TY - JOUR
T1 - Examining the Impacts of Clinical Practice Variation on Operational Performance
AU - Youn, Seokjun
AU - Heim, Gregory R.
AU - Kumar, Subodha
AU - Sriskandarajah, Chelliah
N1 - Funding Information:
The authors are grateful to the department editor Sergei Savin, the senior editor, and the two anonymous reviewers for their constructive comments and valuable suggestions on this research. The authors also thank the participants at 2017–2018 Production and Operations Management Society Annual Meeting, 2017 Conference on Health IT and Analytics, 2017–2019 Institute for Operations Research and the Management Sciences Annual Meeting, 2018 Decision Sciences Institute Annual Meeting, as well as seminar participants at Texas A&M University and the University of Arizona. Their comments helped us to improve this article substantially.
Publisher Copyright:
© 2020 Production and Operations Management Society
PY - 2021/4
Y1 - 2021/4
N2 - This study explores whether and how lower variations in clinical practice relate to hospital operational performance. This relation is critical to the overall search for pathways that will allow the healthcare industry to bend the cost curve, implying significant implications for practice and regulators. We define practice variation as all variation not resulting from patient mix and construct a novel measure using inpatient discharge data for each patient cohort having an identical medical condition. Hospitals in our dataset show a broad practice variation spectrum. Using statistical process control (SPC) as a theoretical lens, we hypothesize the negative impacts of practice variation on operational performance. We also consider intervening impacts of hospital quality evaluations on the relationship. Analyzing data of six years from hospitals in NY and FL states using a dynamic panel system Generalized Method of Moments estimator, we find that higher practice variation relates to longer average patient length-of-stay and higher total cost per capita. This phenomenon is even stronger when a hospital provides services with higher quality in patient experience because such a hospital tends to provide more responsive care to patients, which is often resource-intensive. By delving into granular dimensions of practice variation based on detailed charge data, we find that higher care-delivery practice variation (i.e., the provision of healthcare) is directly associated with poor operational performance. We also find that pursuing higher quality measures may be harmful to some hospital operational performance measures as they have combined effects with the test-ordering practice variation (i.e., detecting disease and monitoring its status). Taken together, these findings imply that careful attention to the two dimensions of practice variation and the nuanced joint relationship with quality measures may address the trade-off between high quality and low cost, and provide room for improvement in practice, ultimately reducing waste in the healthcare industry. Our measure of practice variation also contributes since it enables researchers and managers to rigorously measure and visualize the status of hospitals’ practice variation linked to hospital operational performance.
AB - This study explores whether and how lower variations in clinical practice relate to hospital operational performance. This relation is critical to the overall search for pathways that will allow the healthcare industry to bend the cost curve, implying significant implications for practice and regulators. We define practice variation as all variation not resulting from patient mix and construct a novel measure using inpatient discharge data for each patient cohort having an identical medical condition. Hospitals in our dataset show a broad practice variation spectrum. Using statistical process control (SPC) as a theoretical lens, we hypothesize the negative impacts of practice variation on operational performance. We also consider intervening impacts of hospital quality evaluations on the relationship. Analyzing data of six years from hospitals in NY and FL states using a dynamic panel system Generalized Method of Moments estimator, we find that higher practice variation relates to longer average patient length-of-stay and higher total cost per capita. This phenomenon is even stronger when a hospital provides services with higher quality in patient experience because such a hospital tends to provide more responsive care to patients, which is often resource-intensive. By delving into granular dimensions of practice variation based on detailed charge data, we find that higher care-delivery practice variation (i.e., the provision of healthcare) is directly associated with poor operational performance. We also find that pursuing higher quality measures may be harmful to some hospital operational performance measures as they have combined effects with the test-ordering practice variation (i.e., detecting disease and monitoring its status). Taken together, these findings imply that careful attention to the two dimensions of practice variation and the nuanced joint relationship with quality measures may address the trade-off between high quality and low cost, and provide room for improvement in practice, ultimately reducing waste in the healthcare industry. Our measure of practice variation also contributes since it enables researchers and managers to rigorously measure and visualize the status of hospitals’ practice variation linked to hospital operational performance.
KW - clinical practice variation
KW - empirical operations
KW - healthcare
KW - operational performance
KW - process and experiential quality
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U2 - 10.1111/poms.13256
DO - 10.1111/poms.13256
M3 - Article
AN - SCOPUS:85091046290
SN - 1059-1478
VL - 30
SP - 839
EP - 863
JO - Production and Operations Management
JF - Production and Operations Management
IS - 4
ER -