There is a wealth of data that could help hospitals cut costs while still providing high-quality service for patients, if physicians were willing to join forces with administrators to truly understand how much their services cost, according to a new article by Stanford researchers.

The Centers for Medicare and Medicaid Services (CMS) has been pushing physicians and providers toward population-based payment, which requires that providers reduce their internal costs below payment levels.

In this effort, the beleaguered health-care payer for the elderly has been undertaking innovative payment models, such as accountable care organizations (ACOs) and bundled payment that require providers to better coordinate care and reduce reimbursements and unnecessary or redundant patient procedures.

“However, it has proven challenging for the models, which focus on costs from the payer perspective, to achieve the desired effect of reduced Medicare spending,” writes Merle Ederhof, PhD, in this Health Affairs Blog. The researcher who focuses on issues at the intersection of health-care and accounting is with Stanford’s Clinical Excellence Research Center.

Her co-authors, Alexander L. Chin, MD, MBA and Jeffrey K. Jopling, MD, MSHS, are also at the center, which is dedicated to discovering, testing and evaluating cost-saving innovations in clinical care.

Changing old patterns at hospitals and among physicians

“Highly detailed cost data generated by internal cost accounting systems already exist in a large, and growing, number of health-care organizations,” says Ederhof. 

As Ederhof wrote in this New England Journal of paper last year, the data collected by the Healthcare Information and Management Systems Society shows that more than 1,300 U.S. hospitals have adopted sophisticated internal cost accounting systems.

The authors argue that the cost data produced by these accounting systems can be used in hospitals internally to lower their costs of providing services to all their patients, both within and outside the Medicare system. But physicians must get on board.

“The high adoption rate of these cost-measurement systems is not surprising, considering that the systems are designed around the existing data infrastructure that providers must have in place for billing purposes,” the authors write. “However, while provider administrators have used such cost accounting systems for some time, we are only now beginning to see them being used by interdisciplinary teams involving physicians to restructure clinical processes.”

Some large health-care systems have already started using these accounting systems alongside teams of physicians.

Partners HealthCare in Boston has started to use this approach to analyze costs for a set of services, for example, in a recent project a team of spine surgeons reviewed and discussed unblinded comparisons at the episode and cost-category levels. 

“Analysis of the costs in the individual categories revealed variation in clinical processes across surgeons, which was very illuminating to the team,” the authors wrote.

Leaders at NYU Langone Health have also started to use the cost data in the organization’s “Value-Based Management” initiative. A key feature of the initiative, the authors write, is a dashboard that is accessible to all physicians. For each specific diagnosis-related group (DRG), the dashboard shows cost averages for each physician performing the procedure, at the procedure level and at the level of individual cost categories, such as the ICU, laboratory, operating room and therapies.

“Physicians have been highly engaged and interested in the dashboard since it allows them to compare their costs to their peers and external benchmarks, and to learn how they can restructure clinical processes to lower their costs,” the authors write.

This Value Based Management initiative at NYU, which incorporates cost savings targets, development-level incentives and quality components, has apparently resulted in substantial cost savings for the organization.

Stanford Health Care has also joined the movement to promote value-based care, recently launching its Cost Savings Reinvestment Program. 

Compare, for example, the average cost for a hip replacement surgery among five surgeons who perform the surgery in the same hospital. Then take the “positive outlier,” or the surgeon with the lowest cost for the surgery.

“Once positive outliers are identified, detailed analysis that combines physicians’ clinical expertise and administrators’ insight can uncover ways in which clinical processes can be restructured to deliver high-quality care at lower total episode cost,” the authors wrote.

Then the interdisciplinary team of physicians and administrators must try to understand why that surgeon’s costs are lower and what he or she does differently. Did she order physical therapy sooner after the hip-replacement surgery? Did he use a different anesthesia approach that resulted in a shorter recovery for the patient? 

But you still have to get those four, more expensive surgeons to adopt the less-expensive treatments. And that can go to the heart of a physician’s identity.

