Physician response to a change in Medicaid fees.

This study examines the effects of a change in Medicaid fees on the volume of physician services provided to beneficiaries. The data set includes price and volume at the procedure-level for Medicaid physician services in Texas in 1991, 1993, and 1995. The empirical analysis compares the volume of services provided to Medicaid participants before and after a 1992 change in reimbursement method. The results indicate that, over the period 1991 to 1993, the change in Texas Medicaid physician fees did not have a statistically significant effect on the volume of services provided. When measured over a longer period of time (1991-1995), however, volume increased significantly when price decreased, but, when price increased, there was no significant effect on volume. The results thus provide empirical support for the behavioural offset assumption underlying the switch to Medicare's Resource-Based Relative Value Scale (RBRVS) method of physician payment. A key policy implication is that reduced fees did not lead to a lower volume of physician services provided to Medicaid patients at least over the period of analysis. However, the new Medicaid fee schedule did not have the desired effect of controlling Medicaid expenditures on physician services.

Rural hospitals: organizational alignments for managed care contracting.

In order to facilitate the process of determining how best to respond to the recent growth of rural managed care, this study discusses various organizational alignments for managed care contracting. The organizational alignments are divided into three categories: remain independent, enter into a contractual arrangement, or develop an informal agreement. For each category, the article explains the option, examines advantages and disadvantages, and presents empirical evidence about the observed effects. The purpose is to present a comprehensive menu of possibilities so that rural hospitals, given their own needs and objectives, may evaluate the options. Although situations differ for individual hospitals, certain general conclusions emerge. First, contracting with managed care organizations as an independent entity is likely to be most attractive to rural hospitals that have a strong patient base. Second, rural hospitals will be more likely to enter into contractual arrangements for managed care contracting when financial pressures dominate the potential loss of autonomy and control. Finally, developing an informal agreement with other healthcare providers for purposes of managed care contracting is likely to be desirable as an intermediate step, or way of experimenting with collective action before entering into a contractual arrangement.

The effect of rural hospital closures on the financial performance of neighboring rural hospitals.

This study investigates how the closure of rural hospitals affected other rural hospitals. The empirical analysis examined whether being the neighbor of a closed rural hospital affected financial performance variables during the periods before and after closure. Before and after comparisons of surviving rural hospitals were made between 1985 and 1989 for closures in 1987 and between 1986 and 1990 for closures in 1988. The regression results showed that neighbors of closed rural hospitals typically did experience increased volume in comparison to non-neighbors, but the increased volume did not lead to reductions in average cost or to improved profitability, after controlling for other factors.

Access implications of rural hospital closures and conversions.

This article examines the effects of rural hospital closures and conversions on various structural dimensions of access. Based on a data set of rural hospitals in Texas during the period 1985-1990, the results indicate that closure or conversion typically had relatively little detrimental effect on hospital services and distance to alternative sources of care, but hospital bed and physician availability may have been adversely affected in certain cases. Rural hospital conversions to alternative types of health care facilities, such as ambulatory care clinics, do appear to have maintained the availability of a restricted set of medical services in some rural areas.

Rural hospital closures. Determinants of conversion to an alternative health care facility.

Conversion of closed hospitals to alternative health care facilities is often suggested as a way of maintaining the availability of medical services in rural areas. This study investigates the factors that influence whether or not a closed rural hospital will convert to an alternative health care facility. The study uses primary data collected from a survey of rural hospitals in Texas that closed during the years 1985 through 1990. Regression results indicate that conversion was more likely when the local economy was healthier and when there were fewer substitute forms of health services. Ownership also played a role: government-operated hospitals that closed were less likely to convert than were private not-for-profit providers. The results of the study will be useful for evaluating programs designed to encourage alternative ways to provide health care services in rural areas.

The effect of chain ownership on nursing home costs.

Although it is commonly assumed that chain ownership will result in lower costs due to economies of scale, the empirical evidence with respect to the effect of chain ownership on nursing home costs is mixed. Chain for-profit nursing homes will have a cost advantage over independent for-profit homes only if there are firm-level (multiple-home) economies of scale. For the study population of Texas nursing homes in 1983, cost structures differed sufficiently across ownership types to warrant estimating separate cost functions by ownership type. The results indicate that, when other factors affecting cost are held constant, chain homes have lower average costs than independent homes at intermediate and high levels of output, but higher average costs at low and very high levels of output. The results highlight the importance of considering whether or not to pool data across ownership categories when estimating nursing home cost functions.

An economic evaluation of mandatory premarital testing for HIV.

This study provides a comprehensive assessment of mandatory premarital testing for HIV. We incorporate new evidence about the assumptions underlying an economic evaluation of premarital testing, use standard methods of program evaluation (cost-effectiveness analysis and cost-benefit analysis), and carefully evaluate how changes in the various assumptions affect the results. The cost-effectiveness results show that, under the most likely conditions, the cost per case of HIV infection prevented by mandatory premarital testing would be between $70,000 and $127,000. In the cost-benefit analysis, the benefit-cost ratio in the most likely scenarios ranges between 3.1 and 28.2.

The economic determinants of specialty choice by medical residents.

This paper analyzes how economic factors (relative expected earnings, relative expected hours worked, and relative length of training period) affect the distribution of medical residents across specialties. The results show that the percent of residents in a given specialty changes more than proportionately when relative hours change (hours elasticities averaged between -1.2 and -2.0) and less than proportionately when relative earnings change (earnings elasticities averaged between 0.3 and 0.6). Residents appear to be quite unresponsive to changes in the length of training period.

Quality choice in Medicaid markets. The case of nursing homes.

This article examines whether private patients, who typically pay a price higher than the Medicaid reimbursement rate, receive the same or higher quality services than Medicaid patients in the same health care facility. Because the mix of patients will affect the firm's cost only when Medicaid and private patients receive different levels of quality, the cost function can be used to test for the presence of quality differences. Estimates of a cost function for Texas nursing home in 1983 indicate that the mix of patients does not affect the firm's cost. Thus, private and Medicaid patients in the same nursing home receive the same level of quality.

Industry effects of medical device regulation: the case of diagnostic imaging equipment.

In 1976 Congress passed legislation authorizing the regulation of all medical devices. Some observers predicted that this regulation would have adverse effects on the newly regulated industries. This paper examines the major features of the medical device regulatory program and investigates how the regulation has affected the diagnostic imaging equipment industry. The results indicate that medical device regulation has not materially affected competition or innovation within established product classes in this industry. This suggests that, by choosing methods of regulation that differentiate among levels of potential risk to consumers, the goal of consumer protection can be achieved with fewer undesirable effects on the regulated industry.

Intravenous antibiotic therapy at home.

During a 12-month period, 23 patients aged 12 to 78 years were treated for 8 to 40 days (mean, 23 days) at home with intravenous (i.v.) antibiotics. Diseases treated included bone and joint infection (14 patients), blastomycosis (two), actinomycosis (two), staphylococcal bacteremia (two), endocarditis (two), and candidal pyelonephritis (one). After initial in-hospital training, patients self-administered their drugs through a heparin-lock i.v. cannula, which was changed regularly by a visiting home care nurse. Antibiotics administered included cloxacillin, penicillin G, cephalosporins, gentamicin, carbenicillin, and amphotericin B. Patient and family acceptance of the program was good, the program was therapeutically effective, and, apart from a decreased prevalence of phlebitis with the heparin lock at home, side effects were no different from those of in-hospital-treated patients. The cost of home therapy was $ 40 per patient-day compared with an estimated $ 137 had the patients remained in hospital. Most patients were able to resume normal activities while receiving home i.v. therapy.