Unbiased Analysis of Today's Healthcare Issues

How important is having a good nurse?

Written By: Jason Shafrin - Oct• 08•14

Perhaps unfairly, doctors get all the credit. When patients have better health outcomes, physicians are rewarded; when they have worse health outcomes, the physician is blamed. However, the quality of nurses also likely affects the quality of care that patients receive. A recent paper by Yakusheva, Lindrooth and Weiss (2014) finds that nurse quality does affect outcomes. Using an EHR-based measure of patient health (the Rothman Index), the authors find the following:

Nurse effects were jointly significant and explained 7.9 percent of variance in patient clinical condition change during hospitalization. NVA was positively associated with having a baccalaureate degree or higher (0.55, p = .04) and expertise level (0.66, p = .03). NVA contributed to patient outcomes of shorter length of stay and lower costs.

One issue not addressed is nurse assignment to patients. The empirical approach basically assumes that nurse assignment to patients is uncorrelated with nurse quality. In reality, the highest quality nurses may take the most difficult cases in some hospitals. One might believe that the highest quality nurses would be assigned to case where they would have the largest improvement in outcomes. However, management’s utility function may not be linear in patient outcomes. For instance, management may assign high-quality nurses to critically ill patients and these high-quality nurses may move the patients from critically ill to sick; a feat that may not be feasible for low-quality nurses. Low quality nurses could move moderately ill patients to excellent health, but this feat may be easier than moving patients from critically ill to sick. Thus, if risk adjustment is inadquate, high quality nurses may be more valueable even then the figures from this study state.

One conclusions that the authors incorrectly draw is that their results “…strengthen the body of evidence in support of strategic federal, state, and health system initiatives to build toward a baccalaureate-educated workforce.” Although it is true that nurses with a BA are more likely to be high-performing nurses, there is no evidence that getting a BA has a causal effect on outcomes; nurses who were motivated to get a BA were likely going to be the best nurses regardless of the education received.

Although these results are not surprising–high-quality nursing should clearly result in better patient outcomes than low-quality–this study does make the important point that physicians are not the only healthcare providers who play an important role in hospitalized patients’ health outcomes.

Do specialty drugs provide good value?

Written By: Jason Shafrin - Oct• 07•14

Specialty drugs have greatly improved quality and duration of life for many patients.  Specialty drugs have been developed for a variety of illnesses, such as cancer, hepatitis C, rheumatoid arthritis, and multiple sclerosis.  However, these drugs are typically very expensive.  Are they worth the cost?

A paper by Chambers et al. (2014) find the following:

…specialty drugs offered greater QALY gains (0.183 versus 0.002 QALYs) but were associated with greater additional costs ($12,238 versus $784), compared to traditional drugs. The two types of drugs had comparable cost-effectiveness. However, the distributions across the two types differed, with 26 percent of specialty drugs—but only 9 percent of traditional drugs—associated with incremental cost-effectiveness ratios of greater than $150,000 per QALY. Our study suggests that although specialty drugs often have higher costs than traditional drugs, they also tend to confer greater benefits and hence may still offer reasonable value for the money.


Pharmaceutical Cost Offsets

Written By: Jason Shafrin - Oct• 06•14

Does increasing use of prescription drugs decrease cost?  There is evidence on both sides of the aisle.  However, a recnet paper by Deb, Trevedi and Zimmer (2014) does find evidence of cost offsets using a sophisticated copula-based bivariated dynamic hurdle model.  This model, models drug and non-drugs spending and for each dimensions models the probability of $0 spending using a probit and then models log spending levels conditional on positive spending using a gamma distribution.  Using Medical Expenditure Panel Survey data, the authors find:

There is evidence of greater than dollar-for-dollar cost-offsets of expenditures on prescribed drugs for relatively low levels of spending on drugs and less than dollar-for-dollar cost-offsets at higher levels of drug expenditures.

This is a perfectly sensible conclusion. Effective drugs do reduce medical spending. Likely, cost-offset are smaller when a drug is branded.  For instance, consider an effective drug that reduces hospitalization costs by $10,000 but costs $12,000. This is a less than dollar-for-dollar offset. Now assume that after a few years the drug becomes generic and costs only $500. In this case, the reduction in hospilization cost is still $10,000 so there is a more than dollar for dollar offset. Some people may interpret this finding as that generic drugs are more cost effective than branded drugs. While this may be drug in some static sense, without the higher prices for brands, innovative new drugs would not come to market. It would be interesting to see whether over the life of a drug (say 20-30 years) are the cost offsets more or less than dollar for dollar when taking into account both the time the drug spent on and off patent.

