Specialty hospitals cherry-pick patients, exaggerate success, says INFORMS meeting paper

Although many specialized hospitals deliver better and faster services in cardiac care and other specialties, a paper being presented at the annual meeting of the Institute for Operations Research and the Management Sciences (INFORMS®) maintains that these hospitals cherry-pick patients to achieve these results, and that average patients actually receive worse care. "The Effect of Focus on Performance: Evidence from California Hospitals" is by Diwas KC, Asst Prof at Goizueta Business School at Emory University and Christian Terwiesch, Professor at The Wharton School at the University of Pennsylvania.

The annual meeting (http://www.informs.org/article.php?id=1615&p=1|) of the Institute for Operations Research and the Management Sciences (INFORMS®) takes place at the San Diego Convention Center and the Hilton San Diego from Sunday, October 11 - Wednesday, October 14. Some 4,000 experts in analytics, operations research, and applied math are expected to attend.

The authors acknowledge that focused hospitals deliver faster services at higher levels of quality, as indicated by lower lengths of stay and reduced mortality rates.

They investigated the extent to which the superior operational outcome is driven by focused hospitals truly excelling in their operations or by focused hospitals simply selectively admitting patients who are easier to treat.

Their analysis shows that for randomly assigned patients, focused hospitals deliver a lower quality of care, as measured by a higher mortality rate. They also find that the average length of stay for a randomly assigned patient is longer at focused hospitals.

In other words, patient selectivity is an important driver of the superior outcomes at focused hospitals.

In addition, the authors show that the market entry of a focused hospital has a negative effect on the performance of other hospitals operating in the same region. Their results show that the average operational performance of existing hospitals deteriorates following the entry of a focused competitor, who attracts the easy-to-treat patients.

Overall, they conclude that this business focus can indeed be the source of a competitive advantage in hospital operations. However, this advantage is substantially driven by focused hospitals cherry-picking easy-to-treat patients at the expense of other, full-service hospitals in the region.

Event: The Effect of Focus on Performance: Evidence from California Hospitals, presented by Diwas KC

Date: Wednesday, October 14

Time: 12:45-2:15 PM

Place: Hilton San Diego, Sapphire A/B, fourth floor

Source: Institute for Operations Research and the Management Sciences