The challenge of benchmarking: surgical volume and operative mortality in Veterans Administration Medical Centers.

BACKGROUND: This study examines the relationship between hospital surgical volume and operative modality rate. Emphasis is placed on the role of referral patterns; the effects of variation in patient condition, operative procedures, and hospital characteristics, and the contribution of volume of related procedures, in addition to specific-procedure volume, the definition of operative mortality, and their influence on surgical outcome. METHODS: This cohort study included all Department of Veterans Affairs Medical Centers with surgery programs. All patients in five operation-diagnosis sets (colectomy for cancer, colectomy without cancer, amputation above the knee, coronary artery bypass grafting for old myocardial infarction, and open-heart valvuloplasty), discharged from 1987 through 1989, were assessed to determine the risk-adjusted 30-day postoperative morality rate. RESULTS: Only one of the studied groups, valvuloplasty, demonstrated a significant inverse relationship between hospital surgical volume and operative mortality rate. No additional effect on outcome owing to related procedure volume was noted. CONCLUSIONS: This study demonstrates some of the difficulties in assessing surgical results and that we should be skeptical of the intuitively attractive notion that high annual volumes of operations will necessarily result in improved outcomes. This is congruent with recent literature in which there is no broad-based evidence that hospital surgical volume affects operative mortality rate.

Health care utilization and costs of adult cardiovascular conditions United States, 1980.

Cardiovascular conditions have a major economic as well as health impact on adults in the United States. In the National Medical Care Utilization and Expenditure Survey, conducted during 1980, health service data were obtained from a national sample of 17,123 civilian noninstitutionalized individuals. These data have been analyzed to define the impact and demographic patterns of health care utilization and costs attributable to adult cardiovascular conditions. Approximately 28 million persons in the United States, or 17.3 percent of the total civilian noninstitutionalized population 17 years of age and over, had a cardiovascular condition during 1980. Cardiovascular conditions were reported with increasing frequency in successively older age groups and were reported most frequently by black persons. The prevalence and economic impact differed by specific type of cardiovascular condition and whether the condition was complicated by another disease. To examine these differences, persons reporting cardiovascular conditions were categorized into four mutually exclusive groups: persons with hypertension alone, persons with arteriosclerotic cardiovascular and cerebrovascular disease associated with hypertension, persons with arteriosclerotic cardiovascular disease alone, and persons with cardiovascular disease associated with other conditions that might alter medical care utilization and disability. The disability, service utilization, and health care charges were compared among these groups, and data for each group were compared with those for the overall U.S. population. Survey participants were asked to rate their health relative to that of other people their age. The self-rating of persons reporting hypertension alone was lower than the national average. Only 17 percent of the general population rated their health as "fair" or "poor," but 27 percent of persons with hypertension alone used these descriptions. Overall, persons with hypertension alone were much less likely to be employed than the general population (52.2 percent versus 71.6 percent). However, when controlling for age, it was found that persons with hypertension alone were about as likely to be employed as the general population. On the average, persons with hypertension reported only slightly more work-loss days than did the general population (6.5 versus 4.9 days). A modest restriction of activity was reported by those with hypertension alone (20.1 days per year on the average compared with 15.6 for the general population). The mean number of ambulatory visits per year for those with hypertension alone was 7.9, only slightly greater than the 5.7 average for the overall population.(ABSTRACT TRUNCATED AT 400 WORDS)

A psychiatric patient classification system. An alternative to diagnosis-related groups.

It is generally accepted that diagnosis-related groups (DRGs) for alcohol, drug, and mental disorders are inappropriate for inpatient prospective payment. To address this issue, the Veterans Administration (VA) supported a project to construct alternative classes that are more clinically meaningful, more homogeneous in their resource use, and that account for more variation in resource use among psychiatric and substance use cases than existing DRGs. This paper reports on this project. Using a data set containing universally available discharge data plus behavioral, social, and functional information obtained by a survey of 116,191 discharges from VA psychiatric beds, and with AUTOGRP as the classifying algorithm, a classification system was formed. Twelve psychiatric diagnostic groupings (PDGs) were identified, analogous to major diagnostic groups in the DRG system. Within each PDG, from 4 to 9 terminal groups of Psychiatric Patient Classes (PPCs) were formed and validated. The 12 substance abuse PPCs explain greater than 31% of the variation in length of stay; for the mental disorder PPCs the variance explanation is greater than 11%, a substantial improvement over DRGs that, for the same data set, explain less than 2 and 3%, respectively. With the addition of only 5 variables beyond those presently included in discharge data sets, greater precision for payment purposes can be achieved. Implications for adoption of this classification system are discussed.

