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Disruptive Innovation and Public Policy Reforms in Health Care: Disruptive Innovation and Public Policy Reforms in Health Care:

Disruptive Innovation and Public Policy Reforms in Health Care: - PowerPoint Presentation

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Disruptive Innovation and Public Policy Reforms in Health Care: - PPT Presentation

The Cases of Laparoscopic Appendectomy and Cholecystectomy D Pulane Lucas MBA PhD dlucasreynoldsedu Friday April 1 2016 Reynolds 10 th Annual Faculty Symposium 1 Introduction ID: 759198

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Slide1

Disruptive Innovation and Public Policy Reforms in Health Care: The Cases of Laparoscopic Appendectomy and CholecystectomyD. Pulane Lucas, MBA, PhDdlucas@reynolds.eduFriday, April 1, 2016

Reynolds 10th Annual Faculty Symposium

1

Slide2

Introduction Context Purpose of Study Theoretical Framework MethodologyData Analysis Results Discussion Conclusion

Overview of Presentation

2

Slide3

List of Abbreviations

ALACAmbulatory Laparoscopic Appendectomy and CholecystectomyALCAmbulatory Laparoscopic CholecystectomyALAAmbulatory Laparoscopic Appendectomy ACGHAcute Care General HospitalASCAmbulatory Surgery CenterCBSACore-Based Statistical AreaCMSCenters for Medicare and Medicaid ServicesHOPDHospital Outpatient DepartmentOPDOutpatient DepartmentOPPSOutpatient Prospective Payment SystemPPSProspective Payment System

3

Slide4

Introduction

Advances in medical technologyIncreasing competition in the hospital industryRegulation vs. competitionNeed for new theoretical frameworks

4

Slide5

Context

Why is it important to explore the applicability of disruptive innovation theory in health care?Increasing competition in the hospital industryCompetition should improve efficiency and quality (Porter & Teisberg, 2006)Hospital industry: high costs, poor care, prevalent medical errors (Porter & Teisberg, 2006; Christensen et al., 2009)Calls for regulationDisruptive innovation theory

5

Slide6

Purpose of Study

6

To examine the effects of disruptive innovation in the health care industry

To assess the effects of disruptive innovation and public policy reforms on ambulatory laparoscopic appendectomy and

cholecystectomy

(ALAC) procedures

.

Slide7

Disruptive Innovation Theory

Sustaining innovations: high performance, expensive, expertise-intensive products and services; meet needs of most demanding customers in established firms. Disruptive innovations: lower performance products or services on key measures;

perform well on other important dimensions valued by new customers in emerging markets (Christensen et al., 2009).

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Slide8

Elements of Disruptive Innovation Theory

Source: Christensen et al., 2009: xx.

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Slide9

Methodology: Research Design

(

Babbie

, 2001; Babbie, 2005)

Non-ExperimentalPanel StudyLongitudinal (Retrospective) Repeated MeasuresUnit of Analysis: The FacilityNon-Equivalent Comparison Groups

9

Slide10

Methodology: Scope of Study

Medical Facilities: ASCs and ACGHs

Surgery Type: Appendectomy and CholecystectomySurgical Procedures: Laparoscopic Surgical Settings: AmbulatoryStates: Florida and WisconsinYears: 2004 and 2009

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Slide11

Methodology: Hypotheses

Hypothesis A: Compared to ACGHs, ASCs will experience a larger percentage increase in the number of ALC performed in 2009 compared to 2004.Hypothesis B: Compared to ACGHs, ASCs will experience a larger percentage increase in the number of ALA performed in 2009 compared to 2004.

