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Dissertation Information for Sally Clark Stearns

NAME:
- Sally Clark Stearns

DEGREE:
- Ph.D.

DISCIPLINE:
- [No Discipline Recorded]

SCHOOL:
- University of Wisconsin, Madison (USA) (1987)

ADVISORS:
- None

COMMITTEE MEMBERS:
- None

MPACT Status: Incomplete - Not_Inspected

Title: Price variation under DRG hospital reimbursement: The effects on service choice and health outcome

Abstract: "This dissertation considers the choice of quality of medical care under diagnosis-related group (DRG) hospital reimbursement, which is the reimbursement method currently used by the Medicare program. Two key questions are addressed. First, does variation in the DRG price lead to variation in the choice of services per admission? Second, is observed variation in service levels related to variation in health outcome following treatment?

The regulator's choice of DRG price and the medical provider's response in choice of services constitute a strategic game, and the outcome of the game depends on the objective functions of the two players. The regulator's objective is assumed to be the maximization of social welfare. Two objective functions are considered for the medical provider: profit maximization with a concern for reputation, and utility maximization with a concern for patient outcome as well as profits. In choosing services for a patient, the medical provider observes the patient directly and has more information on the patient's medical condition than the regulator has. The asymmetric information on severity of illness makes the development of a model combining services and outcome important.

An equation for the choice of services is derived from the profit maximization model; this equation is estimated jointly with a health production function in order to control for unmeasured aspects of case severity which affect both variables. Separate estimations are done using billing data for New Jersey Medicare patients admitted for congestive heart failure or prostate surgery from 1982 to 1983.

Empirical results indicate that: (1) a significant and positive correlation exists between DRG price and service levels (length of stay and ancillary services), and (2) variation in services is not significantly related to outcome measured by post-discharge survival. Greater availability of nursing home beds is also significantly correlated with shorter lengths of stay for heart failure patients. Simulations show that a regulator may reduce price and therefore expenditures without causing a substantial decline in post-discharge survival; the expansion of nursing home beds, however, may be necessary to ensure the provision of appropriate medical services following earlier discharge."

MPACT Scores for Sally Clark Stearns

A = 0
C = 1
A+C = 1
T = 0
G = 0
W = 0
TD = 0
TA = 0
calculated 2008-01-31 06:20:30

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