Regardless, the Deb paper clearly shows that many drugs do produce cost offsets.


What does an ACO look like?

Written By: Jason Shafrin - Oct• 05•14

ACOs are all the rage, but what does a typical ACO look like ? A study by Shortell et al. (2014) attempts to answer this question using data from the National Survey of ACOs.

This survey includes ACOs participating in Medicare, Medicaid, or commercial payer programs.  The authors consider eight attributes for creating an ACO taxonomy including: “ACO’s size, number of different types of participating provider organizations within the ACO (including nursing or postacute care facilities), the scope of services offered, whether the ACO belongs to an integrated delivery system (IDS), the percent of primary care clinicians, their institutional leadership model, the performance management system used for accountability, and the ACO’s prior experience with payment models other than fee-for-service.”

They classify ACOs into three separate types:

  • Larger integrated delivery systems (40%). Largely self-identifying as an integrated delivery system, most of these ACOs are large (mean of 566 FTE physicians) and offer a broad scope of services.  About 40 percent of these organizations are physician-led.  Further, about 30 percent of ACOs in this category have postacute facilities. “These ACOs have the most experience with payment reform but are relatively lower on their use of performance management/accountability mechanisms.”
  • Smaller, physician-led ACOs (34%). These ACOs are physician-lead and are not associated with an IDS. They offer a narrow scope of services, with fewer doctors (mean of 181 FTE physicians)  and few include nursing facilities.  Most have many PCPs, but little experience with payment reform.   They have a high degree of performance management/accountability in place.
  • Hybrid ACOs (26%). A hybrid of the two categories above, these groups are of moderate size (mean of 351 FTE physicians) and a moderately large range of services, with about 3 in 10 including post acute services.  “They tend to be hospital-led, coalition-led, state/region/county-led, or some other arrangement…” and these entities have some experience with payment reform and relatively low scores on performance management/accountability.

In summary, one should not think of ACOs as a single simplistic entity as this study highlights some of the diversity–as well as some of the commonalities–across ACOs.

The authors also describe relative ACOs performance on cost and quality measures across these three groups.

Weekend Reading

Written By: Jason Shafrin - Oct• 04•14

Funding for Digital Medicine on the rise

Written By: Jason Shafrin - Oct• 02•14

What is digital health?  Although a single definition is hard to fine, digital health uses data collected from patients to improve care.  Mobile health, the use of electronic medical records, the “quantified self” movement and various forms of health information technology all count as digital health.

Is digital health just a fad or will it revolutionize health care?   If you look where the money is going, a good bet is on the latter. WonkBlog reports:

Companies in the Big Data and analytics space are the biggest fundraisers this year, with 77 deals totaling $1.17 billion, according to StartUp Health. That’s followed by companies that help navigate the health-care system (40 deals, $794 million) and practice management (26 deals, $598 million).

This isn’t just a San Francisco phenomenon either, though that city leads the country in digital health funding this year (62 deals, raising $948 million). It’s followed by New York ($584 million, 33 deals) and the D.C./Maryland area ($536 million, 14 deals).

The question seems now whether or not digital health will be the wave of the future, but rather exactly how it will affect the care provided to patients in the US and around the world.


Visit your doctor whenever you like

Written By: Jason Shafrin - Oct• 01•14

Typical hours when illness strikes is 24 hours a day, 7 days per week.  In the US, typical physician hours are 9-5, Monday through Friday.

Although this is changing (CVS Minute Clinics have Saturday and Sunday hours), it is still difficult for individuals who are work and are ill to see a doctor without taking time off for work.

In England, however, this may no longer be an issue. The UK’s National Health Service is planning a pilot program where patients will have access to primary care physicians 7 days per week.  Pharmafile reports:

Cameron says: “People need to be able to see their GP at a time that suits them and their family. That’s why we will ensure everyone can see a GP seven days a week by 2020. We will also support thousands more GP practices to stay open longer – giving millions of patient’s better access to their doctor.”

The plans are part of a new GP contract to be announced later today. In April the government launched a £50m pilot scheme where practices in nine key areas of England were able to bid for money in order to open from 8am to 8pm seven days a week, in addition to offering Skype consultations.

