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Regionalization versus competition in complex cancer surgery

Author

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  • Ho, Vivian
  • Town, Robert J.
  • Heslin, Martin J.

Abstract

The empirical association between high hospital procedure volume and lower mortality rates has led to recommendations for the regionalization of complex surgical procedures. While regionalization may improve outcomes, it also reduces market competition, which has been found to lower prices and improve health care quality. This study estimates the potential net benefits of regionalizing the Whipple surgery for pancreatic cancer patients. We confirm that increased hospital volume and surgeon volume are associated with lower inpatient mortality rates. We then predict the price and outcome consequences of concentrating Whipple surgery at hospitals that perform at least two, four, and six procedures respectively per year. Our consumer surplus calculations suggest that regionalization can increase consumer surplus, but potential price increases extract over half of the value of reduced deaths from regionalization. We reach three conclusions. First, regionalization can increase consumer surplus, but the benefits may be substantially less than implied by examining only the outcome side of the equation. Second, modest changes in outcomes due to regionalization may lead to decreases in consumer surplus. Third, before any regionalization policy is implemented, a deep and precise understanding of the nature of both outcome/volume and price/competition relationships is needed.

Suggested Citation

  • Ho, Vivian & Town, Robert J. & Heslin, Martin J., 2007. "Regionalization versus competition in complex cancer surgery," Health Economics, Policy and Law, Cambridge University Press, vol. 2(1), pages 51-71, January.
  • Handle: RePEc:cup:hecopl:v:2:y:2007:i:01:p:51-71_00
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    Citations

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    Cited by:

    1. Marius Huguet & Lionel Perrier & X Joutard & Isabelle Ray-Coquard, 2017. "What Underlies The Observed Hospital Volume-Outcome Relationship?," Post-Print halshs-01653405, HAL.
    2. Anne‐Fleur Roos & Ramsis R. Croes & Victoria Shestalova & Marco Varkevisser & Frederik T. Schut, 2019. "Price effects of a hospital merger: Heterogeneity across health insurers, hospital products, and hospital locations," Health Economics, John Wiley & Sons, Ltd., vol. 28(9), pages 1130-1145, September.
    3. Ho Vivian & Short Marah N. & Ku-Goto Meei-Hsiang, 2012. "Can Centralization of Cancer Surgery Improve Social Welfare?," Forum for Health Economics & Policy, De Gruyter, vol. 15(1), pages 1-25, October.
    4. Woohyeon Kim & Stephen Wolff & Vivian Ho, 2016. "Measuring the Volume-Outcome Relation for Complex Hospital Surgery," Applied Health Economics and Health Policy, Springer, vol. 14(4), pages 453-464, August.
    5. Keith Brand & Martin Gaynor & Patrick McAlvanah & David Schmidt & Elizabeth Schneirov, 2014. "Economics at the FTC: Office Supply Retailers Redux, Healthcare Quality Efficiencies Analysis, and Litigation of an Alleged Get-Rich-Quick Scheme," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(4), pages 325-344, December.
    6. Blankart, Carl Rudolf, 2012. "Does healthcare infrastructure have an impact on delay in diagnosis and survival?," Health Policy, Elsevier, vol. 105(2), pages 128-137.
    7. Versteeg, S.E. & Ho, V.K.Y. & Siesling, S. & Varkevisser, M., 2018. "Centralisation of cancer surgery and the impact on patients’ travel burden," Health Policy, Elsevier, vol. 122(9), pages 1028-1034.
    8. Marius Huguet & Xavier Joutard & Isabelle Ray-Coquard & Lionel Perrier, 2022. "What underlies the observed hospital volume- outcome relationship?," SciencePo Working papers Main halshs-01801598, HAL.
    9. Robert G. Valletta, 2007. "The costs and value of new medical technologies: symposium summary," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jul6.
    10. Corinna Hentschker & Roman Mennicken, 2015. "The Volume‐Outcome Relationship and Minimum Volume Standards – Empirical Evidence for Germany," Health Economics, John Wiley & Sons, Ltd., vol. 24(6), pages 644-658, June.
    11. Marius Huguet & Xavier Joutard & Isabelle Ray-Coquard & Lionel Perrier, 2018. "What underlies the observed hospital volume- outcome relationship?," Working Papers halshs-01801598, HAL.

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