2007 March 06 Tuesday
Do Specialty Hospitals Do Excess Treatments?

Specialty cardiac hospitals seem to increase the amount of cardiac treatments done in an area.

The opening of a specialty cardiac hospital is associated with an increase in the rate of coronary revascularization in a region, compared to new cardiac programs opened at general hospitals, according to a study in the March 7 issue of JAMA.

Specialty hospitals, which provide care limited to specific medical conditions or procedures, are opening at a rapid pace across the United States, according to background information in the article. Proponents argue that specialty hospitals provide higher quality health care and greater cost-efficiency by concentrating physician skills and hospital resources needed for managing complex diseases. Critics claim that specialty hospitals focus primarily on low-risk patients and provide less uncompensated care, which places competing general hospitals at significant financial risk.

"However, specialty hospitals raise an additional concern beyond their potential to simply redistribute cases within a health care market. Specialty hospitals are typically smaller than general hospitals and have high rates of physician ownership. Physician owners may have stronger financial incentives for providing services that fuel greater utilization," the authors write.

Of course physician owners have greater financial incentives. One really big problem with medicine is that patients lack the knowledge, expertise, and intellectual ability to evaluate the efficacy of treatment choices. Doctors can create work for themselves. Usually governments or insurance companies are footing the bill. So patients do not have financial incentives to take a critical look at physician recommendations for expensive procedures.

In what are called Hospital Referral Regions (HRRs) new specialty cardiac hospitals seem to raise use of the coronary revascularization procedure more than is seen when general hospitals open cardiac programs.

The researchers found that overall, rates of change for total revascularization were higher in HRRs after cardiac hospitals opened when compared with HRRs where new cardiac programs opened at general hospitals and HRRs with no new programs. "Four years after their opening, the relative increase in adjusted rates was more than 2-fold higher in HRRs where cardiac hospitals opened (19.2 percent) when compared with HRRs where new cardiac programs opened at general hospitals (6.5 percent) and HRRs with no new programs (7.4 percent)."

"Although we are unable to comment directly on the appropriateness of these procedures, these findings raise the concern that the opening of cardiac hospitals may lead to greater procedural utilization beyond the simple addition of capacity to a market. This is particularly worrisome since cardiac hospitals may not substantially improve clinical outcomes when compared with general hospitals with similar procedural volumes," the researchers write.

Within the United States the rate of use of medical care varies greatly

Medicare spending per patient varies greatly in the United States.

In some regions of the United States Medicare pays more than twice as much per person for health care as it pays in other regions. For example, age-, sex-, and race-adjusted spending for traditional, fee-for-service (FFS) Medicare in the Miami hospital referral region in 1996 was $8,414–nearly two and a half times the $3,431 spent that year in the Minneapolis region.1

Even after differences in price levels across regions are adjusted for, there are no obvious patterns that suggest why some areas spend more than others. Spending in urban areas in the Northeast tends to be higher than average, but spending in rural regions in the South and urban areas in Southern California is as high or even higher. And the dollar transfers involved are enormous. The difference in lifetime Medicare spending between a typical sixty-five-year-old in Miami and one in Minneapolis is more than $50,000, equivalent to a new Lexus GS 400 with all the trimmings.2

Lots more doctors want to live in south Florida than in Minnesota. So less unnecessary medical treatment gets done in Minnesota.

Share |      By Randall Parker at 2007 March 06 11:12 PM  Economics Health

Stephen said at March 7, 2007 4:12 AM:

I've not searched out the stats, but this evening a medical friend observed that a big problem with the health system is the huge amount of money spent to keep a person in their dotage alive for just a few more months. She asked me to imagine how much more money we could spend on early intervention work (public health, fitness campaigns, giving every citizen a free complete check-up every 5yrs etc), if we could just bring ourselves as a society to draw a line and say, "you're suffering from old age, that's not a medical condition, go home, let nature take its course and we'll redirect the expenditure toward providing better treatment to the child in the next room."

She observed that the above scenario is even more justifiable where a patient has asked not to be resuscitated but nevertheless takes up an expensive hospital bed.

Not endorsing it, but she does make an interesting point.

Pete said at March 7, 2007 6:47 AM:

Does anyone know what the insurance costs are in Florida vs. Minnesota ( or North vs. South for that matter). I remember a few years ago, insurance costs for obstetricians in PA went through the roof. Many left for friendlier climates down south. One particular case was a doctor whose insurance shot up to $1 million a year. He left for North Carolina pretty soon after that. I'd leave too.

