Ann Arbor: One of the biggest challenges in health care is balancing cost with
patient needs. Compounding the problem is a lack of good data and
analysis. But Wally Hopp and Jun Li, Prs at the University of Michigan Ross School of Business, are trying to change that. They applied cost-benefit analyses common in operations management to
surgery outcomes. One of their first findings, which studied mitral
valve surgery, can help patients and health insurers find better options
and save money.
"One of the big questions for patients and insurers right now is
which procedures should be done in specialized places and which
procedures should be done in community hospitals," said Hopp, professor
of technology and operations. "The decision tree is often a mess, and
the resulting decisions often don't make sense from a health standpoint
or cost standpoint. The key to unlocking the puzzle is good
information."
Hopp and Li mined a trove of data available from the state of New
York on cardiac patients and their outcomes. They analyzed mitral valve
surgery to see if patients benefit from going to a center of excellence
hospital—one that specializes in the procedure and has high patient
volumes—as opposed to a community hospital.
They found that going to a center of excellence is the better option
for both patients and insurers, even if it's further away from the
patient and costs more upfront. Patients treated at a center of
excellence had longer life expectancy and fewer complications. Their
insurers saved $471 to $7,978 over the long term, depending on the age
and health of the person.
More surgeries at centers of excellence resulted in a mitral valve
repair—which is trickier to perform but has fewer complications—as
opposed to a replacement, which leads to more complications and often
requires ongoing medication.
Hopp and Li detail their findings in the working paper
"Cost-Effectiveness of Referring Patients to Centers of Excellence for
Mitral Valve Surgery." The research team included Ross doctoral
candidate Guihua Wang and two U-M Medical School cardiac surgeons, Dr.
Frank Fazzalari, assistant professor of cardiac surgery, and Dr. Steve
Bolling, professor of cardiac surgery.
The problem is that only about 40 percent of patients chose a center
of excellence, despite clear evidence of better outcomes and available
capacity. That goes down to 30 percent when patients have to travel only
an additional five miles. It's a case where the patient's best option
is also the most cost-effective, but the message hasn't gotten through.
"People's choices seem to be influenced by how close people are to a
center of excellence, if they've been there before, or if the hospital
advertises," said Li, assistant professor of technology and operations.
"One of our goals is to get better information to people and look for
better options.
"We looked into why patients make suboptimal choices, and we find
that it's mostly a lack of information and inertia. This kind of study
allows us to uncover key factors that drive behavior and medical
outcomes so we can identify areas where policy intervention could make a
difference."
Hopp is a member of the U-M Institute for Healthcare Policy and
Innovation, which includes other U-M researchers who have studied the
correlation between patient outcomes and how many operations or
procedures are performed by any given surgeon or at any given hospital.
The new model could be used to assess the potential impact of referrals
to centers of excellence for other types of care.