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Economic analyses can provide valuable information for health care decision makers. Systematic reviews of economic analyses can integrate information from multiple studies and provide important insights by systematically examining how differences between models lead to different results. We use our experience in developing and implementing systematic reviews of economic analyses for the U.S. Preventive Services T ask Force, particularly our systematic review of the cost-effectiveness of colorectal cancer screening, to illustrate key methodologic challenges and suggest a framework for other researchers in this area. [ABSTRACT FROM AUTHOR]

Purpose: There are few data on the effects of disease biology and competing mortality on the effectiveness of screening women for breast cancer after age 65 years. The authors performed a review to determine the costs and benefits of mammography screening after age 65 years.Data Sources: Cost-effectiveness articles published between January 1989 and March 2002.Study Selection: Studies were identified by using MEDLINE and the National Health Service Economic Evaluation Database. The authors included research on screening after age 65 years conducted from a societal or government perspective; reviews and analyses of other technologies were excluded.Data Synthesis: 115 studies were identified and 10 met inclusion criteria. One study modeled age-dependent assumptions of disease biology. No study fully captured the potential harms of screening, including anxiety associated with false-positive results, overdiagnosis, and previous knowledge of cancer or living longer with the consequences of treatment. Studies differed in the specific strategies compared and in analytic approaches. On average, extending biennial screening to age 75 or 80 years was estimated to cost 34 000 dollars to 88 000 dollars (2002 U.S. dollars) per life-year gained, compared with stopping screening at age 65 years. Two studies suggested that it was more cost-effective to target healthy women than those with several competing risks for death.Conclusions: Current estimates suggest that biennial breast cancer screening after age 65 years reduces mortality at reasonable costs for women without clinically significant comorbid conditions. More data are needed on disease biology and preferences for benefits and harms in older women. [ABSTRACT FROM AUTHOR]

This article focuses on the cost-effectiveness of strategies to prevent type 2 diabetes. A large study showed that two different methods can prevent or delay the development of diabetes in people with prediabetes. The first method is an intensive diet and exercise program for weight loss. The other is a small daily dosage of a diabetes medication called metformin. Because many Americans have prediabetes, using 1 of these prevention methods in all people who might benefit would be expensive. However, caring for diabetes and its complications is also expensive. It is important to know whether the costs of diabetes prevention are worth the potential benefits.

To estimate the fraction of United States (U.S.) adults who are eligible for treatment to reduce elevated low-density lipoprotein (LDL) cholesterol levels based on Adult Treatment Panel II (ATP II) guidelines and the percent reduction in LDL cholesterol required by those who qualify for treatment, we analyzed data on 7,423 respondents to Phase 2 of the third National Health and Nutrition Examination Survey (NHANES III) administered between 1991 and 1994. Approximately 28% of the U.S. adult population aged > or = 20 years is eligible for treatment based on ATP II guidelines. Eighty-two percent of adults with coronary heart disease are not at their target LDL cholesterol level of 100 mg/dl. Of those eligible for treatment, 65% report that they receive no treatment. Overall, 40% of people who qualify for drug therapy require an LDL cholesterol reduction of > 30% to meet their ATP II treatment goal. Approximately 75% of those with coronary heart disease who qualify for drug therapy require an LDL cholesterol reduction of >30%. Although elevated LDL cholesterol levels can be treated, prevalence rates in the U.S. adult population remain high. Several recent studies indicate that a considerable percentage of people treated with drug therapy do not reach their treatment goals. The findings in this study provide at least a partial explanation for why many patients receiving therapy do not reach their treatment goals: they require a larger reduction in LDL cholesterol than many therapies can provide. [ABSTRACT FROM AUTHOR]

Aims: To estimate the cost of diabetes complications in the United States (U.S.)., Methods: We constructed longitudinal panel data using one of the largest claims databases in the U.S. for privately insured Type 1 (T1DM) and type 2 (T2DM) diabetes patients with a follow-up time of one to ten years. Complication costs were estimated both in years of the first occurrence and in subsequent years, using individual fixed-effects models. All costs were in 2016 dollars., Results: 47,166 people with T1DM and 608,237 with T2DM were included in our study. Aside from organ transplants, which were rare, the estimated average costs for the top three most costly conditions in the first vs. subsequent years were: end stage renal disease ($73,534 vs. $97,431 for T1DM; $94,231 vs. $98,981 for T2DM), congestive heart failure ($41,681 vs. $14,855 for T1DM; $31,202 vs. $7062 for T2DM), and myocardial infarction ($40,899 vs. $9496 for T1DM; $45,251 vs. $8572 for T2DM). For both diabetes types, retinopathy and neuropathy tend to have the lowest cost estimates., Conclusions: Our study provides the latest and most comprehensive cost estimates for a broad set of diabetes complications needed to evaluate the long-term cost-effectiveness of interventions for preventing and managing diabetes., (Copyright © 2020 Elsevier Inc. All rights reserved.)

