Bill Prentice, ASCA chief executive officer, interviews Beth Munnich, a distinguished healthcare economist and professor at the University of Louisville. Professor Munnich has authored a number of important healthcare studies, including ASC-focused research, and she has been widely recognized and awarded for her academic achievements and publications.
Bill Prentice: 0:06
Hello and welcome to the Advancing Surgical Care Podcast brought to you by the Ambulatory Surgery Center Association, or ASCA. My name is Bill Prentice, and I'm ASCA's CEO and host of this episode. This recording is taking place on Wednesday, June 3, 2020, and on this episode of the ASC podcast, I'm very pleased to welcome Professor Beth Munnich as our guest. Beth is a distinguished healthcare economist and professor of economics at the University of Louisville. She obtained her undergraduate degree at Vassar College, has master's degrees from both the University of Chicago and the University of Notre Dame, the latter from which she also received a PhD in economics. Professor Munnich has authored a number of important healthcare studies and has been widely recognized and awarded for her academic achievements and publications. Beth has also spoken at several ASCA meetings over the years where she never fails to educate and enlighten. Beth, welcome to the Advancing Surgical Care Podcast.
Beth Munnich: 1:00
Thank you so much for having me. It's a pleasure to be talking with you today.
Bill Prentice: 1:04
As I mentioned earlier, you've authored a number of important studies in healthcare and today I'd like to talk about two that you've written that speak directly to the care provided by ambulatory surgery centers. The first paper I'm interested in is titled "Procedures Take Less Time at Ambulatory Surgery Centers, Keeping Costs Down and Ability to Meet Demand Up" and the second paper I'd like to discuss is "Returns to Specialization: Evidence from the Outpatient Surgery Market." The first question I'd like to ask is what piqued your interest in outpatient surgery in ASCs and led you to conduct this research?
Beth Munnich: 1:39
So I actually became interested in ASCs when I was working on one of my first research projects in graduate school about the nursing workforce. And I was stunned when I saw a graph of the enormous decline in the number of community hospitals in the US over the last 30 years, and I wanted to know what was driving that change and where people were getting healthcare, especially since we're not getting any healthier as a population. So I started learning about the changes in medicine that allowed patients to recover more quickly from surgery so that they didn't need to spend as long at the hospital and, in many cases, so they don't have to have a procedure done at a hospital at all. So, as you know, most surgeries in the US now are done on an outpatient basis, and that's led to enormous opportunities for growth in the outpatient surgery market and for ASCs in particular. So at that point when I was in grad school, and even now, there's very little economic research about surgery centers, so I started asking questions and trying to answer them myself and here I am.
Bill Prentice: 2:36
Well, that's great and we're glad that you've done so. Well, let's talk more about the research. So, in looking at both of these papers, did you see anything in the data that would suggest that there was any reduction in quality as a result of the higher efficiencies you saw in the ASC space?
Beth Munnich: 2:53
We didn't see any evidence of reduction in quality. And we had to be really careful about this because part of the challenge of measuring quality in ASCs relative to other settings is that ASCs on average treat healthier patients than hospitals. So for example, if we compare patient outcomes for a particular procedure in an ASC to outcomes for patients who underwent the same procedure in a hospital outpatient department, we can't necessarily rule out the fact that any difference in outcomes is because the patients in ASCs are healthier and therefore just more likely to have better outcomes because they're healthier, rather than because ASCs are providing better care. So we tried to do really careful empirical analyses. In the case of looking at surgery center quality, we used data on Medicare patients. And we found that patients who had a procedure done in an ASC were less likely to be hospitalized or visit the ER on the same day as their surgery or within a week or even a month of their surgery relative to patients who were treated in hospitals. And this comparison was for patients who underwent the same procedure by the same doctor even, in a surgery center relative to a hospital. So we didn't find any evidence of reduced quality.
Bill Prentice: 4:01
And just to add-on to that, so that was adjusting for risk?
Beth Munnich: 4:06
Yes, absolutely, it was adjusting for risk. And really we were trying to do, we're trying to do a lot in economics as we don't often have random control trials in economics. And so ideally, we would say, let's randomly assign a patient to a surgery center and one to the hospital, patients who look very similar, and see how they do after surgery. In the absence of that, what we try and do is find what we call a natural experiment, which is some sort of policy change or something large scale that happened, that changed the likelihood of a patient being treated in the surgery center, independent of that patient's decision about where to be treated. And so we adjusted for patient risk and we also kind of used one of these natural experiments to identify the effect of surgery center quality on a patient's care.
