On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Francesco Longo who has a PhD from the University of York. If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch.
What do you mean by ‘hospital performance’, and how is it measured?
The concept of performance in the healthcare sector covers a number of dimensions including responsiveness, affordability, accessibility, quality, and efficiency. A PhD does not normally provide enough time to investigate all these aspects and, hence, my thesis mostly focuses on quality and efficiency in the hospital sector. The concept of quality or efficiency of a hospital is also surprisingly broad and, as a consequence, perfect quality and efficiency measures do not exist. For example, mortality and readmissions are good clinical quality measures but the majority of hospital patients do not die and are not readmitted. How well does the hospital treat these patients? Similarly for efficiency: knowing that a hospital is more efficient because it now has lower costs is essential, but how is that hospital actually reducing costs? My thesis tries to answer also these questions by analysing various quality and efficiency indicators. For example, Chapter 3 uses quality measures such as overall and condition-specific mortality, overall readmissions, and patient-reported outcomes for hip replacement. It also uses efficiency indicators such as bed occupancy, cancelled elective operations, and cost indexes. Chapter 4 analyses additional efficiency indicators, such as admissions per bed, the proportion of day cases, and proportion of untouched meals.
You dedicated a lot of effort to comparing specialist and general hospitals. Why is this important?
The first part of my thesis focuses on specialisation, i.e. an organisational form which is supposed to generate greater efficiency, quality, and responsiveness but not necessarily lower costs. Some evidence from the US suggests that orthopaedic and surgical hospitals had 20 percent higher inpatient costs because of, for example, higher staffing levels and better quality of care. In the English NHS, specialist hospitals play an important role because they deliver high proportions of specialised services, commonly low-volume but high-cost treatments for patients with complex and rare conditions. Specialist hospitals, therefore, allow the achievement of a critical mass of clinical expertise to ensure patients receive specialised treatments that produce better health outcomes. More precisely, my thesis focuses on specialist orthopaedic hospitals which, for instance, provide 90% of bone and soft tissue sarcomas surgeries, and 50% of scoliosis treatments. It is therefore important to investigate the financial viability of specialist orthopaedic hospitals relative to general hospitals that undertake similar activities, under the current payment system. The thesis implements weighted least square regressions to compare profit margins between specialist and general hospitals. Specialist orthopaedic hospitals are found to have lower profit margins, which are explained by patient characteristics such as age and severity. This means that, under the current payment system, providers that generally attract more complex patients such as specialist orthopaedic hospitals may be financially disadvantaged.
In what way is your analysis of competition in the NHS distinct from that of previous studies?
The second part of my thesis investigates the effect of competition on quality and efficiency under two different perspectives. First, it explores whether under competitive pressures neighbouring hospitals strategically interact in quality and efficiency, i.e. whether a hospital’s quality and efficiency respond to neighbouring hospitals’ quality and efficiency. Previous studies on English hospitals analyse strategic interactions only in quality and they employ cross-sectional spatial econometric models. Instead, my thesis uses panel spatial econometric models and a cross-sectional IV model in order to make causal statements about the existence of strategic interactions among rival hospitals. Second, the thesis examines the direct effect of hospital competition on efficiency. The previous empirical literature has studied this topic by focusing on two measures of efficiency such as unit costs and length of stay measured at the aggregate level or for a specific procedure (hip and knee replacement). My thesis provides a richer analysis by examining a wider range of efficiency dimensions. It combines a difference-in-difference strategy, commonly used in the literature, with Seemingly Unrelated Regression models to estimate the effect of competition on efficiency and enhance the precision of the estimates. Moreover, the thesis tests whether the effect of competition varies for more or less efficient hospitals using an unconditional quantile regression approach.
Where should researchers turn next to help policymakers understand hospital performance?
Hospitals are complex organisations and the idea of performance within this context is multifaceted. Even when we focus on a single performance dimension such as quality or efficiency, it is difficult to identify a measure that could work as a comprehensive proxy. It is therefore important to decompose as much as possible the analysis by exploring indicators capturing complementary aspects of the performance dimension of interest. This practice is likely to generate findings that are readily interpretable by policymakers. For instance, some results from my thesis suggest that hospital competition improves efficiency by reducing admissions per bed. Such an effect is driven by a reduction in the number of beds rather than an increase in the number of admissions. In addition, competition improves efficiency by pushing hospitals to increase the proportion of day cases. These findings may help to explain why other studies in the literature find that competition decreases length of stay: hospitals may replace elective patients, who occupy hospital beds for one or more nights, with day case patients, who are instead likely to be discharged the same day of admission.