“Even just a few years ago concern for the cost of providing health-care services still heavily clashed with physicians’ professional identity,” Ederhof said in an interview. 

The authors believe there is no turning back.

“In my view, the shift in recent years is attributable to the fact that physicians are starting to realize that the rising costs of the U.S. health-care system are no longer sustainable and that things will have to change — with or without their collaboration,” Ederhof said.

The health insurance marketplaces created by the Affordable Care Act (ACA) could unravel because its enrollees strategically drop in and out of coverage, Stanford scholars write in a new working paper released June 4 by the National Bureau of Economic Research.

The end result could be a complete unraveling of the market, said Petra Persson, an assistant professor of economics in the Stanford School of Humanities and Sciences.

“If you have too many people who drop out after a few months of coverage, you might end up in a situation where insurers don’t want to offer any insurance at all in the market,” said Persson, who co-authored the paper with Stanford Graduate School of Business assistant professors Rebecca Diamond and Timothy McQuade and NYU Stern’s Michael J. Dickstein. Persson and Diamond are also fellows at the Stanford Institute for Economic Policy Research.

The ACA, also known as Obamacare, passed in March 2010 with the goal of making health insurance more accessible. It established a competitive marketplace where individuals could shop for federal and state-level health care plans. Over 2014 and 2015 – the first two years of the program – the share of Americans covered by individually purchased health insurance rose by 50 and 75 percent, respectively.

Health care consumption surged, especially in low-income households and families with young children. But, as the researchers discovered, so did attrition: Dropout was sharpest after just one month of coverage. And only half of all new enrollees committed a full year to an insurance program.

Health care consumption and attrition

To analyze enrollment and attrition, the researchers studied 104,233 households that purchased health insurance in California either before or after the ACA came into effect.

The researchers examined spending habits and income sources for possible explanations of why people might have discontinued health care coverage. For example, did they drop out because they could no longer afford it, because of a job loss or other large expense?

The researchers found that this was the case before the ACA came into effect. Pre-ACA, people often dropped out early because they experienced a loss of income, like unemployment. But post-ACA, the loss of income was much less important in explaining early dropout.

“These findings indicate that the ACA limited the risk of being forced to drop insurance coverage due to unexpected liquidity shocks,” said Persson.

If income shocks can’t account for dropout, then what can?

The researchers found that some people strategically drop coverage after they have used the health care services they need.

“Our analysis shows that many consumers are strategically signing up for insurance to help defray the costs of non-chronic, potentially discretionary, health care needs and then dropping coverage once they have satisfied these needs,” said Diamond.

“The regulatory structure of the ACA law potentially incentivizes exactly this behavior,” the researchers wrote, noting that because the ACA prevents insurers from discriminating against applicants, they cannot legally reject applicants who strategically dropped coverage the previous year.

The fallout of dropouts

This behavior makes it difficult for insurers to set prices, said Persson.

When people consume a year’s worth of health care in only a three-month period – and only pay a portion of the annual premium – it can be incredibly expensive for insurers. They can only guess what fraction of policyholders will end up dropping out mid-year.

The researchers discovered a counterintuitive response from insurers: Health care plans that experienced more dropouts reduced their premium prices the following year.

“Insurers are trying to increase the demand from the pool of consumers who don’t drop out,” said Diamond, observing that these are the people who are more price sensitive to the cost of an annual plan. “People who drop out are going to be less sensitive to the price set by the plan. They are always going to be willing to pay a higher monthly premium because they know they are not going to pay the full annual amount.”

While lowered annual premiums may seem like a beneficial result for committed health care consumers, the presence of dropouts undermines the stability of the market, the researchers said. As a result, insurers may be unwilling to offer plans in the individual market, they said.

Next steps

The ACA has been especially effective in providing lower-income households with health care coverage through a market that previously had largely served more affluent households, said Persson.

But for ACA to continue being effective, enrollees must stay enrolled, Persson added.

