Reynolds 10th Annual Faculty Symposium
Disruptive Innovation and Public Policy Reforms
in Health Care:
The Cases of Laparoscopic
Appendectomy and Cholecystectomy
D. Pulane Lucas, MBA, PhD
dlucas@reynolds.edu
Friday, April 1, 2016
1
Overview of Presentation
•
Introduction
• Context
• Purpose of Study
• Theoretical Framework
• Methodology
• Data Analysis
• Results
• Discussion
• Conclusion
2
List of Abbreviations
ALAC
Ambulatory Laparoscopic Appendectomy and Cholecystectomy
ALC
Ambulatory Laparoscopic Cholecystectomy
ALA
Ambulatory Laparoscopic Appendectomy
ACGH
Acute Care General Hospital
ASC
Ambulatory Surgery Center
CBSA
Core-Based Statistical Area
CMS
Centers for Medicare and Medicaid Services
HOPD
Hospital Outpatient Department
OPD
Outpatient Department
OPPS
Outpatient Prospective Payment System
PPS
Prospective Payment System
3
Introduction
• Advances in medical technology
• Increasing competition in the hospital industry
• Regulation vs. competition
• Need for new theoretical frameworks
4
Context
• Why is it important to explore the applicability of
disruptive innovation theory in health care?
– Increasing competition in the hospital industry
– Competition should improve efficiency and quality
(Porter & Teisberg, 2006)
– Hospital industry: high costs, poor care, prevalent
medical errors (Porter & Teisberg, 2006; Christensen
et al., 2009)
– Calls for regulation
– Disruptive innovation theory
5
Purpose of Study
• To examine the effects of disruptive
innovation in the health care industry
• To assess the effects of disruptive
innovation and public policy reforms on
ambulatory laparoscopic appendectomy
and cholecystectomy (ALAC) procedures.
6
Disruptive Innovation Theory
Sustaining innovations: high performance, expensive, expertise-intensive
products and services; meet needs of most demanding customers in
established firms. Disruptive innovations: lower performance products or
services on key measures; perform well on other important dimensions
valued by new customers in emerging markets (Christensen et al., 2009).
7
Elements of Disruptive Innovation Theory
1. Sophisticated
technology that
simplifies
Regulations and
standards that
facilitate change
2. Low-cost,
innovative
business models
3. Economically
coherent value
networks
Source: Christensen et al., 2009: xx.
8
Methodology: Research Design
•
•
•
•
•
•
Non-Experimental
Panel Study
Longitudinal (Retrospective)
Repeated Measures
Unit of Analysis: The Facility
Non-Equivalent Comparison Groups
T2004
T2009
ACGHs
O1
O3
ASCs
O2
O4
(Babbie, 2001; Babbie, 2005)
9
Methodology: Scope of Study
• Medical Facilities: ASCs and ACGHs
• Surgery Type: Appendectomy and
Cholecystectomy
• Surgical Procedures: Laparoscopic
• Surgical Settings: Ambulatory
• States: Florida and Wisconsin
• Years: 2004 and 2009
10
Methodology: Hypotheses
• Hypothesis A: Compared to ACGHs, ASCs
will experience a larger percentage
increase in the number of ALC performed
in 2009 compared to 2004.
• Hypothesis B: Compared to ACGHs, ASCs
will experience a larger percentage
increase in the number of ALA performed in
2009 compared to 2004.
11
Methodology: Data and Data Sources
• Intellimed International, Inc.
• U.S. Census Bureau
12
Statistical Procedures
• SPSS Software
– Univariate Analysis
– Bivariate Analysis
– Multivariate Regression Analysis
13
Operationalization of Dependent Variable
Dependent Variable
Operationalization
Hypothesis A: Percent
Change in Ambulatory
Laparoscopic
Cholecystectomy (ALC)
(Total 2009 ALC – Total 2004 ALC)/ Total 2004 ALC
Hypothesis B: Percent
Change in Ambulatory
Laparoscopic
Appendectomy (ALA)
(Total 2009 ALA – Total 2004 ALA)/Total 2004 ALA
14
Operationalization of Independent Variable
Facility Type 0 = Ambulatory Surgery Center (ASC);
1 = Acute Care General Hospital (ACGH)
15
Sample
State
Medical Facilities Percentage
Florida
452
76%
Wisconsin
142
24%
Total
594
100%
A total of 75,216 laparoscopic appendectomy and cholecystectomy
procedures were performed in 2004 and 2009.