Bill Prentice: 4:48
Very interesting. Can you explain to our listeners how the higher efficiencies that you've identified can turn into better value for patients?
Beth Munnich: 4:57
Yeah, that's a great question. And first, let me step back and talk about what value means because this idea is really at the core of what we talk about in economics. So the key here is that it's not enough to talk about how much something costs or high quality something is, what we care about is how much benefit we get relative to the cost. So in other words, how much return we're getting on our investment, which you can think of in very broad terms. So if you're a patient comparing the value you would get from having a procedure done in a surgery center and the value you'd get at a hospital, you want to think about both the costs or the efficiency and the quality. So in the paper you mentioned, I looked at efficiency in terms of the amount of time a patient spends in surgery, getting prepped for surgery and then recovering from surgery before they go home. And by this metric, surgery centers tend to be quite a bit more efficient than hospitals, we find in our research. And this is important because operating room time isn't cheap and this could impact how much a patient has to pay out of pocket, and also because patients value their time. So if you look at this finding alongside the other paper you mentioned that focused on quality, having a procedure done in a surgery center brings about these additional efficiencies at comparable or better quality to hospitals. And so that leads to better value for a lot of patients because it can have a surgery done faster and more efficiently without compromising the quality of care that's received.
Bill Prentice: 6:19
Beth, in economics we're taught that most markets behave rationally. And I'm not an economist, I did take a couple of undergraduate courses, but if I offer a product of equal or greater quality to yours but at a substantially lower price, the rational reaction would be to expect that my product would get a larger share of the marketplace. Yet that's not what we see happening in outpatient surgery, where higher price providers continue to capture a very large share of the market. Is this rational market theory flawed when it comes to healthcare or is there something else going on?
Beth Munnich: 6:53
Well, I think the first thing to keep in mind here is that the key to any economic theory is the assumptions that are made in making that theory, and when we're talking about rational or competitive markets, we make a lot of assumptions. And there are a couple conditions that have to be met in order for a market to be competitive that I think are particularly relevant when we're talking about outpatient surgery markets. The first is that most patients have some form of health insurance, so they're not paying the full cost of the services they're getting. So this means that they're not going to be as sensitive to price changes because the difference in what they pay out of pocket will never be as much as the difference in the cost of service. So that's part of the answer here. And the other important piece, I think, is price transparency. So in a competitive market, consumers have to know what prices are. But as we know, as a patient, it's incredibly difficult to get information about prices, even for relatively straightforward services. Add to this the fact that patients are looking for more than just price and healthcare markets, and a lot of times I think people just pick their doctor or maybe it's a doctor they've been seeing for years, and schedule a procedure without even thinking about the fact that they have choices about where to have a procedure done. Now there are some things changing in healthcare in the US that I think will make markets more responsive to prices going forward, and will likely lead to greater growth in the surgery center market in particular. The first is that an increasing number of people have high deductible plans, so patients are paying more out of pocket than they have in the past. And so we would expect them to be more responsive to price differences between sites of care. And the other aspect is that there are new tools that are making it easier for patients to learn about prices. So Healthcare Bluebook, for example, I know you just interviewed Bill Kampine, they have some really great tools for patients to learn about prices in their healthcare market. And then some insurance companies are also working on making it easier for patients to learn about prices. So I would expect that as these tools evolve and that as we see more and more patients pay more out of pocket for services that we'll see prices respond more to competition and healthcare markets going forward.
Bill Prentice: 8:58
One follow up for you. You know, I'm familiar with the idea that when it comes to healthcare, cost doesn't equal quality, and we know that there's a perception out there amongst most healthcare consumers that if you pay more for something, you're getting something better. Well, that may be true in some markets in terms of, you know, buying a car. For example, if you buy a Cadillac versus, you know, a Kia, you might expect that you're paying more and you're getting more. But in healthcare, we know from most studies that I'm aware of that that's not true, that there is no correlation between cost and the quality of care. Can you respond to that?
Beth Munnich: 9:33
Yeah, I think that what you said about the current research really hits the nail on the head, which is that a lot of research is now finding that prices are really in a lot of markets driven by the level of consolidation in the market, the amount of bargaining power in a market, the insurance network in a particular market. And so it really doesn't seem to be correlated necessarily with the quality of care that a patient would receive.