While the ACA originally came with penalties for ceasing coverage early, the researchers said it was not enough. It was still cheaper for new enrollees to pay the fine for dropping out mid-year than paying a full year of annual premiums, the researchers found in their cost analysis.

The recent removal of the individual mandate will likely increase the midyear dropout rate, said Diamond. “More dropout will raise financial pressure on insurers, increasing the possibility that the market unravels completely.”

Most participants in clinical trials believe the benefits of broadly sharing person-level data outweigh the risks, according to new research by Stanford Medicine's Michelle Mello and Steven N. Goodman. 

And despite low levels of trust in pharmaceutical companies, most of those who take part in clinical trials are willing to share their data with the drug firms.

The Stanford researchers surveyed 771 current and recent participants from a diverse sample of clinical trials at three academic medical centers in the United States. They asked about the practice of making personal data collected in medical research studies widely available, after information that could identify individual participants is removed. Nearly 80 percent of those surveyed responded to the questions — and fewer than 8 percent of the respondents felt that the potential negative consequences of data sharing outweighed the benefits.

Some 93 percent of those surveyed said they were very or somewhat likely to allow their data be shared with university scientists, and 82 percent were either very or somewhat likely to share with scientists in for-profit companies. They found that the willingness to share was high regardless of the purpose for which their data would be used, with the exception of litigation.

Although some researchers and trial funders have worried that participants might object to data sharing as an invasion of privacy, the respondents’ greatest concern was that “data sharing might make others less likely to enroll in clinical trials,” Stanford Health Policy's Michelle Mello and her co-authors write in The New England Journal of Medicine. “Less concern was expressed about discrimination (22 percent) and exploitation of data for profit (20 percent.)”

Mello is a professor of law at Stanford Law School and a professor of health research and policy at Stanford Medicine. Her co-authors are Van Lieou and Steven N. Goodman, a professor of medicine and of health research and policy at Stanford Medicine.

The authors acknowledge there is no turning back from clinical data sharing.

“We are rapidly moving toward a world in which broad sharing of participant-level clinical trial data is the norm,” they wrote.

The European Medicines Agency has implemented a policy to expand public access to data concerning products it approves, and the Food and Drug Administration is considering expanding access to data pooled within a product class. Major research sponsors and journal editors have begun promoting data sharing, and the National Institutes of Health now requires all of its grantees to share data.

Pharmaceutical industry associations have committed to making data more accessible, and several data platforms are now available, such as the Yale Open Data Access Project.

Mello said she was somewhat surprised by the survey results, “given the amount of consternation one hears at conferences about data sharing. Interestingly, nearly half our sample had experienced a breach of their personal data privacy in another context, yet they were still willing to share their clinical trial data.”

Then again, she said, people who take part in clinical trials may be special.

“I suspect that clinical trial participants may be different from the public at large. They are already incurring risks to benefit science by dint of their trial participation.”

Most of those participants, along with clinical researchers, believe the benefits of sharing data include accelerating scientific discovery and improving accurate reporting of trial results.

Yet some investigators and industry sponsors of clinical trials are leery of the swift move toward broad data sharing, the authors note, because of “potential harm to research participants,” the authors wrote. “Investigators express worries that participants’ privacy cannot be adequately protected, particularly in light of the fact that experts have demonstrated that it is possible to reidentify participant-level data.”

Furthermore, they said, some pharmaceutical companies have warned that data sharing could chill willingness to participate in trials, thereby delaying the availability of new therapies. In fact, 31 percent of those surveyed were somewhat or very concerned about having their personal information stolen.  Nevertheless, most felt the benefits of data sharing were more important. 

“Reaching a world in which the sharing of clinical trial data is routine requires surmounting several challenges — financial, technical, and operational,” the authors concluded. “But in this survey, participants’ objections to data sharing did not appear to be a sizeable barrier.” 

Prostate cancer is the second leading cause of death among American men, after heart disease.

