Elaine Kelly: Growth in NHS-funded elective care
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Elaine Kelly: Growth in NHS-funded elective care Elaine Kelly: Growth in NHS-funded elective care Presentation Transcript

  • Introduction Background Results Mechanisms Conclusions More hips, please. Independent sector provision and the growth in NHS-funded elective care Elaine Kelly & George Stoye Nueld Trust Workshop 13th September 2013 1/27
  • Introduction Background Results Mechanisms Conclusions Introduction The past decade of health care policy reforms have increased the role of competition in NHS-funded care. Existing work has concentrated on the patient choice reforms of 2006 and 2008. [Cooper et al, 2011; Gaynor et al, 2012 a,b] This paper focuses on a separate but related set of reforms that increased the access of independent sector providers (ISP) to markets for NHS-funded elective secondary care. How did this aect the market for both NHS and privately funded hip replacements? 2/27
  • Figure : Total number of NHS-funded hip replacements in England, by provider type 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 HipReplacements Financial Year ISP NHS Trusts The total number of NHS-funded hip replacements increased by 40% between 2003/04 and 2010/11. After 2006/07, most of this growth is accounted for by ISPs.
  • Figure : Mean hip NHS-funded replacements per Middle Super Output Area by nearest provider type in 2010/11 6 6.5 7 7.5 8 8.5 9 9.5 10 10.5 11 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 MeanhipreplacementsperMOSA/year NHS ISP Growth was fastest in areas where an ISP was located closer than the nearest NHS trust by 2010/11.
  • Introduction Background Results Mechanisms Conclusions Research Questions How did the introduction of ISPs aect the market for NHS-funded hip replacements? 1 Why did the number of hip replacements increase faster in areas where ISPs were located relatively close by? 2 What explains the increase in the number of NHS-funded hip replacements? New procedures Substitution from privately funded procedures 5/27
  • Introduction Background Results Mechanisms Conclusions Independent Sector Provider reforms 1 Independent Sector Treatment Centres (ISTCs) First introduced in 2003, expanded in 2006. Privately owned but typically treat just NHS-funded patients. Objectives [Naylor & Gregory, 2009]: Wave 1: to address capacity constraints and reduce waiting times Wave 2: increasing competition for NHS providers, providing more choices for patients, and fostering innovation. 2 Any Qualied Providers (AQPs) In mid 2007, choice of providers in orthopaedics expanded to cover existing facilities, such as private hospitals, through the Extended Choice Network. Treat privately funded and NHS-funded patients. Extended to other specialties when 2nd choice reform was introduced in 2008. 6/27
  • Figure : NHS-funded hip replacements conducted by ISPs, by quarter and ISP type 0500100015002000 NumberISPHipProcedures 2003q2 2004q2 2005q2 2006q2 2007q2 2008q2 2009q2 2010q2 2011q2 Time ISTC sites AQP sites ISTC volumes started to increase as ISTCs began to open. Levelled o after 2008. AQP volumes increased rapidly after the second choice reform was introduced.
  • Figure : Number of ISP sites by year and ISP type 0 20 40 60 80 100 120 Sites> 1 pat Sites >20 pats Sites> 1 pat Sites >20 pats ISTC AQP NumberofISPSites 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 More AQP sites, but ISTC procedures more concentrated across sites. In 2010/11, average NHS-funded hip replacements per site were 65 for AQPs and 160 for ISTCs.
  • Figure : Mean number of hip replacements per MSOA/year, by nearest provider type in 2010/11 6 6.5 7 7.5 8 8.5 9 9.5 10 10.5 11 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 MeanhipreplacementsperMSOA/year Financial Year NHS ISTC AQP Relative growth is much faster in areas where an ISTC is the nearest provider than where AQPs are the nearest provider. Shift in entire distribution, not just the mean.
