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What People in England Want When Choosing Their Own Hospitals
RAND Europe researchers in the Cambridge office have found that, contrary to expectations, people in London consider factors beyond just waiting time when given the chance to choose their own hospitals. Although health care is free in England, people historically have had to use hospitals chosen by their general practitioners and have often endured long waiting lists.
If the reputation of the alternative hospital is worse than the home hospital or unknown, patients are willing to wait rather than switch. |
Researchers evaluated a pilot program, known as the London Patient Choice Project, conducted by the National Health Service (NHS). The researchers asked patients to choose between their home hospital and an alternative hospital depending on several variables: the waiting time at each hospital, the travel time to each, whether transportation to the alternative hospital was paid for by NHS or by the patient, the reputation of the alternative hospital, and the location of any follow-up care.
“Shorter waiting time is clearly important to patients, but the choice for quicker treatment depends crucially on whether patients can avoid traveling abroad to an alternative hospital outside the United Kingdom and whether they can avoid treatment at a hospital where the reputation is worse or unknown relative to their current hospital,” said Peter Burge, lead author of the study.
| Reputation Is Very Important in Choosing Hospitals |
SOURCE: London Patient Choice Project Evaluation, 2005. |
The figure shows the importance that patients place on the hospital’s reputation relative to waiting time. The top two panels show that if the reputation of the alternative hospital is worse than the home hospital or unknown, patients are willing to wait rather than switch and that those with higher incomes are willing to wait longer. The bottom panel shows that if the alternative hospital has a better reputation, patients are willing to wait to switch to it and that their willingness to wait is sensitive to how much better that reputation is.
Looking at differences by individual group, the study also showed that patients are less likely to select faster treatment elsewhere if they are older, female, have low education levels, or are parents or guardians of minors.
The study raises a number of key policy implications. First, patients need more information about quality and reputation of alternative providers. Second, if the goal is to encourage movement to alternative providers outside the patient’s local area, then the NHS should arrange and pay for transportation to alternative hospitals. Finally, follow-up care should be provided at the home hospital to minimize the negative value that patients place on switching to an alternative hospital. 
For more information:
London Patient Choice Project Evaluation: A Model of
Patients’ Choices of Hospital from Stated
and Revealed Preference Choice Data, 2005.
Time Is Right to Promote Health Information Technology, Study Finds
Despite investing more than $1.7 trillion annually in health care, the U.S. health care system is inefficient and frequently fails to deliver recommended care. But the “widespread adoption of health information technology could greatly improve health and health care in America while yielding significant savings,” according to Richard Hillestad, a RAND management scientist and lead author of a new study published in the September/October issue of Health Affairs.
“Government action is needed. Without such action, it may be impossible to overcome . . . market obstacles.” |
The study shows that health information technology (HIT) systems can yield dramatic efficiency savings, greatly increased safety, and health benefits. The largest efficiency savings come from reduced hospital stays, reduced nurses’ administration time, and more-efficient drug utilization.
Increased safety results largely from alerts and reminders generated by computerized physician-order-entry systems for medications. For example, if all hospitals had such a system, around 200,000 adverse drug events could be eliminated each year, at an annual savings of about $1 billion.
As for health benefits, HIT systems facilitate prevention by identifying patients who are due for routine screening tests or who require changes in the management of a chronic disease. For example, increasing the pneumonia vaccination rate could prevent between 15,000 and 27,000 deaths annually at a cost of $90 million.
| Estimated Net Savings from Increased Efficiency Would Grow Substantially over 15 Years |
SOURCE: “Can Electronic Medical Record Systems Transform Healthcare? An Assessment of Potential Health Benefits, Savings, and Costs,” Health Affairs, Vol. 24, No. 5, September/October 2005, pp. 1103–1117, Richard Hillestad, James Bigelow, Anthony Bower, Federico Girosi, Robin Meili, Richard Scoville, Roger Taylor.NOTE: The authors assume full adoption of health information technology by 90 percent of hospitals and doctors’ offices at the end of 15 years. |
The figure shows net potential savings (total savings minus total costs) from increased efficiency over a 15-year period, the amount of time generally required for full adoption of a new technology. By 2018, annual net savings for both inpatient and outpatient care could be about $65 billion per year. These net savings are from increased efficiency alone; health and safety benefits could double the net savings.
Despite the promise of savings, relatively few health providers have adopted HIT. Only about 20 to 25 percent of hospitals and 15 to 20 percent of physicians’ offices have HIT systems, and those systems are generally limited in their ability to share information with other providers.
“One of the most serious obstacles to investing in HIT is that those who pay for it (providers) don’t necessarily experience the savings,” Hillestad said. In fact, many providers pay twice, both in terms of higher costs to implement HIT and in lower revenues after implementation.
“We need to find ways to reward health providers who invest in measures that boost efficiency and promote quality. Government action is needed,” stressed Hillestad. “Without such action, it may be impossible to overcome such market obstacles.”
Terrorism Risk Insurance Act Can Distribute Financial Losses Effectively
Given the massive financial losses after the 9/11 terrorist attacks, concerns have arisen about the potential financial impact of another large terrorist attack on U.S. soil. But there is some good news to report.