11

Slide12

Methodology: Data and Data Sources

Intellimed International, Inc.U.S. Census Bureau

12

Slide13

Statistical Procedures

SPSS SoftwareUnivariate AnalysisBivariate AnalysisMultivariate Regression Analysis

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Slide14

Operationalization of Dependent Variable

Dependent VariableOperationalizationHypothesis A: Percent Change in Ambulatory Laparoscopic Cholecystectomy (ALC)(Total 2009 ALC – Total 2004 ALC)/ Total 2004 ALCHypothesis B: Percent Change in Ambulatory Laparoscopic Appendectomy (ALA) (Total 2009 ALA – Total 2004 ALA)/Total 2004 ALA

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Slide15

Operationalization of Independent Variable

Facility Type 0 = Ambulatory Surgery Center (ASC); 1 = Acute Care General Hospital (ACGH)

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Slide16

Sample

StateMedical FacilitiesPercentageFlorida45276%Wisconsin14224%Total594100%

A total of 75,216 laparoscopic appendectomy and cholecystectomy procedures were performed in 2004 and 2009.

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Slide17

Research Question

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How has the utilization of ALAC changed over time?

Slide18

Results: Number of Ambulatory Laparoscopic Procedures by State in 2004 and 2009

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Slide19

Research Question

How do ACGHs and ASCs differ in the utilization of ALAC?

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Slide20

Results: Multivariate Regression AnalysisMedical Facility Shift (Equation 1)

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Represents

Percentage Change in Number of ALC Procedures Performed in 2004 and 2009 = Dependent Variable

Represent coefficients

ACGH

Facility Type = Independent Variable

FLORIDA

State = control variable

POP%

CBSA population change = control variable

METRO

CBSA area classification = control variable

Represent error term

Slide21

Results: Multivariate Regression AnalysisMedical Facility Shift (Equation 2)

21

Represents

Percentage Change in Number of ALC Procedures Performed in 2004 and 2009 = Dependent Variable

Represent coefficients

ACGH

Facility Type = Independent Variable

FLORIDA

State = control variable

POP%

CBSA population change = control variable

METRO

CBSA area classification = control variable

Represent error term

Slide22

Results: Multivariate Regression AnalysisFacility Type on Percent Change in the Number of Ambulatory Laparoscopic Cholecystectomy Cases Performed in 2004 and 2009 (N = 516) (beta coefficient, beta weight, and significance level)

22

Slide23

Results: Multivariate Regression Analysis Facility Type on Percent Change in the Number of Ambulatory Laparoscopic Appendectomy Cases Performed in 2004 and 2009 ( N = 436) (beta coefficient, beta weight, and significance level)

23

Slide24

Results: Summary Hypothesis Chart (mean percent change, beta coefficient, beta weight, and significance)

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Hypothesis

Medical

Facility Shift

Average

% Change

Bivariate

Multivariate

(Model 4)

ACGH

ASC

A

Compared to ACGHs, ASCs will experience a larger percentage increase in the number of ambulatory laparoscopic

cholecystectomy

procedures performed.

203%

-64.3%

2.675**

.296

(.000)

3.176**

.351

(.000)

B

Compared to ACGHs, ASCs will experience a larger percentage increase in the number of ambulatory laparoscopic appendectomy procedures performed.

205%

-97.8%

3.026**

.339

(.000)

2.306**

.258

(.000)

Slide25

Research Question

Do study findings support disruptive innovation theory in the hospital industry?

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Slide26

Interpretation of Results: Summary of Hypotheses

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Hypothesis

Hypothesis

Supported?

Null Rejected?

A

Medical Facility Shift

Larger Percent Increase

in

ALC performed in ASC

No

No

B

Medical Facility Shift

Larger Percent Increase in ALA performed in ASC

No

No

Slide27

Discussion Question

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Medical Facility

:

Why did the medical facility shift move contrary to what was expected?

Slide28

Research Question

How have public policy reforms affected the provision of ALAC?

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Slide29

Discussion: CMS Coverage Determination

HCPCS/CPTCode Short Descriptor42225Reconstruct cleft palate42842Extensive surgery of throat42844Extensive surgery of throat43020Incision of esophagus43130Removal of esophagus pouch43280Laparoscopy, fundoplasty43510Surgical opening of stomach44970Laparoscopy, appendectomy47562Laparoscopic cholecystectomy60252Removal of thyroid63030Low back disk surgery

Appendix E: Partial List of CPT Surgical Procedure Codes Proposed for Exclusion from ASC Facility Fee Payment Because They Require an Overnight Stay, 2006

Source: CMS. (2007a). 42 CFR Parts 410, 414, 416, 419, 421, 485, and 488. [CMS-1506-P; CMS-4125-P]. Washington, D.C. Department of Health and Human Services. Available online: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/downloads/CMS1506P.pdf.