The National Diabetes Prevention Program lifestyle change program demonstrated health benefits and potential for health care cost-savings. For many states, employers, and insurers, there is a strong business case for paying for type 2 diabetes prevention, which will likely result in medical and nonmedical cost-savings as well as improved quality of life after a few years. Using an iterative feedback process with multiple stakeholders, the Centers for Disease Control and Prevention developed the Diabetes Prevention Impact Tool kit, https://nccd.cdc.gov/toolkit/diabetesimpact, which forecasts the cost impact the lifestyle change program can have for states, employers, and health insurers. We conducted key informant interviews and a qualitative analysis to evaluate the tool kit. We found that end users recognized its utility for decision making. They valued the detail of the tool kit's underlying calculations and appreciated the option of either using the default settings or revising assumptions based on their own data. The Diabetes Prevention Impact Tool kit can be a helpful tool for organizations that wish to forecast the economic costs and benefits of implementing or covering the National Diabetes Prevention Program lifestyle change program.

Despite the promise of incentive-based chronic disease prevention programs, comprehensive evidence on their accessibility among low-income populations remains limited. We adapted Aday and Andersen's framework to examine accessibility and consumer satisfaction within the Medicaid Incentives for the Prevention of Chronic Disease (MIPCD) cross-site demonstration. MIPCD provided 10 states with 5-year grants to implement incentivized chronic disease prevention and management programs for low-income and/or disabled-Medicaid enrolled-Americans. We conducted 36 focus group discussions between July 2014 and December 2015 with Medicaid enrollees participating in the MIPCD programs. We assessed participants' satisfaction by program type (i.e., diabetes prevention, diabetes management, hypertension reduction, smoking cessation, and weight management) related to three components: program enrollment and participation, staff courtesy, and program convenience. Based on Aday and Andersen's framework, we conducted thematic analysis to determine similarities and differences across MIPCD programs by type. Participant feedback confirmed the importance of several features of the Aday and Andersen framework, particularly programs with easy enrollment and participation procedures, courteous and helpful staff, and those that are convenient and flexible for participants. Participants valued programming around the clock via telephone and flexible, in-person hours of operation as well as proximity of the program to reliable transportation. We observed that most participants, despite enrollment and participation barriers, perceived programs as accessible and were willing to engage and continue to participate. This finding may reflect behavior change theory's perspective on personal readiness to change. Individuals in the preparation stage of change can effectively change health habits despite barriers they may encounter. In some cases, personal readiness to change was more impactful than consumer satisfaction at encouraging ongoing participation and perceived access to the programs. Thus, program developers may want to consider individual participant readiness to change and its impact on consumer satisfaction when designing, implementing, and evaluating behavior change initiatives.

Objective: To demonstrate rolling entry matching (REM), a new statistical method, for comparison group selection in the context of staggered nonuniform participant entry in nonrandomized interventions., Study Setting: Four Health Care Innovation Award (HCIA) interventions between 2012 and 2016., Study Design: Center for Medicare and Medicaid Innovation HCIA participants entering these interventions over time were matched with nonparticipants who exhibited a similar pattern of health care use and expenditures during each participant's baseline period., Data Extraction Methods: Medicare fee-for-service claims data were used to identify nonparticipating, fee-for-service beneficiaries as a potential comparison group and conduct REM., Principal Findings: Rolling entry matching achieved conventionally-accepted levels of balance on observed characteristics between participants and nonparticipants. The method overcame difficulties associated with a small number of intervention entrants., Conclusions: In nonrandomized interventions, valid inference regarding intervention effects relies on the suitability of the comparison group to act as the counterfactual case for the intervention group. When participants enter over time, comparison group selection is complicated. Rolling entry matching is a possible solution for comparison group selection in rolling entry interventions that is particularly useful with small sample sizes and merits further investigation in a variety of contexts., (© Health Research and Educational Trust.)

