Authors: Brach C, and Fraser I.
Title: Reducing Disparities through Cultural Competent Health Care: An Analysis of the Business Case.
Publication: Quality Management in Health Care 10(4):15-28.
Abstract: The persistence of racial and ethnic disparities in health care access, quality, and outcomes has prompted considerable interest in increasing the cultural competence of health care, both as an end in its own right and as a potential means to reduce disparities. Health care organizations have financial incentives to become culturally competent, but limitations inherent in these incentives must be overcome if cultural competence is to become widespread.
Availability: AHRQ Publication No. 02-R081 is available from the AHRQ Publications Clearinghouse.
Authors: Friedman B., Devers K., Steiner C., Fox, S.
Title: The Use of Expensive Health Technologies in the Era of Managed Care: The Remarkable Case of Neonatal Intensive Care.
Publication: Journal of Health Politics, Policy and Law 27(3)441-64
Abstract: The use of neonatal intensive care (NIC) continued to rise rapidly in the 1990s despite the concerns of observers about cost-effectiveness of NIC in some cases and better outcomes in facilities with high volume and capabilities. The study tested the effects of insurance type, competition among hospitals, and market pressure from managed care plans on the supply and cost of NIC. Key findings are that the decision of a hospital to offer NIC was associated with teaching status, the proportion of infants in the market area with high documented risk, and the market concentration of major competitors. The market share of managed care plans, and the concentration of enrollment, was not associated with NIC being offered or the standardized charges. Whether a particular patient was admitted to a NICU depended on patient risk factors, whether a NICU was present, but not on payer group. The results are consistent with the hypothesis that young insured parents (with the advice of their obstetricians) prefer hospitals with NIC, and also are relatively profitable enrollees for health plans.
Authors: Jiang HJ, Begun JW.
Title: Dynamics of Change in Local Physician Supply: An Ecological Perspective.
Publication: Social Science and Medicine 54(10):1525-41.
Abstract: An ecological framework was proposed that explains the growth of a physician population by four mechanisms—the intrinsic properties of this physician population; the local market's carrying capacity, determined by three environmental dimensions (munificence, concentration, diversity); competition within the same physician population; and interdependence between different physician populations. The study period is from 1985 to 1994, during which dramatic changes occurred in the health care sector—an unprecedented growth in managed care, increased hospital consolidation and organized physician practice. MSA level data were compiled from ARF, the AHA Annual Surveys of Hospitals, the AMA Census of Medical Groups, the InterStudy National HMO Census, and the U.S. County Business Patterns. Both changes in the number and percentage of physicians in a particular specialty population were examined. Variables measuring three environmental dimensions were found to have significant and differential effects on change in the size of different specialty populations. For instance, hospital consolidation and managed care penetration both showed significant positive effects on growth of the generalist population but suppressing effects on growth of the specialist population. MSAs with higher percentages of for-profit hospitals had significant increases in the percentage of specialists.
Authors: Wong H., Hellinger F.
Title: Conducting Research on the Medicare Market: The Need for Better Data and Methods.
Publication: Health Services Research 2001 Apr;36(1 Part 2):291-308.
Abstract: This study highlights data limitations, the need to improve data collection, the need to develop better analytic methods, and the need to use alternative data sources to conduct research related to the Medicare program. These objectives are achieved by reviewing existing studies on risk selection in Medicare HMOs, examining their data limitations, and introducing a new approach that circumvents many of these shortcomings. Data for 1995-97 for five States (Arizona, Florida, Massachusetts, New York, and Pennsylvania) from the HCUP State Inpatient Databases (SID), maintained by AHRQ and the Health Care Financing Administration's Medicare Managed Care Market Penetration Data Files and Medicare Provider Analysis and Review Files are used in this study. The authors analyzed hospital utilization rates for Medicare beneficiaries in the traditional fee-for-service Medicare and Medicare HMO sectors and examine the relationship between these rates and the Medicare HMO penetration rates. Medicare HMOs were found to have lower hospital utilization rates than their fee-for-service counterparts, differences in utilization rates vary across States, and that HMO penetration rates are inversely related to the rough measure of favorable selection. The authors conclude that substantial growth in Medicare HMO enrollment and the implementation of a new risk-adjusted payment system have led to an increasing need for research on the Medicare program. Improved data collection, better methods, new creative approaches, and alternative data sources are needed to address these issues in a timely and suitable manner.