Yet ever since the prostate-specific antigen (PSA) screening was approved by the FDA in 1986, there has been a debate in the health-care community about the efficacy of the test. The American Urological Association had until 2013 recommended routine testing but did an about-face not long after the U.S. Preventive Services Task Force recommended against regular screening.

The Task Force — and independent, volunteer panel of national experts in prevention and evidence-based medicine — concluded in 2012 that there was “moderate certainty” the benefits of the screening did not outweigh the potential harms. The biggest risks included a false positive that leads to a biopsy that could cause infection, pain and bleeding, as well as surgery and radiation that can provoke impotence or problems with the bladder or bowels.

But the Task Force is now recommending that men aged 55 to 69 talk to their physicians about whether to get the test. New evidence indicates screening in this age group can reduce the risk of metastatic cancer and the chance of dying from prostate cancer.

“Prostate cancer is one of the most common cancers to affect men and the decision whether to be screened is complex,” said Task Force vice chair Alex H. Krist, MD. “Men should discuss the benefits and harms of screening with their doctor, so they can make the best choice for themselves based on their values and individual circumstances.”

Stanford Health Policy’s Douglas K. Owens, director of the Center for Health Policy and the Center for Primary Care Outcomes and Research, said there is also new information on active surveillance — a way of monitoring prostate cancer that may allow some men with low-risk prostate cancers to delay or, in some cases, avoid treatment with radiation or surgery.

Active surveillance, he said, has become a more common choice for men with lower-risk prostate cancer over the past several years and may reduce the chance of overtreatment.

“For men who are more interested in the small potential benefit and willing to accept the potential harms, screening may be the right choice for them,” said Owens, MD, a professor at Stanford Medicine and another vice chair of the Task Force. “Men who place more value on avoiding the potential harms may choose not to be screened.”

The Task Force still recommends men 70 and older do not get the test as a matter of routine.

The panel released its recommendation on the Task Force website on May 8. The final recommendation and evidence reviews were published in the Journal of the American Medical Association (JAMA), along with several editorials.

The guidelines issued by the 16-member Task Force impact virtually every primary care patient and practice in the United States. They make letter grade recommendations and have now bumped the “D” against screening up to a “C,” which recommends screening decisions for prostate cancer be based on professional judgment and patient preference. 

The new recommendation now aligns with those of the American Cancer Society and the American Urological Association. Peter R. Carroll, MD, writes in an accompanying editorial in JAMA that the final recommendation by the Task Force “has restarted a national discussion on prostate cancer early detection.”

“The Task Force deserves credit for this more balanced, fairer approach,” said Carroll, a professor and chair of the Department of Urology at the University of California, San Francisco, who opposed the “D” grade the Task Force had given PSA screens in 2012. “The message now is not ‘no screening,’ but ‘smarter screening,’ preserving benefits and reducing harms.”

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The recommendation also addresses men who are at increased risk, particularly African-American men and patients with a family history of prostate cancer.

“For African-American men or those with a family history of prostate cancer, informing these men of their higher risk for developing prostate cancer should be a part of the conversation,” wrote two researchers from the Cleveland Clinic in another accompanying JAMA editorial.

“The U.S. health care delivery system needs a structure that not only allows, but encourages, a space for physicians and patients to engage in meaningful conversations where shared decision making has the opportunity to take place,” wrote Anita D. Misra-Herbert, MD, and Michael W. Kattan, PhD. “What the updated USPSTF recommendations for prostate cancer screening are asking of physicians is to take time to pause, explain what is currently known, understand patient preferences, and make the screening decision together.”

Cuts to Medicaid hurt all children — rich and poor. Because hospitals that deal with serious childhood injuries and illnesses depend on the public funding as much as those poor families who get medical care under the government insurance program.

