2004-2009

A.M., Ph.D., Applied Economics and Managerial Science The Wharton School, University of Pennsylvania, Philadelphia, PA

Concentration: Management. GPA: 3.83. Recipient of a National Research Service Award (NRSA) training grant from AHRQ. Coursework in microeconomics, econometrics, statistics, strategic management, health economics, and cost-benefit analysis.

1998-2002

A.B., magna cum laude, Health Care Policy Harvard University, Cambridge, MA

GPA: 3.6 overall, 3.74 in major. Winner of Harvard College and John Harvard Scholarships for academic excellence. Coursework included microeconomics, macroeconomics, health economics, statistics, medical sociology, public health, and medical ethics.

	Title:	Organizational Form and Niche Overlap: The Dynamics of Surgery Center Entry and Exit
	Committee:	Mark V. Pauly (Chair), Lawton R. Burns (Advisor), Guy David, Lee Fleisher, Jitendra Singh

The literature on organizational niche suggests that competition between firms that have overlapping niches tends to elevate mortality risks. Thus, firms tend to enter markets that are relatively uncrowded in order to minimize direct competition with other firms. Although the vast majority of this research has tested these ideas among a mature organizational population of generalists, there are reasons to believe that firm entry and exit patterns differ within a growing population of specialists. We apply niche overlap theory to the market for outpatient surgical procedures in order to compare the entry and exit patterns of firms in a mature population of hospitals to those of firms within a growing population of ambulatory surgery centers (ASCs). By manipulating patient-level datasets from the state of Florida, we were able to measure competition, market demand, and firm entry/exit with a high level of precision. We broke down our explanatory variables by facility type (ASC vs. hospital), and utilized Cox proportional hazard and negative binomial models to evaluate the impact of niche density on market entry/exit among ASCs and hospitals. Although hospitals tend to exit markets with high levels of ASC density, ASCs appear to be unaffected by the presence of nearby hospitals. This finding confirms the presence of asymmetric competition between these two organizational forms since specialized organizational forms representing “focused factories” are unaffected by generalist forms while generalists are hurt by the presence of competing specialists. We also find that hospitals attempt to avoid competition with ASCs while ASCs appear to seek out markets with overlapping ASCs. These results suggest that firms in growing populations tend to seek out crowded markets as they compete to occupy the most desirable market segments while firms in mature populations avoid direct competition as they compete on the basis of efficiency. Taken together, our results extend niche overlap theory to settings in which two different organizational forms compete and demonstrate that several key predictions are actually reversed in the case of these industries.

Burns L.R., Housman M.G., Booth R.E., & Koenig A. "Implant Manufacturers and Hospitals: Competing Influences over Product Choice by Orthopedic Surgeons," Health Care Management Review, January/March 2009, 34(1): 2-18. [PDF] [Pubmed]

Background: Vendors of hip and knee implants court orthopedic surgeons to adopt their products. Hospitals, which have to pay for these products, now court the same surgeons to help reduce the number of vendors and contain implant costs. Purposes: This study measures the surgeon’s perceived alignment of interests with both vendors and hospitals and gauges surgeons’ exposure and receptivity to hospital cost-containment efforts. Methodology/Approach: We surveyed all practicing orthopedists performing 12 or more implant procedures annually in Pennsylvania. The survey identified the surgeon’s preferred vendor, tenure with that vendor, use of the vendor during residency training, receipt of financial payments from the vendor, alignment of interests with both vendor and hospital stakeholders, and exposure and receptivity to hospital cost-containment efforts. Findings: Surgeons have long-standing relationships with implant vendors, but only a small proportion receive financial payments. Surgeons align most closely with the vendor’s sales representative and least closely with the hospital’s purchasing manager. Paradoxically, surgeons support hospital efforts to limit the number of vendors but report that their own choice of vendor is not constrained. The major drivers of surgeons’ alignment and stance toward cost containment are their tenure with and receipt of financial payments from the vendor. Practice Implications: Hospitals face a competitive disadvantage in capturing the attention of orthopedists, compared with implant vendors. The vendors’ advantage stems from historical, financial, and service benefits offered to surgeons. Hospital executives now seek to offer comparable benefits to surgeons.

