MANAGING CARE, INCENTIVES, AND INFORMATION - AN EXPLORATORY LOOK INSIDE THE BLACK-BOX OF HOSPITAL EFFICIENCY

Objective. We sought to estimate the impact of individual dimensions o f hospitals' managed care strategies on the cost per hospital discharg e. Study Setting/Data Sources. Thirty-seven member hospitals of seven health systems in the Pacific, Rocky Mountain, and Southwest regions o f the United States were studied. Study Design. Separate cross-section al regression analyses of 21,135 inpatient discharges were performed i n 1991 and 23,262 discharges in 1992. The multivariate model was estim ated with hospital cost per discharge as the dependent variable. Model robustness was checked by comparing regression results at the individ ual discharge level with those at the level of the hospital/clinical c ondition pair. Data Collection/Extraction Methods. Information on hosp itals' managed care strategies was provided by mail and phone survey o f key informants in 1991 and 1992. Other hospital characteristics were collected from AHA Annual Survey data, and discharge data from hospit al abstracting systems. Principal Findings. The pooled discharge analy sis indicated three dimensions of hospital managed care strategy that consistently related to lower costs per hospital discharge: the propor tion of hospital revenues derived from per case or capitation payment, the hospital's mechanisms for sharing information on resource consump tion with clinicians, and the use of formalized, systematic care coord ination mechanisms. Conclusions. Three strategies appear to hold promi se for enhancing the efficiency of inpatient resource use: (1) ''fixed price'' hospital payment incentives, (2) hospital approaches to shari ng resource use information with clinicians, and (3) the application o f formal care management mechanisms for specific clinical conditions.