Home Forum Research Costly Efficiencies Working Paper – Critical feedback

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  • #247449
    CM

    I would like to solicit some critical feedback on my working paper ‘Costly Efficiencies: Health Care Spending, COVID-19, and the Public/Private Health Care Debate’, recently posted here:

    2021/05: Mouré, ‘Costly Efficiencies: Health Care Spending, COVID-19, and the Public/Private Health Care Debate’

    I was hoping to get some feedback broadly in terms of these questions:

    1. Do you think the approximation of health financing ratios to ratios of public/private control of health care systems is warranted? What additional information or questions answered do you think might strengthen or weaken this assumption?

    2. Is the explanation and treatment of the quantitative analysis comprehensive enough/too comprehensive (and how)? What further information/calculation/chart illustrations would you like to see (e.g. other variables, larger sample size, etc.). Is there anything that is unnecessary or superfluous?

    3. Any other notes on the empirical evidence, including ideas of how to expand the study?

    Many thanks in advance!

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    • #247457
      Scot Griffin
      • Topics started: 16
      • Total posts: 118

      I was hoping to get some feedback broadly in terms of these questions: 1. Do you think the approximation of health financing ratios to ratios of public/private control of health care systems is warranted? What additional information or questions answered do you think might strengthen or weaken this assumption? 2. Is the explanation and treatment of the quantitative analysis comprehensive enough/too comprehensive (and how)? What further information/calculation/chart illustrations would you like to see (e.g. other variables, larger sample size, etc.). Is there anything that is unnecessary or superfluous? 3. Any other notes on the empirical evidence, including ideas of how to expand the study? Many thanks in advance!

      For the duration of 2020, COVID-19 was an untreatable disease and largely remains so now. You can get vaccinated, but if you contract COVID-19, the only question is whether you survive it. By the end of 2020, the US had approved remdesivir and monoclonal antibodies as treatments, but I don’t believe they are broadly deployed even today. Given this inability to treat the disease, how do we measure quality of care or efficiency? Alternatively, if neither the quality of care nor the efficiency of its delivery affects the outcome, why do they matter?

      Responding to your questions:

      1. Does the mix of non-profit v. for-profit private providers affect your approximation of health financing ratios?  I know that you chose to leave the US out of most of your analysis, but the American health care system is the only one I have studied.  According to the Kaiser Family Foundation, in 2019, only 24% of American hospitals were for-profit entities, 57.3% were non-profit entities, and the remainder were government entities (state or federal). Nominally, then, 76% of American hospitals are not driven by the demand for differential accumulation. To be clear, I believe that it can be shown that an increasing number of non-profit hospitals are managed exactly like for-profit hospitals, but the profits are distributed as salaries and bonuses to management, not as dividends to the owners.

      2. The explanation and treatment of the quantitative analysis seem comprehensive enough based on your assumptions and the limits you placed on your study. If you had included the US healthcare system in the meat of your results, I probably would have had something to say because I don’t think differential accumulation in US healthcare manifests itself purely as a strategic scarcity (i.e., the most common form of sabotage). In fact, the real scam in US healthcare is price fixing, or more precisely “annual price increase fixing,” between insurers and providers. The whole point of the US healthcare system appears to be transfer what little wealth elderly Americans have to dominant capital (over 60% of all healthcare costs are incurred by people 50 and over).

      3. I have some ideas, but they’re probably more relevant to a different study than the current one. That said, to the extent you do discuss U.S. healthcare costs and COVID-19 outcomes, you may consider consider comparing outcomes among the states themselves, as the per capita data for both healthcare costs and COVID-19 deaths are available. Unfortunately, the CMS’s per capita healthcare costs data seems to end in 2014, but newer data seems to be available elsewhere.