Burns L.R., Housman M.G., & Robinson C.A. "Market Entry and Exit by Biotechnology and Medical Device Companies Funded by Venture Capital," Health Affairs, 2009, 28(1): w76-86. [PDF] [Pubmed]

Start-up companies in the biotechnology and medical device sectors are important sources of health care innovation. This paper describes the role of venture capital in supporting these companies and charts the growth in venture capital financial support. The paper then uses longitudinal data to describe market entry and exit by these companies. Similar factors are associated with entry and exit in the two sectors. Entries and exits in one sector also appear to influence entry in the other. These findings have important implications for developing innovative technologies and ensuring competitive markets in the life sciences.

Beard N., Elo K.Z., Hitt L.M., Housman M.G., & Mansfield J.G. Information Technology and Hospital Performance: An Econometric Analysis of Costs and Quality, San Jose, CA: PricewaterhouseCoopers, Global Technology Center, 2007. [PDF]

Healthcare delivery organizations face a chorus of exhortations to invest in healthcare IT. Yet authoritative studies have concluded that the lack of a substantive business case for investment in clinical systems is a key factor in organizations’ resistance to invest. Our study had two objectives: first, to assess the relationships between IT investment and other measures of hospital performance by using advanced statistical and econometric techniques; and second, to establish whether such relationships support the assertion that investment in IT by US hospitals actually enhances organizational performance. The study used data from a sample of almost 2,000 US hospitals and we relied on econometric techniques derived from studies published in peer-reviewed, academic publications during the past 10 years. These methods are more capable of exploring claims that IT investment causes economic benefit. Our multiyear data panel also allowed us to explicitly test for the effects of IT investment that take a year or more to appear in hospital performance data, an outcome that other studies have found in healthcare and other industries. Our study reveals an important and statistically significant relationship between IT capital investment and hospital cost efficiency. At levels of IT that most hospitals can aspire to reasonably quickly, our study shows evidence of real cost reductions. At lower levels of IT capital investment, however, additional IT investment seems to be associated with increased hospital operating expenses. In hospitals that have reached a threshold level, increases in IT capital investment are associated with lower hospital operating costs. For-profit hospitals generally appear to gain larger cost reductions from their investments, and they gain these benefits at lower levels of IT investment. Another noteworthy result indicates that mortality rates adjusted for risk and case mix are also affected by IT investment; hospitals that invest more in IT demonstrate lower mortality rates. Although mortality is not an ideal proxy measure for quality of care, it can highlight areas worthy of additional exploration.

Housman M.G. "The Surgeon General's First Report on Smoking," in E. Carlson-Berne (Ed.), The History of Drugs: Nicotine, Detroit, MI: Thomson Gale, 2006. [PDF]

In the following selection, the author argues that the U.S. surgeon general's report on smoking in 1964 was a turning point in the antismoking movement. In the report Surgeon General Luther Terry stated unequivocally that smoking causes cancer and other health problems. The document had a lasting and profound effect on smomking in America, causing cigarette sales to drop to a level from which they have yet to recover. He explains that three factors converged to cause this decline in sales: the influence of the surgeon general, the scientific legitimacy of the report's findings, and the widespread media campaign that accompanied the report. The author is a doctoral student at the University of Pennsylvania.

Chiang A.R., David G.R., & Housman M.G. "The Determinants of Urban Emergency Medical Services Privatization," Critical Planning, 2006, 13: 5-22. [PDF] [SSRN]

This paper undertakes an analysis of the decision to utilize public or private providers for the local provision of emergency medical services (EMS) in cities. We provide a historical overview of the EMS industry from the mid-1860s to the present day. EMS services are commonly broken into two components: first response and transport. While first response is generally kept within the purview of local fire departments, transport is maintained in-house by public agencies, contracted out to private providers, or provided by some combination of the two. The decision to employ public or private providers for EMS transport services involves a fundamental trade-off between incentives for innovation/flexibility among private providers and infrastructural advantages posed by maintaining in-house transport services. The degree to which cities value the competing advantages of each method of provision is a result of a number of city-level factors, including population, urban density, population age, health status, the likelihood of major emergency events, crime levels, the location of fire departments and trauma centers, and the strength of labor unions. This paper poses a number of hypotheses regarding how each of the above factors is likely to affect incentives to utilize public or private EMS providers. Some of these interactions are examined empirically using data on EMS contracting decisions in the 200 largest US cities. We conclude by discussing the strongest relationships between city-specific characteristics and the method of EMS provision, and identify avenues for future research in this arena.