Despite these plans, fewer physicians in the UK are going into primary care. Thus, will the UK have the staff to fulfill these promises? Will it have the budget since these doctors likely would require salary increases to work nights and weekends?


CoR #218

Written By: Jason Shafrin - Oct• 01•14

David Williams of the Health Business Blog hosts this week’s abbreviated – but meaty – Cavalcade of Risk. From child-proofing your vacay to unique weorker’s comp risk calculations, you’re sure to find something interesting

What share of society’s “raise” should go to healthcare?

Written By: Jason Shafrin - Sep• 30•14

Politico.com has an interesting series of articles titled Obamacare 2.0, which examines different perspectives on how to improve the Affordable Care Act.   One common theme in about half the articles is that the ACA does not do enough to cut healthcare spending.

The rise in healthcare spending over the past few decades has been significant.  In 1995, 13.6% of the economy went to healthcare.  By 2012, this figure had climbed to 17.9%.  The CBO projects that federal spending on Medicare, Medicaid, CHIP and health insurance exchange subsidies will rise by 85% between 2014 and 2024.  Further, 22% of the federal budget goes to Medicare, Medicaid and CHIP, and this figure will only rise as the baby boomers retire.

Those who focus on cost control have a valid point which cannot be discounted, especially as it relates to the fiscal solvency of the federal government.

On the other hand, consider where else you would want to spend your money besides healthcare.  In 1995, per capita GDP in the US was $28,782.  By 2012, this figure had risen to $51,755.  In other words, each person saw an increase of $22,973 in income on average.  Of this increased income, $5,353 went to healthcare and $17,620 went to non-healthcare items.

Ignoring issues of the unequal distribution of income, one might think that by 1995 the US had sufficient income to cover the basic needs (e.g., clothing, food, housing) for all its citizens.  If this is the case, then how would you rather spend your money?  Nicer cars?  Bigger houses?  Better education?  Certainly.  However,  many believe that healthcare is a luxury good and that as society’s income increases, society and individuals become more willing to pay a larger share of their income towards healthcare.  Life is short and one cannot enjoy and of the aforementioned luxuries if you are not alive and healthy.

To put the increase in health spending another way, in essence, society got a 3.5% raise every year between 1995 and 2012 and we decided to spend 23 cents of every dollar of that raise on health care and 77 percent of the raise on everything else.

That doesn’t sound like too crazy a breakdown to me.

Reimbursement Rates and Quality

Written By: Jason Shafrin - Sep• 29•14

How do reimbursement rates affect quality?  One school of thought holds that decreased reimbursement decreases quality in the short-run and decreases innovation in the long-run.  Another school of thought believes that there is so  much inefficiency in the health care system, that reducing reimbursement rates will have no affect  on quality.  Which answer is correct?

A study by Wu and Shen (2014) aims to answer this question by examining the long-run impact on quality of the reimbursement rate reductions from the Balanced Budget Act of 1997 (BBA).  Why is the BBA so important?

With the exception of the Prospective Payment System (PPS), the BBA is the only legislation that reduced Medicare inpatient payments in nominal terms, rather than just slowing down the growth rate.  Second, BBA payment cuts could have a long-lasting effect on hospitals because the legislation not only reduced diagnosis-related group (DRG) payment levels between 1998 and 2002 but also permanently altered the formula for special add-on payments [i.e., DSH and IME payments]…Third, Medicare BBA reductions occurred after a sustained period of declining inpatient admissions and lengths of stay, as well as aggressive payment negotiations from managed care plans (Wu 2009) that limited hospital ability to cost shift to private payers.

Using MedPAR data between 1995 and 2005, the author uses a DDD design.  They compare “…the relative change in mortality trends between large- and small-cut hospitals before and after the BBA.”  They find that:

…the BBA generated long-term financial pressure to hospitals that extended beyond the BBA implementation period. While there is a general declining trend in AMI mortality rate, Medicare patients treated at hospitals facing a large degree of such fi nancial pressure experienced smaller improvement in mortality outcomes relative to patients treated in small-cut hospital, not in the short run, but in the longer run post-BBA period. The elasticity  of the effect, while small ( 0.2), is constant and consistently observed from 7-day to 1-year post hospitalization…hospitals responded to BBA cuts by reducing operating costs per bed immediately after the BBA took effect, and such effort involved a reduction in staffing, particularly among registered nurses.