Cardiac Care, Focused Hospitals in California, US Cherry Pick Patients, Exaggerate Success, Says Paper at INFORMS Annual Meeting

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SAN DIEGO, CA, October 6, 2009 – Although many focused hospitals deliver better and faster services in cardiac care and other specialties, a paper being presented at the annual meeting of the Institute for Operations Research and the Management Sciences (INFORMS®) maintains that these hospitals cherry-pick patients to achieve these results, and that average patients actually receive worse care.

“The Effect of Focus on Performance: Evidence from California Hospitals” is by Diwas KC, Asst Prof at Goizueta Business School at Emory University and Christian Terwiesch, Professor at The Wharton School at the University of Pennsylvania.

The annual meeting of the Institute for Operations Research and the Management Sciences (INFORMS®) takes place at the San Diego Convention Center and the Hilton San Diego from Sunday, October 11 - Wednesday, October 14. Some 4,000 experts in analytics, operations research, and applied math are expected to attend.

Event: The Effect of Focus on Performance: Evidence from California Hospitals, presented by Diwas KC

Date: Wednesday, October 14

Time: 12:45-2:15 PM

Place: Hilton San Diego, Sapphire A/B, fourth floor

The authors acknowledge that focused hospitals deliver faster services at higher levels of quality, as indicated by lower lengths of stay and reduced mortality rates.

They investigated the extent to which the superior operational outcome is driven by focused hospitals truly excelling in their operations or by focused hospitals simply selectively admitting patients who are easier to treat.

Their analysis shows that for randomly assigned patients, focused hospitals deliver a lower quality of care, as measured by a higher mortality rate. They also find that the average length of stay for a randomly assigned patient is longer at focused hospitals.

In other words, patient selectivity is an important driver of the superior outcomes at focused hospitals. Thus although it is tempting for hospital managers and policy makers to view focus as a powerful means to improve hospital efficiency, from a societal perspective, the benefits of focused hospitals are much smaller than what was previously believed.

In addition, the authors show that the market entry of a focused hospital has a negative effect on the performance of other hospitals operating in the same region. Their results show that the average operational performance of existing hospitals deteriorates following the entry of a focused competitor, who attracts the easy-to-treat patients.

Overall, they conclude that this business focus can indeed be the source of a competitive advantage in hospital operations. However, this advantage is substantially driven by focused hospitals cherry-picking easy-to-treat patients at the expense of other, full-service hospitals in the region.

Operations research, also known as analytics, is the application of advanced analytical methods to help make better decisions. Information about the field, often referred to as analytics, is at www.scienceofbetter.org.

Additional information about the conference is at www.informs.org.

About INFORMS

The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.

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