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Direct and Spillover Effects of Quality Disclosure Regulation: Evidence from California Hospitals

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Do quality disclosure regulations in healthcare genuinely improve patient outcomes, or are the benefits more significant for ailments they aren’t even targeting?

Image courtesy of interviewee. November 20, 2024

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This video discusses a study examining the impact of quality disclosure regulations on healthcare in California, focusing on hospitals and mortality rates for certain ailments. Over the last few decades, there has been a push for increased information transparency in the healthcare sector. The researchers aimed to assess whether these regulations, which target specific ailments, had a meaningful effect on patient outcomes.

The study analyzed changes in mortality rates for ailments directly affected by the regulations compared to those that were not. The findings indicated that improvements in treatment for disclosed ailments, like heart attacks, also benefited related conditions, such as angina, due to shared resources and treatment efforts—a phenomenon referred to as spillover effects.

Furthermore, the research highlighted a shift in consumer behavior, noting that patients began choosing hospitals based on the new, accessible quality information. This video resulted in improved market share for hospitals with better outcomes for the targeted ailments.

Significantly, the study concludes that such healthcare regulations not only enhance care for the targeted ailments but also bring broader benefits across related areas, suggesting that even limited regulatory efforts can produce extensive positive spillover effects. The implications extend beyond healthcare, with parallels identified in other industries, such as automotive and aviation, where targeted regulations can lead to improvements in unregulated areas as well. The study advocates for continued research into these spillover effects and the broader implications of regulation.

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Here are five key points from the video:

1. **Regulatory Impact on Healthcare Quality**: The study focuses on the impact of quality disclosure regulations in California's healthcare sector, highlighting that these regulations have prompted hospitals to improve quality, which has significant implications for patient outcomes, particularly mortality rates for targeted ailments.

2. **Methodology – Treatment and Control Groups**: The research design utilized a treatment and control group approach within hospitals. By comparing mortality rates of ailments affected by the disclosure regulations to those that were not targeted but were medically related, the study aimed to isolate the impact of regulatory changes.

3. **Spillover Effects**: The concept of spillover effects is central to the findings. Improvements made in the treatment of disclosed ailments benefit related non-disclosed ailments due to shared resources (such as equipment and medical staff), suggesting that regulatory focus on specific ailments can have broader positive impacts on overall healthcare quality.

4. **Consumer Demand and Information Accessibility**: The study highlights a demand-side effect where consumers are more likely to consider mortality rates and choose hospitals based on the accessible information made available by regulatory changes. This increase in consumer awareness and choice enhances competitive pressure on hospitals to improve care quality.

5. **Broader Applications of Regulatory Benefits**: The findings suggest that the benefits of targeted regulations extend beyond the initial aims, indicating potential applications in other industries (e.g., automotive, airline) where similar spillover effects could occur. This underscores the importance of effective regulatory frameworks and their capacity to provoke improvements across a wide range of areas beyond the specific targeted interventions.

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Here are key quotes extracted from the video you , capturing essential points about the impact of regulatory changes in California's healthcare environment:

1. **Regulatory Impact**: “We wanted to study whether this regulatory changes actually have any impact.”

2. **Focus on California**: “Because of data availability concerns, we focused only on the California hospitals.”

3. **Targeted Ailments**: “This regulation targeted only a few ailments... we looked at whether the mortality rates of these targeted ailments changed relative to other ailments in the same hospital, but which were not affected by these regulations.”

4. **Controlled Study Design**: “It was a really tight treatment and control group... so there’s no reason apart from like the regulation that these ailments get affected and not the other ailments in the same hospitals.”

5. **Spillover Effects**: “We theorize arise from resource and effort sharing between disclosed or, as we say in the paper, medically related ailments.”

6. **Complimentary Tasks**: “The treatment of heart attack and angina share a lot of common resources.”

7. **User Accessibility of Information**: “Prior to this regulation, there were other regulations in place... but it was given in such a complicated manner that I don’t think anyone even bothered to look at it.”

8. **Consumer Awareness**: “The market share of disclosed ailments were not sensitive to mortality rates before the disclosure regulation. However, after the disclosure regulation, they were.”