Linkins K.W., Lucca A.M., Housman M.G., & Smith S.A. "Use of PASRR Programs to Assess Serious Mental Illness and Service Access in Nursing Homes," Psychiatric Services, March 2006, 57(3): 325-332. [PDF] [Pubmed]

OBJECTIVE: This study assessed the implementation of state Preadmission Screening and Resident Review (PASRR) programs with respect to identification of serious mental illness among nursing facility applicants and residents and access to mental health services. METHODS: A national survey was conducted with representatives from agencies that implement PASRR in all 50 states and the District of Columbia. Also, 44 states sent PASRR data for review. Four states were selected for an in-depth study; six nursing homes per state were selected and one staff member from each facility was interviewed (N=24). Medical records were reviewed for 30 to 40 residents from each facility who met criteria for potentially having a disabling serious mental illness (N=786). RESULTS: Medical records showed that 50 percent of patients at the time of admission and 68 percent of patients at the time of the record review had a psychiatric diagnosis, typically a diagnosis of depressive disorder. At the time of admission, fewer records identified individuals with a serious mental illness (9 to 20 percent) or a primary diagnosis of any psychiatric illness (5 to 12 percent). Many records indicated that in-depth, required PASRR screens were not performed. Ninety percent of the states reported that Medicaid covers only basic psychiatric consultation services, such as medication monitoring, in nursing facilities. Between 30 and 32 percent of national survey respondents also characterized access to facilities that provide mental health services as limited and of variable quality. Although all 24 nursing facilities reported providing psychiatric consultation services, access to other mental health services, such as psychosocial rehabilitation or individual counseling, varied considerably. CONCLUSIONS: Nursing facility compliance with administration and documentation of PASRR screens appears problematic. Nevertheless, there do not appear to be excessively high numbers of residents with serious mental illness, suggesting that state PASRR programs may contribute positively to the identification of people with serious mental illness. However, many nursing facility residents have some type of psychiatric illness, and PASRR legislation does not appear to have enhanced their ability to gain access to mental health services beyond standard psychiatric consultation and medication therapy.

Bovbjerg R.R., Wiener J.M., & Housman M.G. "State and Federal Roles in Health Care: Rationales for Allocating Responsibilities," in J. Holahan, A. Weil, & J.M. Wiener (Eds.), Federalism and Health Policy, Washington, DC: The Urban Institute Press, 2003. [PDF]

This chapter explains how American federalism apportions responsibility for domestic policy between federal and state governments, and sometimes localities, often in overlapping ways. Starting in colonial times, debates have simmered – or raged – about what government should have responsibility for which function. For the 200 years after the Bill of Rights, federal responsibilities grew, but the “New Federalism” of the 1990s increased reliance on states. Arguments for relying on states versus the federal government can be grounded in political philosophy. States are said to be closer to the people, for example, so that policy makers "know the territory. On the other hand, the federal government may be preferred because problems or solutions cross boundaries or because only a national policy can assure equitable distribution of services and comport with Americans' sense of national citizenship. Market principles also contribute to federalism debates. Having states in charge allows them to serve as "laboratories of democracy" and can spur inter-state competition to improve efficiency as well as useful policy innovation. But national action may be needed to avoid a "race to the bottom," especially in policies affecting income distribution. Finally, pragmatic considerations seem most important for most issues, most of the time. Citizens and policy makers ask what government performs best on a particular issue in their era. Thus, how states have exercised their enhanced authority in our New Federalism era matters a great deal. The rest of this book focuses on state policy making and implementation in health care and financing for lower-income Americans. The following chapters assess past state accomplishments, the extent to which current policies can be sustained or move forward, and options for reallocating responsibilities.

