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One-fifth of California's nonprofit community hospitals do not provide community benefits sufficient to balance their tax subsidies

Nonprofit hospitals in the United States are exempt from Federal corporate income taxes and other taxes, amounting to annual tax subsidies of $8.5 billion nationwide. About 80 percent of nonprofit community hospitals in California provide uncompensated care for community patients equal to the tax subsidies they receive, but another 20 percent do not. The average shortfall per hospital was nearly $815,000 in 1991 for a total shortfall of more than $40 million that year, according to a study supported by the Agency for Health Care Policy and Research (HS07266). And, most hospitals that do not provide community benefits (i.e., charity care and forgiving bad debts) sufficient to balance their tax subsidies tend not to do so consistently year after year.

It may be time to revisit the tax codes and define standards for tax exemption more narrowly and explicitly, conclude Michael A. Morrisey, Ph.D., and Mahmud Hassan, Ph.D., of the Lister Hill Center for Health Policy at the University of Alabama at Birmingham, and Gerald J. Wedig, Ph.D., of Indiana University.

The researchers used 1988 to 1991 financial data from a Statewide hospital disclosure report on 189 nonprofit voluntary community hospitals in California. Analysis showed that an average nonprofit hospital in California received $1.58 million in tax subsidies in 1991. These subsidies increased with the size of the hospital, with large hospitals receiving nearly $4 million.

California hospitals provided on average more than $3 million in uncompensated care in 1991. Larger hospitals were more likely than smaller hospitals to provide uncompensated care in excess of their tax subsidies. Major teaching hospitals provided nearly $15 million in uncompensated care. On average, the amount of uncompensated care, measured on a cost basis, exceeded the tax subsidies by almost two to one. However, one in five nonprofit California hospitals failed to provide charity care at least equal to the amount of tax subsidies it received, with an average shortfall of about $815,000.

For more information, see "Do nonprofit hospitals pay their way?" by Drs. Morrisey, Wedig, and Hassan, in the Winter 1996 issue of Health Affairs 15(4), pp. 132-144.

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Special Populations

Research center focuses on health of Asian and Pacific Islander Americans

Asian and Pacific Islander Americans (APIs) are the fastest growing minority group in the United States, doubling from 3.5 million to 7.3 million between 1980 and 1990. Yet few studies on the health of APIs have been reported in the medical research literature. The University of California, Los Angeles Medical Treatment Effectiveness Program (MEDTEP) Center for Asians and Pacific Islanders was established in 1992, as one of a group of research centers funded by the Agency for Health Care Policy and Research (HS07370) to focus on health care for minority populations.

The goal of the UCLA MEDTEP Center is to find out whether prevailing health care strategies and practices are appropriate and effective for the API community. The Center has found that as a group, APIs have better or equal health compared with non-Latino American whites but are less satisfied and feel less a partner in the doctor-patient relationship compared with other ethnic groups.

A few MEDTEP studies provide insight into the health of APIs. One pilot study on falls and hip fractures in APIs showed that 24 percent of the women studied (mostly Chinese Americans with an average age of 86) died within 12 months of hip fracture. Women who had the poorest ability to function and those who were taking sedative medications prior to hip fracture were at the greatest risk of fracture. Another study showed that 200 API patients changed medication twice as often and reported side effects two times more frequently than 196 age- and sex-matched non-Latino American whites treated at the UCLA outpatient clinic.

Finally, MEDTEP researchers found that the increase in tuberculosis (TB) among Asian Americans between 1985 and 1993 occurred primarily in immigrants from countries with high endemic rates of TB, such as the Philippines, Vietnam, South Korea, and the People's Republic of China. The peak incidence of TB occurred in the 2 months after immigrants arrived in the United States. The risk of TB among newly arrived Vietnamese, Filipino, Chinese (mainland), and Korean Americans was 112, 60, 37, and 28 times, respectively, relative to the risk of the U.S. general population.

More details on the Center's research development strategy and core research projects are in "Medical health outcome studies in the Asian and Pacific Islander American Population," by Takashi Makinodan, Ph.D., and Nancy Harada, Ph.D., in the Asian American and Pacific Islander Journal of Health 4(1-3), pp. 97-104, 1996.

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AHCPR News and Notes

President's budget includes increased funding for AHCPR in FY 1998

President Bill Clinton's budget for fiscal year 1998, presented to Congress and the Nation on February 6, includes $149 million for the Agency for Health Care Policy and Research, an increase of $5.5 million over the FY 1997 level. This request reaffirms AHCPRs unique and important niche to provide the public and private sectors with the information and data they need to improve the quality and value of health care services.