  • Introduction Background Results Mechanisms Conclusions Why might introducing ISPs aect the number of NHS-funded procedures? 1 Supply: extra potential capacity relaxes supply constraints. An initial objective of the ISTC programme [Naylor & Gregory, 2009] 2 Demand: ISPs provide an option that potential patients prefer to: 1 No procedure. 2 Privately funded treatment This paper focuses on establishing whether there was a demand response. Diculty: all areas/patients can access ISPs through the 2008 choice reforms. Solution: exploit variation in intensity of treatment or exposure by relative distance between the nearest ISP and the nearest NHS trust. 10/27
  • Introduction Background Results Mechanisms Conclusions Why does the growth rate of hip replacement vary by distance to ISP? 1 Endogenous placement: ISPs located in areas where higher growth is anticipated/removing supply constraints 2 A demand response: Patients prefer treatment closer to home [Beckert et al, 2012; Sivey 2012]. Analysis examines ISP placement and the number of hip replacements at the Middle Super Output Area (MSOA) level. Data on NHS-funded hip replacements from the inpatient Hospital Episode Statistics (HES). 6,710 MSOAs in England (ave pop 7,200). MSOAs are a statistical construct, no administrative jurisdictions. Dene MSOA as treated if there is an ISP that performs hip replacements nearer than the NHS trust. 11/27
  • Introduction Background Results Mechanisms Conclusions What are the determinants of ISP placement? The odds of MSOA m having an ISP closer than the nearest NHS trust in 2010/11 is given by the following specication: ISPclose10m = θo +θ1WaitTimesm +θ2nTrustm +θ3SDm +em (1) WaitTimesm includes waiting times of nearest trust and residents of the MSOA, and MSOA admittances for hip replacements in 2003/04. nTrustm are characteristics of the nearest trust to MSOA m; SDm are socio-demographic characteristics (all pre 2005) Results aim to indicate: The extent to which ISP placement reects population need/supply constraints Any sources of random variation in placement that could be used for identication 12/27
  • Table : Odds of having an ISP closer than the nearest NHS trust in 2010/11 Type of ISP Closer than the Nearest Trust ISP ISP ISP ISTC only AQP only (1) (2) (3) (4) (5) Nearest Trust Wait Time 2003 (SD) 1.352*** 1.195** 1.141 1.284 1.124 (0.102) (0.0900) (0.117) (0.272) (0.128) MSOA Wait Time 2003 (SD) 0.983 0.963 0.943 0.927 0.955 (0.0356) (0.0355) (0.0451) (0.0742) (0.0493) Average hip replacements in 2003 and 2004 0.972* 0.927*** 0.939** 1.013 0.938** (0.0159) (0.0176) (0.0242) (0.0370) (0.0257) Distance to Nearest Trust (km) 1.120*** 1.078*** 1.054 1.064** (0.0270) (0.0294) (0.0408) (0.0300) Distance to Nearest Trust Squared (km) 0.997*** 0.998** 0.999 0.999 (0.000760) (0.000768) (0.000941) (0.000789) IMD score (2004) 0.967*** 0.976 1.063*** 0.941*** (0.0117) (0.0179) (0.0185) (0.0198) Private hospital closer 29.25*** 3.573*** 33.56*** (7.843) (1.292) (9.935) NHS `hospital' (>30 beds) closer 2.028*** 2.146*** 1.915*** (0.384) (0.624) (0.386) Nearest trust & Socio-demographics No Yes Yes Yes Yes Observations 6,710 6,710 6,710 6,710 6,710 Pseudo R-squared 0.0127 0.0731 0.404 0.119 0.413 Notes: *** denotes signicance at 1%, ** at 5%, and * at 10% level. Observations are at the MSOA level. Presence of existing hospital facilities is strongest determinant of ISP location Adding PCT FE strengthens relationship with private hospital location. (OR increases to 9.6 in col 4 and 138.7 in col 5)
  • Introduction Background Results Mechanisms Conclusions Estimating a demand response Within PCTs, relative distance to an ISP should not aect hip replacement numbers through supply. Placement related to nearest trust waiting times but not MSOA waiting times (not related to local pre-existing need). Administrative constraints should operate at PCT level, not MSOA level. However, relative distance to an ISP should aect patient demand. 14/27
  • Table : Treatment and Control Group Denitions Financial % MSOA % of MSOA hip rep % ISP pats Year ISP close conducted by ISPs live "close" ISP closer ISP Further 2003/4 2.7 1.1 0.1 35.0 2004/5 7.3 2.4 0.9 16.2 2005/6 8.6 3.9 1.9 17.9 2006/7 3.6 13.8 3.2 17.4 2007/8 12.8 13.8 5.6 29.2 2008/9 19.4 18.1 8.5 36.5 2009/10 22.3 17.7 10 36.8 2010/11 28.2 24.4 14.1 45.2 The proportion of areas treated by an ISP increases as more ISPs open Patients are more likely to receive care from an ISP if they live in treated areas. But, most ISP patients do not live in treated areas.