Purenoiz said at March 7, 2007 7:49 AM:

I was watching Mclauglin group about 2 months back and they had an entire show dedicated to the rising coast of medical care in america. In the next 30 years it will make up 50% of our GDP (i'm a little fuzzy on the time line).

What isn't so fuzzy is the role choices play in life and death.

Heart disease is the leading cause of death
followed by cancer lung colon breast are the top three killers.
followed by stroke.

What do all of these have in common? What you put in your body, and what you do with your body effect your lifespan.
Interestingly, breast cancer rates fell for the first time by 7%, without manipulating statistics, or some miracle drug, but interestingly enough a 20% reduction in HRT use. Colon cancer epidemiology shows that the less veggies, and more red meat you eat, the more likely you are to develop it. And don't forget Smoking's link to lung cancer.

So why should insurance companies, state plans or medicare pay for intervention style medicine for people who treat their bodies like a garbage pit? If you want trans fat laden fries with your supersized combo meal, maybe you should be burdened with the entire cost of your lifestyle choices.

Purenoiz said at March 7, 2007 7:55 AM:

By the way, people are in general healthier (my assumption) in minnesota and the dakota's than in the south. Thats where people go to die (snow birds and retiree's). I'm a native minnesotan, my fiance is from florida. Only hawaii has a longer life expectancy. Maybe it's in the lutefisk

Cedric Morrison said at March 7, 2007 8:30 AM:


If you take all of the advice of the health professionals and live a resolutely abstemious life, you are still going to die from something, just maybe a couple of years later than you otherwise would have. Unless my understanding is off, there is nothing guaranteeing you a quick death, and no reason to suppose that your end-life expenses will be any cheaper than average.

If the choice becomes death from a heart attack at 75 or from Alzheimer's at 80, for example, has society gained much? (I'm talking about the overall economy, not personal values.) After factoring social welfare costs, such as pensions, the people who die relatively young might actually be saving the overall economy a lot of money.

The above is a harsh calculation, but I find it no more harsh than what you said.

Purenoiz said at March 7, 2007 9:19 AM:

Accidents are the number one way for young people (18-44) to die.

Another thought regarding social security. Do what kaiser wilhelm did. Have it kick into effect after you have made it to the median age of death. That way they can keep contributing to society (at least monetarily). Then agin people who make it to 80, typically have a decent shot of living into their 90's. All of my grandparents are doing well, almost all of them are 90, and only one is on few medications. Mostly for her eye's. And since her vision is deteriorating, so is other aspects of her health. Since she can't go walking around the lakes anymore.

Obviously, people who have contributed to society by working for 40-50 years should be rewarded for that. Besides they still spend money after they have retired and that effects the economy as well. But at what point do you say, look your lifestyle choices are a detriment to you and society, the amount of resources put into keeping a negligent person alive could be better used educating and taking care of children (who are innocent of the sins of their parents).

do we care for all with equal diligence, or do we say up front, we as a society should not bare the burden of a lifetime of bad choices. If you choose this, this is what you can expect from us. And invest in education for better health.

Cedric Morrison said at March 7, 2007 10:08 AM:

Is there any reason to believe that a person dying at 85 is going to receive any less of the costly end-life care than a person dying at 65?

purenoiz said at March 7, 2007 5:53 PM:

I 'll have to look up the location of the statistics again. But I read somewhere that people who live to 80, do tend to live longer, healthier lives, yet when they do die, it's a very quick decline.

I'm guessing that if you are healthy enough to make it to 85, you have not had as many prior health issues that require extensive/expensive medical interventions.
Given that averages that some people exceed the average, and others are below it. The people who die sooner, probably have more medical complications, or ongoing health issues.

I'm just guessing, but it seems to me that the bulk of the medical care is loaded on one end of the spectrum. And how much of medical expenses are for accidents. Obviously a heart specialist isn't gonna be doing heart work on somebody with a good ticker.

Then agin cancer is hugely expensive. Some of the newer drugs approved by the FDA are amazingly expensive, example...
"Vectibix will still cost US $4,000 for an infusion every two weeks, which would add up to more than $100,000 over the course of a year. Even if the patient fails to survive for more than a few months, treatment with Vectibix will still cost tens of thousands of extra dollars, most of which will be borne by insurance companies (and eventually by the public in the form of rising insurance premium costs)." http://www.cancerdecisions.com/021107.html
"Pfizer has said that Sutent may earn $1.5 billion in annual sales by the year 2010, according to Bloomberg News (Moore 2006). Not bad for a drug that still hasn't been proven to enable patients to live a single day longer." http://www.cancerdecisions.com/092406.html

smoke and very expensive mirrors.

