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Physician ownership of specialty hospitals has become commonplace in recent years in several states where certificate-of-need laws do not exist. The study examines trends in utilization rates for complex and simple spinal fusion procedures performed on injured workers with back/spine disorders in two markets in Oklahoma. During the time period we examine, physician-owned spine or orthopedic specialty hospitals entered both market areas in Oklahoma. Because there were no market areas in Oklahoma without physician-owned spine or orthopedic hospitals to use as a comparison group, we also analyzed trends in utilization for these surgical procedures performed on Medicare beneficiaries. We compared utilization for these procedures in Oklahoma and three other states with a high concentration of physician-owned specialty hospitals (Kansas, South Dakota, and Arizona) to utilization rates for back surgery performed on Medicare patients who reside in the Northeast region. States in the Northeast constitute an appropriate control group because there are no physician-owned specialty hospitals in this region. Both analyses indicate that the entry of the physician-owned specialty hospitals was followed by substantial increases in the market area utilization rates for complex spinal fusion surgery. Conversely, such dramatic changes did not occur in the Northeast where physician-owned specialty hospitals do not exist. After considering but ruling out alternative explanations, the findings imply that the financial incentives linked to ownership coincided with significant changes in physicians' practice patterns.

Back pain treatments are costly and frequently involve use of procedures that may have minimal benefit on improving patients' functional status. Two recent studies evaluated adverse outcomes (mortality and major medical complications) following receipt of spinal surgery but neither examined whether such treatments affected functional ability. Using a sample composed of Medicare patients with persistent back pain, we examined whether functional ability improved after treatment, comparing patients treated with back surgery or spinal injections to nonrecipients. We analyzed four binary variables that measure whether the ability to perform routine tasks improved. We used instrumental variables analysis to address the nonrandom selection of treatment received due to unobservable confounding. Contrary to the observational results, the instrumental variable estimates suggest that receipt of either back surgery or spinal injections does not improve back patients' functional ability. Failure to account for selection into treatment can lead to overestimating the benefits of specific treatments.

Ambulatory surgery centers (ASCs) recently have grown to become the dominant provider of specific surgical procedures in the United States. While the majority of ASCs focus primarily on a single specialty, many have diversified to offer a wide range of surgical specialties. We exploited a unique data set from Pennsylvania for the years 2004 to 2014 to conduct an empirical investigation of the relative cost of production in ASCs over varying degrees of specialization. We found that for the majority of ASCs, focus on a specialty was associated with lower facility costs. In addition, ASCs appeared to be capturing economies of scale over a broad range of service volume. In contrast to studies of cost efficiency in specialty hospitals, our results provide evidence that supports the focused factory model of production in the ASC sector.

Relatively little is known about the extent and effects of horizontal mergers among physician specialists. We developed and implemented a methodology to document changes in physician practice structure resulting from horizontal integration among urology groups. We merged cancer registry records from four large states with Medicare Part B claims to identify all urologists who treated men with prostate cancer. We added information from SK & A surveys and extensive internet searches to assign a practice structure to each urologist-year (2005-2014). Horizontal integration among small urology groups led to a sharp increase in the proportion of urologists who belong to large urology practices with ownership in intensity modulated radiation therapy and/or anatomical pathology services. By 2014, more than half of New Jersey urologists and about 43% of urologists in Florida and Texas were members of such large practices, whereas small percentages (7%-16%) were employed by a health system. In contrast, more than 27% of California urologists were employed but only 17.5% had ownership in intensity modulated radiation therapy and/or pathology services. Importantly, we found our indicators of market share of urologists associated with each practice structure type were highly concordant with indicators of market share based on number of prostate cancer episodes treated by each practice structure type.

Since the late 1990s, the use of advanced diagnostic imaging modalities has increased by double-digit rates, outpacing the rate of increase of medical spending overall. In an attempt to assure the appropriate use of advanced imaging procedures, private insurers are increasingly contracting with radiology benefit management programs (RBMs) to reduce overall use and expenditures for radiology services. This article describes the services offered by RBMs and then presents trends in utilization of advanced imaging procedures from three health plans that adopted RBM prior authorization protocols. The implementation of prior authorization protocols by each plan was associated with declines in use of advanced imaging procedures, especially during the first year of the program. Although more rigorous empirical analysis is required in order to draw definitive conclusions, these trends suggest that RBM prior authorization initiatives may be a viable approach for addressing concerns about appropriate use of advanced imaging.

This study used data from Medicare files, the American Hospital Association's Annual Survey of Hospitals, and the 1990 census to investigate whether Medicare fees for breast-conserving surgery (BCS) and mastectomy (MST) affected the rate of BCS across 799 3digit ZIP code areas in 1994. The full model, which was based on the conceptual framework of the supply of and demand for different treatments, explained 51 percent of the variation in BCS rates. Medicare fees were statistically significant and had the hypothesized effects: a 10 percent higher BCS fee was associated witha7to10percent higher BCS rate, while a 10 percent higher MST fee was associated with a 2 to 3 percent lower proportion receiving BCS. Other significant economic variables were proximity to a radiation therapy hospital, a teaching hospital or a cancer center, and the percentage of elderly women with incomes below the poverty rate, which were negatively related to the BCS rate. Variations in age, race, and metropolitan populations had small or insignificant effects. The single most important variable was the percentage of cases with one or more comorbidities.