  • Introduction Background Results Mechanisms Conclusions Fixed Eects Specication Number of residents in MSOA m that receive a NHS-funded hip replacement (conducted by an NHS trust or an ISP) in year t: Hipsmt = α +βISPmt +γm + µt +Xmt +εmt (2) The coecient of interest is β, the eect of introducing an ISP close to MSOA m on number of residents admitted for NHS-funded hip replacements. Xmt includes time varying MSOA measures of population age composition, admissions for fractured neck of femur, and the unemployment rate. εmt clustered at the PCT level. Identifying assumption: conditional on Xmt, ISPmt uncorrelated with εmt. 16/27
  • Table : Fixed eects estimates of the impact of ISP introduction on number of admittances for elective hip replacements per MSOA Type of ISP Closer: ISP ISTC AQP ISTC20 AQP20 (1) (2) (3) (4) (5) ISP closer than nearest NHS Trust 0.222** 0.447 0.174* 1.189*** 0.825*** (0.0983) (0.326) (0.0976) (0.392) (0.168) Pop 65-79 (thousands) 9.838*** 9.860*** 9.866*** 9.423*** 9.579*** (0.867) (0.863) (0.867) (0.860) (0.864) Pop 80+ (thousands) 9.806*** 9.815*** 9.818*** 9.695*** 9.721*** (1.253) (1.255) (1.256) (1.256) (1.264) FNOF admits 0.0581*** 0.0579*** 0.0581*** 0.0582*** 0.0586*** (0.0161) (0.0161) (0.0161) (0.0162) (0.0162) FNOF admits squared -0.00377*** -0.00375*** -0.00376*** -0.00378*** -0.00377*** (0.00123) (0.00124) (0.00123) (0.00123) (0.00123) Unemployment Rate -8.207 -8.176 -8.214 -9.216 -9.151 (6.126) (6.115) (6.134) (6.037) (6.082) Year Fixed Eects Yes Yes Yes Yes Yes MSOA Fixed Eects Yes Yes Yes Yes Yes Demographics Yes Yes Yes Yes Yes Observations 46,970 46,970 46,970 46,970 46,970 R-squared 0.121 0.121 0.121 0.123 0.124 Notes: *** denotes signicance at 1%, ** at 5%, and * at 10% level. Observations are at the MSOA year level. The dependent variable in all columns is the number of admissions for an NHS-funded elective hip replacement amoungst MSOA residents.
  • Introduction Background Results Mechanisms Conclusions Summary The introduction of ISPs is associated with an increase in demand for hip replacements. For large ISPs introduced nearer than the nearest trust, ISTCs add 1.2 and AQPs 0.8 to annual hip replacements per MSOA. Relative to a baseline level of hip replacements in 2003/04 of 7. Equivalent to adding an additional 100 people aged 65+ to the MSOA population. Propensity score matching estimates provide a similar set of results. Potential to use location of existing health care facilities as an IV. 18/27
  • Introduction Background Results Mechanisms Conclusions Where is the additional demand for NHS treatment coming from? The increase in demand for hip replacements may operate through: A rise in the number of people having hip replacements Substitution from privately funded to NHS-funded hip replacements Combine HES with hospital level data from the National Joint Registry (NJR), to estimate relationships between NHS, ISP and private pay volumes. Caution: much more work needed on separating demand from supply. 19/27
  • Introduction Background Results Mechanisms Conclusions Data Construction I HES contains: Number of patients treated in NHS hospitals Number of NHS-funded patients treated in AQPs and ISTCs. NJR contains: Number of patient treated in NHS hospitals Total number of patients treated in private hospitals, including those operating as AQPs and ISTCs. Private patients = Hip replacements in private hospitals (NJR) − hip replacements conducted at ISTCs (NJR)− NHS-funded hip replacements conducted by AQPs (HES) Note: measurement error in the number of private procedures. will be improved with access to patient level data (agreed in principle). 20/27
  • Introduction Background Results Mechanisms Conclusions Data Construction II The NJR has no information on where patients live, therefore assign patients to areas on the basis of hospital location. Collapse number of procedures by provider type and NHS/private pay by Primary Care Trust and nancial year. Use data from 2007/08 to 2010/11, due to concerns about quality of data in earlier years. Drop negative private pay volumes. 21/27