With this amount, AHCPR will be able to fund existing commitments, support the Medical Expenditure Panel Survey (MEPS), and support the new Quality and Cost-Effectiveness of Clinical Care Initiative. To the extent that any additional efficiencies can be found, AHCPR is also committed to maximizing the number of grants funded in 1998. The FY 1997 appropriation will support a modest number of new small grants and dissertations and full funding of grant commitments, based on expected cost savings to be identified for MEPS.

AHCPR's new $5 million quality initiative consists of two components. The first will increase scientific knowledge by supporting outcomes, effectiveness, and cost-effectiveness research on common, costly conditions for which the evidence base is incomplete or controversial. The second component will fund research studies that will assess the effectiveness of strategies to implement quality improvement techniques and clinical interventions in actual medical practice.

Data from MEPS, one of AHCPR's highest priorities, will be released for use by researchers beginning in late March 1997. These data, which are not available from other surveys supported by the Federal Government or the private sector, are essential for analyzing issues such as insurance portability, access to health care, spending by different population groups, and changes in overall health care financing and delivery.

AHCPR names new director for outcomes research program

Carolyn M. Clancy, M.D., has been appointed as the new Director of the Center for Outcomes and Effectiveness Research (COER) at the Agency for Health Care Policy and Research. Dr. Clancy, a clinical researcher and practicing internist, has been with AHCPR since 1990 and has served as Acting Director of COER since the departure of Richard Green, M.D., in March 1996.

During her time with AHCPR, Dr. Clancy has held a number of senior positions. Most recently, she served as Director of the Center for Primary Care Research. She will remain as Acting Director of that Center while a national search is conducted for her replacement. Dr. Clancy is a member of the Public Health Service's Commissioned Corps and is board certified in internal medicine.

Under her direction, COER will place a special emphasis on filling vital gaps in knowledge about the effectiveness of treatments for prevalent, costly conditions, and continue to focus on the application of patient-reported outcomes measures, pursue research to inform the effective use of pharmaceutical interventions, and work toward the development of tools to help patients make good health care decisions.


New publications and data products are available from AHCPR and NTIS

The following new publications and data products are now available from the Agency for Health Care Policy and Research and the National Technical Information Service.

Child Health Services: Building a Research Agenda. Over the past 25 years, health services researchers have made impressive strides in developing methods to understand the organization and financing of health care systems and assess the effectiveness of health care services and their impact on patient outcomes. However, most of this work focuses on health care for adults, leaving important gaps in our understanding of children's health care services. A new report developed by AHCPR in response to a request from the U.S. House of Representatives Committee on Appropriations is intended to facilitate further development of an agenda for health services research focused on children. The report explains the need for such an agenda; describes AHCPRs activities and progress in this area, including its collaborative approach to developing a children's research agenda; and outlines principal priorities identified to date. The report also highlights examples of new findings with potentially significant implications for children's health.

The report (AHCPR Publication No. 97-R022) is available from the AHCPR Publication Clearinghouse.

Most Frequent Diagnoses and Procedures for DRGs, by Insurance Status. Healthcare Cost and Utilization Project (HCUP-3) Research Note 4. Elixhauser, A., Duffy, S.Q., and Sommers, J.P. December 1996. AHCPR Publication No. 97-0006. This Research Note presents information on the most frequent diagnoses and procedures for the top 50 diagnosis-related groups (DRGs) in U.S. community hospitals. The analysis is based on data from the 1992 Nationwide Inpatient Sample (NIS) of the Healthcare Cost and Utilization Project (HCUP-3). The five most common principal diagnoses and five most commonly performed principal procedures are listed for each of the 50 most frequent DRGs. Mean and median charges and length of stay for each DRG-diagnosis combination and each DRG-procedure combination are provided along with estimates of standard errors. Results are provided for all patients combined and for three patient groups defined by their insurance status: privately insured, Medicaid, and self-pay patients. This information will be useful to several audiences: medical professionals can compare their own practices to a nationwide sample; third-party payers and managed care organizations can use it as a starting point for examining the impact of payment policies and insurance status on practice patterns; health services researchers can generate hypotheses for future research on the treatment of specific conditions and the variation in resource use within DRGs, as well as differences in morbidity, use of services, and patterns of care by payer groups.

Research Note 4 is available from the AHCPR Publication Clearinghouse.

