Separate and Concentrate: Accounting for Patient Complexity in General Hospitals

Abstract

Scholars have recently suggested the reorganization of general hospitals into organizationally separate divisions for routine and non-routine services to overcome operational misalignments between the two types of services. We provide empirical evidence for this proposal from a quality perspective, using over 250,000 patient records from 60 German hospitals across 39 disease segments, and focusing on in-hospital mortality as outcome. First, routine patients in the sample benefit from a high relative volume (focus) of their disease segment in their hospital, suggesting that routine services division should be organized as a set of diseasefocused units (hospitals-within-hospitals). Second, after controlling for focus effects, mortality of routine patients is statistically unaffected by their hospitals volume in their disease segment, while mortality rates for complex patients are lower in hospitals that have a low volume in the patient's disease segment. This suggests that the reduced patient volume in the two separate divisions, relative to the whole hospital, will not impede quality for routine patients and may increase quality for complex patients. Finally, we provide evidence that non-routine service divisions can improve service quality for complex patients by adopting a disease-based rather than medical specialty-based departmental routing strategy for newly arriving patients. A counterfactual analysis, based on a simultaneous equations probit model that controls simultaneously for endogeneity of volume, focus, and routing suggests that the proposed reorganization could have reduced mortality in the sample by 13:43% (95% CI [6:87%; 18:95%]) for routine patients and by 11:66% (95% CI [6:13%; 16:86%]) for non-routine patients.

Economies of Scale and Scope in Hospitals: An Empirical Study of Volume Spillovers

“…Our findings also provide additional support for a more radical proposal to separate out elective services from acute hospitals and provide them in organizationally separate treatment centers, each focused on a relatively narrow set of related services. Physicians and health management researchers have repeatedly called for such reorganization (ASGBI 2007, RCS/DH 2007, Christensen et al 2009, Bohmer 2009, Hopp and Lovejoy 2012, Monitor 2015, and there is evidence to suggest that this would offer quality benefits across the system (RCS/DH 2007, Kuntz et al 2018. Our findings complement these studies by providing evidence that such a reorganization would also result in productivity gains.…”

Boundaries of Focus and Volume: An Empirical Study in Neonatal Intensive Care

“…Hospitals provide a variety of services for various patient groups and not all patient groups benefit equally from operational factors such as volume and focus. The work by Kuntz et al (2019) shows that it is beneficial for complex patients if they are routed to the same department instead of experiencing fragmented service provision. Our analysis of complex neonatal patients indicate equivalent implications; hospitals should also avoid separation of complex patients within clinical departments.…”

“…With more uncertainty in the differential diagnostic and less information being present at the start of the service trajectory, cluster 2 is characterized by higher process uncertainty. Higher process uncertainty poses more challenges for care coordination, which diminishes the volume effects (Kuntz et al 2019). Therefore, we expect the volume outcome effect to be weaker for cluster 2.…”

“…Kuntz et al (2019), for instance, show that routine patients with a pre-planned hospital stay and no comorbidities experience substantial quality benefits from focus, yet are unaffected by volume. Complex patients are detrimentally affected by high levels of volume, but they benefit if the same types of patients are routed to the same clinical department (Kuntz et al 2019). The authors call for more research to verify their findings in the context of specific conditions while taking the peculiarities of these conditions into account.…”

Empirical Research in Healthcare Operations: Past Research, Present Understanding, and Future Opportunities

“…Clark and Huckman (2012) find that hospitals that are more focused on cardiac surgery have lower mortality rates and that the association is more pronounced when complementary services are present in the hospital. This warns against a narrow specialization from a quality perspective and is confirmed by a mortality study by Kuntz et al (2019), who find that routine elective patients benefit most from their hospital's focus on their disease segment, whereas emergency patients with significant comorbidities see no benefit.…”