Changes in hospital-doctor relations.

Recent trends in the health care system are changing relationships between physicians and hospitals. Excess hospital capacity, DRGs, and prospective payment impel managers to be more cost conscious. By introducing protocols, practice monitoring, and incentives for conservative styles, they are eroding traditional physician autonomy. These new realities require better cooperation between doctors and managers to safeguard patient interests while making the system more cost-effective.

Frequency and cost of diagnosis-related group outliers among newborns.

Analysis of outliers, as defined by the Health Care Financing Administration, among 47,776 newborns discharged from 33 short-term hospitals in Maryland in 1981 shows that the three prematurity diagnosis-related groups (DRGs) (386 to 388) represented only 5.3% of all discharges of newborns, but more than one fifth of all outliers and more than three fifths of outlier days of care for newborns. The disparity in charges for outliers and inliers (not exceeding the "trim point") is even more dramatic. Newborns with "extreme immaturity" (DRG 386) and "prematurity with major problems" (DRG 387) together accounted for less than 3% of all newborn discharges but for nearly one fourth of all outlier discharges. The mean length of stay in hospitals for outliers in those two DRGs was more than 2 months. The mean charge per outlier discharge in DRG 386 was $27,061 in 1981. Nearly one third of the discharges and more than two thirds of the days of care in this DRG were for outliers. Outliers occurred up to five times more often among premature neonates than among normal newborns and occurred preponderantly in teaching hospitals, especially those with more than 400 beds. This finding may require a reevaluation of the outlier trim points and the reimbursement method for newborn DRGs to assure adequate payment to the providers of neonatal intensive care, mainly large teaching hospitals.

Incidence, utilization, and costs associated with acute respiratory conditions, United States, 1980.

Acute respiratory conditions are common causes of health disturbance in the general population. They are generally self-limiting, although occasionally recurrent, and seldom result in large health care costs for each episode of illness. The National Medical Care Utilization and Expenditure Survey (NMCUES), conducted during 1980, provided an opportunity to assess the effect of acute respiratory conditions on utilization of medical services and on functional capability as well as the cost of related medical care. Acute respiratory conditions were reported by survey respondents and separated into five subgroups: colds, influenza, nasopharyngitis, otitis media, and lower respiratory infections. Allergic conditions and chronic respiratory disorders (tuberculosis, chronic obstructive pulmonary disease, and pneumoconioses) were excluded. The subgroupings of acute respiratory conditions appear to separate the disorders in a manner consistent with the epidemiologic characteristics of each condition. About one-half (50.4 percent) of the U.S. civilian noninstitutionalized population had one or more acute respiratory conditions during 1980. The highest rates for upper respiratory conditions (colds, influenza, nasopharyngitis, and otitis media) were reported for those under 18 years of age, and rates were lower in successively older groups. Lower respiratory infection rates were higher in the youngest and oldest groups. Despite a high incidence in the general population, most symptomatic episodes of colds, influenza, and nasopharyngitis did not result in ambulatory care visits or hospital admissions. Otitis media and lower respiratory infections were more often associated with medical visits. Acute respiratory conditions were associated with lower disability levels than the average for the U.S. civilian noninstitutionalized population during 1980 (5.9 restricted-activity days for acute respiratory conditions, compared with an overall average of 13.8 restricted-activity days). Persons with upper respiratory conditions (colds, influenza, otitis media, and nasopharyngitis) averaged 2.3 to 5.4 restricted-activity days, but persons with lower respiratory infections experienced an average of 8.2 restricted-activity days. Indirect costs attributed to acute respiratory conditions in 1980 were $7.7 billion for employed persons and $698 million for homemakers, for a total of $8.4 billion, about the same as total direct costs ($8.3 billion). These indirect costs were several times larger than the annual indirect costs estimated for either cardiovascular diseases or musculoskeletal diseases, two common chronic or recurrent condition groups. The high indirect costs reflect the high frequency of episodes in the general population during 1980 and the greater likelihood of associated bed-disability and work-loss days than for other conditions.(ABSTRACT TRUNCATED AT 400 WORDS)

Costs of illness: United States, 1980.

