HOSPITAL MARKET ANALYSIS USING A COHORT OF PRIVATELY INSURED PATIENTS WITH TOTAL HIP AND KNEE REPLACEMENT PROCEDURES
Date of Award
Doctor of Philosophy (PhD)
ELLERIE S WEBER
MICHAEL D SWARTZ
Background: Several recent studies have analyzed the contribution of hospital inpatient prices and utilization to variation in medical spending. However, it is still unknown how the drivers of spending for specific procedures differ within privately insured patients. Next, the market concentration of hospitals has been a matter of concern for several decades. However, researchers usually calculate Herfindahl-Hirschman index (HHI) as a measure of market concentration or power, but there is a drawback of using this measure. Hospitals sell differentiated products, and the HHI measure does not take this differentiation into account in its formulation (Gaynor and Town, 2011). Objective: First aim was to calculate and compare variation in hospital spending of a privately insured population with total hip or knee replacement procedures within and across Hospital Referral Regions (HRRs) in Colorado between 2009 and 2014; and assess the contribution of price and utilization to the variation in hospital spending. Second aim was to calculate and estimate the impact of different market competition indices, namely willingness to pay (WTP) and logit competition index (LOCI), on negotiated prices between private payer and hospitals for total hip and knee replacement procedures in Colorado between 2009 and 2014. Methods: This was a retrospective cohort study that included private insurance payer claims for total hip or knee replacement procedures using Colorado All Payer Claims Database (CO APCD) data. The hospital inpatient spending index measure for each HRR was calculated. Next, the relative contributions of price and quantity to spending variation were analyzed within and between HRRs in Colorado. Later, beneficiary demand for hospitals for total hip and knee replacement procedures using a discrete choice model was estimated as a first step to attain market power measures of WTP and LOCI. After calculating WTP and LOCI measure, the impact of hospital market power on inpatient hospital prices reimbursed by PPO plans in Colorado was estimated. Results: For HMO and PPO spending, quantity differences across HRRs accounted for between 64 percent to 71 percent; and for POS spending, quantity differences across HRRs accounted for around 25 percent for both clinical cohorts of total hip or knee replacement procedures. The patient choice model showed that patients with an elective procedure prefer to have the procedure in a hospital nearby. The mean value of LOCI was 0.572 which indicates that the competition was low on average among hospitals in Colorado for total hip or knee replacement procedure market. Changes in WTP for total hip or knee replacement surgery markets were associated with a change of approximately 1% to 5% in negotiated hospital prices for PPO plan types in the period 2009–2014. Conclusion: Findings for overall service category spending (i.e. inpatient spending) cannot be generalized to different service lines within a specific service category (i.e. total hip or knee replacement procedures). Increased market power (i.e. low competition among hospitals) was associated with significant increases in the negotiated hospital prices for PPO plans, in the case of total hip or total knee replacement surgeries during 2009–2014 in Colorado.
DONDERICI, ELIFNUR YAY, "HOSPITAL MARKET ANALYSIS USING A COHORT OF PRIVATELY INSURED PATIENTS WITH TOTAL HIP AND KNEE REPLACEMENT PROCEDURES" (2020). School of Public Health Dissertations (Open Access). 225.