Association of Children’s Hospital Status With Value for Common Surgical Conditions

Abstract

IMPORTANCEAlthough children's hospitals (CH) provide a substantial proportion of highly specialized pediatric care in the United States, the value of CH compared with non-children's hospitals (NCH) for routine surgical procedures is unknown. OBJECTIVE To examine the value of CH for routine surgical procedures by assessing clinical outcomes and payment data. DESIGN, SETTING, AND PARTICIPANTS This retrospective cohort study examined pediatric patients undergoing 1 of 13 commonly performed surgical procedures between 2010 and 2015 with 90-day follow-up using administrative data from the Health Care Cost Institute. Data analysis was conducted from July 2019 to December 2021.EXPOSURES The primary exposure was tier of CH status, defined using self-reported pediatric services, affiliation with pediatric focused programs, and validated based on proportion of pediatric admissions. MAIN OUTCOMES AND MEASURESPayments for common surgical procedures from private insurers and overall complication and readmission rates at 30, 60, and 90 days. RESULTS There were 368 220 pediatric patients who underwent one of the surgical procedures of interest; 220 899 (60.0%) of the patients were male; 118 977 (32.3%) had their procedure at freestanding CH (CH-A), 75 256 (20.4%) at CH attached to an adult hospital (CH-B), and 173 987

Price spillovers and specialization in health care: The case of children's hospitals

“…Following Piper et al (2020) and Raval et al (2022), our designation of CH versus NCH is based on a handful of responses in the American Hospital Association (AHA) annual surveys. Specifically, Piper et al (2020) delineates hospitals into one of four tiers and validates their delineation against commercial claims data and other sources: Tier A reflects all hospitals that restrict admissions primarily to children; Tier B is defined as all non-Tier A hospitals that also have a pediatric emergency department (ED), a neonatal intensive care unit (NICU), and a pediatric intensive care unit; Tier C are all non-Tier A or B hospitals that have one of a pediatric ED, NICU, or PICU; and Tier D hospitals reflect all remaining hospitals without any designated pediatric services.…”

“…(2020) and Raval et al. (2022), our designation of CH versus NCH is based on a handful of responses in the American Hospital Association (AHA) annual surveys. Specifically, Piper et al.…”

“…Second, patients increasingly rely on CH even for relatively common procedures for which NCH are strong substitutes (Cosper et al., 2006; Goldin et al., 2014; Lorch et al., 2010; McAteer et al., 2014; Oldham, 2014; Salazar et al., 2016). Yet even for such routine procedures, payments to CH remain much higher while quality is comparable to that of NCH (Raval et al., 2010, 2022; Tian et al., 2015). These payment and quality comparisons also play out in our data, as summarized in Section 3.1.…”

“…The growth of specialty hospitals in the U.S. has been a major concern to policy‐makers, so much that the 2003 Medicare Modernization Act included a temporary federal moratorium on new physician‐owned specialty hospitals (Government Accountability Office, 2003; Greenwald et al., 2006). One concern that has not been fully assessed empirically is that specialty hospitals may negotiate higher payments from commercial insurers relative to their general acute care competitors (Raval et al., 2022). 1 Such a price premium may be justified for highly specialized procedures for which speciality hospitals provide higher quality care or have few competitors; however, price differentials also persist for relatively routine procedures for which specialty and general acute care hospitals appear equivalent along many quality metrics, suggesting a potential source of inefficiency in health care delivery.…”

“…In order to focus on counties with sufficient numbers of patients going to each hospital, we require that at least 10% of a hospital's procedures must come from patients in that county in order to qualify as a "connection" between a given hospital and county.18 It is also possible that we identify an entrant simply as a hospital that was previously excluded from an insurer's network and recently included; however, this event is unlikely since it would require that the hospital be excluded from the networks of all four large insurers for which we have data.19 As before, our designation of a hospital as CH versus NCH is based on responses in the AHA annual surveys followingPiper et al (2020) andRaval et al (2022).20 In the supplemental appendix, we also investigate whether the observed price premium instead derives from CH exercising monopoly power in highly specialized treatment areas (e.g., as part of an all-or-nothing bargaining process). We find little evidence of such an effect in our setting.…”