Can we reduce healthcare spending through service innovation in hospitals?

Objectives Innovations in hospital has a direct impact on healthcare expenditures and on overall health system efficiency. Beyond technical and biomedical innovation, health service innovations in hospitals and their consequences on patients care pathways and health expenditure are little studied in the literature. In this study, we evaluate the impact of implementation of an innovative treatment protocol in hospitals, the Enhanced Recovery After Surgery (ERAS) in orthopedics, on health care expenditure in hospital and ambulatory care settings as well as on patient outcomes in France. MethodsThe data come from the French National Health System Data (SNDS), which allows linking patients' care consumption in primary care, in hospital and in all other care facilities. We have data for all patients treated for hip or knee replacement in private hospitals from 2012 to 2017 (62% of these surgeries in this period in France). We analyze the impact of ERAS on patients' care spending across all settings starting from one month before surgery to 6 months after the discharge from index hospitalization, and on patient outcomes measured by all-cause readmissions at 30 days after discharge, complications at 1 year, and revision of the prosthesis at 1 year. To compare the results of patients in ERAS-labeled hospitals with others, we constructed a synthetic control group and specified DID models controlling for patient composition (age, share of women, comorbidity score) and facility surgical volume. Results Patients operated in hospitals that practice ERAS have, on average, lower total health spending, in hospital and after surgery, than those treated with conventional methods (-2%). This decrease is essentially related to the decrease in rehabilitation care spending after discharge for hip or knee replacement (-5%). There were no differences in the complication rates, but the 30-day readmission rates fell by 2 percentage points on average in hospitals using ERAS. Discussion Hospital is a multi-agent environment that can bring efficient organizational innovations to the health system. It is important to examine how innovations that are recognized as better practices can be disseminated throughout the healthcare system. In a competitive environment, like France, hospitals can invest in service innovation to differentiate in quality. Our results also show that service innovations in hospital can have significant impact on cost of care outside the hospital in other settings.