Nationwide Inpatient Sample (NIS) Release 3. NIS Release 3, which contains 1994 data on hospital inpatient care, conditions, services, and costs, is now available from the National Technical Information Service. Developed as part of AHCPR's Healthcare Cost and Utilization Project (HCUP-3), the NIS consists of 6.4 million patient records from a geographically dispersed sample of 904 community hospitals in 17 States. NIS Release 3, along with NIS Releases 1 and 2, form the largest, most powerful source of discharge-level information for hospital inpatients, regardless of payer, in the United States. NIS Release 3, which consists of six CD-ROMs designed to run on desktop computers, contains information on more than 100 variables, including: patient demographic characteristics, total patient charges, median income for patient's area of residence, diagnoses and procedures, admission and discharge status, links to hospital and community characteristics, length of stay, weights for national estimates, and expected source of payment. As with past releases, the data will prove useful to public- and private-sector organizations interested in hospital care. Data from previous releases have been used to compare services of various types of payers, assess treatment variations, prioritize strategies for product development by studying conditions treated in hospitals, and determine the costs of treating specific conditions. More than 200 organizations are now using NIS data. In addition, the hospital identifiers in NIS Release 3 allow users to obtain detailed information on individual hospitals by linking the data with the American Hospital Association's Survey of Hospitals. Users also can obtain county-level information, such as the availability of medical personnel and services, by linking the NIS data to the Bureau of Health Professions' Area Resource File. The weights included in the NIS data allow users to produce national estimates.

NIS Release 3 is available from National Technical Institute Service (NTIS accession no. PB97-500433, $160.00) as a set of six CD-ROMs in ASCII format. The set includes documentation in Adobe® Acrobat® (a Windows® Reader™ is provided) and NIS tools (to assist SAS and SPSS users). NIS Release 1, which presents data for 1988 to 1992, is available from National Technical Institute Service (NTIS accession no. PB95-503710, $300.00) on a set of 26 CD-ROMs. NIS Release 2, covering 1993, is available from National Technical Institute Service (NTIS accession no. PB96-501325, $160.00) on six CD-ROMs. Users of NIS data must sign and return a Data Use Agreement supplied by NTIS before their CD-ROM set can be shipped. For more information on HCUP-3 or the NIS, phone toll-free 866-290-HCUP (4287) or E-mail

Calling all AHCPR Web site users

We'd like to hear your evaluation of the AHCPR Web site. Customer feedback will help us make the site responsive to your needs and the needs of other users.

We are conducting a 1-month, online survey during March 1997. We want you to tell us how we are doing and what we could do better. AHCPR's Web site offers access to information and data related to AHCPR's activities in the areas of health services research, quality measurement and improvement, clinical care, health technology assessment, and medical expenditures. The site also features consumer information for health care decisionmaking. Your ideas on how we can make this electronic dissemination system more responsive to your information needs are welcome.

AHCPR funds new conference grants

The following five conference grants were awarded recently by the Agency for Health Care Policy and Research.

Advances in research for rural community and migrant health center operations
Project dir: Keith J. Mueller, Ph.D.
Organization: University of Nebraska Medical Center, Omaha, NE
Project no: AHCPR grant HS09364
Period: 2/1/97 to 10/31/97
Funding: $44,473

Chicago health services research symposium
Project dir: Edward F. Lawlor, Ph.D.
Organization: University of Chicago, Chicago, IL
Project no: AHCPR grant HS09361
Period: 12/1/96 to 3/31/97
Funding: $25,005

Efficacy of prenatal care for women and children's health
Project dir: Marie C. McCormick, M..D. Sc.D.
Organization: Harvard School of Public Health Boston, MA
Project no: AHCPR grant HS09528
Period: 1/1/97 to 12/31/97
Funding: $50,000

Healthy People 2000: Taking action with children and families
Project dir: Ardene Brown, Ph.D.
Organization: Marquette University, Milwaukee, WI
Project no: AHCPR grant HS09362
Period: 2/1/97 to 1/31/98
Funding: $27,316

Value-based health care purchasing by employers
Project dir: James D. Mortimer, B.A.
Organization: Midwest Business Group on Health, Chicago, IL
Project no: AHCPR grant HS09363
Period: 2/1/97 to 4/30/97
Funding: $24,795

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Research Briefs

American Medical Informatics Association (1996). "Proceedings of the 1996 AMIA annual fall symposium: Beyond the superhighway: Exploiting the internet with medical informatics." (AHCPR grants HS08362, HS08751, HS07632, HS07719, HS06594, HS07763, HS06575, HS08749, and HS00028). Journal of the American Medical Informatics Association Symposium Supplement.