Purpose: Evaluate the Centers for Medicare & Medicaid Incentives for Prevention of Chronic Diseases (MIPCD) program in terms of participant satisfaction and self-reported program impact., Design: Participant survey (mail/telephone follow-up), English and Spanish (N = 2274)., Settings: Ten states in MIPCD program., Participants: Medicaid beneficiaries., Intervention: Incentive-based health promotion programs targeting diabetes prevention and management, smoking cessation, and weight, hypertension, and cholesterol management., Measures: Dependent measures are (1) overall program satisfaction and (2) self-reported program impact, operationalized as whether program helped with understanding health issues, learning ways to take care of health, and encouraging healthy lifestyle changes., Analysis: Multilevel multivariable ordinal logistic regression models to identify predictors of overall program satisfaction and program impact., Results: Sixty-seven percent were very satisfied with the program, and 76% strongly agreed the program encouraged healthy lifestyle changes. Age (59+ vs <45 years) and being female predicted overall program satisfaction. Satisfaction with specific aspects of the program including communication with staff, accessibility, and incentives predicted higher overall satisfaction. Age (45-52 vs <45 years) and being black or Hispanic predicted higher program impact. Points redeemable for rewards performed worse than money-valued incentives in terms of encouraging lifestyle changes (odds ratio [OR], 0.30; 95% confidence interval [CI], 0.11-0.82). Participants receiving incentives valued at $25 to <$100 were more likely to report higher agreement that the program helped them learn ways to care for their health (OR, 1.72; 95% CI, 1.21-2.44) and encouraged lifestyle changes (OR, 1.46; 95% CI, 1.02-2.10), compared to participants receiving incentives valued at $0 to <$25. Incentives valued at $100 to <$400 predicted higher agreement that the program helped with understanding of health issues (OR, 1.62; 95% CI, 1.13-2.33), compared to incentives valued at $0 to <$25., Conclusion: Effective chronic disease prevention programs are needed for Medicaid populations. Study findings highlight important considerations for incentive-based programs.

Objective: To test the effectiveness of financial incentives for smoking cessation in the Medicaid population., Data Sources: Secondary data from the Medicaid Incentives for Prevention of Chronic Disease (MIPCD) program and Medicaid claims/encounter data from 2010 to 2015 for five states., Study Design: Beneficiaries were randomized into receipt or no receipt of financial incentives. We ran multivariate regression models testing the impact of financial incentives on the use of counseling services, smoking behavior, and Medicaid expenditures and utilization., Data Extraction: Participating states provided Medicaid eligibility, claims and encounters, program enrollment, and incentivized service use data., Principal Findings: Participants who received incentives were more likely to call the Quitline and complete counseling sessions. Incentive receipt was positively associated with self-reported quit attempts, self-reported quits, or passing cotinine tests of smoking cessation in most programs, although results were only statistically significant in a subset. There was no systematic evidence that incentives affected health care use or spending., Conclusions: Financial incentives are a promising policy lever to motivate behavioral change in the Medicaid population, but more evidence is needed regarding optimal incentive size, effectiveness of process-versus outcome-based incentives, targeting of incentives, and long-run cost-effectiveness., (© Health Research and Educational Trust.)

Background and Aims: Effective strategies are needed to address dramatic increases in hepatitis C virus (HCV) infection among people who inject drugs (PWID) in rural settings of the United States. We determined the required scale-up of HCV treatment with or without scale-up of HCV prevention interventions to achieve a 90% reduction in HCV chronic prevalence or incidence by 2025 and 2030 in a rural US setting., Design: An ordinary differential equation model of HCV transmission calibrated to HCV epidemiological data obtained primarily from an HIV outbreak investigation in Indiana., Setting: Scott County, Indiana (population 24 181), USA, a rural setting with negligible baseline interventions, increasing HCV epidemic since 2010, and 55.3% chronic HCV prevalence among PWID in 2015., Participants: PWID., Measurements: Required annual HCV treatments per 1000 PWID (and initial annual percentage of infections treated) to achieve a 90% reduction in HCV chronic prevalence or incidence by 2025/30, either with or without scaling-up syringe service programmes (SSPs) and medication-assisted treatment (MAT) to 50% coverage. Sensitivity analyses considered whether this impact could be achieved without re-treatment of re-infections, and whether greater intervention scale-up was required due to the increasing epidemic in this setting., Findings: To achieve a 90% reduction in incidence and prevalence by 2030, without MAT and SSP scale-up, 159 per 1000 PWID (initially 24.9% of infected PWID) need to be HCV-treated annually. However, with MAT and SSP scaled-up, treatment rates are halved (89 per 1000 annually or 14.5%). To reach the same target by 2025 with MAT and SSP scaled-up, 121 per 1000 PWID (19.9%) need treatment annually. These treatment requirements are threefold higher than if the epidemic was stable, and the impact targets are unattainable without retreatment., Conclusions: Combined scale-up of hepatitis C virus treatment and prevention interventions is needed to decrease the increasing burden of hepatitis C virus incidence and prevalence in rural Indiana, USA, by 90% by 2025/30., (© 2017 Society for the Study of Addiction.)