Authors: Encinosa W, Seldon T.
Title: Designing Employer Health Benefits for Heterogeneous Workforces: Risk Adjustment and Its Alternatives.
Publication: Inquiry 38:270-9.
Date: Fall 2001
Abstract: Many health economists recommend that employers provide employees with a risk-adjusted choice among competing health insurance plans. Formal risk adjustment is, however, rarely if ever used by employers. This paper examines a range of health benefit design options that are available to employers, focusing attention not only on risk adjustment but also on its alternatives. We argue that while formal risk adjustment is rare, employers commonly use strategies that accomplish some of the same objectives and at less cost.
Author: Encinosa W.
Title: A comment on Neudeck and Podczeck's "adverse selection and regulation in health insurance markets."
Publication: Journal of Health Economics 20(4): 667-73.
Abstract: Using the Grossman equilibrium concept, Neudeck and Podczeck [Journal of Health Economics 15:387] show that imposing a minimum standard on a perfectly competitive insurance market can result in anti-competitive effects: decreased welfare with some insurers earning positive profits. However, the Grossman concept precludes an insurer from offering two separating, cross-subsidizing health plans. When an insurer can offer multiple plans (as under both the Nash and Miyazaki-Wilson equilibrium concepts), minimum standards result in a doubleton equilibrium, never allow positive total profits, and increase welfare. This is of interest since in 1997 more than half of establishments in the US offering choice of multiple plans did so through a single insurer.
Authors: Brach C, Sanches L, Young D, et al.
Title: Wrestling with typology: Penetrating the "black box" of managed care by focusing on health care system characteristics.
Publication: Med Care Res Rev 57(Suppl 2):93-115.
Abstract: The health care system has undergone a fundamental transformation, undermining the usefulness of the typology of HMO, IPA, PPO, etc. The authors present a new approach to studying the health care system. In matrix form, they have identified a set of organizational and delivery characteristics with the potential to influence outcomes of interest, such as access to services, quality, health status and functioning, and cost. The matrix groups the characteristics by domain (financial features, structure, care delivery and management policies, and products) and by key roles in the health care system (sponsor, plan, provider intermediary organization, and direct services provider). The matrix is a tool for researchers, administrators, clinicians, regulators and policy makers, and data collectors. It suggests a new set of players to be studied; emphasizes the relationships among the players; and provides a checklist of independent, control, and interactive variables to be included in analyses.
Availability: AHRQ Publication No. 01-R014 is available from the AHRQ Publications Clearinghouse.
Author: Young GJ, Desai KR, Hellinger FJ.
Title: Community control and pricing patterns of nonprofit hospitals: An antitrust analysis.
Publication: Journal of Health Politics, Policy, and Law 25(6):1051-81.
Abstract: The traditional control of nonprofit hospitals by the communities they serve has been offered as a justification for restraining antitrust enforcement of mergers involving nonprofit hospitals. Community control is arguably a constraint on a nonprofit hospital's inclination to exercise market power in the form of higher prices. However, community control is likely to be attenuated for hospitals that through merger or acquisition become members of hospital systems, particularly those that operate on a regional or multi-regional basis. In this paper the authors report findings from a study in which they used a panel data set to examine empirically the relationship between market concentration and price growth for three types of nonprofit hospitals: independent (or stand alone) facility, member of local hospital system, and member of non-local hospital system. Study results indicated that (1) all three types of nonprofit hospitals exercised market power in the form of higher prices and (2) hospitals that were members of non local systems were more aggressive in exercising market power than were either independent or local system hospitals. The results have important implications for antitrust enforcement policy.
Author: Friedman B.
Title: Excess capacity: Commentary on the evolution of analysis
Publication: Health Services Research 33(6):1669-82.
This article is a response to "Excess capacity: Markets, regulations,
and values," written by Professor Carolyn Madden. Dr. Friedman formulates
more carefully and augments Professor Madden's assessment of divergent
viewpoints on the issues of excess bed capacity and costs in hospitals,
as well as questions the evidence for her conclusions about changes in
dominant conceptual frameworks.
Availability: AHCPR Publication No. 99-R046 is available from the AHRQ Publications
Author: Friedman B, Steiner C.