That’s the message that Stanford Health Policy’s Lisa Chamberlain, Olga Saynina and Paul Wise and will be presenting at the Pediatric Academic Societies meeting in Toronto later this week. The PAS conference is the leading event for academic pediatrics and child health research. Chamberlain and Wise are Stanford Medicine pediatricians and Saynina is a data research analyst with Stanford Health Policy.

New research by the Stanford team shows that proposals to dramatically reduce federal expenditures on Medicaid and CHIP — the Children’s Health Insurance Program — could destabilize current specialty care referral networks for all children. This includes a large subset of privately-insured children in greatest need of high quality, specialized pediatric care.

“Most people think of Medicaid as a safety-net program, and to a certain extent it is,” said Wise, a core faculty member at SHP and the Center on Democracy, Development, and the Rule of Law, as well as a senior fellow at the Freeman Spogli Institute for International Health.

“But it has become so important to child-health systems that rich kids — kids with good commercial insurance — are heavily dependent on specialized care if they really get sick, on facilities that are heavily dependent on Medicaid,” he said.

Nearly one out of every five children live below the poverty line, according to the U.S. Census Bureau, yet few children need extensive health care. But of those who do, about 44 percent rely on Medicaid or other public insurance programs, regardless of their family’s income.

“Caring for seriously ill children requires a wide range of services and specialists, from pediatric surgeons to speech therapists to hospital teachers who make sure kids don’t fall behind,” Chamberlain told SHP for this story last year. “In pediatrics, we work as a team — and cutting Medicaid will reduce our ability to do that.”

The Stanford group analyzed two large datasets: the 2012 national Kids’ Inpatient Databaseand the 2012 California Patient Discharge Database. They found that hospitals caring for children with serious, chronic illnesses — such as congenital heart disease, cancer and severe asthma — are highly dependent on public payers such as Medicaid.

Nationally, major pediatric hospitals reported 55 percent of bed-days were covered by public payers, with the 10-highest volume hospitals ranging from 36 to 100 percent.   Overall, in California for all hospitals, 30 percent of net revenue is derived from Medicaid and for children’s hospitals, Medicaid provides 56 percent of net revenue.

Paul H. Wise, the Richard E. Behrman Professor of Child Health and Society, professor of pediatrics, and a Senior Fellow in the Freeman Spogli Institute for International Studies, is elected to the 2018 membership class of the American Academy of Arts and Sciences. His work focuses on health inequalities, maternal and child health policy, and children's health in areas of violent conflict, political instability and weak governance.

In this video, we ask him about the honor and what he hopes to achieve through membership in the prestigious organization founded in 1780 and devoted to the advancement and study of key societal, scientific and intellectual issues of the day.

"The recognition is important, but I see it as being more important as a platform for continuing to act in the real world; that it provides some semblance of enhanced legitimacy to speak to issues of global importance," says Wise, who is a core faculty member at Stanford Health Policy.

When a close relative dies, the stress can be overwhelming. But for many adults and children, mourning and grief often give way to healing.

A pair of Stanford scholars now focuses on the impact that loss has on often-overlooked family members: babies. A new publication by Petra Persson and Maya Rossin-Slater indicates that losing a loved one during pregnancy may actually impact the mental health of the child as he or she grows into adulthood.

“We find that prenatal exposure to the death of a maternal relative increases take-up of ADHD medications during childhood and anti-anxiety and depression medications in adulthood,” the researchers wrote in the April edition of the American Economic Review.

Petra Persson

Both are faculty fellows at the Stanford Institute for Economic Policy and Research (SIEPR); Rossin-Slater is an assistant professor of health research and policy with Stanford Medicine and Persson is an assistant professor of economics in the Department of Economics.

“Of course, you cannot prevent family members from dying, and we certainly do not want our findings to constitute yet another source of stress for expecting mothers, who already face rather intense pressure to eat the right foods, avoid activities deemed harmful, and experience an avalanche of health advice,” Persson said. “But our findings potentially point to the importance of generally reducing stress during pregnancy, for example through prenatal paid maternity leave and programs that provide resources and social support to poor, pregnant women.”

