(in)Equity in Healthcare Services: Does Insurance Type Bias Clinical Decisions?

47 Pages Posted: 24 Feb 2024

See all articles by Subhankar Saha

Subhankar Saha

Indian Institute of Management Bangalore

Sriram Thirumalai

Texas Christian University - M.J. Neeley School of Business

Sarang Sunder

Indiana University - Kelley School of Business - Department of Marketing

Date Written: February 18, 2024

Abstract

Problem Definition: Equity in care delivery is a foundational aspect of healthcare services. It calls for clinical decisions and treatment pathways that are primarily based on patient care needs, independent of any other demographic or socio-economic patient characteristics. A normative assumption in healthcare services is that procedural choices are exogenous to economic [profitability] arguments. Our study tests this fundamental assumption -- we investigate if differences in financial incentives trigger biases in clinical decision-making during inpatient care, specifically in the context of healthcare services for 65-years and older patients in the US.

Methodology/Results: The econometric analysis in our study exploits an exogenous variation introduced in 2011-12 by the Center for Medicare and Medicaid Services (CMS) via its Hospital Value-Based Purchasing (HVBP) program, with key implications for hospital reimbursements for care provided to Medicare patients. As such, our identification strategy involves a difference-in-differences analysis to estimate the difference in care provided to Medicare vs. Private Insurance patients, before and after HVBP. We utilized inpatient discharge data from acute care hospitals in Florida over the period from 2008 to 2015. Our empirical analysis reveals evidence of inequity in clinical care decisions. We find that physicians prescribed a significantly higher number of procedures, on average, to Medicare patients than patients with private insurance, pre-HVBP. Post-HVBP policy, these differences reduces significantly, pointing to clinical biases from financial reimbursements and payment policy.

Implications: Our findings carry key implications for patients, providers, and policymakers. From a patient perspective, our findings highlight the need for greater awareness and patient advocacy in care decisions. From a provider’s (hospital administrator) perspective, these findings call for renewed attention to service design and planning that empowers a `patients first’ approach to clinical care delivery. Our findings inform policy-makers of the intended and unintended consequences of public-policy instruments in healthcare.

Keywords: Process of Care, Healthcare Inequity, Insurance-based discrimination, Value-based purchasing program

Suggested Citation

Saha, Subhankar and Thirumalai, Sriram and Sunder, Sarang, (in)Equity in Healthcare Services: Does Insurance Type Bias Clinical Decisions? (February 18, 2024). Available at SSRN: https://ssrn.com/abstract=4730770 or http://dx.doi.org/10.2139/ssrn.4730770

Subhankar Saha (Contact Author)

Indian Institute of Management Bangalore ( email )

Bengaluru
Karnataka
India

Sriram Thirumalai

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States

Sarang Sunder

Indiana University - Kelley School of Business - Department of Marketing ( email )

Kelley School of Business
Bloomington, IN 47405
United States

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