UCLA

Maximizing health outcomes, minimizing costs, and optimizing equitable access to care are fundamental goals of health systems and the policies that influence those systems. To facilitate these goals, it is essential to investigate economic features of the health system. Specific factors can be critically important to improving outcomes and efficiency, such as evaluating the economic and clinical value of a certain therapy. On the other hand, expansive features, such as cost, charge, and payment trends during pandemics, are also essential to examine. Many of these economic issues are potentially responsive to substantive policies or small nudges that can help a health system reach its goals. This dissertation combines three empirical analyses that apply novel methods or data sources to examine economic features of the US health system. As evidenced by the recent pandemic, numerous healthcare players are essential to ensuring the global population can survive disease outbreaks. On an ongoing basis, hospitals, physicians, biotech manufacturers, and insurers help to develop and bring to market technologies that prolong life, reduce pain and suffering, and shorten hospital stays, among other contributions. The essential role of the healthcare sector is accompanied by ongoing media and political spotlights. Accordingly, healthcare affordability and effectiveness are recurrent hot topics that pit various stakeholders against one another. Companies engaged in healthcare services and products must navigate the volatile political landscape to ensure compliance and maximize profitability under the regulatory constraints. Industry also interacts with stakeholders and policymakers in efforts to influence legislation and regulation. The study of healthcare markets and the industry’s relations with the government is perpetually central to safeguarding innovation of and patient access to technologies. These studies are complicated by the healthcare sector’s major deviations from ordinary markets. Previous research has extensively studied topics related to healthcare policy and economics. This three-part dissertation contributes to the literature by examining the effects of the novel coronavirus disease (COVID-19) pandemic on hospital costs and charges, analyzing the impact of remdesivir on hospital economics related to COVID-19 admissions, and investigating price bargaining within the pharmaceutical supply chain. The first paper provides descriptive statistics and applies additive modeling techniques to study the impact of the pandemic-induced demand for ICU care on ICU costs and charges in the United States. The 2010-2020 Healthcare Cost Report Information System (HCRIS) Cost Reports were used to evaluate direct medical costs and charges associated with an ICU stay. The study is focused on the changes occurring in 2020, the year when COVID-19 was declared a pandemic and hospital providers began seeing a surge in patients. Factors associated with changes in charges were analyzed with a statistical model approach based on a generalized additive model (GAM). Additionally, annual trends in costs and charges were examined. Descriptive statistics on ICU charges and costs were presented, showing that ICU charges per day increased at a faster pace (6.6%) than ICU costs per day (0.2%) between 2019-2020, on average. Mean ICU charges per day in 2020 were $45 more than what the GAM predicted. In the descriptive statistics, other factors evaluated included ownership type, critical care management (CCM) beds, outpatient revenue, full-time employees, and competition. The second paper is also concerned with economics of the COVID-19 pandemic. It investigated how the use of a specific pharmaceutical therapy, remdesivir, affected hospital economics during the pandemic. The study was designed as a retrospective claims study that compared inpatient charges, payments, and length of stay and ICU charges during the COVID-19 pandemic with and without remdesivir use. Data from the Medicare 100% Inpatient Limited Data Set Standard Analytic Files (SAF) were analyzed using the stability-controlled quasi-experiment (SCQE) approach. In addition, descriptive statistics on inpatient and ICU charges, payments, and length of stay were presented. Inpatient charges, payments, length of stay, and ICU charges tended to increase from April-June 2020, then decrease through November in 2020. If we are willing to assume inpatient charges would not have been decreasing by more than $32,900 without the use the remdesivir, then remdesivir use may have significantly decreased hospital inpatient charges among Medicare FFS patients between April-December 2020. The third study focuses on bargaining between payers and manufacturers for price concessions in the pharmaceutical supply chain. Policies that aim to reduce pharmaceutical expenditures are often focused on manufacturer pricing; however, the complex supply chain may play a larger role in actual costs to payers and beneficiaries. Using a novel and proprietary database, average sales prices (purchase prices) for therapies was compared to wholesale acquisition costs (list prices) to estimate trends in direct and indirect renumeration (DIR) from 2005-2022 among physician-administered drugs as measures of bargaining strengths. Changes in DIR by therapeutic class, manufacturer characteristics, and competition factors are described. Trends in DIR were also analyzed using Joinpoint regression analysis. The mean price concession percent increased from about 36% in 2005 to 47% in 2022, representing a simple growth rate of 30% between the 18 years and an average annual growth rate of 2%. Price concessions among branded drugs tended to increase alongside measures of decreased manufacturer market power, including facing generic competition, being one of few therapies in a therapeutic class, and being a manufacturer with relatively few therapies. Together, these studies address key issues dealing with the interrelationship among healthcare providers, biotechnology manufacturers, payers, policymakers, public policy, and population health. They consider how technologies and providers work within the framework of the US regulatory and reimbursement system and introduce novel ways of examining key economic outcomes, including costs, charges, and payments.