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Slide30

Discussion: CMS Coverage Determination

HCPCS/CPTCode Short Descriptor38120Laparoscopy, splenectomy43020Incision of esophagus43280Laparoscopy, fundoplasty44970Laparoscopy, appendectomy50080Removal of kidney stone59409Obstetrical care60252Removal of thyroid61720Incise skull/brain surgery62000Treat skull fracture63075Neck spine disk surgery63030Low back disk surgery

Appendix F: Partial List of Surgical Procedures Payable under the OPPS That Are Excluded From ASC Payment Because They Pose a Significant Safety Risk or Are Expected to Require an Overnight Stay, 2007

Source: CMS. (2007b). Federal Register Volume 72 Number 148 Thursday, August 2. Rules and Regulations, Pages 42470-42626. Available online: http://www.gpo.gov/fdsys/pkg/FR-2007-08-02/html/07-3490.htm

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Slide31

Ambulatory Laparoscopic Appendectomy in Florida ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Annual Number of Florida ASC and ACGH Facilities Performing Ambulatory Laparoscopic Appendectomy (2004-2009) and Annual Percent Change

Year200420052006200720082009Facility TypeASC233189214868ACGH131141142129131131Total364330356137137139ASC as a percent of total64.0%57.3%60.1%5.8%4.4%5.8%

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Slide32

Ambulatory Laparoscopic Appendectomy in Florida ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Line Chart: Annual Number of Florida ASCs and ACGHs Performing Ambulatory Laparoscopic Appendectomy Procedures, 2004-2009

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Slide33

Ambulatory Laparoscopic Appendectomy in Wisconsin ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Annual Number of Wisconsin Facilities Performing Ambulatory Laparoscopic Appendectomy (2004-2009) and Annual Percent Change

Year200420052006200720082009Facility TypeASC7610886ACGH606058606464Total676668687270ASC as a percent of total10.4%9.1%14.7%11.8%11.1%8.6%

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Slide34

Ambulatory Laparoscopic Appendectomy in Wisconsin in ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Line Chart: Annual Number of Wisconsin ASCs and ACGHs Performing Laparoscopic Appendectomy Procedures, 2004-2009

34

Slide35

Ambulatory Laparoscopic Cholecystectomy in Florida ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Annual Number of Florida Facilities Performing Ambulatory Laparoscopic Cholecystectomy (2004-2009) and Annual Percent Change

Year200420052006200720082009Facility TypeASC265233249384246ACGH164169171158155156Total429392420196197202ASC as a percent of total61.8%56.9%59.3%19.4%21.3%22.8%

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Slide36

Ambulatory Laparoscopic Cholecystectomy in Florida ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Line Chart: The Number of Florida ASCs and ACGHs Performing Ambulatory Laparoscopic Cholecystectomy Procedures, 2004-2009

36

Slide37

Ambulatory Laparoscopic Cholecystectomy in Wisconsin ASC and ACGH Facilities (State-Level)

Data Source: Intellimed, Inc.

Annual Wisconsin Totals for Laparoscopic Cholecystectomy Procedures Performed in ASCs and ACGHs, 2004-2009

Year200420052006200720082009Facility TypeASC161616171518ACGH676465646566Total838081818084ASC as a percent of total19.3%20.0%19.8%21.0%18.8%21.40%

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Slide38

Ambulatory Laparoscopic Cholecystectomy in Wisconsin (State-Level)

Data Source: Intellimed, Inc.

