BUSI 629 Week 1 Discussion Board Forum 1 Example

Discussion Board Forum 1: Economic Reasoning for Health Care Managers

BUSI 629 Economic Analysis in Healthcare, Discussion Board Forum 1

Thread by [Student Name]

The clinic network, its costs and the classmates are composites; the textbook and the peer-reviewed sources cited are real.

Our network of five primary care clinics has been asked by its board to stay open until 8 p.m. on weekdays and from 8 a.m. to noon on Saturdays. Patients have asked for it for years, and our emergency department sees a steady stream of visits for sore throats, rashes and urinary infections after 5 p.m. The chief financial officer asked me a simple question: is it worth it? The economic answer is that the question is posed wrongly. Lee (2015) explains that managers should think at the margin, comparing the additional cost of one more unit of activity with the additional benefit it brings, because the total value of a program says little about whether expanding it further makes sense. Extended hours may be worth it at one clinic and not at another, and worth it on weeknights but not on Saturdays. The useful question is therefore narrower: for each clinic and each block of time, does the next hour of service produce more than it costs?

For our network, the marginal cost of evening and Saturday hours is mainly staff. Each clinic would need a physician or nurse practitioner, two medical assistants and a front desk worker for about 19 extra hours a week, at evening and weekend pay differentials, plus utilities and security. Our finance office estimated about $9,500 a week per clinic. The marginal benefit is harder to estimate, which is where research helps. It includes three pieces: revenue from visits that would not otherwise happen at our clinics, savings on emergency visits our accountable care contracts pay for, and value to patients who no longer miss work or wait days for appointments. Only the first two show up on our books, but the third matters to our mission and to patient loyalty, which affects revenue over time. Lee (2015) also stresses opportunity cost, what the same money would have bought in its next best use, and here the alternative is real: the same money could fund a care manager for chronic disease patients.

Two studies help estimate the benefit. Whittaker et al. (2016) compared 56 practices in Greater Manchester, England, that offered evening and weekend access in 2014 with 469 practices that did not, using propensity score matching and a difference-in-differences design. Practices with extended access saw a 26.4% relative reduction in patient-initiated emergency department visits for minor problems, along with a similar reduction in the cost of those visits. Jerant et al. (2012) analyzed U.S. national survey data on 30,714 adults and found that people whose usual source of care offered evening and weekend hours in two consecutive years had 10.4% lower total health care expenditures than those without such access, with no difference in mortality. Neither study is from our population, and the U.S. study is observational, but both suggest the benefit is real and concentrated in visits for minor problems.

Applying those findings, our largest clinic, which sends about 60 patients a week to the emergency department for minor problems after hours, could avoid roughly 16 such visits weekly if the English effect held, and would fill most new slots with patients who now wait days for appointments, since its daytime schedule is already booked two weeks out. Its marginal benefit, counting visit revenue and avoided emergency costs to our accountable care contracts, clearly exceeds $9,500. A second clinic is similar. The third, in a neighborhood where most patients work daytime retail hours, shows weak evening demand in our scheduling data, and its marginal benefit probably falls short.

I recommended extending hours at the two high-demand clinics, measuring after-hours emergency visits and appointment fill rates for six months, and revisiting the third clinic only if demand data change. Marginal thinking keeps a good idea from being applied everywhere just because it works somewhere.

Reply to Elena

Elena, your thread used marginal analysis to evaluate adding a second shift of phlebotomists at your hospital's outpatient lab, and you concluded the added cost exceeded the added revenue from more draws. I think your method is sound, but your benefit side may be incomplete. Lee (2015) emphasizes that economic analysis should count all the benefits and costs that matter to the decision maker, and in your case some benefits fall outside the lab's revenue. Shorter waits may mean fewer patients leaving without having blood drawn, which delays diagnoses and generates repeat visits elsewhere in the system. If your hospital holds risk contracts, earlier lab results could shorten the time to treatment for patients with chronic disease. Jerant et al. (2012) found that greater access to care outside standard hours was associated with lower total spending, partly through lower spending on prescriptions and testing, which suggests better access can reduce costs elsewhere even when it adds cost locally, a pattern that department budgets routinely miss. There may also be capacity value. If morning crowding in the lab drives some outpatients to competitors, a second shift could recover that lost volume, and the recovered visits would count as marginal benefit even though they do not show up as new demand. I would suggest recalculating your benefit using the hospital's total cost of care for lab patients, not only the lab's revenue, and adding an estimate of volume now lost to other labs, which your scheduling or referral data may reveal. Timing is worth checking too, since marginal analysis works best in small steps: a two-hour evening extension might pay where a full second shift does not. If the second shift still does not pay, you will have stronger evidence for your conclusion, and if it does, you will have found value that a department-level view hides.

Reply to Malik

Malik, your thread proposed extending hours at your pediatric practice to reduce visits to the children's emergency department, using adult studies as your evidence. Pediatric data suggest your idea is sound, with one caution. Hincapie et al. (2024) examined 52,459 nonurgent pediatric emergency visits by children from 42 primary care offices and found that offices in the lowest third of nonurgent emergency use were more likely to offer four or more evenings of extended hours and at least one day of weekend hours. They also found that offices with the highest emergency use served neighborhoods with lower Child Opportunity Index scores. That second finding matters for your marginal analysis, because extended hours may produce the largest benefit in the neighborhoods with the most need, where families face the hardest barriers to daytime visits. Lee (2015) reminds managers that the value of the next unit of service depends on who uses it, and an evening slot taken by a child who would otherwise spend four hours in an emergency waiting room is worth far more than one taken by a family who could easily have come at noon. I would suggest targeting the first extended hours to the office serving the most disadvantaged neighborhood and tracking whether its nonurgent emergency visits fall. Because the study was cross-sectional, your own before-and-after data will show whether the association holds in your practice. Costs deserve the same care: evening pediatric visits may need a nurse experienced with infants and access to after-hours imaging, which raise the marginal cost above an adult clinic's. Telephone triage that books evening slots directly could raise the benefit by steering families who would otherwise go to the emergency department toward your office instead. Measuring both sides for six months would let you decide whether to keep, expand or trim the hours.

References

Hincapie, M. R., Corbera-Hincapie, M. A., Suresh, S., Alston, K., Butler, G., Fabio, A., & Ray, K. N. (2024). Primary care enhanced access services and the association with nonurgent pediatric emergency department utilization and Child Opportunity Index. Pediatric Emergency Care, 40(9), e209-e215. https://doi.org/10.1097/PEC.0000000000003213

Jerant, A., Bertakis, K. D., Fenton, J. J., & Franks, P. (2012). Extended office hours and health care expenditures: A national study. Annals of Family Medicine, 10(5), 388-395. https://doi.org/10.1370/afm.1382

Lee, R. H. (2015). Economics for healthcare managers (3rd ed.). Health Administration Press.

Whittaker, W., Anselmi, L., Kristensen, S. R., Lau, Y. S., Bailey, S., Bower, P., Checkland, K., Elvey, R., Rothwell, K., Stokes, J., & Hodgson, D. (2016). Associations between extending access to primary care and emergency department visits: A difference-in-differences analysis. PLOS Medicine, 13(9), e1002113. https://doi.org/10.1371/journal.pmed.1002113