Their research focused specifically on singleton children in Sweden born between 1973 and 2011 whose mother lost a close relative during her pregnancy. They used population registers to construct family trees that span four generations, from the children to their maternal great-grandparents. Their sample included all children whose mother lost a close relative — a sibling, parent, maternal grandparent, the child’s father or her own older child — in the nine months after the child’s date of conception or the year after the child’s birth. The study did not account for the quality of those relationships.

Their analysis compared the outcomes of children whose mothers experienced a relative’s death while they were pregnant with those of children whose maternal relatives died in the year after birth. They were thus able to isolate the impacts of fetal exposure to maternal stress from bereavement from all other consequences associated with a family member’s passing, such as changes to family resources or household composition, which affect all children in their sample.

Additionally, by considering the deaths of different relatives, their approach presents a new measure of intensity of stress exposure: the closeness between the mother and the relative who passed in the family tree.

The researchers merged the Swedish data with information about the children’s health throughout childhood and into adulthood, using birth and medical records. They were aided by Sweden’s novel prescription drug registry, which contains all prescription drug purchases and the exact substances and doses prescribed in the country.

“Our research suggests that policies that can reduce stress during pregnancy can have substantial benefits for the next generation,” Rossin-Slater said in an interview. “Moreover, since poor families are more likely to experience stress than more advantaged ones, our results imply that stress-reducing policies that target low-income pregnant women could play a role in mitigating the persistence of socio-economic inequality across generations.”

Persson and Rossin-Slater said they were initially inspired by two recent economic studies using data from Uganda and Iraq, which found that fetal exposure to malnutrition has adverse consequences for adult mental illness.

“Our study offers complementary evidence linking early-life circumstance to adult mental health, but breaks new ground by focusing on stress,” the authors wrote, “which may be more pertinent than malnutrition in modern developed countries such as the United States and Sweden, and by tracing health outcomes throughout the time period between the fetal shock and adulthood.”

Mental illness results in great financial and social costs. In 2008, the market for prescription drugs treating depression totaled $9.6 billion in the United States alone, a sales volume exceeded only by cholesterol and pain medications.

In 2013, one in seven school-age boys were treated with prescription drugs for Attention Deficit Hyperactivity Disorder, fueling a $9 billion market, five times larger than the $1.7 billion market just a decade earlier. The authors note that estimates also suggest that mental illness accounts for more than one-half of the rise in disability costs among men in the last two decades.

Moreover, in Sweden — the setting for their paper – mental illness accounts for a larger share of health expenditures on prescription drugs than any other therapeutic class.

The scholars said that their study contributes to the research in this area by documenting a causal link between fetal stress exposure and mental health later in life. Moreover, by following the same children from birth to adulthood, they were able to observe the onset of adverse effects of exposure to maternal bereavement in utero.

“In sum, our results show that the death of a relative up to three generations apart during pregnancy has far-reaching consequences for mental health during childhood and adulthood,” Persson and Rossin-Slater said.

Their findings suggest large welfare gains of preventing fetal exposure to severe stress: For example, based on the 2008 figure for the U.S. market, the 8 percent decrease in the consumption of prescription drugs treating depression alone can be valued at around $800 million annually.

They conducted a back-of-the-envelope calculation to understand how exposure to economically induced stress during pregnancy might affect the mental well-being of the next generation by relying on past research estimating cortisol responses to grief and to economic shocks like unemployment and poverty.

“Our calculation suggests that in-utero exposure to stress from unemployment may lead to a 17.3 percent increase in the likelihood of ever purchasing a drug to treat ADHD in middle childhood,” they concluded, “and a 9 percent and 5.5 percent increases in the likelihoods of ever purchasing drugs to treat anxiety and depression in adulthood, respectively.”

The newly published findings can inform one way by which policymakers and the medical community can tackle the prevalence and rising costs of mental health issues: by considering ways to make pregnancy — an inherently stressful time — a little easier to manage.