The theme of this medical informatics conference was use of the Internet and World Wide Web for medical computing. There were seven sessions. The first session, Training, Education and Cognition, focused on bridging health informatics and education, social-cognitive approaches to understanding human-computer interaction, using the Web for accessing and designing medical curricula, Web-based approaches to professional training, and clinical lexicons. The second session, Policies and Standards, examined health information standards and terminologies. The third session, Expert Systems and Algorithms, offered papers ranging from the use of neural networks to predict survival in AIDS patients and use of expert systems via the Internet for diabetic patient management, to image and signal processing such as brain mapping and defibrillator pattern recognition. The fourth session, Information Retrieval and Digital Libraries, covered data confidentiality, publishing biomedical journals on the Web, concept-based information retrieval, and Web information resources. The fifth session, Clinical Information: Storage and Use, focused on advancing medical records, computer-based guidelines, and computer-based records; natural language processing and guideline implementation; and user interfaces and hospital systems. The sixth session, Health Information Networks, explored such issues as implementing Web-based clinical information and "clinics without walls." The final session, User Interfaces and Hospital Systems, examined the uses and evaluation of physician order entry, Web-based interfaces to clinical information systems, and bedside workstations.

Cappelleri, J.C., Ioannidis, J.P., Schmid, C.H., and others. (1996). "Large trials vs. meta-analysis of smaller trials." (AHCPR grant HS08532). Journal of the American Medical Association 276(16), pp. 1332-1338.

Large-scale clinical trials and meta-analyses of smaller trials are both used to obtain evidence for medical treatment decisions. Although some previous studies have shown differences in the results of these two approaches, this study found that results of meta-analyses of smaller studies are usually compatible with the results of large studies, based on an examination of 79 meta-analyses with at least one large study of 1,000 or more patients. Random effects calculations showed agreement between large and smaller trials in 90 percent of meta-analyses selected by the sample-size approach and in 82 percent of the meta-analyses selected by the statistical power approach. Of the 15 disagreements between results of large and smaller trials using the random effects model, plausible explanations were identified in 10 meta-analyses. Two other disagreements were not clinically important, and tentative reasons could be identified for two of the remaining three disagreements.

Iezzoni, L.I., Shwartz, M., Ash, A.S., and Makiernan, Y.D. (1996, December). "Predicting in-hospital mortality for stroke patients." (AHCPR grant HS06742). Medical Decision Making 16, pp. 348-356.

Patients with stroke vary considerably in their use of hospital resources and risk of in-hospital death, depending on how ill they are. Sicker patients are more likely to do poorly than others managed by the same treatment or provider. However, this study shows that different measures of patient severity of illness yield a different probability of hospital death for stroke patients. The researchers studied 9,407 stroke patients from 94 hospitals, with 10 percent in-hospital deaths. They calculated probability of death, adjusting for age and sex, using five severity measures. Results showed that two severity measures, MedisGroups and the physiology scores, predicted similar odds of death for 82 percent of patients. MedisGroups and Patient Management Categories (PMCs) disagreed the most, with very different odds predicted for 62 percent of patients. Patients viewed as more severely ill by MedisGroups and the physiology scores were more likely to have clinical stroke findings than patients seen as sicker by the other severity measures. This suggests that MedisGroups and the physiology score are more clinically credible than the other measures used.

Katz, D.A., Griffith, J.L., Beshansky, J.R., and Selker, H.P. (1996). "The use of empiric clinical data in the evaluation of practice guidelines for unstable angina." (AHCPR grant HS07360). Journal of the American Medical Association 276(19), pp. 1568-1574.

