An analysis of hospital productivity and product change

Health Affairs

Volumn 19, Issue 5, 2000, Pages 197-205

  Ashby, Jack ^a   Guterman, Stuart ^b   Greene, Tim ^a  

^a Medicare Payment Advisory Commission   (United States)

^b URBAN INSTITUTE   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; ECONOMICS; HEALTH CARE COST; HEALTH SERVICES RESEARCH; HOSPITAL COST; HOSPITAL DISCHARGE; HOSPITAL MANAGEMENT; HUMAN; LENGTH OF STAY; MEDICARE; ORGANIZATION; ORGANIZATION AND MANAGEMENT; STANDARD; STATISTICAL MODEL; STATISTICS; UNITED STATES;

EFFICIENCY, ORGANIZATIONAL; HEALTH CARE SECTOR; HEALTH SERVICES RESEARCH; HOSPITAL ADMINISTRATION; HOSPITAL COSTS; HUMANS; LENGTH OF STAY; MEDICARE; MODELS, ECONOMETRIC; ORGANIZATIONAL INNOVATION; PATIENT DISCHARGE; PRODUCT LINE MANAGEMENT; UNITED STATES;

EID: 0034264111     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.19.5.197     Document Type: Article

References (5)

1. This analysis includes only inpatient care covered by Medicare's prospective payment system (PPS).
2. The cost measure is total inpatient costs, including services delivered in both acute and other inpatient units, and care provided to all patients. Direct graduate medical education expenses were excluded. We deflated costs using a special version of HCFA's market-basket index that reflects hospital wages exclusively rather than a combination of wage increases for hospital workers and workers in other industries. This cost measure combines data from different segments of the Medicare Cost Report to extend Medicare's sophisticated cost allocation techniques to a measure encompassing all payers. To test how well this measure tracked with the relatively crude "total cost per adjusted admission" available from American Hospital Association (AHA) data, we matched hospital records for a sample of more than 2,000 hospitals. We found that the average annual change over ten years was exactly the same.
3. We used the hospitals and related institutions component of the Consumer Price Index (CPI) for the price adjustment. The hospital CPI is based on a sample of service units taken from hospitals' price masters. Although the decision to base the hospital CPI on charges was well suited for the purposes of this study, a charge-based index does a poor job of measuring actual price inflation for hospital care. Consequently, a new method went into effect in January 1997, which unfortunately prevents us from extending our measure of service output beyond that point.
4. Although the reduced rate of decline in length-of-stay shown in Exhibit 5 is for the elderly population, the same phenomenon is seen for all patients.
5. AHA, National Hospital Panel Survey Report (Chicago: AHA, 1998).