The authors apply a conditional choice model to simulate the results of patient and physician choices of hospitals for a specific surgical procedure in response to improvements in quality or changes in charges. The model includes all zip code areas and relevant hospitals in a large metropolitan area and estimates the impact on admissions at each hospital. It can be used to estimate both the impact of decisions by a given hospital and the potential responses of competitors, as well as the effects of selective contracting with hospitals by certain payors.

One of the most striking pieces of medical news in the 1980s revealed the connection between high blood cholesterol and a person's likelihood of developing coronary artery disease. In 1985, the National Heart, Lung, and Blood Institute of the National Institutes of Health began the National Cholesterol Education Program, whose goal was to develop a national policy for reducing serum cholesterol. However, the panel that convened to formulate recommendations for screening and treatment was instructed not to consider cost in its deliberations. As Alan Garber and Judy Wagner point out in this article, failure to include costs in the development of guidelines such as these can have "far-reaching, unanticipated effects." This point is especially relevant to the new Agency for Health care Policy and Research (AHCPR) , which was formed as part of the 1989 budget reconciliation law. One of AHCPR's express mandates is to develop condition-specific treatment guidelines for nationwide use. "If the AHCPR guidelines show the same disregard for costs" that the cholesterol guidelines showed, the authors state, "they cannot be expected to guide health dollars to their most effective use."

If a person were faced with a medical problem requiring a risky operation, it would be natural, even prudent, for that person to want to know the comparative experience with the procedure (as shown by annual volumes) and the relative success with which area hospitals perform the operation. Unfortunately, such information is often impossible for the average consumer or even the average employee benefits manager to obtain.

Various studies have shown that certain complicated procedures are volume-sensitive. That is, when hospitals perform higher volumes of the procedure, morality rates and charges decline. This relationship is said to reflect experience and economies of scale. While some argue that such quality and cost information can easily be misinterpreted, consumers deserve as much information as can be made available to help them determine where to obtain care. Unfortunately, hospitals believe that information regarding their quality and efficiency is proprietary and should not be released, and they have been quite successful at guarding hospital-specific information.

In recent years, much information has been provided to the public and to physicians about hospital quality measured in terms of patient outcomes. To examine if, before these public data releases, quality influenced the attractiveness of a hospital to referring or admitting physicians and to patients, we estimated the influences of quality, charges, ownership, and distance on the choice of hospitals for patients with seven surgical procedures and five medical diagnoses in hospitals in three geographic areas in California in 1983. Greater distance and public or proprietary ownership consistently reduced the likelihood of selection while medical school affiliation increased the likelihood of selection. For five of seven surgical procedures and two of five medical diagnoses, hospitals with poorer than expected outcomes attracted significantly fewer admissions. The reverse held for two surgical procedures and one medical diagnosis. The results suggest that quality played an important role in choices among hospitals even before explicit data were widely available.

This study used 1982-1986 data on 262 private community hospitals to evaluate the effects of selective contracting for inpatient services by California's Medicaid program. Selective contracting by Medicaid significantly reduced the rate of inflation in average costs per admission and per patient day, while slightly increasing average lengths of patient stays. Private sector contracting also reduced cost inflation rates significantly and caused small, non-significant, reductions in lengths of stays. Hospital savings in 1986 due to Medicaid selective contracting were $836 million, 7.6% of what hospital expenditures would have been in the absence of contracting.

It is plausible that distance, quality, and hospital charges all influence which hospital patients (and their referring physicians) choose. Several researchers have estimated conditional choice models that explicitly incorporate the existence of competing hospitals. To be useful for hospital administrators, health planners and insurers, however, estimates must be made for specific types of patients and include entire market areas. Data sets meeting these requirements have many combinations of hospitals and locations with zero patients. This raises computational difficulties with the linear estimation techniques used previously. In this paper, we use data on patients undergoing cardiac catheterization in several market areas to assess alternative estimation techniques. First, we estimate the conditional choice model with the two techniques used previously to transform the non-linear choice model. These involve using as a reference (1) a single hospital, or (2) the geometric mean of all the hospitals in the market. When there are many zeros, these techniques require extensive adjustments to the data which may lead to biased estimators. We then compare these results with maximum likelihood estimates. The latter results are substantively and significantly different from those using traditional techniques. More importantly, the linear estimates are much more sensitive to the proportion of zeros. We thus conclude that maximum likelihood estimates are preferable when there are many zeros.

Technology assessment can lead to the rapid application of essential diagnostic technologies and prevent the wide diffusion of marginally useful methods. In both of these ways, it can increase quality of care and decrease the cost of health care. This comprehensive monograph carefully explores methods of and barriers to diagnostic technology assessment and describes both the rationale and the guidelines for meaningful evaluation. While proposing a multi-institutional approach, it emphasizes some of the problems involved and defines a mechanism for improving the evaluation and use of medical technology and essential resources needed to enhance patient care.

Most pesticide illnesses go untreated. Many are nor serious enough to require medical attention, others are not treated because agricultural workers lack access to health care. Additional analysis of physical report of occupational injuries and illnesses in California agriculture continues to rise. Only a fraction of these reports involve pesticides. Surveys of field workers indicate that there are many more pesticide illnesses than are reported by physicians. Most survey methods can report symptoms, but cannot confirm the incidence of illness. Some studies have found seasonal depression in the blood cholinesterase of field workers, but the physiological significance of such depression is uncertain.

Clinical tests and specific antidotes are needed to treat illnesses induced by pesticides other than cholinesterase inhibitors. The clinical significance of pesticide residues in human fluids and tissue has yet to be defined. Research is needed to standardize cholinesterase testing, and to find the means to assay the enzyme independent of its activity, so that baseline tests will not be needed. Research is needed on the neurotoxic effects of organophosphate insecticides, including the use of psychological tests and evaluation with EMG and EEG.

Field workers reentry standards are based on studies of foliar induced, and extrapolation forma few evaluation of human health effects. Research is needed to see if current standards are adequate, and to evaluate the risk assessment models used in setting reentry intervals. More research is needed to develop methods and equipment which better protect the pesticide applicator.

There are few studies which suggests that pesticides cause adverse long-term health effects in human populations, including cancer and birth defects. Such research is fraught with methodological difficulties. Research is needed to evaluate the new California program which is attempting to close the date gap of tests involving experimental animals.