Financial constraints can cause firms to reduce product quality when quality is difficult to observe. We test this hypothesis in the context of medical choices at hospitals. Using heart attacks and child deliveries, we ask whether hospitals shift towards more profitable treatment options after a financial shock — the 2008 financial crisis — and whether the shock worsens patient outcomes. The crisis caused an unprecedented shock to hospitals’ financial health and was followed by a significant and sudden decline in capital investments, yet we find no overall effects on treatment choices and weak effects on patient outcomes. The results are similar for for-profits and nonprofits, and somewhat stronger for hospitals with more tightly integrated physicians.
Hospital Financial Health and Clinical Choices: Evidence From the Financial Crisis by Manuel Adelino, Katharina Lewellen, W. Ben McCartney :: SSRNOctober 18, 2018
In the domain of technology startups, biotechnology has often been considered as specific. Their unique technology content, the type of founders and managers they have, the amount of venture capital they raise, the time it takes them to reach an exit as well as the technology clusters they belong to are seen as such unique features. Based on extensive research from new databases, the author claims that the biotechnology startups are not as different as it might have been claimed: the amount of venture capital raised, the time to exit, their geography are indeed similar and even their equity structure to founders and managers have similarities. The differences still exist, for example the experience of the founders, the revenue and profit level at exit.
This Issue Brief examines 1996‒2016 trends in the availability of and enrollment in self-insured health plans among private-sector establishments offering health plans and their covered workers, with a particular focus on 2013 to 2016, so as to assess whether the Patient Protection and Affordable Care Act of 2010 (ACA) might have affected these trends. The data come from the Medical Expenditure Panel Survey Insurance Component (MEPS-IC).
Here are the key findings:
• The percentage of all private-sector establishments offering health plans at least one of which is self-insured has continued an increase that started in 2000.
o In 2016, 40.7 percent of private-sector establishments reported that they self-insured at least one of their health plans, up from 39 percent in 2015.
• Between 2013 and 2016, the percentages of small and midsized establishments offering at least one self-insured plan both increased.
o For small establishments, the percentage increased from 13.3 percent to 17.4 percent (a 31 percent increase), with most of the increase occurring in 2016.
o For midsized establishments, the percentage increased from 25.3 percent to 29.2 percent (a 15.4 percent increase). (In 2016, the percentage of midsized establishments offering a self-insured plan fell from 30.1 percent to 29.2 percent.)
• Between 2013 and 2016, the self-insurance trend for large establishments continued to decline, falling from 83.9 percent to 78.5 percent.
• Because many more employees work for large establishments, the increase in self-insurance among small establishments (and their workers) was not large enough to offset the decline among large establishments (and their workers), resulting in a decrease in the percentage of covered workers enrolled in self-insured plans.
o Between 2015 and 2016, the percentage of enrollees in self-insured plans fell from 60 percent to 57.8 percent.
With public services such as health and education, it is not straightforward for consumers to assess the quality of provision. Many such services are provided by monopoly not-for-profit providers and there is concern that for-profit providers may increase profit at the expense of quality. This paper explores whether entry by for-profit providers is good for consumers despite the problem of unobserved quality. The model generates three key policy-relevant insights. First, by developing a novel approach to competition between different organizational forms, it frames the relevant trade-offs precisely. Second, it shows the value of keeping an incumbent not-for-profit as an active provider. Third, it characterizes the optimal payment (or voucher value) to an entrant for each consumer who switches in a way that can be applied empirically.
Consolidation and Innovation in the Pharmaceutical Industry: The Role of Mergers and Acquisitions in the Current Innovation EcosystemDecember 12, 2017
Recent changes in the pharmaceutical industry have spurred an unprecedented wave of mergers and acquisitions. Some researchers and agencies have questioned whether pharmaceutical consolidation could impede drug innovation. However, as I explain in this Article, these concerns are largely based on an outdated understanding of the drug innovation ecosystem. Whereas a few decades ago almost all drug discovery took place inside traditional pharmaceutical companies, today most drug innovation is externally-sourced from biotech companies and smaller firms. Internal R&D is no longer the primary source, or even an important source, of drug innovation. As a result, analyses that focus on the impacts of pharmaceutical consolidation on internal drug innovation are incomplete and missing the point. Instead, merger analyses should examine whether consolidation increases demand for externally-sourced innovation and, ultimately, strengthens aggregate drug innovation.
Healthcare Spending and Utilization in Public and Private Medicare by Vilsa Curto, Liran Einav, Amy Finkelstein, Jonathan Levin, Jay Bhattacharya :: SSRNFebruary 12, 2017
We compare healthcare spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their healthcare spending. Healthcare spending is 25 percent lower for MA enrollees than for enrollees in traditional Medicare (TM) in the same county with the same risk score. Spending differences between MA and TM are similar across sub-populations of enrollees and sub-categories of care, with similar reductions for “high value” and “low value” care. Spending differences primarily reflect differences in healthcare utilization; spending per encounter and hospital payments per admission are very similar in MA and TM. Geographic variation in MA spending is about 20 percent higher than in TM, but geographic variation in hospital prices is about 20 percent lower. We present evidence consistent with MA plans encouraging substitution to less expensive care, such as primary rather than specialist care, and outpatient rather than inpatient surgery, and with employing various types of utilization management. Some of the overall spending differences between MA and TM may be driven by selection on unobservables, and we report a range of estimates of this selection effect using mortality outcomes to proxy for selection.
Retail clinics have become a popular choice for routine aliments and quick primary care treatment, but they may not be reducing visits to emergency departments, according to a new analysis.
There’s little question Americans have taken to the concept of retail medicine as CVS Health CVS +1.21%, Walgreens, Walmart and grocery store chains like Kroger have opened thousands of clinics as a primary care option. CVS now has more than 1,100 MinuteClinics in 33 states . But RAND Corp. researchers looking at the early days of retail clinic growth indicates they might not be changing patient behaviors when it comes to using more expensive hospital emergency rooms.