Nov08

2013 Economics & Healthcare Speaker Series

  • November 08, 2013 - November 22, 2013
  • Queen's School of Business

About the Event

In Fall 2013, The Monieson Centre for Business Research in Healthcare presented their first speaker series on Economics & Healthcare. Drawing together three noted scholars from leading business schools, the series introduces forward-thinking economic theory to challenges in healthcare. Below are video interviews of each speaker and abstracts of the papers they presented.

Dr. Ashley Swanson, Assistant Professor, Healthcare Management
Wharton School, University of Pennsylvania

Prescriptive Drug Use Under Medicare Part D: What the Rational Model Misses

Abstract: Medicare Part D enrollees deciding which drugs to consume face a complicated decision problem: they must choose what basket of drugs to consume in each period given potentially dozens of close substitutes, a non-linear set, and a dynamic environment in which uncertainty is realized gradually over time. We estimate a model of prescription drug consumption which accounts for non-linear budget sets, dynamic incentives due to myopia and uncertainty, and variantion in price salience using a 20% sample of the entire universe of Part D claims data from 2006-2009. The model allows us to identify to which individuals are myopic and respond to the current prices versus marginal prices that pertain for their specific expected bundle of drugs. We also consider whether individuals respond to plan cost-sharing characteristics which should not impact them in any rational model of expectations. We use the substantial intertia in plan choices to construct instruments based on the change in coinsurance rates for the plan in which an individual was enrolled in the prior year. Our estimates suggest small marginal price elasticities and substantial myopia. We also find evidence that plan donut hole coverage impacts consumption more than we expected given its impact on expected marginal price, suggesting that price salience is an important factor in determining consumption.

Dr. Joseph Doyle, Erwin H. Schell Professor of Management and Professor of Applied Economics
MIT Sloan School of Management

The Quality of Hospital Quality Measurement

Abstract: Hospital quality measures are playing an increasingly large role in delivery system reform, including financial penalties tied to these risk-adjusted measures of performance. There are concerns that the risk adjustment is inadequate. This paper aims to estimate the casual relationship between these "report card" measures on patient outcomes. To compare similar patients across hospitals in the same market, we exploit ambulance company preferences as an instrument for patient assignment. We find great dispersion across quality measures' ability to predict patient outcomes, but risk-adjusted hospital morality is highly predictive of mortality when using our empirical framework to control patient selection. We also consider appropiateness of hospital "reference pricing," wherby hospitals of an equal quality are reimbursed an equal amount. If patient outcomes are comparable across hospitals ofa  fixed quality level, then payments could be tied to the least expensive of these hospitals.

Dr. Jason Abaluck, Assistant Professor of Economics
Yale School of Management

Negative Tests and the Efficiency of Medical Care: Investigating the Determinants of Imaging Overuse

Abstract: There is enormous variation in medial treatment across physicians, hospitals and regions but designing reforms to lower costs and maintain quality requires identifying specific instances of inefficient spending. We develop a measure of the efficiency of health care delivery based on the frequency of negative CT scans for pulmonary embolism. Our model shows how to transform the fraction of negative tests into a measure of medical care efficiency that links directly to welfare. We apply our model using a 20% sample of Medicare claims data from 2000-2009; the empirical assignment of testing outcomes is validated using chart and billing data from two large hospitals. We find that 80% of doctors are performaing too many tests, in the sense that on the margin they perform tests even if the costs exceed the benefits. If all doctors tested only when the benefits exceeded the costs, the proportion of patients tigen a chest CT in our sample would fall by 15%, from 3.63% to 3.08%. The financial savings would be about $66 per person tested, while the medical benefits due to reduced mortality risk from treatent of false positives would be $242 per person tested; together these factors would roughly double the welfare increase from testing over a world with no overtreatment. We also find that more experienced doctors and doctors in regions with lower spending overall are less likey to overtest.