The total costs of illness and injury in the U.S. civilian noninstitutionalized population in 1980 amounted to $381.7 billion. The direct costs of illness and injury--resource expenditures for the diagnosis, treatment, and management of medical and dental conditions--were $153.9 billion, or 40.3 percent of total costs. Indirect costs--economic losses from morbidity and mortality--were $227.9 billion, or 59.7 percent of total costs. Of indirect costs, $104.9 billion resulted from productivity losses because of morbidity, and $123.0 billion represent the present value of lost productivity from premature mortality based on a net effective discount rate of 4 percent. These estimates, based on data from the 1980. National Medical Care Utilization and Expenditure Survey (NMCUES), differ from other estimates of the costs of illness and injury in 1980 (Gibson and Waldo, 1982; Rice, Hodgson, and Kopstein, 1985). The differences, which can be resolved, are attributable to two major factors: (1) NMCUES includes only the civilian noninstitutionalized population, but the other estimates include the institutionalized population and the military; and (2) NMCUES indirect cost estimates for the population unable to work include persons who were retired for health reasons in 1979 and 1980, disabled homemakers, and other persons who were disabled for the entire year 1980 but were not retired for health reasons in 1979, but the Rice et al. estimates do not include the last two categories in the population unable to work. The principal NMCUES findings on the total costs of illness in the civilian noninstitutionalized population reinforce the importance of considering distributional effects. Persons 65 years of age and over represent one-tenth of this population yet account for more than one-fourth of direct costs and more than their share of total costs, even though the institutionalized elderly are excluded. More than two-thirds of total costs for this age category are accounted for by direct costs. Direct costs also account for more than two-thirds of total costs for people under 17 years of age. However, this youngest age category, which constitutes over one-fourth of the civilian noninstitutionalized population, generates only 12.3 percent of direct costs. In contrast, indirect costs account for well more than 60 percent of total costs for the working-age population (17-64 years of age). Within the working-age population, per capita direct costs are highest among persons who are not full participants in the work force, many of whom are not working full time or at all because of injury or ill health.(ABSTRACT TRUNCATED AT 400 WORDS)

High-volume and low-volume users of health services: United States, 1980.

Data from the National Medical Care Utilization and Expenditure Survey of 1980 are used to examine the characteristics of high-volume users of health care services, contrasting them with low-volume users and those who used no services at all. The three major types of medical care services examined are hospital inpatient care, ambulatory visits, and prescribed medications. Low users were defined, respectively, as those who during the year had either one or two hospital days, one nondental visit to a physician or nonphysician, and one prescribed medicine acquisition. High users were those with, respectively, 17 or more hospital days, 20 or more visits, and 25 or more prescribed medicine acquisitions. A very small percent of the U.S. civilian noninstitutionalized population and of those who used services at all during the year consume a large percent of services in each of the three service types. High users of inpatient hospital care constitute 1.7 percent of the civilian noninstitutionalized population and 15 percent of persons hospitalized during the year, yet they used 54.4 percent of all hospital days used by the reference population. High users of ambulatory services constitute 4.5 percent of the reference population and only 5.7 percent of all users of ambulatory services, yet they accounted for 32.3 percent of all ambulatory visits. For prescribed medications, only 3.7 percent of the civilian noninstitutionalized population are high users, comprising 5.9 percent of all users, but they account for 32.9 percent of all prescription acquisitions. At the other extreme, low users of ambulatory care visits represent 17 percent of the reference population, and 21 percent of all users of such care, but only 3.3 percent of all visits. High users share certain characteristics. They are more likely than low users to be older and poorer, to have poorer health status and more medical conditions, and are more likely to have functional limitations. Both univariate and multivariable analyses show that the most important distinguishing characteristics of high users of any of the three medical services are poor health status, severe functional limitations, and the presence of multiple medical conditions--most importantly cancer, cardiac disorders, musculoskeletal diseases, respiratory diseases, and injuries and poisonings. Almost all high-volume users of every category of service (88 percent for hospital days, 89 percent for ambulatory visits, and 94 percent for prescribed medications) had at least three different diagnostic conditions reported during the year.(ABSTRACT TRUNCATED AT 400 WORDS)

Health insurance coverage of the unemployed.

Of 1,332 unemployed individuals in the Detroit area interviewed in late 1983, 51% did not have health insurance. Lack of insurance was directly related to length of unemployment. Of those unemployed 3 months or less, 31% had no insurance, as compared with 56% of those unemployed more than 3 years. For the most part, these were not the chronically uninsured: 78% of them were insured when they were employed. Three fourths of those without insurance were not covered by Medicaid either. These findings suggest that during the latest economic recession, the problem of health insurance loss due to losing one's job was more severe than had been assumed by most policymakers.