Lewis J.H., Kilgore M.L., Goldman D.P., Trimble E.L., Kaplan R., Montello M.J., Housman M.G., & Escarce J.J. "Participation of Patients 65 Years of Age or Older in Cancer Clinical Trials," Journal of Clinical Oncology, April 2003, 21(7): 1383-1389. [PDF] [Pubmed]

PURPOSE: Although 61% of new cases of cancer occur among the elderly, recent studies indicate that the elderly comprise only 25% of participants in cancer clinical trials. Further investigation into the reasons for low elderly participation is warranted. Our objective was to evaluate the participation of the elderly in clinical trials sponsored by the National Cancer Institute (NCI) and assess the impact of protocol exclusion criteria on elderly participation. PATIENTS AND METHODS: We conducted a retrospective analysis using NCI data, analyzing patient and trial characteristics for 59,300 patients enrolled onto 495 NCI-sponsored, cooperative group trials, active from 1997 through 2000. Our main outcome measure was the proportion of elderly patients enrolled onto cancer clinical trials compared with the proportion of incident cancer patients who are elderly. RESULTS: Overall, 32% of participants in phase II and III clinical trials were elderly, compared with 61% of patients with incident cancers in the United States who are elderly. The degree of under-representation was more pronounced in trials for early-stage cancers than in trials for late-stage cancers (P <.001). Furthermore, protocol exclusion criteria on the basis of organ-system abnormalities and functional status limitations were associated with lower elderly participation. We estimate that if protocol exclusions were relaxed, elderly participation in cancer trials would be 60%. CONCLUSION: The elderly are underrepresented in cancer clinical trials relative to their disease burden. Older patients are more likely to have medical histories that make them ineligible for clinical trials because of protocol exclusions. Insurance coverage for clinical trials is one step toward improvement of elderly access to clinical trials. Without a change in study design or requirements, this step may not be sufficient.

Comparative Effectiveness of Hip and Knee Implants: Orthopedists' Evaluations of Product Vendors (with Lawton R. Burns)

Background: The U.S. spent $80 billion on medical devices in 2007, a substantial proportion of which were orthopedic implants. While hip and knee implant procedures represent two of the fastest growing sources of hospital expenditures, Medicare reimbursements have not kept pace. Hospitals seek to maximize value from their device spending by standardizing their vendor purchases and negotiating lower prices. At the same time, policy-makers are funding research on the comparative clinical effectiveness of products and procedures to demonstrate and ultimately improve value from public spending. This study seeks to contribute to the evidence base by developing comparative profiles of five leading vendors for hip and knee implants on several dimensions of product performance, service, and quality, as evaluated by their orthopedic surgeon customers. Methods: We surveyed all practicing orthopedists performing twelve or more implant procedures annually in the Commonwealth of Pennsylvania. The survey identified each surgeon’s preferred hip and knee vendor as well as the factors that influenced the decision to use his/her primary vendor. We compared the surgeons’ evaluation of the five vendors on multiple performance, service, and quality dimensions using ANOVA techniques, controlling for physician characteristics, hospital characteristics, and physician-vendor ties that might influence these evaluations. Results: There are few significant differences among hip and knee implant vendors. Surgeons’ preference for a particular vendor seems to be driven by factors other than current performance, service, or quality differences. Conclusions: Our results suggest there is not a great deal of variation across hip and knee implant vendors. This finding is consistent across various dimensions of product performance, service, and quality. Hospitals appear to be justified in their efforts to implement cost-containment initiatives that are intended to standardize implant choice by using a smaller number of vendors and thereby negotiate lower implant prices.