9. **Broader Implications of Regulation**: “The regulation in the healthcare industry is beneficial. It is necessary... these benefits go beyond the scope of the regulation.”

10. **Cross-Industry Findings**: “Even if you target a few select ailments, the benefits can be much wider... this is not only limited to the healthcare industry.”

11. **Other Industry Examples**: “Auto safety regulation can target only certain models of cars... even the on-time performance of international flights improved.”

12. **Future Research Directions**: “There’s a lot of scope... to look at spillover effects... other outcomes apart from those targeted by this regulation change.”

These quotes highlight the main findings and implications of the study on healthcare regulation and its broader benefits.

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Study was the healthcare

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and the corresponding regulatory environment in California.

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And we found that the quality disclosure regulations

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have been very widely adopted

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in the US over the last couple decades, right?

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There's been a lot of push over, like from the nineties to,

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you know, kind of get, especially in the healthcare sector,

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to get more information out to the public.

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So we wanted to study whether this regulatory changes

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actually have any impact.

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So, and

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because of data availability, you know, concerns,

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we focused only on the California hospitals.

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What we did is this regulation, as

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with many other regulations,

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targeted only a few ailments, right?

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So we looked at whether the mortality rates

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of these targeted ailments changed relative

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to other ailments in the same hospital,

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but which were not affected by these regulations.

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So it was a really tight treatment and control group,

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and we wanted to make sure that we controlled

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for all the hospital level factors that could be, you know,

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affecting changes, you know, techno like the technology

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or the resources adopted by a hospital.

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And over time the technology changes.

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That's why we kept it at a, within hospital level.

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So there's no reason apart from like the regulation

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that these ailments get affected

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and not the other ailments in the same hospitals.

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Spillover effects we theorize arise from resource

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and effort sharing between disclosed

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and non-disclosed ailments, which are complimentary nature,

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or as we say in the paper, medically related, right?

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There is a whole theory in accounting on multitasking

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and complimentary task settings, which is used

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to motivate our research and spillover effects.

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Okay? So medically related,

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non-disclosed ailments are essentially those ailments which

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were not directly targeted by the regulation,

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but were housed in the same medical category

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or, you know, ICD code as the disclosed ailment.

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So for example, you know, heart attack was disclosed, right?

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This lies in the cardiovascular group, right?

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The, there are many other ailments which are housed

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in the cardiovascular group.

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For example, angina, which is not disclosed,

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but the treatment of heart attack

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and angina share a lot of common resources.

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For example, following the disclosure regulation,

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let's say the hospitals

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invested more resources into improving the

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treatment of heart attacks, right?

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So they bought newer machines,

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they hired new cardiac surgeons, all of that.

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Now, that will not only benefit heart attack,

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but will also benefit, for example, angina, right?

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Because the p the treat, the patients coming in

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with angina are getting treated in the same rooms.

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They're getting treated by the same machines,

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by the same doctors, right?

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So because of this complimentary nature of the disclosed and

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Nondisclosed medically related ailments, there is a lot

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of resource and effort sharing that happens.

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And therefore, even if the hospitals have very directed,

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you know, their efforts to,

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its improving the disclosed ailments,

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the improvements will spill over

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to the medically related ailments as well.

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One of the biggest questions we had is what is the demand,

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side effect, right?

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Do consumers actually even look at this information?

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Because actually prior to this regulation,

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there were other regulations in place wherein the hospitals

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also had to disclose, you know,

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their mortality rates and stuff.

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But it was given in such a complicated manner

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that I don't think anyone even bothered to look at it.

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But CMS made this really accessible

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and easy for the public, right?

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So what we find is that in the reregulation period,

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the market shares of the disclosed ailments, which is,

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you know, looking at how many patients were admitted to

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that disclosed ailment in

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that hospital relative to the entire county.

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So the market share of disclosed ailments were not sensitive

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to mortality rates before the disclosure regulation.

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However, after the disclosure regulation, they were,

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so these findings indicate

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that there is like a demand side pressure

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or a demand side effect of quality regulation,

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and that consumers are deliberately choosing

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better quality hospitals

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because now this information is available to them.

