Linking Quality and Cost: An Analysis of the Hospital Quality Information Initiatives Measures [MPRO]
Research Projects – Health
The Health Section Research Team is pleased to make available this research report which explores the return on investment for health providers that implement certain quality programs. The study was conducted by MPRO, Michigan’s Quality Improvement Organization, which collected data from a number of health providers based in Michigan.
The Project Oversight Group, which oversees completion of the quality-related research projects includes:
- Curtis Lee Robbins, Chair
- Jane Jensen
- Karl Madrecki
- Guy Marszalek
- John Stark
- Steve Siegel, SOA Staff Actuary
Actuarial Perspective on Quality Research
To provide some perspective on value of this report and the role of health actuaries in research on quality issues, John Stark, a Project Oversight Group Member, has the written the following overview:
- Quality in medical care has become one of the hottest topics for health insurers, providers, and the general public. Measuring quality initiatives is a daunting task at best since so many variables are involved and the sample sizes can be small. Also, it is virtually impossible to show causality so the best outcome is to show correlation. Finally, some of the standard actuarial techniques may not apply since they are based on broad averages that span a variety of conditions while quality initiatives focus on a limited number of diseases.
- Health actuaries need to be involved in not only estimating the cost savings of these initiatives but also in their design and in setting up procedures to monitor the results. This will ensure that the effects of the initiatives are consistent in pricing, reserving, and forecasting. In addition, with health care costs increasing at an alarming rate, it is imperative that health insurers show the value of these initiatives to the publics that they serve. In the same vein, if an initiative is not working or has outlived its usefulness, it should be dropped or replaced.
- Today’s health actuary probably feels that his or her job is in a state of flux. On the one hand, actuaries are being asked to perform the traditional tasks of pricing and reserving more accurately and at finer levels. On the other, health actuaries are getting involved in more non-traditional areas such as medical management. This type of work requires new tools and more emphasis on the clinical aspect of health insurance.
- To help develop some new tools that touch on quality initiatives that are important to health actuaries, the SOA contracted with MPRO to perform the following study to expose health actuaries to an important and growing area of practice. Another oucome of the project is to expose actuaries to applications in other areas that can be used by themselves or to augment studies using standard actuarial techniques.
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