1. Does Hospital Price Competition Influence Nurse Staffing and Quality of Care? Julie Sochalski, PhD 1 R. Tamara Konetzka, PhD 2 Jingsan Zhu, MBA 1 Joanne Spetz, PhD 3 Kevin Volpp, MD, PhD 1,4 Academy Health June, 2005 1 University of Pennsylvania 2 University of Chicago 3 University of California at San Francisco 4 Philadelphia VA Medical Center

2. Introduction Over past 20 years hospitals shift from competing on quality/amenities competing on price.Over past 20 years hospitals shift from competing on quality/amenities competing on price. Evidence that price competition rate of increase in hospital costs, profits efficiencies or lower quality?Evidence that price competition rate of increase in hospital costs, profits efficiencies or lower quality? Examine impact of price competition on one feature associated with hospital quality – nurse staffingExamine impact of price competition on one feature associated with hospital quality – nurse staffing.

3. Nurse Staffing – Patient Outcomes Relationship Cross-sectional studies over 3 decades show higher nurse staffing associated with reduced mortality.Cross-sectional studies over 3 decades show higher nurse staffing associated with reduced mortality. Mark et al (2004) found increases in RN staffing linked to lower mortality, with diminishing returns.Mark et al (2004) found increases in RN staffing linked to lower mortality, with diminishing returns. Most studies rely on hospital-wide measure of nurse staffing which may obscure relationship.Most studies rely on hospital-wide measure of nurse staffing which may obscure relationship.

4. Nurse-Staffing-Price Competition Relationship Hospital personnel increased from 1980s to early 1990s.Hospital personnel increased from 1980s to early 1990s. RNs increased commensurate with volume and CMI while other nursing personnel declined.RNs increased commensurate with volume and CMI while other nursing personnel declined. Buerhaus & Staiger (1996) found slower growth in hospital employment of RNs in states with higher state- level HMO penetration.Buerhaus & Staiger (1996) found slower growth in hospital employment of RNs in states with higher state- level HMO penetration. In California Spetz (1999) found HMO penetration was not associated with RN staffing through early 1990s.In California Spetz (1999) found HMO penetration was not associated with RN staffing through early 1990s. Mark et al (2005) found higher nurse staffing associated with lower mortality in markets with higher HMO penetration.Mark et al (2005) found higher nurse staffing associated with lower mortality in markets with higher HMO penetration.

5. In summary: Substantial gaps in understanding of nurse staffing— quality relationship.Substantial gaps in understanding of nurse staffing— quality relationship. Rely on crude staffing measures to explore relationship.Rely on crude staffing measures to explore relationship. Lack information on how hospitals respond to price competition, and impact on quality.Lack information on how hospitals respond to price competition, and impact on quality. 1999 – California passes AB 394 to establish minimum nurse staffing ratios.1999 – California passes AB 394 to establish minimum nurse staffing ratios.

6. Research Questions Are changes in nurse staffing levels associated with patient outcomes?Are changes in nurse staffing levels associated with patient outcomes? What hospital and market features are associated with staffing changes and thereby outcomes?What hospital and market features are associated with staffing changes and thereby outcomes?

7. Study Design California acute care hospitals, 1991-2001California acute care hospitals, 1991-2001 –1983 selective contracting legislation passed allowing price competition –1990s represents maturing managed care market –Administrative data has more refined measures of nurse staffing.

8. Data California’s Office of Statewide Health Planning and Development (OSHPD) discharge data from 1991-2001. OSHPD annual disclosure (financial) data 1991-2001 State death certificates 1991-2001.

9. Key Study Variables Nurse staffingNurse staffing –RN, LVN, Nurse Aide –Nursing productive hours per patient day –Acute medical-surgical units Market factorsMarket factors –Managed care penetration for hospital market area (fixed radius) –Interaction between managed care penetration and market competition Patient outcomesPatient outcomes –AHRQ inpatient quality indicators: 30-day mortality for AMI, stroke, hip fracture

10. Sample Hospitals: n = 421 short-term acute hospitals (non-federal, non-Kaiser) Patients: AMI: n = 352,536 (15.5%) StrokeStroke: n = 592,651 (14.1%) Hip fracture: n = 276,628 (5.3%)

11. Control Variables #1: Staffing-Outcomes Relationship  Age * Source of payment  Gender * Elixhauser comorbidities  Race * Hospital CMI  Ethnicity * Year dummy variables #2: Staffing-Price Competition relationship  All above + wages

12. Model Generalized linear model with hospital-level fixed effects + time fixed effects Model 1 Model 2

13. Hospital Summary Statistics No. of hospitals:421 Avg. # beds:192 Urban:88% Teaching:18.7% Ownership: Non-profit:52.7% Government:20.7% For-profit:26.6% Avg. CMI 1.114

14. Change in CM-adjusted RN medical-surgical hours per patient day, 1991-2001 75 th 25 th

15. Effects of nurse staffing on 30-day mortality Model: AMI Stroke Hip Fracture RN -0.004* (0.001) -0.002* (0.001) 0.002 (0.001) LVN -0.003 (0.002) 0.0004 (0.001) 0.0008 (0.001) Aide 0.001 (0.001) -0.0002 (0.0007) -0.0001 (0.0007) RN*baseline 0.0004 † (0.0002) -0.0001 (0.0001) -0.0004 (0.0003) * p <.05 † p <.1

16. Effects of price competition on nurse staffing Managed care penetration 2.479 ** (0.696) Managed care penetration x Market competition -3.192* (1.245) ** p <.001 * p <.01

17. Caveats/Limitations Changes over time in DRGs, coding, zip codes (but smoothed/corrected to the extent possible)Changes over time in DRGs, coding, zip codes (but smoothed/corrected to the extent possible) Limited to California – generalizable to other states?Limited to California – generalizable to other states? Limited to mortality– generalizable to other quality measures?Limited to mortality– generalizable to other quality measures? Are there thresholds to staffing-quality relationship?Are there thresholds to staffing-quality relationship?

18. Conclusions Extent to which changes in RN staffing levels are associated with lower mortality varies by condition.Extent to which changes in RN staffing levels are associated with lower mortality varies by condition. Increasing managed care penetration is associated with higher RN staffing except in most competitive markets.Increasing managed care penetration is associated with higher RN staffing except in most competitive markets. Limiting the number of patients per nurse may improve quality outcomes.Limiting the number of patients per nurse may improve quality outcomes.