Unbiased Analysis of Today's Healthcare Issues

The uselessness of volume-based hospital analysis

Written By: Jason Shafrin - Apr• 13•14

Do hospitals with higher volumes have better outcomes? If hospitals specialize or providers learn-by-doing, hospitals with more admissions or more procedures may have higher quality. A paper by Hentschker and Mennicke (2014) examine just this question and find:

We define hypothetical minimum volume standards in both conditions and assess consequences for access to hospital services in Germany. The results show clearly that patients treated in hospitals with a higher case volume have on average a significant lower probability of death in both conditions [aortic aneurysm and hip fracture]. Furthermore, we show that the hypothetical minimum volume standards do not compromise overall access measured with changes in travel times.

The bigger question is, is this an important finding? I would say the answer is ‘no’. Even if it is the case that bigger hospitals perform better, requiring patients to go to high-volume hospitals is likely only optimal in a short-run equilibrium. In the long-run, prohibiting small hospitals from doing certain procedures in essence will give large hospitals increased market share and perhaps even a pseudo-monopoly. Thus, in the long-run quality will likely suffer. Further, new entrants with innovative surgical techniques would be barred from the market since they do not have sufficient volume.

Even if volume is highly correlated with quality, a preferred alternative would be to distribute this quality information more widely to patients. Even if policymakers wished to restrict access only to the highest quality hospitals, it would make more sense to prohibit patients from going to low-quality hospitals directly rather than using a proxy.

In some cases, quality measures may be incomplete. In this case, volume may serve as a good proxy for quality. However, without good quality measures, it is difficult to verify if this the case.

In summary, knowing whether high volume hospitals have better quality outcomes is an interesting academic finding, but has little practical application.

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