A clinical practice guideline released by Agency for Health Care Policy and Research in 1994 recommends outpatient management of low-risk patients and intensive care unit (ICU) admission of high-risk patients who arrive at hospital emergency departments (EDs) with unstable angina. However, this study by researchers at Tufts University School of Medicine found that low-risk patients with unstable angina account for only 6 percent of patients who arrive at the ED with chest pain, and that often there are no ICU beds available for high-risk patients (about 40 percent of patients). The researchers studied placement of patients with symptoms suggestive of acute cardiac ischemia and unstable angina prior to and after dissemination of the guideline. These 10,785 patients arrived at the EDs of 10 hospitals during 1993 and participated in the Acute Cardiac Ischemia-Time-Insensitive Predictive Instrument (ACI-TIPI) Trial. Only 4 percent of low-risk patients were discharged directly home with outpatient followup; the others were placed in telemetry beds with constant heart monitoring. Only 40 percent of high-risk patients were admitted to ICUs, with the rest placed in telemetry beds. For many patients, chest pain was controlled without the use of medications that would necessitate ICU admission. Often, there were no ICU beds available for high-risk patients. The small number of low-risk ED patients with unstable angina suggests that following the guidelines recommendations will result in only modest reductions in hospital admissions but may increase demand for the limited number of ICU beds to accommodate high-risk patients. According to the researchers, these findings underscore the importance of obtaining data on the likely actual impact of guidelines on clinical care prior to their national dissemination.

Musen, M.A., Tu, S.W., Das, A.K., and Shahar, Y. (1996, December). "ON: A component-based approach to automation of protocol-directed therapy." (AHCPR grant HS06330). Journal of the American Medical Informatics Association 3(6), pp. 367-388.

Providing automated support for planning protocol-directed therapy requires a computer program to take as input clinical data stored in an electronic patient-record system and to generate as output recommendations for therapeutic interventions and laboratory testing that are defined by applicable protocols. The authors present a synthesis of research carried out at Stanford University to model the therapy-planning task and to demonstrate a component-based architecture for building protocol-based decision-support systems. The researchers developed general purpose software components that interpret abstract protocol specifications to construct appropriate patient-specific treatment plans; infer from time-stamped patient data higher-level, interval-based, abstract concepts; perform time-oriented queries on a time-oriented patient database; and allow acquisition and maintenance of protocol knowledge. They implemented these components in a computer system known as EON. They tested the EON architecture within the context of T-HELPER, a computer-based patient record system that uses EON to offer advice regarding the management of patients who are following clinical trial protocols for AIDS or HIV infection. Their experience demonstrates that EONs ability to reason about protocol-based care is sufficient to provide therapy recommendations for a wide range of AIDS-related clinical trials. In addition, a test of the reuse of the software components in a different clinical domain demonstrated rapid development of a prototype application to support protocol-based care of patients who have breast cancer.

Ohsfeldt, R.L., Morrisey, M.A., Johnson, V., and Treat, R. (1996). "Simplifying the assessment of rural emergency medical service trauma transport." (AHCPR grant HS06814). Medical Care 34(11), pp. 1085-1092.

Managed care organizations and State licensure and emergency medical service (EMS) programs would like to know whether the choice of an ambulance company has any impact on time to care or patient outcomes. Assessing expected versus actual outcome is ideally based on the patients initial Trauma Related Injury Severity Score (TRISS). However, this measure is usually only available for patients ultimately admitted to a trauma center or hospital that maintains a trauma registry. This study found that in rural settings, where a patient's TRISS generally is not available, studies of rural EMS characteristics and trauma outcomes may use Revised Trauma Score, patient age, and type of trauma to control for expected survival. Data were taken from ambulance trip reports and merged with the trauma registry data for the Georgia EMS region VI trauma center hospital. The researchers used these factors and TRISS to predict the probability of patient death and compared it with predicted probability of death when the model omitted TRISS.

Osmond, D.H., Vranizan, K., Schillinger, D., and others. (1996, December)."Measuring the need for medical care in an ethnically diverse population."(AHCPR grant HS07373). HSR: Health Services Research 31(5), pp. 551-571.

Need for medical care can be measured in several ways, for example by number of days spent in bed, existence of a major chronic condition, use of prescription medication, and self-rated health. How various ethnic groups judge these factors as indicating the need for care varies, and it is not clear how medical need relates to use of outpatient health services, according to this study. None of the measures of medical need used by the researchers (self-rated health, activity limitation, major chronic conditions, need for ongoing treatment, bed days, and prescription medication) could be applied to adjust health care use uniformly across five ethnic groups. Compared with whites, one or more of the other ethnic groups varied significantly for each need-for-care measure, after adjustment for health insurance, age, sex, and income. Overall, blacks reported the most need for care and Latinos the least. Latinos interviewed in Spanish reported the worst health, and whites reported the best mean self-rated health. Asians and Latinos interviewed in English reported less need for care than whites on four measures, but reported more bed days in the previous 3 months, as well as worse self-rated health.

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AHCPR Publication No. 97-0021
Current as of February 1997

The information on this page is archived and provided for reference purposes only.


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