16
Research Question
How has the utilization of ALAC
changed over time?
17
Results: Number of Ambulatory Laparoscopic
Procedures by State in 2004 and 2009
Procedure Totals
by State and Year
30000
24842
25000
19132
20000
15000
10000
Ambulatory Laparoscopic
Cholecystectomy
12225
9599
5000
Ambulatory Laparoscopic
Appendectomy
3239
3083
1677
1419
0
2004
2009
Wisconsin
2004
2009
Florida
18
Research Question
How do ACGHs and ASCs differ in
the utilization of ALAC?
19
Results: Multivariate Regression Analysis
Medical Facility Shift (Equation 1)
 %AmbLapChol  b0  b1 ACGH  b2 FLORIDA  b3 POP%  b4 METRO  
Y %ALC
b0 , b1 , b2 , to bn
Represents Percentage Change in Number of ALC
Procedures Performed in 2004 and 2009 =
Dependent Variable
Represent coefficients
ACGH
Facility Type = Independent Variable
FLORIDA
State = control variable
POP% 
CBSA population change = control variable
METRO
CBSA area classification = control variable
Represent error term
20
Results: Multivariate Regression Analysis
Medical Facility Shift (Equation 2)
 %AmbLapApp  b0  b1 ACGH  b2 FLORIDA  b3 POP%  b4 METRO  
Y %ALA
b0 , b1 , b2 , to bn
Represents Percentage Change in Number of ALC
Procedures Performed in 2004 and 2009 =
Dependent Variable
Represent coefficients
ACGH
Facility Type = Independent Variable
FLORIDA
State = control variable
POP% 
CBSA population change = control variable
METRO
CBSA area classification = control variable
Represent error term
21
Results: Multivariate Regression Analysis
Facility Type on Percent Change in the Number of Ambulatory Laparoscopic Cholecystectomy Cases
Performed in 2004 and 2009 (N = 516) (beta coefficient, beta weight, and significance level)
Variables
Acute Care General Hospital
Model 1
2.675**
.296
(.000)
Florida
Model 2
3.140**
.347
(.000)
Model 3
3.194**
.353
(.000)
Model 4
3.176**
.351
(.000)
1.836**
.157
(.000)
1.541**
.132
(.005)
1.581**
.136
(.005)
7.577
.069
(.130)
7.727
.070
(.124)
% Change in CBSA Population
Metropolitan Area
Constant
-.643
(.017)
.087
R²
*P<0.10
-.298
-.019
(.659)
-2.372
(.000)
.110
-2.618
(.000)
.114
-2.382
(.003)
.114
**P<0.05
22
Results: Multivariate Regression Analysis
Facility Type on Percent Change in the Number of Ambulatory Laparoscopic Appendectomy
Cases Performed in 2004 and 2009 ( N = 436) (beta coefficient, beta weight, and significance
level)
Variables
Acute Care General Hospital
Model 1
3.026**
.339
(.000)
Florida
Model 2
2.294**
.257
(.000)
Model 3
2.331**
.261
(.000)
Model 4
2.306**
.258
(.000)
-2.515**
-.214
(.000)
-2.691**
-.229
(.000)
-2.545**
-.216
(.000)
4.553
.042
(.381)
4.762
.044
(.360)
% Change in CBSA
Population
Metropolitan Area
Constant
R²
-.719
-.045
(.337)
-.978
(.001)
.115
1.457
(.018)
.154
1.302
(.041)
.155
1.840
(.031)
.157
23
Results: Summary Hypothesis Chart
(mean percent change, beta coefficient, beta weight, and significance)
Hypothesis
A
B
Medical Facility Shift
Compared to ACGHs, ASCs will
experience a larger percentage
increase in the number of
ambulatory laparoscopic
cholecystectomy procedures
performed.