Length-of-stay variations within ICDA-8 diagnosis-related groups.

The number of bed days per inpatient episode, the length of stay (LOS), is a major indicator of hospital performance and a basic measure of patients' resource consumption. Hospital reimbursement on the basis of treated cases requires a system for accurately identifying case categories. Diagnosis Related Groups (DRGs) have been proposed for this purpose. An initial study to analyze variations in length of stay and resource consumption within DRGs is presented. Regression analysis of variation in ALOS for 7 DRGs, in terms of 8-10 independent variables not included in the classification scheme itself, was done. Results indicate that 30-65% of the large intra-DRG LOS variations are explainable by indicators of case complexity and severity despite the homogeneity claimed for the DRGs. For certain DRGs, such variations are also related to admission factors. Results indicate the need for more precise patient taxonomies than the ICDA-8-based DRGs.

Classification of hospitals based on measured output: the VA system.

Evaluation of hospital performance and improvement of resource allocation in hospital systems require a method for classifying hospitals on the basis of their output. Previous approaches to hospital classification relied largely on input characteristics. The authors propose and apply a procedure for classifying hospitals into groups where within-group hospitals are similar with respect to output. Direct measures of case-mix-adjusted discharges and outpatient visits are the principal measures of patient care output; other measures capture training and research functions. The component measures were weighted, and a composite output measure was calculated for each of the 162 hospitals in the Veterans Administration health care system. The output score then was used as the dependent variable in an Automatic Interaction Detector analysis, which partitioned the 162 hospitals into 10 groups, accounting for 85 per cent of the variance in the dependent variable. An extension of the output classification method is presented for illustration of how the difference between hospitals' actual operating costs and costs predicted on the basis of output can be used in defining isoefficiency groups.

Health maintenance organizations as Medicaid providers.

Evolution of a one-door, one-class system of medicine for all Americans was the professed goal of the social legislation of the 1960s. The development of health maintenance organizations (HMOs) was seen to be a major mechanism for assuring access to care and at the same time reducing the costs of social health programs. This has currently been reinforced by procompetitive proposals, which predict great efficiency resulting from the envisaged competition among organized systems of care. This article argues that established HMOs have no incentives to enroll Medicaid beneficiaries and that under current arrangements. Medicaid beneficiaries have no incentives to enroll in HMOs. As Medicaid programs across the states are cut, resulting in fewer benefits and more restricted physician payments, beneficiaries may have greater incentives to enroll in organized systems. Private physicians may also face greater incentives to develop HMOs to serve Medicaid beneficiaries. If that happens, however, a two-class system--one for the poor and one for others--will be institutionalized; and to assure minimum standards of care for the poor, more, not less, regulation will be required.

Health care policy: lessons from the past and issues of the future.

Liberal distributional values, the increasingly powerful capacity of medicine to provide more and better care, and concern about the health hazards of an industrial society fueled the vast expansion of the health care sector during the last 20 years. That growth was facilitated by a growing economy. The current health policy debate at one level reexamines the distributional bases of entitlement programs, and at another seeks alternative resource allocation mechanisms to reduce the cost of health care. This article has two themes. First, distributional and allocational policies are shown to be intrinsically related, so that the health policy debate is fundamentally a clash between liberal and libertarian values. Second, the inexorable social forces driving the health care system are shown to be the aging of the population and the rapid expansion of technology. The resulting dynamics imply the further growth of the health sector, now in the environment of a sluggish economy. Future policies will have to struggle with how to ration scarce health resources and how to reorient the health care sector to the problems of the aged.

The design of case-based hospital payment systems.

Reimbursing hospitals on the basis of treated cases, as in the New Jersey diagnosis-related groups (DRG) experiment, is equivalent to a centrally set pricing scheme, with all of its inherent difficulties. In addition to the problems of appropriate case definition, it is not obvious how hospitals should be classified to form reference groups for cost determination. Because empirically derived cost schedules are based on observed treatment patterns and resource use, they reflect variations in clinical appropriateness and quality and in resource use efficiency that characterize the system from which the data are drawn. If case-based schemes are to incorporate desirable performance incentives, they must be much better specified and take into account the complexity of hospital behavior. This article identifies the basic components of case-based systems of hospital reimbursement and discusses the analytic and empiric problems involved in their design.