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I think the most pertinent implication is

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that the regulation in the healthcare

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industry is beneficial.

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It is necessary, right?

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And more important than that is that these benefits go

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beyond the scope of the regulation right?

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Now, obviously it is too expensive

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and fairly impossible for any regulatory body

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to regulate all ailments, right?

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You can't, you can't ask hospitals

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to disclose mortality rates of all ailments.

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There are millions of ailments.

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But what this shows is

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that even if you target a few select ailments,

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the benefits can be much wider.

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It can spill over to other sections in the hospital.

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And we would like to think that this is not only limited

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to the healthcare industry, right?

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For example, look at the automobile industry, right?

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So auto safety regulation can target only certain models

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of cars, and as long as it's within the same company,

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the benefits are going to spill over to other cars

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because it's too expensive for hospitals

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to have like a different treatment for just this model

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of a car or for this ailment,

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and then an entirely different supply

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chain and treatment for another.

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The same applies to like the FDA industry,

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the trans, the airline industry.

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Actually, there was a study done in

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the Department of Transportation.

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What they did is they made it, mandatory

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for the airlines to report the on-time performance

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of domestic flights, right?

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All the domestic flights.

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But what they found is that even the on-time performance,

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international flights improved.

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So that's a spillover effect, right?

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So I would like to think that our study shows

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that regulation can have much broader benefits

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than its intended impact.

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I think there's a lot of scope in, you know, the healthcare,

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especially area to look at spillover effects at.

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So we had a very broad kind of spillover effect.

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We just looked at medically related ailments, right?

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Uh, but given that,

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some people might just have better data on, you know,

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patients and patient level data,

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they can look at even more granular spillover effects.

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We can look at hospitals that belong to the same system.

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You know, there are systems of hospitals

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and whether this effect is kind

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of different in those markets.

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We ourselves have another paper

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where we looked at regulation, how,

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how healthcare regulation actually affected other, so

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for example, there was another regulation in 2010,

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the A CA act, which targeted readmission rates.

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And what we found is that not only readmission rates,

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but also the continuity of care rates improved.

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So it's not just about like, for example,

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this regulation targeted mortality rates, right?

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But what else benefited?

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Maybe the length of stay changed,

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maybe patient satisfaction changed, maybe the customer,

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you know, rating of the hospital.

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The other outcomes apart from that is targeted

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by this regulation change.

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There are many types of spillover effects.

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So we focused, obviously just on mortality rates,

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but of a different ailment, right?

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Uh, other papers could look at what about other outcomes

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of the same unit, other outcomes of related ail.

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And of course, across industries, you know, the,

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the potential is limitless.

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Like I just said. It applies to the pharmaceutical industry,

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airline industry, you know, regulation is pervasive.

Impact of Quality Disclosure Regulations in California Healthcare

00:00:00 - Study was the healthcare and the corresponding regulatory environment in California. And we found that the quality disclosure regulations have been very widely adopted in the US over the last couple decades, right? There's been a lot of push over, like from the nineties to, you know, kind of get, especially in the healthcare sector, to get more information out to the public. So we wanted to study whether this regulatory changes actually have any impact.

00:00:32 - because of data availability, you know, concerns, we focused only on the California hospitals. What we did is this regulation, as with many other regulations, targeted only a few ailments, right? So we looked at whether the mortality rates of these targeted ailments changed relative to other ailments in the same hospital, but which were not affected by these regulations. So it was a really tight treatment and control group,

00:01:05 - for all the hospital level factors that could be, you know, affecting changes, you know, techno like the technology or the resources adopted by a hospital. And over time the technology changes. That's why we kept it at a, within hospital level. So there's no reason apart from like the regulation that these ailments get affected and not the other ailments in the same hospitals. Spillover effects we theorize arise from resource and effort sharing between disclosed

Spillover Effects in Healthcare Regulations

00:01:39 - or as we say in the paper, medically related, right? There is a whole theory in accounting on multitasking and complimentary task settings, which is used to motivate our research and spillover effects. Okay? So medically related, non-disclosed ailments are essentially those ailments which were not directly targeted by the regulation, but were housed in the same medical category or, you know, ICD code as the disclosed ailment.