Compared to ACGHs, ASCs will
experience a larger percentage
increase in the number of
ambulatory laparoscopic
appendectomy procedures
performed.
Average %
Change
ACGH ASC
203% -64.3%
Bivariate
Multivariate
(Model 4)
2.675**
.296
(.000)
3.176**
.351
(.000)
205% -97.8%
3.026**
.339
(.000)
2.306**
.258
(.000)
24
Research Question
Do study findings support disruptive
innovation theory in the hospital
industry?
25
Interpretation of Results:
Summary of Hypotheses
Hypothesis
Hypothesis
Null
Supported? Rejected?
A
Medical Facility Shift
Larger Percent Increase in ALC performed
in ASC
No
No
B
Medical Facility Shift
Larger Percent Increase in ALA performed in
ASC
No
No
26
Discussion Question
Medical Facility:
Why did the medical facility shift
move contrary to what was
expected?
27
Research Question
How have public policy reforms affected
the provision of ALAC?
28
Discussion: CMS Coverage Determination
Appendix E: Partial List of CPT
Surgical Procedure Codes
Proposed for Exclusion from
ASC Facility Fee Payment
Because They Require an
Overnight Stay, 2006
Source: CMS. (2007a). 42 CFR Parts 410, 414, 416, 419, 421, 485,
and 488. [CMS-1506-P; CMS-4125-P]. Washington, D.C.
Department of Health and Human Services. Available online:
http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/downloads/CMS1506P.pdf.
HCPCS/CPT
42225
42842
42844
43020
43130
43280
43510
44970
47562
60252
63030
Code Short Descriptor
Reconstruct cleft palate
Extensive surgery of throat
Extensive surgery of throat
Incision of esophagus
Removal of esophagus pouch
Laparoscopy, fundoplasty
Surgical opening of stomach
Laparoscopy, appendectomy
Laparoscopic cholecystectomy
Removal of thyroid
Low back disk surgery
29
Discussion: CMS Coverage Determination
HCPCS/CPT
38120
43020
43280
44970
50080
59409
60252
61720
62000
63075
63030
Code Short Descriptor
Laparoscopy, splenectomy
Incision of esophagus
Laparoscopy, fundoplasty
Laparoscopy, appendectomy
Removal of kidney stone
Obstetrical care
Removal of thyroid
Incise skull/brain surgery
Treat skull fracture
Neck spine disk surgery
Low back disk surgery
Appendix F: Partial List of
Surgical Procedures Payable
under the OPPS That Are
Excluded From ASC Payment
Because They Pose a Significant
Safety Risk or Are Expected to
Require an Overnight Stay, 2007
Source: CMS. (2007b). Federal Register Volume 72
Number 148 Thursday, August 2. Rules and Regulations,
Pages
42470-42626.
Available
online:
http://www.gpo.gov/fdsys/pkg/FR-2007-08-02/html/073490.htm
30
Ambulatory Laparoscopic Appendectomy in
Florida ASC and ACGH Facilities (State-Level)
Annual Number of Florida ASC and ACGH Facilities Performing Ambulatory Laparoscopic
Appendectomy (2004-2009) and Annual Percent Change
Year
2004
2005
2006
2007
2008
2009
ASC
233
189
214
8
6
8
ACGH
131
141
142
129
131
131
Total
364
330
356
137
137
139
64.0%
57.3%
60.1%
5.8%
4.4%
5.8%
Facility
Type
ASC as a
percent of
total
Data Source: Intellimed, Inc.
31
Ambulatory Laparoscopic Appendectomy in
Florida ASC and ACGH Facilities (State-Level)
Line Chart: Annual Number of Florida ASCs and ACGHs Performing Ambulatory Laparoscopic
Appendectomy Procedures, 2004-2009
250
200
150
Count
ASCs
ACGHs
100
50
0
2004
2005
2006
2007
2008
2009
Data Source: Intellimed, Inc.
