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Econometrics

System membership involves the inclusion of patients into a hospital database where they are subscribed to certain services in exchange for a fee. The arrangement is slightly different from independent hospitals where patients get treatment and pay immediately for the services. By highlighting the discussions presented by Kristin Madison in the article Multihospital System Membership and Patient Treatments, Expenditures and Outcomes, it can be established that acquiring a system membership has a proportional effect on the outcome of the services. Such an approach equally involves lower costs and expenditure. In the current paper, the responses to the research questions will seek to establish the effects that system membership may have on patient treatment, expenditures as well as outcomes.

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Part 1: Acute Myocardial Infarction

The author accesses the impacts of system membership by using AMI patients as the main point of focus for observation. The transfers, catheterization, angioplasties, and bypass surgeries performed on the patients are treated as the dependent variables. The patient’s traits and the fixed effects of the hospitals are used as the independent variables for the study. The observation comprises 90 days where the rate of mortality and patient expenditures is monitored. The author justifies the choice to use the AMI patients by noting that the approach is relatively cost effective as certain variables can be monitored within the same period. In addition, she notes that it is easier to monitor and hence identify the relative growth in procedure use in AMI patients compared to other medical situations (Madison, 2004). Furthermore, the approach gives a clear indication of the improvement of system protocols for inter-hospital transfers. Therefore, it gives more room for inter-hospital integration. The author’s main justification is the fact that the AMI approach encourages coordination and transfer of information. 

The econometric issue, which can be deduced from the case, is the aspect of cost reduction despite high-quality health services. The studies indicated an improvement in patient survival rate as a direct effect of introduction into system membership. Since it happened at a relatively lower cost, the approach is considerably economical. However, the inter-hospital transfer of information, which leads to greater interaction between staff members, may easily lead to a breach of confidentiality, especially on patient information. Besides, the high rate of coordination alters the process of decision making, for instance on inter-hospital transfers which may lead to longer periods taken on making decisions which may affect the quality of services offered. Therefore, the approach may be characterized by ethical challenges which need the necessary adjustments for effectiveness.

Part 2: Use of Fixed Effects in the OLS approach.

The author uses the ordinary linear squares method in a bid to estimate the unknown parameters. The main goal is to minimize the variations in the observed responses of the patients to inclusion into the system membership. The OLS approach was used to examine transfer rates, rates of treatment, expenditure as well as mortality rates. The regression includes two fixed effects which include the year fixed effects and the hospital fixed effects. Such effects are essential in addressing certain methodological problems hence their inclusion into the regression (Bazzoli, 2001). The procedure rates have increased greatly due to advancements in technology. On the other hand, the mortality rates have decreased due to the quality of services offered. When a regression lacks a time fixed effects, the formation of a particular system in later years may be projected to have had more positive effects on the outcome than it had in a real sense. The year fixed effects, therefore, enhance precise results when monitoring the effects of a system on the outcome. In addition, the inclusion of the hospital fixed effects plays a crucial role in controlling the unchanging attributes of a hospital and the market area. Such a strategy is important since it prevents the presentation of misleading correlations.

Part 3: Impacts of Fixed Effects on Results

It is possible to establish the insignificant results in comparison to other data sources which can be attributed to lack of fixed effects in the regression. Consequently, fixed effects play a key role in the minimizing misleading correlations as projected by the outcome of the regression. The information obtained from the conducted analysis is vital in making the necessary adjustments to improve the system efficiency. Consequently, it is equally important to ensure that the elements included in a regression lead to outcomes that are statistically efficient.

To know the advantages of using fixed effects, it would be important to identify the fixed elements within the regression and their effects on the outcome. For instance, on time fixed effects, it would be vital to establish the rate of cardiac procedures in a given year and compare the trend for a given period within the fixed year. In addition, it would be important to establish the fixed characteristics of a hospital like its location and the projected impact of the fixed effect on the patient outcome. The regression can then be run for two procedures, the first one being without the fixed effects and the second regression involving the inclusion of the fixed effects. The precision of the outcome and reliability of the information, when compared to data from other sources, would determine whether using fixed effects is a good approach.

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Part 4: Argument on the main findings of the paper

From the author’s discussion, it is evident that participating in system membership has led to a decline in mortality rates, especially among the rural patients. She argues  that the relatively low outcome, experienced in the urban hospitals, is an indication that the services may not be the only function which determines the outcome. She accesses this by extending the core regression to include service offerings. The outcome of the regression suggests that service offerings have an impact on various approaches to patient care. However, system participation still has an independent effect on the outcome. The author reveals the possibility of selection based on performance by highlighting the aspect of catheterization. However, she remains clear on the argument that the patient’s selection of a system is not solely tied to the performance of the system but an inclusion of other factors as well. For instance, despite the better performance concerning service delivery in urban centers, there is more likely to be a higher rate of patient transfer. Patient transfers may lead to inconsistent outcomes due to variations in the systems hence the projection of incorrect correlations (Bazzoli, 2000). The system in urban centers depends on catheterization while the rural patients are taken through angioplasty. The former is associated with higher transfer levels, procedures, expenditures and lower mortality rates while the latter is characterized by the lower level of transfers hence more advantageous. The comparison of the rural and urban settings offers the observer a clearer picture of the trend in the outcomes and how the outcomes are affected by location.

An integrated and truly coordinated system goes a long way in enhancing positive impacts on the outcome. The discussion above reveals that system membership has a direct impact on patient outcomes, expenditure, and treatment. In comparison to the other manual approaches, the system membership approach is quite economical. It can be emphasized by the results analysis of AMI patients (Alexander, 1988). The outcomes from the regressions indicate a decline in mortality rates, a decrease in patient transfers, and an increase in the rates of patient survival. Therefore, participating in system membership can be considered an economical way of getting high-quality services.