Preference for Medical Device Implants and Surgeon-Vendor Relationships: Implications for Cost Containment (with Lawton R. Burns)

This study surveyed surgeons in one state to identify the criteria used in their choice of orthopedic implants. The most important criteria are patient outcomes, implant longevity, design/ease of use, and scientific evidence. Other important criteria include the sales representative’s service and impact on clinical areas, and the vendor’s reputation and willingness to listen to product suggestions. The study also examined what factors might shape the criteria used in implant choice. Surprisingly, the drivers of implant choice do not differ across implant vendors. Nor do physician and hospital characteristics influence physician choice. Criteria for implant choice tend to be influenced by physician-vendor relationships (vendor exposure during the physician’s training, tenure with the vendor, and receipt of financial payments) rather than product differences. Such relationships do not alter the primacy of patient outcomes, implant longevity, and scientific evidence criteria, however. The study suggests that comparative effectiveness research evidence can potentially influence the implant purchasing decisions by surgeons, even in the presence of financial relationships. The study also documents the important role played by economic relationships between vendors and physicians in the product choices made by clinicians.

Factors that Facilitate or Impede the Growth of Medical Device Firms: A Review of the Academic Literature and an Analysis of Industry Cases (with Lawton R. Burns)

The medical device industry has experienced remarkable growth over the past few decades. In fact, it is one of the only sectors to consistently demonstrate mid-to-high single digit rates of growth, which has resulted in over $165 billion in worldwide revenues in 2003. While the industry has a whole has experienced a high rate of growth across the board, there are very clear winners and losers among medical device companies. Some firms grow to become multi-billion dollar companies while others exit quickly. What factors contribute to or impede the growth and success of medical device firms? Given the high rates of entrepreneurship in the industry, what factors in particular contribute to the success of small and start-up medical device companies? This report reviews several bodies of literature and evidence to answer the question. I begin with a review of the academic literature on the topic of technology management and medical devices. Based on this review, there are two primary factors that influence the growth of medical device companies. The first relates to firm and product characteristics: the literature suggests at least ten "proficiency areas" that drive the growth and success of medical technology firms. Deficiencies and shortcomings in these areas impede product innovation capability and organizational achievement. The second factor relates to the product or the firm's market and regulatory environment. Given the high levels of competition and government intervention within the industry, much of what predicts product success lies outside of the firm. Nevertheless, there is a great deal that firms can do to position themselves in order to maximize their probability of success in the face of environmental constraints. The first part of this literature review discusses these two factors -- the internal and external factors that contribute to a medical device company's success, and how firms can address each of these critical predictors of success. The review then considers lessons from the trade literature on new start-ups, case studies of successful and unsuccessful new device firms, Wall Street analyst reports of different device sectors, and interviews with venture capitalists.

The Relationship Between IT Capital and Hospital Quality (with Lorin M. Hitt)

Many have suggested that information technology can improve health care quality but there is a lack of empirical evidence based on formal research. Our study investigated the hypothesis that hospital information technology can improve both care process and care outcome measures. We merged hospital data on demographics, information technology investment, and health care quality into a single dataset, representing approximately one half of the population of US hospitals. We went on to construct an IT investment scale and employed both simple regression and general linear model analyses to assess the nature and strength of association between reported levels of IT and care quality. Our primary findings indicate that increasing levels of hospital IT were associated with both higher process quality scores (p<0.01) and with better patient outcome metrics (p<0.01). Associations were stronger for process measures than for outcome measures and clinical IT applications had stronger associations with quality improvement than did administrative IT applications (p<0.05). While observational in nature, our results are consistent with the hypothesis that appropriate use of information technology can lead to improved compliance with recommended best practices and to improved patient care outcomes in hospital settings.

