Sunday, January 27, 2013

Hospice "Under-Use"

The end-of-life care system in the United States is not part of the health care system that often gets high reviews.  We have a system of hospice care that can be used to facility what some call a "high quality dying experience," although whether it is important to have a high quality experience of approaching death or to having on until very end and have what some consider to be a "lower quality dying experience" is a matter of opinion.  In other words, what constitutes a high quality dying experience is a matter of opinion.  Not everyone's utility (or their family members' utility) is maximized by the same choices.

Still, many think of hospice care as potentially less expensive, providing better management of the condition approaching death, and providing an opportunity for family of the dying individual to manage their own interests better.  In that case, the quantity of hospice care demanded is often perceived to be "less than what would be expected".  For a long time people have asked why.

Many reasons have been given.  Perhaps people don't understand hospice.  Perhaps patients of their families have a disutility of even dealing with the hospice decision as it means that they are admitting that they are close to death.  Perhaps providers have a disutility of discussing the issue with patients.

Or, perhaps, according to a news piece featured in the Johns Hopkins Bloomberg School of Public Health news feed last week (the news piece can be found here: the reason is an even more basic economic one.

The news piece reports on an article in Health Affairs (a very good health policy journal) that was worked on by a colleague of mine, Colleen Barry.  The work found that many hospice care facilities have rules that limit enrollment opportunities for patients with more complex needs.  This is more likely to be true in facilities that are smaller and for-profit.  Some, one may question the profit and the capacity of some hospice facilities.

This raises the interesting question about whether a focus on demand side policy interventions is misplaced.  In other words, should we be educating families more?  Should we be educating physicians more?  Should we be working on improving the decision making process?  Or should we, instead, be focused on changing incentives for the supply side?

No definitive answer here, but it does give us something to think about.  The news piece says that the Health Affairs article suggests that Medicare could consider raising the per day reimbursement rate for complex patients.  The big question--would that solve the problem or create new ones by making it easier for more people to enroll.  

Thursday, January 24, 2013

Incentivizing Good Behavior Among Hospitals

The Johns Hopkins Bloomberg School of Public Health newsfeed yesterday carried a version of a piece from the Wall Street Journal.  The article, headlined "Return Patients Vex Hospitals" was written by Laura Landro and appeared on page A6.  The article noted that there are new policies being put in place for Medicare to penalize hospitals up to 1% if the rate of readmission for discharged patients is higher than expected.

There are many interesting questions about this from an economic perspective.

First, how is the expected rate defined and could an individuals hospital do anything to "game the system" and push the expected rate upward, making it easier to stay under the rate, without harming patients?

Second, the article comments on how part of the problem may be the transition between the hospital and care in the community.  While there is no reason to suspect that those providing care in the community would want to provide anything other than the highest quality care, does this create a need for the hospital to control care in the community better?  Does this then lead to an incentive to form an integrated network?  And even if the hospital is successful at hospital care will it then be successful at providing care in the community?  Presumably the incentives might line up better if the hospital was responsible for care to the conclusion of the episode of care but would that give the organization too much market power and, again, would the management work well.

Third, the article mentions that thirty day readmission rates may not be the right thing to measure.  What if a hospital were to lower its readmission rate but then have more patients die in the community?  Would an incentive to decrease readmission rates then, perhaps in an unintended way, lead to more deaths.

Public policy to manipulate economic incentives must be ever vigilant for unintended consequences if the target of the policy/incentive change finds a way to respond that was not anticipated.