Medicaid Market and Pediatric Patient Safety

How do market forces affect the safety of children in hospitals? A paper by Smith, et al. (HSR 2007) looks at data from Florida, New York and Wisconsin and they see if Medicaid market concentration affects quality of care for children aged 0-17.  It is important to examine Medicaid’s affect on patient safety since about 40% of all pediatric hospitalizations are charged to Medicaid.  Recent developments have lead to a variety of Medicaid programs.

Since the early 1990s, most states, with increasing flexibility granted by the federal government, have transferred Medicaid-eligible children into managed care programs as a way to improve access to preventive services and to reduce health care expenditures. Between 1991 and 2004, the proportion of Medicaid recipients enrolled in managed care plans increased from under 10 to over 60 percent.

Using data from the State Inpatient Databases (SID) and the Healthcare Cost and Utilization Project (HCUP), the authors calculate the  Herfindahl-Hirschman index (HHI) for both Medicaid-payer and hospital concentration.  The hospital data is adjusted for available technology using the ‘Saidin Index’ and DRG diagnoses are used to adjust for hospital case mix characteristics.

The authors find the following:

At the market level, patients in markets in which Medicaid payers face relatively little competition are more likely to experience a patient safety event (odds ratio [OR]=1.602), while patients in markets in which hospitals face relatively little competition are less likely to experience an adverse event (OR=0.686). At the patient-discharge and hospital levels, Medicaid characteristics are not significantly associated with the incidence of a pediatric patient safety event.

The authors do note, however, that the number of Medicaid markets with high market power is very small and not representative of most Medicaid markets.  Thus, these results may not be very generalizable.