Analysis of Hospital Production-An Output Index Approach.ppt
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1、Analysis of Hospital Production: An Output Index Approach,Martin Gaynor Carnegie Mellon, NBER, CMPO Samuel A. Kleiner Carnegie Mellon William B. Vogt Rand and NBERConference on Public Organisation Centre for Market and Public Organisation University of Bristol June 11-12, 2008,2,2,Hospital Costs and
2、 Policy,Price regulation PbR (UK), Medicare, Medicaid (US), Want price to reflect marginal costs Antitrust Merging parties normally claim efficiencies defense That is, economies of scale (possibly scope) Failing firm defense Planning Want to know scale, scope Specialty hospitals Are scope economies/
3、diseconomies important? Are scale economies/diseconomies important?,3,3,Hospital Costs and Economics,There are many outputs Over 500 DRGs Thousands of ICD codes There is significant individual heterogeneity within outputs Age, sex, race Comorbidities, etc Hospital have these characteristics in commo
4、n with other service industries Outputs difficult to pin down “Mass-customization” E.g., education, legal services, haircuts, Even “traditional” industries: electric power generation, steel manufacturing, shoes, brewing,.,4,Output Aggregation,Too many outputs to estimate econometric cost function wi
5、th individual outputs Curse of dimensionality Need to aggregate Economic Theory of Output Index Ratios of marginal costs of aggregated outputs are independent of input prices (Hall, 1973) Implies that outputs within an aggregation category should be similar with regard to input requirements,5,5,Prev
6、ious Hospital Cost Studies,Most hospital studies are conducted using older data (1970s, 80s) Technology has changed since previous studies No firm conclusions as to the extent of scale economies and very limited evidence of scope economies Scale Economies Cowing and Holtman (1983), Vita (1990), Gayn
7、or and Anderson (1995), Carey (1997), Dranove (1998), Hughes and McGuire (2003), Preyra and Pink (2006) No Scale Economies Grannemann et. al. (1986), Keeler and Ying (1996), Conrad and Strauss (1983), Fournier and Mitchell (1992) Output typically defined as discharges or patient days, casemix variab
8、le added to function Ad hoc Clearly not consistent with requirements for aggregation Preyra and Pink aggregate inpatient care into primary/secondary, tertiary,6,A Scale Economies Problem,Outputs captured in a crude way in previous work It seems clear that more complex cases typically go to bigger ho
9、spitals These two facts would seem to argue that scale economies are understated using conventional methods Big hospitals look more expensive than they are due to more complex case mix,7,7,Research Objectives,Develop method for estimating hospital costs which: takes account of hundreds of outputs ta
10、kes account of individual patient heterogeneity attempts to aggregate in a way thats consistent with economic theory Use these methods to estimate hospital cost function with CA data Use these methods to evaluate scale and scope economies & compare to more typical methods,8,8,Our Method vs. Previous
11、,Previous literature uses crude output categories and adds an ad hoc casemix adjustment to take account of heterogeneity,We construct output indexes which build in output diversity and individual heterogeneity from the start We estimate a long run cost function,9,Setup,Create 76 different hospital o
12、utputs 25 MDC codes Each with 3 levels of care (primary, secondary, tertiary) Plus outpatient care Each individual patient consumes his own individualized quantity of one of these 76 outputs Outputs are aggregated upwards via output index,10,Setup, 2,Normal translog cost function with four aggregate
13、 outputs at the top level, primary, secondary, tertiary, outpatient Economies of scale, scope for these aggregate outputs estimated in the normal way, roughly Each top level output is an index of lower level outputs - corresponding to the 25 MDCs is a measure of scope economies within top-level outp
14、uts 1: economies - C(Y(Q1,Q2) C(Y(Q1, 0),10,11,Setup, 3,Each individual consumes a certain quantity of one of the outputs (primary, secondary, tertiary) That quantity depends on his characteristics, qik= exp( Xik k), k = P,S,T Individual characteristics include DRG, age, sex, race, number of seconda
15、ry procedures, number of secondary diagnoses, unscheduled admission Accounts for individualized nature of hospital production,12,Setup, 4,Then, each hospitals level of each output is calculated by summing over the patients seeking care there:Iij is an indicator for patient i seeking care at hospital
16、 j In is an indicator for patient is diagnosis is in specialty n,13,Aggregate Output Classes,Classify inpatient output into four categories based upon input intensiveness Primary Care: Inpatient illnesses which are least complex to treat Secondary Care: Complex problems, specialist providers Tertiar
17、y Care: Highly specialized providers, sophisticated equipment Outpatient Care: Used hospital but not admitted as a registered bed patient This classification is based on DRG Rank DRGS based on: % of hospitals performing DRG, % of patients traveling for this DRG, % of procedures performed in teaching
18、 hospital, DRG weight Top ranked 10% of discharges: tertiary Next 40%: secondary Lowest 50%: primary,14,Examples of Tertiary Care,Nervous System DRG 3: Craniotomy (brain surgery) DRG 9: Spinal disorders & injuries Circulatory System DRG 103: Heart transplant DRG 107: Coronary bypass with cardiac cat
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