Service mix, market competition, and cost efficiency: A longitudinal study of U.S. hospitals

Hou

et al. 2021

IJERPH

It is a consensus that Fee-for-Service (FFS) is a traditional medical insurance payment scheme with significant disadvantages, namely the waste of health care resources. However, the majority of the prior works that draw such conclusions from the perspective of social welfare while analyzing the impacts of FFS on operation outcomes of hospitals still lack attention from the existing literature, considering the fact that the majority of public hospitals are self-founding. Under this motivation, we collected operation data of 301 public hospitals with different grades (grade II and III) in central China. Here, we present a novel statistical evaluation framework on the impact of FFS on hospital operation outcomes from four dimensions (financial income, efficiency, medical service capacity, and sustainability) using fixed-effects multivariate regression. With verification by the robustness test, our results indicate that: (i) The classification of the hospital (COH) significantly affected the impacts of FFS on hospitals’ operations. (ii) For grade III hospitals, FFS leads to higher financial income, medical service capacity (MSC) and longer length-of-stay (LOS). (iii) However, as for grade II hospitals, hospitals with FFS adoptions achieve lower financial income, lower MSC and shorter LOS, which violates the common sense from previous works. (iv) FFS has a significant negative impact on public hospital’s sustainable development; however, there is lack of evidence showing that sustainability would be affected by the interaction effects between FFS and COH. We believe these new findings from the perspective of hospital operation provide insights and could serve as a reference for the healthcare payment hierarchical reform by COH in low and middle-income countries (LMICs), which are going through the primary stage of the healthcare reform.

Section: Methodsmentioning

confidence: 99%

“…Hospital size and Staff number: Hospital size by controlling bed size and the number of full-time employees [ 16 , 22 , 23 , 29 , 34 , 35 ]. We take the natural logarithm of beds and the number of employees to account for the heavy tails in this distribution.…”

Section: Methodsmentioning

confidence: 99%

Bad to All? A Novel Way to Analyze the Effects of Fee-for-Service on Multiple Grades Hospitals Operation Outcomes

Hou

et al. 2021

IJERPH

“…A diversified product portfolio may enable organizations to leverage existing capabilities, cross-learn from the varied categories, and hedge against demand and supply uncertainties of their operating environment (Ding et al, 2019). Extant literature identifies multiple mechanisms such as learning from variety, complementarity of capabilities in related areas and spillovers by which diversification may be posited to improve organizational knowledge (Boh et al, 2007;Narayanan et al, 2009;Schilling et al, 2003;Clark and Huckman, 2012;Freeman et al, 2019).…”

Section: Conceptual Foundation 21 Outcomes Of Care-tradeoffsmentioning

confidence: 99%

“…Our research complements and serves to address the call for research in this area (e.g. Senot et al, 2016;Roth et al, 2019;Ding et al, 2019;Dreyfus et al, 2020) by accounting for heterogeneity in (in)efficiency of care in examining the interrelationships between throughput, experiential quality and net revenue from operations, and the role of operational drivers such as diversification of care in improving these outcomes of care along the production frontier.…”

mentioning

confidence: 99%

You cannot be good at everything: tradeoff and returns in healthcare services

Thirumalai

Lindsey

Stratman

2022

IJOPM

PurposeIn the face of growing demand for care and tightening resource constraints, hospitals need to ensure access to care that is affordable and effective. Yet, the multiplicity of objectives is a key challenge in this industry. An understanding of the interrelationships (tradeoffs) between the multiple outcome objectives of care (throughput, experiential and financial performance) and returns to operational inputs (diversification of care) is fundamental to improving access to care that is effective and affordable. This study serves to address this need.Design/methodology/approachThe empirical analysis in the study builds on an output-oriented distance function model and uses a longitudinal panel dataset from 153 hospitals in California.FindingsThis study results point to key insights related to output–output tradeoffs along the production frontier. Specifically, the authors find that higher throughput rates may lead to significantly lower levels of experiential quality, and net revenue from operations, accounting for the clinical quality of care. Similarly, the authors’ findings highlight the resource intensity and operational challenges of improving experiential quality of care. In regards to input–output relationships, this study finds diversification of care is associated with increased throughput, improvements in service satisfaction and a corresponding increase in the net revenue from operations.Originality/valueHighlighting the tradeoffs along the production frontier among the various outcomes of interest (throughput, experiential quality and net revenue from operations), and highlighting the link between diversification of care and care delivery outcomes at the hospital level are key contributions of this study. An understanding of the tradeoffs and returns in healthcare delivery serves to inform policy-making with key managerial implications in the delivery of care.

“…Two papers (Catena, Dopson, & Holweg, 2020;Lee, Venkataraman, Heim, Roth, & Chilingerian, 2020) examine how operational policies set by a national health system affect the delivery of healthcare. Two papers (Ding, Peng, Heim, &Jordan, 2020 andMishra, Salzarulo, &Modi, 2020) examine how strategic approaches taken by hospitals, possibly in response to national health-system policies, affect the delivery of healthcare in those hospitals. Two papers describe hospital-emergency-department operations (Berry Jaeker & Tucker, 2020;Davis, Zobel, Khansa, & Glick, 2020).…”

Section: Special Issue Process and Papersmentioning

confidence: 99%

Editorial: Delivering effective healthcare at lower cost: Introduction to the special issue

Fredendall

Smith

2019

J of Ops Management

The healthcare industry represents a substantial portion of worldwide economic and social activities and initiatives and employs many people around the globe. The Organisation for Economic Cooperation and Development (OECD) estimates that its member countries spend over 8% of gross domestic product (GDP) on healthcare. The United States spends almost 18% of GDP and is projected to move closer to 20% in the near future (Organisation for Economic Cooperation and Development, 2019). The World Health Organization (WHO) has estimated that there are over 59 million workers in the healthcare arena, while the Centers for Disease Control (CDC) has reported that the United States alone has over 18 million (Centers for Disease Control, 2018; World Health Organization, 2019).Research about health-related problems by operationsmanagement (OM) scholars is increasing: The Journal of Operations Management (JOOM) has published 22 papers on this topic (not including these in this special issue) since 2015. One reason research by OM scholars about healthcare processes has rapidly increased is the open access to rich data sets that enable investigations on core operational issues. The U.S. Centers for Medicare and Medicaid Services (CMS) have collected and made available volumes of data (e.g.