Objective: Newer medications offer more options for glycemic control in type 2 diabetes. However, they come at considerable costs. We undertook a health economic analysis to better understand the value of adding two newer medications (exenatide and sitagliptin) as second-line therapy to glycemic control strategies for patients with new-onset diabetes., Research Design and Methods: We performed a cost-effectiveness analysis for the U.S. population aged 25-64. A lifetime analytic horizon and health care system perspective were used. Costs and quality-adjusted life years (QALYs) were discounted at 3% annually, and costs are presented in 2008 U.S. dollars. We compared three glycemic control strategies: 1) glyburide as a second-line agent, 2) exenatide as a second-line agent, and 3) sitagliptin as a second-line agent. Outcome measures included QALYs gained, incremental costs, and the incremental cost-effectiveness ratio associated with each strategy., Results: Exenatide and sitagliptin conferred 0.09 and 0.12 additional QALYs, respectively, relative to glyburide as second-line therapy. In base case analysis, exenatide was dominated (cost more and provided fewer QALYs than the next most expensive option), and sitagliptin was associated with an incremental cost-effectiveness ratio of 169,572 dollars per QALY saved. Results were sensitive to assumptions regarding medication costs, side effect duration, and side effect-associated disutilities., Conclusions: Exenatide and sitagliptin may confer substantial costs to health care systems. Demonstrated gains in quality and/or quantity of life are necessary for these agents to provide economic value to patients and health care systems.

Purpose: To perform a systematic review of the cost-effectiveness of colorectal cancer screening for the U.S. Preventive Services Task Force., Data Sources: MEDLINE and the British National Health Service Economic Evaluation Database, January 1993 through September 2001., Study Selection: Original economic evaluations of colorectal cancer screening in average-risk patients were reviewed. The authors sought studies addressing the incremental cost-effectiveness of different screening strategies compared with no screening, of different screening strategies compared with one another, and of different ages of screening initiation and cessation. Two investigators independently reviewed each abstract, and potentially eligible articles were retrieved. A four-member working group reached consensus regarding final inclusion or exclusion of articles., Data Extraction: One reviewer extracted data into evidence tables. The results were checked by other members and discrepancies resolved by consensus., Data Synthesis: Among 180 potential articles identified, 7 were retained in the final analysis. Compared with no screening, cost-effectiveness ratios for screening with any of the commonly considered methods were generally between 10, 000 dollars and 25, 000 dollars per life-year saved. No one strategy was consistently found to be the most effective or to have the best incremental cost-effectiveness ratio. Currently available models provided insufficient evidence to determine optimal starting and stopping ages for screening., Conclusions: Screening for colorectal cancer appears cost-effective compared with no screening, but a single optimal strategy cannot be determined from the currently available data. Additional data regarding adherence with screening over time, complication rates in real-world settings, and colorectal cancer biology are needed. Additional analyses are necessary to determine optimal ages of initiation and cessation.

Objective: To project the number of people with diagnosed diabetes in the U.S. through 2050, accounting for changing demography and diabetes prevalence rates., Research Design and Methods: We combined age-, sex-, and race-specific diagnosed diabetes prevalence rates-predicted from 1980-1998 trends in prevalence data from the National Health Interview Survey-with Bureau of Census population demographic projections. Sensitivity analyses were performed by varying both prevalence rate and population projections., Results: The number of Americans with diagnosed diabetes is projected to increase 165%, from 11 million in 2000 (prevalence of 4.0%) to 29 million in 2050 (prevalence of 7.2%). The largest percent increase in diagnosed diabetes will be among those aged > or =75 years (+271% in women and +437% in men). The fastest growing ethnic group with diagnosed diabetes is expected to be black males (+363% from 2000-2050), with black females (+217%), white males (+148%), and white females (+107%) following. Of the projected 18 million increase in the number of cases of diabetes in 2050, 37% are due to changes in demographic composition, 27% are due to population growth, and 36% are due to increasing prevalence rates., Conclusions: If recent trends in diabetes prevalence rates continue linearly over the next 50 years, future changes in the size and demographic characteristics of the U.S. population will lead to dramatic increases in the number of Americans with diagnosed diabetes.

