Law. His research interests include economic regulations, competition, and innovation, with a particular focus on public choice and the economics of government favoritism. Koopman received his JD from Ave Maria University and his LLM in law and economics from George Mason University. † Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University, where he is the program director for the Project for the Study of American Capitalism. He is also an adjunct professor of economics at George Mason University. He specializes in economic freedom and economic growth, public-choice economics, and the economics of government favoritism toward particular businesses. Mitchell has testified before the U.S. Congress and his articles have been featured in numerous national media outlets. He served from August 2010 to June 2014 on the Joint Advisory Board of Economists for the Commonwealth of Virginia. Mitchell received his PhD and MA in economics from George Mason University. ‡ Adam Thierer is a senior research fellow with the Technology Policy Program at the Mercatus Center at George Mason University. He specializes in technology, media, Internet, and free-speech policies, with a particular focus on online safety and digital privacy. His latest book is Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom. Thierer is a frequent guest lecturer, has testified numerous times on Capitol Hill, and has served on several distinguished online safety task forces, including Harvard University's Internet Safety Technical Task Force and the federal government's Online Safety Technology Working Group. He received his MA in international business management and trade theory at the University of Maryland. § The Authors would like to thank Veronique de Rugy, Daniel Rothschild, and an anonymous reviewer for numerous helpful comments.
Purpose
The authors examined the “hub-and-spoke” health care system in the United States for patients transferred from one hospital (“spoke”) to a major teaching hospital (“hub”) and assessed the financial and clinical impact of this system on major teaching hospitals.
Method
The authors surveyed Council of Teaching Hospitals and Health Systems members to collect detailed financial and clinical data from fiscal year 2015 for transfer cases and nontransfer cases (cases directly admitted to the teaching hospital). Data included computed margins (the difference between revenue received and direct and indirect facility costs as estimated by the hospitals) as well as case severity, average length of stay (ALOS), time of admission, surgical or medical status, and other situational variables for All Patient Refined Diagnosis Related Groups (APR-DRGs). The authors used an ordinary least-squares regression model with fixed effects to analyze the data.
Results
Twenty-six hospitals provided data. The average difference between transfer and nontransfer cases was a 2.18 day longer ALOS and a $1,716 lower computed margin, for a case in the same APR-DRG and hospital (P < .001 for both outcomes). Transfer cases had a 19% higher case severity of illness rating and were disproportionately represented among complex APR-DRGs. Transfer patients were 14% more likely to be Medicaid beneficiaries.
Conclusions
Compared with nontransfer cases, transfer cases at major teaching hospitals were more complex and resulted in greater resource utilization, affecting the financial margins on which teaching hospitals rely to support their multipart mission.
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