The Value of Children's Hospitals-Are Increased Costs Justified by Improved Outcomes or Driven by Internal and External Economic Forces?

Aim 1: Evaluate the quality of care at NCH versus CH for 11 commonly performed surgical procedures for children. Hypothesis: For common surgical procedures, quality outcomes at CH and NCH are not statistically different from one another. Aim 2: Evaluate private insurance payments at NCH versus CH for 11 commonly performed surgical procedures for children. Hypothesis 2a: For common surgical procedures, CH will receive higher payments than NCH. Hypothesis 2b: After controlling for patient, hospital, and market structure characteristics, payment for care at CH and the payment differential between CH and NCH are lower in areas with higher CH density. Our empirical analysis will first test for any quality (Aim 1) or price (Aim 2) differentials among CH and NCH, after controlling for a rich set of controls for patient and hospital characteristics, as well as hospital and insurer market structure. We will then examine the sources of any such differentials, with particular interest in the role of hospital market structure and competition on quality and payment differentials. Collectively, our aims will directly assess the value of children’s surgical care at CH compared to NCH in terms of outcomes and payments for 11 common surgical procedures. This will be the first project to our knowledge to directly assess the value of children’s surgical care using actual payments for 25% of privately insured children in the U.S. To do so, we have assembled a team of experts including a content expert in children’s surgical care with experience in risk-adjusted hospital-level outcome comparison (Raval), a methodologic expert in measurement and evaluation of competition in healthcare markets (McCarthy), and a healthcare administrator with expertise in healthcare costs, quality, and access as well as healthcare delivery innovation (Sanfilippo). The results will provide important and policy-relevant information as to any quality and payment differentials between CH and NCH, and the extent to which any payment differentials are explained by improved quality as well as healthcare market structure.