32
Ambulatory Laparoscopic Appendectomy in
Wisconsin ASC and ACGH Facilities (State-Level)
Annual Number of Wisconsin Facilities Performing Ambulatory Laparoscopic Appendectomy
(2004-2009) and Annual Percent Change
Year
2004
2005
2006
2007
2008
2009
Facility
Type
ASC
7
6
10
8
8
6
ACGH
60
60
58
60
64
64
Total
67
66
68
68
72
70
10.4%
9.1%
14.7%
11.8%
11.1%
8.6%
ASC as a
percent of
total
Data Source: Intellimed, Inc.
33
Ambulatory Laparoscopic Appendectomy in
Wisconsin in ASC and ACGH Facilities (State-Level)
Line Chart: Annual Number of Wisconsin ASCs and ACGHs Performing Laparoscopic
Appendectomy Procedures, 2004-2009
70
60
50
Count
40
ASCs
ACGHs
30
20
10
0
2004
2005
2006
2007
2008
2009
Data Source: Intellimed, Inc.
34
Ambulatory Laparoscopic Cholecystectomy in
Florida ASC and ACGH Facilities (State-Level)
Annual Number of Florida Facilities Performing Ambulatory Laparoscopic Cholecystectomy
(2004-2009) and Annual Percent Change
Year
2004
2005
2006
2007
2008
2009
Facility
Type
ASC
265
233
249
38
42
46
ACGH
164
169
171
158
155
156
Total
429
392
420
196
197
202
61.8%
56.9%
59.3%
19.4%
21.3%
22.8%
ASC as a
percent of
total
Data Source: Intellimed, Inc.
35
Ambulatory Laparoscopic Cholecystectomy in
Florida ASC and ACGH Facilities (State-Level)
Line Chart: The Number of Florida ASCs and ACGHs Performing Ambulatory
Laparoscopic Cholecystectomy Procedures, 2004-2009
300
250
Count
200
ASCs
150
ACGHs
100
50
0
2004
2005
2006
2007
2008
2009
Data Source: Intellimed, Inc.
36
Ambulatory Laparoscopic Cholecystectomy in
Wisconsin ASC and ACGH Facilities (State-Level)
Annual Wisconsin Totals for Laparoscopic Cholecystectomy Procedures Performed in
ASCs and ACGHs, 2004-2009
Year
2004
2005
2006
2007
2008
2009
Facility
Type
ASC
16
16
16
17
15
18
ACGH
67
64
65
64
65
66
Total
83
80
81
81
80
84
19.3%
20.0%
19.8%
21.0%
18.8%
21.40%
ASC as a
percent of
total
Data Source: Intellimed, Inc.
37
Ambulatory Laparoscopic Cholecystectomy
in Wisconsin (State-Level)
Line Chart: Wisconsin ASCs and ACGHs Performing Ambulatory Laparoscopic
Cholecystectomy Procedures, 2004-2009
80
70
60
Count
50
ASCs
40
ACGHs
30
20
10
0
2004
2005
2006
2007
2008
2009
Data Source: Intellimed, Inc.
38
Discussion: Medicare Fee-For-Service Payment Rates
Laparoscopic Appendectomy and Laparoscopic Cholecystectomy for
Hospital Outpatient Prospective Payment System (PPS)
HCPCS
Year Code
Descriptor
2004 44970 Laparoscopy
Appendectomy
2009 44970 Laparoscopy
Appendectomy
2004 47562 Laparoscopic
Cholecystectomy
2009 47562 Laparoscopic
Cholecystectomy
Relative
Weight
Payment
Rate
32.7724
$1,788.09
46.3238
$3,060.10
40.8064
$2,226.44
46.3238
$3,060.10
Percent change
between 2004
and 2009
71.1%
37.4%
39
Conclusion
The hospital industry is one of the most dynamic
marketplaces in the U.S. economy. With health care
spending rising and competition intensifying, new and
revised theoretical frameworks are needed to understand
better the interplay between advanced medical
technology, organizations, and regulation.
40
Questions and Discussion
Thank you for your time.
41
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–
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42
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–
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43
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44