CMS has recently launched a series of initiatives to control Medicare spending on durable medical equipment (DME) and prosthetics, orthotics, and supplies (DMEPOS). An important question is how these initiatives will affect beneficiary satisfaction. Using survey data, we analyze Medicare beneficiary satisfaction with DMEPOS suppliers in two Florida counties. Our results show that beneficiaries are currently highly satisfied with their DMEPOS suppliers. Beneficiary satisfaction is positively related to rapid delivery, training, dependability, and frequency of service. Results of our analysis can be used as baseline estimates in evaluating CMS initiatives to reduce Medicare payments for DMEPOS.

As medical technology continues to expand and the cost of using all effective clinical services exceeds available resources, decisions about health care delivery may increasingly rely on assessing the cost-effectiveness of medical services. Cost-effectiveness is particularly relevant for decisions about how to implement preventive services, because these decisions typically represent major investments in the future health of large populations. As such, decisions regarding the implementation of preventive services frequently involve, implicitly if not explicitly, consideration of costs. Cost-effectiveness analysis summarizes the expected benefits, harms, and costs of alternative strategies to improve health and has become an important tool for explicitly incorporating economic considerations into clinical decision making. Acknowledging the usefulness of this tool, the third U.S. Preventive Services Task Force (USPSTF) has initiated a process for systematically reviewing cost-effectiveness analyses as an aid in making recommendations about clinical preventive services. In this paper, we provide an overview and examples of roles for using cost-effectiveness analyses to inform preventive services recommendations, discuss limitations of cost-effectiveness data in shaping evidence-based preventive health care policies, outline the USPSTF approach to using cost-effectiveness analyses, and discuss the methods the USPSTF is developing to assess the quality and results of cost-effectiveness studies. While this paper focuses on clinical preventive services (i.e., screening, counseling, immunizations, and chemoprevention), the framework we have developed should be broadly portable to other health care services.

Objective: To assess whether the covariates that explain expectations of nursing home entry are consistent with the characteristics of those who enter nursing homes., Data Sources: Waves 1 and 2 of the Assets and Health Dynamics Among the Oldest Old (AHEAD) survey., Study Design: We model expectations about nursing home entry as a function of expectations about leaving a bequest, living at least ten years, health condition, and other observed characteristics. We use an instrumental variables and generalized least squares (IV-GLS) method based on Hausman and Taylor (1981) to obtain more efficient estimates than fixed effects, without the restrictive assumptions of random effects., Principal Findings: Expectations about nursing home entry are reasonably close to the actual probability of nursing home entry. Most of the variables that affect actual entry also have significant effects on expectations about entry. Medicaid subsidies for nursing home care may have little effect on expectations about nursing home entry; individuals in the lowest asset quartile, who are most likely to receive these subsidies, report probabilities not significantly different from those in other quartiles. Application of the IV-GLS approach is supported by a series of specification tests., Conclusions: We find that expectations about future nursing home entry are consistent with the characteristics of actual entrants. Underestimation of risk of nursing home entry as a reason for low levels of long-term care insurance is not supported by this analysis.

The purpose of this study is to estimate the level of healthcare use and costs incurred by postmenopausal women overall and for these selected conditions: cardiovascular disease, osteoporosis, breast cancer, and gynecological cancers. National healthcare survey and discharge data were used to estimate healthcare use by women aged 45 and older. Clinical Classification for Health Policy Research (CCHPR) codes were used to identify patients whose primary diagnosis or procedure corresponded with the selected conditions. National weights were used to estimate resource use. Treatment costs were estimated using cost/charge ratios or the Medicare fee schedule to calculate costs for each individual procedure. Estimated total annual medical care treatment costs for women 45 and older were about $186 billion in 1997 dollars, including about $60.4 billion for cardiovascular disease, $12.9 billion for osteoporosis, and $5.0 billion for breast and gynecological cancers. For each condition, estimated resource use and costs are reported for hospitalization, outpatient, nursing home, and home healthcare services. Resource use and costs are also reported by age and expected source of payment. The economic burden of disease for conditions commonly affecting postmenopausal women is substantial. Prior research establishes that hormone replacement therapy (HRT) may be effective in reducing the burden of disease among women who continue preventive therapy for many years, but few at-risk women do so. New alternatives for prevention, such as selective estrogen receptor modulators (SERMs), may be effective in reducing the burden of disease among postmenopausal women.