Randall Parker said at March 7, 2007 10:07 PM:


The amount that Medicare pays per treatment does not vary enough between Florida and Minnesota to account for the difference. The old folks in Florida are getting more procedures done.


People who eat poorly die sooner and therefore cost the public purse less.

Half the people who reach 85 get Alzheimers or other dementia. That means expensive care. Someone who dies of a heart attack at age 62 costs little. So I do not see how better diets will cut medical costs.

beowulf said at March 9, 2007 9:44 AM:


By "insurance", you seem to mean malpractice insurance. That's a red herring, according the Congressional Budget Office, medmal costs are less than 2% of total health care spending.

Insurance premiums (for every sort of coverage, not just medmal) have increased faster this decade as compared to the 90's for a simple reason, the stock market. Insurance companies make money in two ways, collecting premiums and investing premiums. When the stock market is up, they can charge lower premiums and make a decent rate of return. When the stock market is stagnant (as it has been this decade) then the only way to make a profit is to jack up premiums. "Tort Reform" is an insurance company hobbyhorse they drag out every time the stock market is down.

Doctors may think tort reform will lower their premiums, but they're mistaken, only a bull market brings premiums down. And as I mentioned above, medmal costs have very little to do with total health care spending. Even "reforming" the system by banning all medmal lawsuits would only cut health care spending by 2%.

Ned said at March 9, 2007 12:00 PM:

beowulf -

What you say about insurance companies is true enough. Rates (for any type of insurance) are based not only on claims history but also on such factors as how much the insurance companies are earning on their investments (stocks, bonds, etc.) and on any recent unexpected major losses (e.g., Hurricane Katrina, 9/11). So last year was a pretty good one for the insurance industry - no major catastrophes, no hurricanes, and a good stock market. But you miss the point about the real savings from genuine tort reform. Yes, actual professional liability insurance costs run around 2% of all health care expenditures. With health costs approaching 16% of GDP in the US, this is not a small number, but still, it's not where the major savings can be found. The real savings are in reducing the "defensive medicine" costs. Does every patient with a headache need a CAT scan plus a neurology consultation? Does everyone who belches or farts need endoscopy? Does every patient with any sort of chest pain, no matter how trivial, need a full cardiac workup from a cardiologist? Right now, the answer is pretty much yes in every case. Given the punitive and emotionally charged basis of our legal system, no one can afford to "miss" anything. Reducing these costs would lead to substantial savings.

purenoiz said at March 13, 2007 9:36 PM:

I would say that 220 billion isn't small change randall
page 39, look at the costs heart disease plays in america, and also the fact that 66& of peaople who sufffer a heart attack survive it. It's their survival that is a burden on our system.

Where did you find the stats on alzheimers at 85?

Randall Parker said at March 13, 2007 10:40 PM:


The Alzheimer's stat: It is a very much reported figure and I wrote it from memory. But I just did a search on Google News for Alzheimers 85 years old and found 2 articles quoting that figure. Then I went to plain Google with the same search and found many pages that said it. See, for example, this PBS Frontline documentary's fact list about aging and search for 85 on that page. A few bullet points above it you'll see the figure that only 1 in 20 85+ year olds are still fully mobile.

The decay in brain function poses a huge problem. We are going to find rejuvenation of the rest of the body far easier to achieve than rejuvenation of the brain. I think we are going to go through a period with large numbers of physically healthy but mentally impaired old folks.

purenoiz said at March 14, 2007 5:33 AM:

well those are some sobering statistics.

Randall Parker said at March 14, 2007 7:46 PM:


If Alzheimer's is caused by a decay in the circulatory system then prospects for slowing brain aging are a lot more favorable than if it is caused by aging of neurons. If the problem is capillaries and arteries then we will be able to send up stem cells programmed to differentiate into new cells for the vasculature long before we can send up gene therapies that'll reverse neural aging.

I figure part of brain aging will be fixable with cell therapies for the vasculature. But I worry about all the 100 billion neurons.

Gene therapies doesn't get the attention that stem cell therapies get because stem cells are a hot ethical issue that divides along partisan lines. This is unfortunate. We ought to be making a much bigger effort on methods of delivering gene therapies. Though we also ought to be making a bigger effort on cell therapies too.

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