi Dor, William Encinosa & Kathleen Carey
NBER Working Paper, November 2016
Abstract:
Previous research found that the initiation of Hospital Compare (HC) quality reporting had little impact on patient outcomes. However little is known about its impact on hospital prices, which may be significant since insurers are positioned to respond to quality information when engaging hospitals in price negotiations. To explore this issue we estimate variants of difference-in-difference models allowing HC impacts to vary by levels of quality scores. We separately examine the effects of the three main scores (heart attack, heart failure, and combined mortalities) on transaction prices of two related cardiac procedures: bypass surgery and angioplasty. States which had mandated reporting systems preceding HC form the control group. Analyzing claims data of privately insured patients, we find that HC exerted downward pressure on prices, which we attribute to competitive pressures. However, hospitals ranked "above average" captured higher prices, thereby offsetting the overall policy effect. We conclude that HC was effective at constraining prices without penalizing high performers.
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Physician Agency and Patient Survival
Mireille Jacobson et al.
Journal of Economic Behavior & Organization, forthcoming
Abstract:
We investigate the role of physician agency in determining health care supply and patient outcomes. We show that an increase in health care supply due to a change in private physician incentives has a theoretically ambiguous impact on patient welfare. The increase can reflect either induced demand for ineffective care or a reduction in prior rationing of effective care. Furthermore, physician market structure matters in determining the welfare effects of changes in private physician incentives. We then analyze a change to Medicare fees that caused physicians to increase their provision of chemotherapy. We find that this increase in treatment improved patient survival, extending median life expectancy for lung cancer patients by about 18%. Consistent with the model, we find that while the treatment response was larger in less concentrated markets, survival improvements were larger in more concentrated markets.
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Sarah Stith & Richard Hirth
Journal of Economics & Management Strategy, Winter 2016, Pages 789-825
Abstract:
Performance standards are designed to ensure a basic level of quality, and through public reporting of firm performance, encourage firms to compete on quality thus allowing the market to determine the optimal level of quality. In markets with substantial excess demand, however, demand effects may be insufficient to induce any change in firm behavior and enforcement may be required to ensure high quality. Even with enforcement, quality still may not improve at underperforming firms if gaming the system is less costly than improving quality. We test whether information alone or with regulatory enforcement improves outcomes or elicits gaming behavior in our study of 266 kidney transplant centers between 2001 and 2012. In a context of excess demand induced by price controls, we show that information alone has no impact and enforcement may actually increase market inefficiencies; firms respond to costly quality requirements, not by improving quality, but by reducing supply, which exacerbates the disequilibrium between supply and demand, and by cream-skimming, which reduces access to transplantation among sicker patients.
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Does Health IT Adoption Lead to Better Information or Worse Incentives?
Gautam Gowrisankaran, Keith Joiner & Jianjing Lin
NBER Working Paper, December 2016
Abstract:
We evaluate whether hospital adoption of electronic medical records (EMRs) leads to increases in billing where financial gains are large or where hassle costs of complete coding are low. The 2007 Medicare payment reform varied both financial incentives and hassle costs of coding. We find no significant impact of financial incentives on billing levels, inconsistent with bill inflation. However, the reform led to increases in reported severity for medical relative to surgical patients at EMR hospitals, consistent with EMRs decreasing coding costs for medical patients. Greater post-reform completeness of coding with EMRs may increase Medicare costs by $689.6 million annually.
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Margaret Langelier et al.
Health Affairs, December 2016, Pages 2207-2215
Abstract:
Dental hygienists are important members of the oral health care team, providing preventive and prophylactic services and oral health education. However, scope-of-practice parameters in some states limit their ability to provide needed services effectively. In 2001 we developed the Dental Hygiene Professional Practice Index, a numerical tool to measure the state-level professional practice environment for dental hygienists. We used the index to score state-level scopes of practice in all fifty states and the District of Columbia in 2001 and 2014. The mean composite score on the index increased from 43.5 in 2001 to 57.6 in 2014, on a 100-point scale. We also analyzed the association of each state's composite score with an oral health outcome: tooth extractions among the adult population because of decay or disease. After we controlled for individual- and state-level factors, we found in multilevel modeling that more autonomous dental hygienist scope of practice had a positive and significant association with population oral health in both 2001 and 2014.
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The Effect of Certificate of Need Laws on All-Cause Mortality
James Bailey
Health Services Research, forthcoming
Data Sources: The data of 1992-2011 all-cause mortality are from the Center for Disease Control's Compressed Mortality File; control variables are from the Current Population Survey, Behavioral Risk Factor Surveillance System, and Area Health Resources File; and data on Certificate of Need laws are from Stratmann and Russ (2014).
Study design: Using fixed- and random-effects regressions, I test how the scope of state Certificate of Need laws affects all-cause mortality within US counties.
Principal Findings: Certificate of Need laws have no statistically significant effect on all-cause mortality. Point estimates indicate that if they have any effect, they are more likely to increase mortality than decrease it.
Conclusions: Proponents of Certificate of Need laws have claimed that they reduce mortality by concentrating more care into fewer, larger facilities that engage in learning-by-doing. However, I find no evidence that these laws reduce all-cause mortality.
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Jeongyoung Park et al.
Medical Care Research and Review, forthcoming
Abstract:
We explore the extent to which state scope of practice laws are related to nurse practitioners (NPs)' day-to-day practice autonomy. We found that NPs experienced greater day-to-day practice autonomy when they had prescriptive independence. Surprisingly, there were only small and largely insignificant differences in day-to-day practice autonomy between NPs in fully restricted states and those in states with independent practice but restricted prescription authority. The scope of practice effects were strong for primary care NPs. We also found that the amount of variation in day-to-day practice autonomy within the scope of practice categories existed, which suggests that factors other than state scope of practice laws may influence NP practice as well. Removing barriers at all levels that potentially prevent NPs from practicing to the full extent of their education and training is critical not only to increase primary care capacity but also to make NPs more efficient and effective providers.
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Geographical Distribution of Emergency Department Closures and Consequences on Heart Attack Patients
Yu-Chu Shen & Renee Hsia
NBER Working Paper, November 2016
Abstract:
We develop a conceptual framework and empirically investigate how a permanent emergency department (ED) closure affects patients with acute myocardial infarction (AMI). We first document that large increases in driving time to closest ED are more likely to happen in low-income communities and communities that had fewer medical resources at baseline. Then using a difference-in-differences design, we estimate the effect of an ED closure on access to cardiac care technology, treatment, and health outcomes among Medicare patients with AMI who lived in 24,567 ZIP codes that experienced no change, an increase of <10 minutes, 10 to <30 minutes, and ?30 minutes in driving time to their closest ED. Overall, access to cardiac care declined in all communities experiencing a closure, with access to a coronary care unit decreasing by 18.64 percentage points (95% CI -30.15, -7.12) for those experiencing ?30-minute increase in driving time. Even after controlling for access to technology and treatment, patients with the longest delays experienced a 6.58 (95% CI 2.49, 10.68) and 6.52 (95% CI 1.69, 11.35) percentage point increase in 90-day and 1-year mortality, respectively, compared with those not experiencing changes in distance. Our results also suggest that the predominant mechanism behind the mortality increase appeared to be time delay as opposed to availability of specialized cardiac treatment.