00:02:09 - This lies in the cardiovascular group, right? The, there are many other ailments which are housed in the cardiovascular group. For example, angina, which is not disclosed, but the treatment of heart attack and angina share a lot of common resources. For example, following the disclosure regulation, let's say the hospitals invested more resources into improving the treatment of heart attacks, right? So they bought newer machines, they hired new cardiac surgeons, all of that.

00:02:41 - but will also benefit, for example, angina, right? Because the p the treat, the patients coming in with angina are getting treated in the same rooms. They're getting treated by the same machines, by the same doctors, right? So because of this complimentary nature of the disclosed and Nondisclosed medically related ailments, there is a lot of resource and effort sharing that happens. And therefore, even if the hospitals have very directed, you know, their efforts to,

Demand Effects of Healthcare Quality Disclosure Regulations

00:03:10 - the improvements will spill over to the medically related ailments as well. One of the biggest questions we had is what is the demand, side effect, right? Do consumers actually even look at this information? Because actually prior to this regulation, there were other regulations in place wherein the hospitals also had to disclose, you know, their mortality rates and stuff. But it was given in such a complicated manner that I don't think anyone even bothered to look at it. But CMS made this really accessible and easy for the public, right?

00:03:43 - the market shares of the disclosed ailments, which is, you know, looking at how many patients were admitted to that disclosed ailment in that hospital relative to the entire county. So the market share of disclosed ailments were not sensitive to mortality rates before the disclosure regulation. However, after the disclosure regulation, they were, so these findings indicate that there is like a demand side pressure or a demand side effect of quality regulation,

00:04:14 - better quality hospitals because now this information is available to them. I think the most pertinent implication is that the regulation in the healthcare industry is beneficial. It is necessary, right? And more important than that is that these benefits go beyond the scope of the regulation right? Now, obviously it is too expensive and fairly impossible for any regulatory body to regulate all ailments, right? You can't, you can't ask hospitals to disclose mortality rates of all ailments.

Broader Benefits of Targeted Regulation

00:04:43 - But what this shows is that even if you target a few select ailments, the benefits can be much wider. It can spill over to other sections in the hospital. And we would like to think that this is not only limited to the healthcare industry, right? For example, look at the automobile industry, right? So auto safety regulation can target only certain models of cars, and as long as it's within the same company, the benefits are going to spill over to other cars because it's too expensive for hospitals

00:05:16 - of a car or for this ailment, and then an entirely different supply chain and treatment for another. The same applies to like the FDA industry, the trans, the airline industry. Actually, there was a study done in the Department of Transportation. What they did is they made it, mandatory for the airlines to report the on-time performance of domestic flights, right? All the domestic flights. But what they found is that even the on-time performance, international flights improved.

00:05:45 - So I would like to think that our study shows that regulation can have much broader benefits than its intended impact. I think there's a lot of scope in, you know, the healthcare, especially area to look at spillover effects at. So we had a very broad kind of spillover effect. We just looked at medically related ailments, right? but given that, some people might just have better data on, you know, patients and patient level data, they can look at even more granular spillover effects.

Exploring Spillover Effects of Healthcare Regulations

00:06:20 - You know, there are systems of hospitals and whether this effect is kind of different in those markets. We ourselves have another paper where we looked at regulation, how, how healthcare regulation actually affected other, so for example, there was another regulation in 2010, the A CA act, which targeted readmission rates. And what we found is that not only readmission rates, but also the continuity of care rates improved. So it's not just about like, for example,

00:06:51 - But what else benefited? Maybe the length of stay changed, maybe patient satisfaction changed, maybe the customer, you know, rating of the hospital. The other outcomes apart from that is targeted by this regulation change. There are many types of spillover effects. So we focused, obviously just on mortality rates, but of a different ailment, right? other papers could look at what about other outcomes of the same unit, other outcomes of related ail. And of course, across industries, you know, the,

00:07:24 - Like I just said. It applies to the pharmaceutical industry, airline industry, you know, regulation is pervasive.

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