“The nation’s terrorism insurance system creates an effective mechanism for sharing the financial risk that businesses face from terrorism,” said Stephen Carroll, a RAND economist and lead author of a new study.
After 9/11, Congress passed the Terrorism Risk Insurance Act (TRIA), which requires insurers to make terrorism coverage available to commercial policyholders. The legislation will expire at the end of 2005 unless Congress extends it.
TRIA is not, as some have suggested, a taxpayer bailout of the insurance industry. |
To assess how well TRIA would work, RAND researchers simulated the expected losses from three types of terrorist attacks: (1) the crash of a hijacked aircraft into a major office building, (2) the release of anthrax within a major office building, and (3) the release of anthrax outdoors in a major urban area. The researchers then assessed how TRIA would distribute the resulting losses.
The study found that losses would vary substantially in size, with losses from the outdoor anthrax scenario ($172 billion) dwarfing those from the aircraft impact ($7 billion) and indoor anthrax ($8 billion) scenarios.
| Under TRIA, Who Would Pay for Losses Incurred in Three Scenarios? |
SOURCE: Distribution of Losses from Large Terrorist Attacks Under the Terrorism Risk Insurance Act, 2005. |
For eligible losses under TRIA, commercial insurers would be responsible for payouts up to an annual deductible and, in addition, for a co-payment of 10 percent of all losses above the deductible. Beyond that, the federal government (taxpayers) would step in and reimburse the commercial insurers for remaining covered losses up to $100 billion. However, the government would recoup some of this reimbursement through a surcharge on all U.S. commercial policyholders.
The figure shows what would happen under the three scenarios. Uninsured businesses would incur a large portion of the losses in every case. Life and health insurers, which are not covered under TRIA, would also pay for some losses.
How TRIA would distribute the covered losses varies by scenario. For the aircraft impact and indoor anthrax scenarios, commercial insurers and commercial policyholders (through the surcharge) would pay all the remaining losses from a single attack. For the outdoor anthrax scenario, the entire remaining burden for the attack would fall on commercial insurers.
“What’s notable is that taxpayers would likely pay for no losses in any of the scenarios,” noted Tom LaTourrette, another study author. As such, TRIA is not, as some have suggested, a taxpayer bailout of the insurance industry.
Also notable is that fewer than half of all businesses have yet to buy terrorism insurance, even though TRIA makes it more available and affordable. Given how much of the losses would go uninsured in the three scenarios, the study suggests that the federal government consider encouraging uninsured businesses to buy terrorism insurance.
For more information:
Distribution of Losses from Large Terrorist Attacks Under the Terrorism Risk Insurance Act,, ISBN 0-8330-3865-6, 2005.
China Should Go Further in Controlling WMD Exports, Report Argues
With terrorists seeking weapons of mass destruction (WMD), it is all the more critical to control exports of sensitive goods and technologies that could be used to help create chemical, biological, radiological, and nuclear weapons. This concern is especially applicable to China, according to a new RAND report.
In the last ten years, China has gradually erected a legal structure to control the export of goods that can be used in making WMD, “but it hasn’t devoted the necessary financial or political resources to make these controls fully effective,” said Evan Medeiros, a RAND political scientist.
China “hasn’t devoted the necessary financial or political resources to make these controls fully effective.” |
His study relies on numerous sources, including publicly available Chinese-language materials plus interviews with Chinese government officials, analysts, and businessmen directly involved in the country’s export control process. The study traces the evolution of China’s export control system and assesses its strengths and weaknesses.
According to the study, China’s export control system has evolved significantly over the past 25 years, moving from highly underdeveloped and ineffective administrative procedures to a comprehensive collection of laws, regulations, and measures that incorporate prevailing standards for international export control. Many factors have influenced this evolution, including changes in Chinese leaders’ views about the contributions of nonproliferation to Chinese foreign policy and national security, along with international pressure, mostly from the United States.
Despite these gains, the Chinese government has been unable to consistently and effectively enforce its new controls, which is “a persistent and glaring weakness of the current system,” said Medeiros. The Chinese government has publicized only two cases of export control violations where penalties were assessed, generating little incentive for Chinese companies to comply with the laws.
The study cites a number of additional concerns:
- Foreign agents and enterprises operating in China have taken advantage of the weak regulatory environment to illicitly procure controlled items for their national WMD-related development programs.
- As a result of China’s membership in the World Trade Organization, foreign involvement in China’s domestic nuclear, aerospace, and chemical industries will grow and could become a matter of concern for China’s export control system.
- China’s current antiproliferation mechanisms are largely reactive and rely heavily on reports and tips from Western intelligence officials about pending exports of controlled goods and technologies.
- Chinese Ministry of Commerce officials appear unwilling to pursue investigations of alleged wrongdoing against large and influential Chinese state-owned enterprises with strong political connections.
The study concludes that further improvements will be gradual and mixed unless the Chinese government devotes more resources and political capital to bolstering its export controls. How much effort the government devotes will be a key indicator of the government’s ability to fulfill its stated goal of acting like a “responsible major power” in global affairs, especially as related to WMD nonproliferation, says the report.
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