Healthcare Quality, Physician-Hospital Integration, and Medical Malpractice

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While it is the ongoing growth in healthcare spending that has been making headlines, improving and maintaining healthcare quality is a critical goal of healthcare policy. In this dissertation I answer three questions relating to healthcare quality: does physician-hospital financial integration improves healthcare quality; how physician-hospital financial integration improves healthcare quality -- in particular does it alter referral patterns, and does it affect EMR usage in physician offices; and whether medical malpractice suits are the results of poor healthcare quality (as opposed to random events). Physician-hospital financial integration rates have surged over the past few years. The Medicare fee rules permit integrated physicians to charge higher prices for office visits. Meanwhile, industry stakeholders claim that integration may promote care coordination and quality, each of which may in turn improve patient health. Economic theory provides mixed evidence about the consequences of physician-hospital financial integration. I examine the effect of physician-hospital financial integration on health outcomes and spending using patient-year level Medicare data, and physician-year level integration data. I exploit the granularity of this data to estimate the effect of integration on health outcomes more precisely than previous studies have done. I address selection on both patient and physician unobservables by using an instrumental variables model with physician fixed effects. This allows me to identify the causal effects of physician-hospital financial integration. I find that having an integrated primary care physician (PCP) does not significantly affect average mortality risk, but does reduce the risk of less severe adverse health outcomes attributable to conditions that are treatable in primary care settings. I also show that attending an integrated PCP does not increase health care spending. I find that poor patients die more when their PCP is acquired by a hospital but wealthy patients die less. Physician-hospital financial integration could impact patient health via several mechanisms. I test for changes to referral patterns, EMR installation, evidence of improved care coordination between specialists, and evidence that higher prices reduce access to care. My results indicate that installation of Electronic Medical Records (EMRs) may be playing a role in the beneficial effects of physician-hospital financial integration. Meanwhile, neither inter-specialty coordination, the probability of being referred, nor referral concentration appears to be playing a role. I also show that the higher prices associated with integrated PCPs do not reduce access to primary care. My inpatient referral results support the hypothesis that physicians are redirecting their patients to their hospital-owner after they are acquired. However, the Cardiology referral results do not appear to support this hypothesis. I test whether PCPs who are acquired by hospitals redirect their wealthy patients to their hospital-owner and their poor patients away from their hospital-owner. Although my point estimates appear to support this hypothesis, the standards errors are too large to confirm it. Advocates of malpractice reform often argue that most malpractice claims are unrelated to the quality of the care provided. In a coauthored chapter, Bernard Black, Zenon Zabinski and I study the connection between hospital adverse events and malpractice claim rates in the two states with public data sets on medical malpractice claim rates: Florida and Texas. We use Patient Safety Indicators (PSIs), developed by the Agency for Healthcare Research and Quality, to measure rates for 17 types of adverse events. Hospitals with high rates for one PSI usually have high rates for other PSIs. We find a strong association between PSI rates and malpractice claim rates with extensive control variables and hospital fixed effects (in Florida) or county fixed effects (in Texas). Our results, if causal, provide evidence that malpractice claims leading to payouts are not random events. Instead, hospitals that improve patient safety can reduce malpractice payouts.

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  • 10/28/2018
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