The Effect of IT Capital on Hospital Efficiency (with Lorin M. Hitt)

The academic literature on hospital information technology is relatively sparse despite its important implications for hospital management, with only limited empirical evidence linking implementation of hospital IT systems with improvements in health care quality, financial and operational performance. This study aims to corroborate the existing evidence by using a cost function estimation approach to examine the impact of IT capital investments on hospital cost efficiency. Most studies have either utilized cross-sectional analyses or small samples of convenience; instead, we analyze 1999 to 2004 data from multiple sources that describes the implementation status of 40 different software applications in US hospitals. Consistent with prior work on hospital cost efficiency, we utilize a translog cost function system (the primal and the factor share equations) to calculate the marginal product of various factor inputs in hospitals (capital, labor, materials) as well as IT capital. In this analysis we focus on a single output measure, adjusted patient days, and adjust this output for differences in the patient case mix, scope of services, and the quality of care provided by hospitals. We find that the impact of IT capital on hospital productivity follows a non-linear pattern, indicating that a certain amount of IT investment is necessary before hospitals gain efficiency benefits from that investment. We find that significant differences exist in the cost-reducing effects of different application types. Administrative applications show a shorter term positive effects, while clinical applications need significantly more time to demonstrate their impact.

The Dynamics of Physician Induced Demand: A Systemic Approach (with Jitendra V. Singh)

The provision of health care in the United States occurs in a complex system. Health insurers, hospitals, physicians, and medical manufacturers have interdependencies which necessitate examining outcomes of the health care system within a system framework. This project examines the phenomenon of physician induced demand within a framework conducive to analyzing the interdependencies among actors in a system. The results of the model suggest that physician induced demand may be a natural result of the structure of the system and relationships among the various players, rather than a conscious act on the part of physicians to inflate demand for health care services.

2007-2008

Teaching Assistant, Professor Beth Linker (American Health Policy)

This lecture course introduces students to a broad range of topics that fall under the heading of American health policy. Its main emphasis will be on the history of health care in America from the U.S. Civil War to the present day. The primary objective of the course will be to consider why the United States is one of the only industrialized nations to have a private, non-nationalized health care system. Some of the themes addressed include: private health insurance (such as Blue Cross/Blue Shield), industrial health and workmen’s compensation, the welfare state (in Europe, Canada, and the U.S.), women’s health, especially maternal and infant care programs, Medicare/Medicaid, the Clinton Health Plan of 1993, injured soldiers and the Veterans Administration.

2005-2006

Teaching Assistant, Professor Guy David (The Economics and Financing of Health Care Delivery)

This course provides an application of economic principles to the health care sector. By recognizing the importance of scarcity and incentives this course will focus on the critical economic issues in producing, delivering and financing health care. In particular, the course will analyze determinants of demand for medical care, such as health status, insurance coverage, and income; the unique role of physicians in guiding and shaping the allocation of resources in medical care markets; and competition in medical care markets, especially among hospitals. Special emphasis will be placed on the evaluation of policy instruments such as government regulation, antitrust laws, 'sin taxes' on cigarettes and alcohol, and public health systems. The course will use more advanced quantitative methods and formal economic theory; knowledge of calculus and basic microeconomics are recommended.

2005-2008

Consultant, PricewaterhouseCoopers, LLP: Developed a collaborative research project between the firm's Health Care Advisory (HCA) practice and its Health Research Institute (HRI) measuring the impact of IT implementation on hospital productivity, cost-efficiency, profitability, and quality.

	•	Analyzed time-series (1998-2004) data on U.S. hospitals (6,000+) from HIMSS Analytics, the American Hospital Association, Medicare Cost Report, and Medpar databases.
	•	Drafted written materials in support of the project that included a research methodology, project presentations, outlines, preliminary academic papers, and white papers.
	•	Managed oversight of the project while approaching potential collaborators, hiring additional personnel, and presenting the research methodology and results to major stakeholders.

2002-2004

Research Analyst II, The Lewin Group: Managed data-related activities within the Health Care Policy practice group for projects studying national PASRR requirements to screen nursing home residents, state financing for mental illness and substance abuse, and Medicaid payment accuracy measurement.

	•	Managed data-related activities for a project studying the effectiveness of national PASRR requirements, including data collection, the development of relational databases, and the performance of statistical analyses.
	•	Coordinated project activities for the Medicaid Payment Accuracy Measurement (PAM) project by communicating with the 12 participating states to organize conference calls, site visits, and quarterly reports.
	•	Conducted interviews with state Medicaid officers to create a technical guide aimed at instructing states regarding the implementation and financing of Assertive Community Treatment (ACT) programs.