  • Introduction Background Results Mechanisms Conclusions NJR-HES Sample Table : PCTs that contain Independent Sector Providers and estimated privately funded hip procedures 2007/08 to 2010/11 PCTs with ISPs No of hip reps on private sites ISTCs AQPs All NHS-funded Est pr pay NJR HES NJR & HES 2007/8 14 31 18,387 4,222 14,165 2008/9 19 48 22,198 6,794 15,404 2009/10 20 60 21,511 7,830 13,681 2010/11 22 77 22,975 11,665 11,310 Private hospitals treated more patients in 2010/11 than 2007/08. Increased numbers of NHS-funded patients compensated for falls in private pay patients. 22/27
  • Introduction Background Results Mechanisms Conclusions Estimation Private pay hip replacements and ISTCs We assume that the supply of ISTC hips is determined by the ISTC contract and therefore does not respond to private pay volumes. Private pay hip operations in PCT p and nancial year t is given by: PPHipspt = α +ρISTCpatspt +γp + µt +Zpt +εpt (3) Private pay hip replacements and AQPs We assume that private hospitals strictly prefer to treat private patients over NHS-funded patients because they receive more for their care. AQPpatspt = α +σPPHipspt +γp + µt +Zpt +εpt (4) 23/27
  • Table : Fixed eects estimates of the impact of ISP introduction on number of admittances for elective hip replacements per PCT of treatment Priv Funded Ops AQP NHS Ops NHS Trust Ops (1) (2) (3) (4) (5) (6) HES ISTC hips -0.155 -0.149 -0.147** -0.144** (0.0995) (0.0958) (0.0628) (0.0618) Est private pay hips -0.664*** -0.338*** (0.141) (0.0842) HES AQP hips -0.0749 -0.207* (0.0653) (0.109) Sample All Balanced All Balanced All Balanced PCT & Year FE Yes Yes Yes Yes Yes Yes Age Composition Yes Yes Yes Yes Yes Yes Observations 515 484 515 484 532 520 R-squared 0.112 0.165 0.664 0.484 0.043 0.052 Number of PCTs 135 121 135 121 136 130 Notes: *** denotes signicance at 1%, ** at 5%, and * at 10% level. Observations are at the PCT year level. Strong evidence of substitution between private pay and AQP procedures, but not between private pay and ISTC procedures. Small negative eects of ISTC and AQP procedures on NHS trust procedure numbers
  • Introduction Background Results Mechanisms Conclusions Summary Number of NHS-funded hip replacements increased by 40% between 2003/04 and 2010/11, with ISPs accounting for almost two-thirds of the rise. Hip replacements increased faster in areas that were closer to an ISP than the nearest NHS trust. Fixed eects and matching estimates suggest that this was consistent with a demand response. Data on private pay patients from the NJR indicates strong evidence of substitution between private pay and NHS-funded AQP procedures. Consistent with private hospitals treating NHS patients to help compensate for a decline in demand from private patients. Increases in ISTC and AQP procedures tend to reduce procedures conducted by NHS trusts. 25/27
  • Introduction Background Results Mechanisms Conclusions Implications 1 For patients ISPs contributed two-thirds of the total increase in hip replacements, contributing a substantive increase in supply. Patients beneted more in areas located nearer to an ISP than the nearest trust. 2 For ISPs ISTC sites provided an unambiguous increase in revenue, as there is not much evidence of substitution For AQPs, NHS-funded patients have compensated for falls in demand from private patients. In the long run could ISPs crowd out private pay patients? 3 For NHS trusts. There is some evidence that ISP operations led to a fall in NHS trust operations. Unclear what this means for NHS trust nances, given likely substitution to other activity. 26/27
  • Introduction Background Results Mechanisms Conclusions Future Work Add data from 2011/12 and 2012/13. Patient level data from the National Joint Registry (removing the need to estimate private pay patients). Use the presence of existing health care facilities as an instrument for ISP location. More theoretical and empirical work separating the supply of health care from demand for health care. 27/27