Line Chart: Wisconsin ASCs and ACGHs Performing Ambulatory Laparoscopic Cholecystectomy Procedures, 2004-2009

38

Slide39

Discussion: Medicare Fee-For-Service Payment RatesLaparoscopic Appendectomy and Laparoscopic Cholecystectomy for Hospital Outpatient Prospective Payment System (PPS)

YearHCPCS CodeDescriptorRelative WeightPayment RatePercent change between 2004 and 2009200444970Laparoscopy Appendectomy32.7724$1,788.0971.1%200944970Laparoscopy Appendectomy46.3238$3,060.10200447562Laparoscopic Cholecystectomy40.8064$2,226.4437.4%200947562Laparoscopic Cholecystectomy46.3238$3,060.10

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Slide40

Conclusion

The hospital industry is one of the most dynamic marketplaces in the U.S. economy. With health care spending rising and competition intensifying, new and revised theoretical frameworks are needed to understand better the interplay between advanced medical technology, organizations, and regulation.

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Questions and Discussion

Thank you for your

time.

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References

Books & ArticlesAmerican College of Surgeons. Cholecystectomy. Patient education website. Available online: http://www.facs.org/public_info/operation/cholesys.pdf.Babbie, E. (2001). The practice of social research. Belmont, CA. Thomson Wadsworth.Babbie, E. (2005). The basics of social research. Belmont, CA. Thomson Wadsworth.Baum, J. A. C., & Shipilov. (2004). Ecological approaches to organizations. In Stewart R. Clegg, Cynthia Hardy, Tom Lawrence, and Walter Nord (eds.), Handbook of Organizations Studies (2e): 55-110. London: Sage Publications. Campbell, D. T., & Stanley, J. C. (1963). Experimental and quasi-experimental designs for research. Boston, MA. Houghton Mifflin Company.Christensen, C. M., Grossman, J. H., & Hwang, J. (2009). The innovator’s prescription: A disruptive solution for health care. New York. McGraw-Hill.Danneels, E. (2004). Disruptive technology reconsidered: A critique and research agenda. Journal of Product Innovation Management, 21(4), 246-258.DiMaggio, P. J. & Powell, W. W. (2004). The iron cage revisited: Institutional isomorphism and collective rationality in organization fields. In Dobbin, F. (ed.) The New Economic Sociology, Princeton. Princeton University Press. (Chapter 4, 111-134).

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References (Continued)

Books & ArticlesEncinosa, W. E., Bernard, D. M., Steiner, C. A., & Chen, C. (2005). Use and costs of bariatric surgery and prescription weight-loss medications. Health Affairs, 24(4), 1039-1046.Govindarajan, V., Kopalle, P. K. (2006). The usefulness of measuring disruptiveness of innovations ex post in making ex ante predictions. Journal of Product Innovation Management, 23, 12-18.Hannan, M. T. & Freeman, J. (1977). The population ecology of organizations. The American Journal of Sociology, 82(5), 929-964.Hume, D. J. & Simpson, J. (2006). Acute Appendicitis. British Medical Journal, 333, 530-534.Lucas, D. P. (2014). Disruptive Transformations in Health Care: The Impact of Technological Innovation and Public Policy in the Hospital Industry. Saarbrücken, Deutschland/Germany. Lambert Academic Publishing. Lucas, D. P. (2015). Disruptive Transformations in Health Care: Technological Innovation and Public Policy Reforms in the Hospital Industry in The International Journal of Interdisciplinary Organizational Studies, Volume 9, Issue 1.

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References (Continued)

Books & ArticlesPorter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review. March/April.Porter, M.E. (1980). Competitive Strategy. New York. Free Press. Porter, M. E. & Teisberg, E. O. (2006). Redefining heath care: Creating value-based competition on results. Boston, MA. Harvard Business School Press.Rapoport, J., Chaulk, P., Kuropatwa, R., & Wright, M. (2011). Game changing or disruptive innovation: Analytical framework and background study. Institute of Health Economics. Alberta, Canada. Available online: http://www.ihe.ca/documents/2011%2002%2023%20IHE%20Disruptive%20Innovations%20Paper%20FINAL.pdf.Scott, W. R., Ruef, M., Mendel, P. J., & Caronna, C. A. (2000). Institutional change and healthcare organization. Chicago, IL. The University of Chicago Press.Tellis, G. J. (2006). Disruptive technology or visionary leadership? Journal of Product Innovation Management, 23, 34-38.Yu, D., & Hang, C. C. (2010). A reflective review of disruptive innovation theory. International Journal of Management Review, 12(4), 435-452.

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