Objective: Pramipexole was recently approved in the US for treatment of the symptoms of idiopathic Parkinson's disease (PD). Although pramipexole has been found to be safe and efficacious when compared with placebo, little data are yet available on its cost effectiveness when compared with baseline treatment. The aim of this study was to estimate the costs and cost effectiveness (cost utility) of pramipexole compared with baseline treatment in patients with early and advanced PD., Design and Setting: We developed a cost-effectiveness (CE) model in the US setting that linked Unified Parkinson's Disease Rating Scale (UPDRS) Part II (activities of daily life) and III (motor) scores to disease progression, costs and patient utility. Data for the model were obtained from clinical trials, a literature review and a survey of 193 patients' health resource use and utility. We used cost and quality-adjusted life-year (QALY) estimates from the model to estimate the incremental cost effectiveness of pramipexole relative to baseline treatment patterns. We performed separate analyses for patients with early and advanced PD. We also performed extensive sensitivity analyses by adding other dopamine agonists to the no-pramipexole treatment regimen and varying disease progression parameters. The study was conducted from the societal perspective, although data presentation allows interpretation of cost effectiveness from either the societal or payer perspective., Main Outcome Measures and Results: For patients with both early and advanced PD, treatment with pramipexole had higher costs but was more effective than baseline treatment. For patients with early onset of PD, the incremental total CE ratio for pramipexole was $US8837/QALY. For patients with advanced PD, the incremental CE ratio was $US12 294/QALY (1997 costs). These ratios were lower than the CE ratios of many widely used medical treatments., Conclusions: Subject to the inherent limitations of modelling chronic disease progression and subsequent healthcare costs and patient utility, the results suggested that pramipexole was a cost effective treatment for patients with early and advanced PD in the US.

The purpose of Medicare's Demonstration of Competitive Bidding for Clinical Laboratory Services is to determine whether competitive bidding can be used to provide quality laboratory services at prices below current Medicare reimbursement rates. Here, we present key features of the preliminary design for the demonstration. The following areas are covered: scope of the demonstration, bidding process, selection of winners, reimbursement, quality, and administration and monitoring. The role of the Health Care Financing Administration's Laboratory Technical Advisory Committee is also described, and the future of competitive bidding in a Medicare managed care environment is evaluated. We close with some brief comments on how to succeed in competitive bidding for Medicare services.

Competitive bidding to derive Medicare fees promises several advantages over administered fee systems. The authors show how incentives for cost savings, quality, and access can be incorporated into bidding schemes, and they report on a study of the clinical laboratory industry conducted in preparation for a bidding demonstration. The laboratory industry is marked by variable concentration across geographic markets and, among firms themselves, by social and economic heterogeneity. The authors conclude that these conditions can be accommodated by available bidding design options and by careful selection of bidding markets.

Using a pooled, cross-sectional time-series analysis, this study examines the relationship of financial performance of short-term, inpatient psychiatric hospitals to ownership and system affiliation. After controlling for market variables, case mix, the number of services, and bed size, the results indicate that for-profit psychiatric hospitals had higher revenues per adjusted discharge, higher expenses per adjusted discharge, and higher profitability compared to not-for-profit hospitals. System affiliated psychiatric facilities had lower revenues per adjusted discharge, lower expenses per adjusted discharge, and lower profitability than freestanding facilities.

This paper proposes two tests of the hypothesis that not-for-profit hospitals (NFPs) behave differently than for-profit hospitals. The profit variability test states that the profits of an NFP will be less variable over time than profits of a for-profit hospital if the NFP maximizes utility subject to a profit constraint. The second test examines whether NFP profits respond less to change in exogenous factors, such as Medicare reimbursement rates, than profits of for-profit hospitals. Both tests, performed on panel data from 1983 to 1988, support the hypothesis that NFPs behave differently than for-profit hospitals.

Patients learn something when they visit a physician for the first time. Primary care physicians may exploit this information by using a two-part pricing strategy to price discriminate between new and established patients. The price of established patient visits will exceed marginal cost; because physicians maximize their profits from the entire relationship with a patient, competition drives new patient prices below marginal cost. Empirical tests indicate that general and family practitioners and obstetricians and gynecologists charge higher mark-ups on established patient visits than on new patient visits. Internists charge similar mark-ups on both types of visit.