Bill Prentice: 9:59
You know, we've been talking about operating efficiencies, value, pricing, quality. As a health economist and researcher, and I'm sure you're always looking for the next hill to climb, the next bit of research to do, where's your research heading? What are you looking to look at next?
Beth Munnich: 10:14
I think there's still a lot of questions about quality in outpatient surgery markets and how we can measure that and how we can measure relative quality between different types of settings. And so I'm always trying to think of different ways that we can think about that, different data sets that we can leverage to try and think about that. I'm also interested in how outpatient surgery markets function in general. So when a surgery center enters a market, what happens to prices? What does competition look like? And I think there's still a lot of questions about that in economic research. And then I also think, you know, we have some good evidence that surgery centers provide a really high-quality product at lower prices than hospitals, but on average treat patients who are healthier and also who are more likely to be privately insured. And so I'm also interested in we have this product that cost less and as good quality as hospitals, so how does that product get expanded to other markets that haven't traditionally been served by surgery centers? And so I'm really interested in understanding that more broadly as well.
Bill Prentice: 11:12
Well, I'm really excited to see where you go with that because, particularly in that last point, I think that's a really apt observation is that we know that when it comes to public programs like Medicare and Medicaid, the surgery center model provides a lot of efficiency and can help reduce those costs, but we need greater penetration into those marketplaces. So if your research helps to kind of crack the code on that, that would be excellent.
Well, we have time for one last question. As we record this podcast, the country is obviously still in the grips of the COVID-19 pandemic that interrupted the delivery of many healthcare services over the past couple of months, including elective surgeries. It's also resulted in a record level of unemployment that, unfortunately, is also going to result in the loss of health insurance for many Americans. So, I know this is a tough question for you, but from your position as an economist, are there any historical parallels or lessons that you're aware of that may provide some insight to what kind of recovery we can expect? You know, particularly when it comes to healthcare.
Beth Munnich: 12:15
This is really, as you know, this is unlike anything we've seen in the US, both in terms of its health and its economic toll. Typically, economists have thought of the healthcare sector as recession proof because it's somewhat insulated from the impact of economic downturns, certainly not completely insulated. As you pointed out, people lose health insurance as a result of a lot of economic downturns. But this clearly isn't the case now, it's affecting healthcare industries directly, and it's having a huge economic toll on people in terms of losing employment and losing related insurance coverage. So that said, I think broadly speaking elective surgeries are in a better position than some other segments of the healthcare market to recover from this, but the transition is going to be pretty lumpy. So we're already seeing a lot more surgeries being done as healthcare systems open up more and that will certainly continue throughout the year, with some possible setbacks due to potential COVID surges. And I think the transition of getting people back on health insurance will obviously be quite a bit longer given how huge an impact this has had on employment. And we may see people put off surgeries for a year or two until they have health insurance through an employer again. But we do also have more public insurance options now than we've had at some points in the past, for example, due to Medicaid expansion. So while some individuals may not necessarily put off surgeries, they may also have a different type of insurance for paying for those surgeries. That's also something that we have to look to. So, you know, in terms of historic parallels and lessons, I think it's really hard. We're kind of, you know, people are working on this research right now and trying to kind of estimate what's going to happen looking forward. But we're really taking pieces of information from a lot of different points in history to try and understand what the impact and what the recovery will be from this.
Bill Prentice: 14:02
That's so true and, obviously, I guess we're all going to learn as events continue to move forward over the next months and probably the next couple years. Well, Beth, listen, thank you so much for being on the podcast today.
Beth Munnich: 14:13
Thank you so much for having me. It was great talking with you.
Bill Prentice: 14:16
Well, this concludes our discussion today. I'd like to thank Professor Munnich for coming on to the Advancing Surgical Care Podcast and sharing her knowledge and insights with us. The scholarly work that she does is vitally important to fostering a greater awareness and a better understanding of the care provided by ASCs. So we're obviously very grateful for her contributions. As always, if anyone listening has thoughts or suggestions for future topics, or how we might improve these presentations, please do not hesitate to send us your thoughts and recommendations. We want to hear from you so that we can serve you better. Thanks for listening and please stay safe and stay healthy.