Title: Does managed care affect the
supply and use of ICU services?
Publication: Inquiry 1999 Spring;(36):68-77.
In two States that differ greatly in hospital ownership and history
of regulation, we find that the services per ICU user are less for managed
care patients than for other privately insured. In Massachusetts, the differences
across payers disappear for hospitals where the total supply of ICU is
low in relation to expected demand. In both States, admission to ICU is
not significantly different between managed care and other privately insured.
Availability: AHCPR Publication No. 99-R071 is available from the AHRQ Publications Clearinghouse.
Authors: Luce B, Elixhauser A.
Title: Documenting the value of your
product—Outcomes research for medical devices.
Publication: Medical Devices and
Diagnostic Imaging Jan 1999:159-68.
The market for medical technologies is changing. This market is more
austere and more demanding, and new technologies are being scrutinized more
closely than ever before. This article describes the new medical marketplace
and helps device manufacturers become proactive in demonstrating the
value of their products. Rather than trying to catch up when the demands
for information are thrust upon them, a proactive approach helps smooth
the way for product development, marketing, and acceptance.
Author: Hellinger F.
Title: Antitrust enforcement in the health care industry:
The expanding scope of State activity.
Publication: Health Services Research
This study examines State laws that attempt to immunize mergers and
other cooperative agreements among health care providers from federal antitrust
prosecution. These laws are referred to as State health care antitrust
exemption laws (SHAELs), and since 1992, 20 States have passed such
laws. This study also examines the increasing activity of many State attorney general's offices
involving collaborative activities among health-related organizations. In particular, the study reviews instances where merging hospitals
have obtained State antitrust consent decrees that entail ongoing oversight
Availability: AHCPR Publication No. 99-R030 is available
from the AHRQ Publications Clearinghouse.
Author: Brach C, ed.
Title: AHCPR research about managed care.
Abstract: This Program Note describes recent research projects supported by AHCPR, some with other agencies in the Department of Health and Human Services, or conducted by AHCPR researchers on managed care. Most research on managed care has been conducted in HMOs, the prototypic managed care organization. These studies are designed to produce information that, ultimately, will improve consumer choice, improve the quality and value of health care services, and support and improve the marketplace. The Program Note organizes the studies into these categories: Changes in Health Care Markets; Organization and Delivery of Services; Impact on Clinical Decisionmaking, Access, and Quality; Interventions that Improve Outcomes; Informing Consumers; Impact on Cost; Rural Studies; Tools; and Fostering Research.
Availability: AHCPR Publication No. 97-0023 is available from the AHRQ Publications Clearinghouse. Online version.
Authors: Brooks J, Dor A, Wong H.
Title: Hospital-insurer bargaining:
An empirical investigation of appendectomy pricing.
Publication: Journal of Health
Employers' increased sensitivity to health care costs has forced insurers
to seek ways to lower costs through effective bargaining with providers.
What factors determine the prices negotiated between hospitals and insurers?
The hospital-insurer interaction is captured in the context of a bargaining
model, in which the gains from bargaining are explicitly defined. Appendectomy
was chosen because it is a well defined procedure with little clinical
variation. The authors' results show that certain hospitals' institutional arrangements
(e.g., hospital affiliations), HMO penetration, and greater hospital concentration
improve hospitals' bargaining position. Furthermore, hospitals' bargaining
effectiveness has diminished over time and varies across States.
Availability: AHCPR Publication No. 97-R089 is available from the AHRQ Publications Clearinghouse.
Authors: Brooks J, Dor A, Wong H.
Title: The impact of physician payments
on hospital-insurer bargaining in the U.S.
Publication: In Governments and Health Systems: Implications of Differing Involvements, edited by Chinitz D, Cohen J.
New York (NY): John Wiley and Sons, Ltd.
While there has been considerable research on the impact of hospital
competition on the insurers' ability to extract price discounts from hospitals,
the role physicians play in the hospital-insurer bargaining process has
been largely ignored. The hospital-insurer interaction can be thought of
as a two-player bargaining game in which financial pressures from physicians
can alter incentives. An application of the Nash-bargaining game leads
to an empirical specification of hospital pricing in which payments to
physicians are explicitly recognized. The authors' results show that certain
hospital institutional arrangements (e.g., ownership type and hospital
affiliations) and greater hospital concentration improve hospitals bargaining
position. Although the new estimation strategy does effect the results
somewhat, they provide added confidence to the notion that price competition
is on the rise among U.S. hospitals.