       

       

      • #247462
        CM
        • Topics started: 3
        • Total posts: 13

        Thank you for your comments Scot, you raise many good issues, esp. with the US. I agree with you that it looks like the large not-for-profit healthcare institutions in the US are being run like for-profit companies, but I haven’t done much research into it. The US was so far outside of the normal distribution of study (both in costs and deaths) that it skewed the results (albeit in favour of my argument). Within the US, it would be interesting to see if the same pattern shows up between states. I haven’t looked into whether there are data on the public/private mix of institutions at that level. Though I was unable to figure out how to segregate private for-profit from private not-for-profit organizations, it appeared that private insurance made up a significant portion of private funding of healthcare. If this is the case everywhere, I belive my approximation should hold.

        Regarding your initial question, I don’t think health care systems have been entirely unable to treat covid-19. Even at a basic level (as in, excluding expensive technological solutions like ventilators and vaccines), healthcare systems which had enough hospital beds and nurses to monitor and properly quarantine patients, proper PPE, an honest and communicative medical community, etc. have gone a long way to reducing the spread and severity of the pandemic, especially in the initial months of the outbreak.  In the long term, I suppose its possible that everyone will eventually contract the virus and the efficacy of healthcare systems will have been insignificant.

    • #247460
      Jonathan Nitzan
      • Topics started: 30
      • Total posts: 180

      Hi Chris:

      I have a technical point to make.

      Your paper looks at the relationship between health expenditures and Covid19 deaths, implying that the former has a varying effect on the latter, depending on the public/private expenditure mix.

      Your chars make this implied causality potentially difficult to follow. In the sciences, it is conventional to plot the implied cause on the horizontal axis and the effect on the vertical one. Your figures — such as the one reproduced below — invert this convention. They put the effect on the horizontal axis and the cause on the vertical one. Changing the axes will make your results easier to read.

      • #247463
        CM
        • Topics started: 3
        • Total posts: 13

        Hi Jonathan,

        Thank you for pointing this out!

    • #247467
      Scot Griffin
      • Topics started: 16
      • Total posts: 118

      Within the US, it would be interesting to see if the same pattern shows up between states. I haven’t looked into whether there are data on the public/private mix of institutions at that level. Though I was unable to figure out how to segregate private for-profit from private not-for-profit organizations, it appeared that private insurance made up a significant portion of private funding of healthcare. If this is the case everywhere, I believe my approximation should hold.

      The Kaiser Family Foundation (KFF) website has a breakdown of hospital ownership for each state in the U.S..   (URL embedded).  The KFF data only goes through 2019, but the American Hospital Association (AHA) is the source of KFF’s data, and they should have an update.  https://www.aha.org/

      The state of California has a tremendous amount of data available regarding the state’s hospital finances, utilization and pricing.  See, e.g., https://hcai.ca.gov/data-and-reports/

      You may find this website of interest. The website is owned by a San Francisco Bay Area doctor who decided to dig into what it really costs to deliver healthcare in the U.S.. He eventually published a book about his findings.

       

       

       

    • #247484
      Pieter de Beer
      • Topics started: 4
      • Total posts: 26

      Following up on Scot’s comments about non-profit hospitals. I don’t think an analysis of Private For-Profit Hospitals vs Public Hospitals can provide an adequate picture of what is really going on.

      In September of 2020, a study was published on Investment Income of Private Non-Profit Hospitals in the US  that there is a definitive differential in the Investment Income of these non-profits, the biggest ones use investment to generate almost half their income.

      In 2019, Kaiser showed that Investment Income totaled nearly $300 billion, and that only 7% of this was dedicated to their core mission (healthcare). With some non-profit hospitals going from “In the Red” budgets, to profitable using this strategy, and with the non-profit status hinging on the hospitals giving back to the community in exchange for their tax-exempt status, we would assume that this would result in increases of free patient care and debt forgiveness, but on the contrary, what we see instead is that these non-profit hospitals fall far short of their requirements, and in many cases, actually chase down payments that should have qualified for debt relief ( Fierce Health Report )

      Once we account for this middle sector, which is much larger than either the for profit or the public sector, it becomes far more obvious that there is a lot of opacity in the US hospital industry that is hiding some very shady stuff

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