Authors: Dor A, Duffy S, Wong H.
Title: Expense preference behavior
and contract-management: Evidence from U.S. hospitals.
Publication: Southern Economic
This article reports on a study of expense preference behavior in a conditional
sample of hospitals (before and after adoption of contract-management arrangements),
using an extension of Mester's (1989) test. Expense preference theory maintains
that managers of firms that possess market power and in which ownership
is separate from control will employ an input mix that deviates from the
cost minimizing input mix. Based on this test, contract managers do not
appear to be cost minimizers, although they tend to exhibit lower expense
preference behavior than salaried managers.
Authors: Encinosa W, Sappington D.
Title: Competition among health maintenance
Publication: Journal of Economics and Management Strategy 6:129-50.
This article develops a model of competition among health maintenance
organizations (HMOs) to analyze the effects of market power, scale economics,
and asymmetric knowledge of health risk on market outcomes. Competition
among HMOs may, but need not, ensure socially preferred outcomes. Market
power or scale economics can sometimes admit socially preferred outcomes
when they would otherwise not arise. Asymmetric knowledge of health risk
may or may not be constraining. When it is constraining, a variety of patterns
of incomplete health insurance can arise, along with excessive or insufficient
treatment and preventive care for either high-risk or low-risk individuals.
Author: Fraser I.
Title: Access to health care.
Publication: In Health Politics and
Policy, edited by L. R. T. Littman. Albany, (NY): Delmar Publishers.
This article examines threats to health care access, dynamics of coverage,
and three important trends affecting access to health care in America—the
downsizing and decentralization of public programs and restructuring of
the private health care market, increased enrollment in managed care organizations,
and the greater power of purchasers.
Availability: AHCPR Publication No. 98-R003 is available from the AHRQ Publications
Author: Fraser I.
Title: Research on health care organizations and markets—The
best and worst of times.
Publication: Health Services Research 32(5):669-78.
This article contains reflections from four short papers commissioned
by AHCPR in January 1997 to identify central managed care research questions
in the areas of health care markets, access, chronic illness, and long
Availability: AHCPR Publication No. 98-R019 is available from the AHRQ Publications Clearinghouse.
Authors: Miller M, Welch W, Wong H.
Title: Exploring the relationship
between inpatient facility and physician services.
Publication: Med Care 1997;35(2):114-27.
Abstract: Available on PubMed®
Availability: AHCPR Publication No. 97-R045 is available
from the AHRQ Publications Clearinghouse.
Author: Hellinger F.
Title: The expanding scope of State legislation.
Publication: JAMA 276(13):1065-70.
This study examines three types of State laws that regulate managed
(1) Laws that limit the ability of managed care plans to direct
the flow of patients to specific (e.g., direct access laws, any-willing-provider
laws, and freedom-of-choice laws). (2) Laws that prohibit contracts between
managed care plans and providers that establish exclusive relationships
(i.e., contracts that do not permit providers to sign contracts with other
managed care plans). (3) Laws that mandate minimum lengths of hospital
stay for deliveries. Arguments advocating and resisting these laws are
examined along with information about their impact on the cost and quality
Availability: AHCPR Publication No. 97-R025 is available from the AHRQ Publications
Author: Wong H.
Title: Market structure and the role of consumer information
in the physician services industry: An empirical test.
Publication: Journal of Health
This article uses the Panzar and Rosse econometric test of market structure
to evaluate the market for physician services. The article tests the hypothesis that
an increase in the number of physicians causes consumer "informational
Availability: AHCPR Publication No. 97-R005 is available from the AHRQ Publications Clearinghouse.
Author: Hellinger F.
Title: Any-willing-provider and freedom-of-choice laws:
An economic assessment.
Publication: Health Aff 14(4):297-302.
In recent years the prerogative of managed care plans to selectively
contract with health care providers to establish networks of preferred
providers has been circumscribed in many States through the enactment of
any-willing-provider and freedom-of-choice laws. This study considers arguments
for and against these laws, and reviews evidence on their impact.
Availability: AHCPR Publication No. 96-R030 is available from the AHRQ Publications
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