The Impact of a Tiered Network on Hospital Choice

Area of Science:

• Health economics
• Healthcare management
• Health services research

Background:

• Healthcare systems increasingly utilize tiered networks to influence patient choice.
• Differential cost sharing is a common strategy within tiered networks to incentivize preferred provider selection.
• Understanding the impact of tiered networks on hospital choice is crucial for optimizing healthcare resource allocation.

Purpose of the Study:

• To evaluate the effectiveness of a three-tiered hospital network in influencing patient hospital selection for scheduled admissions.
• To quantify the impact of differential cost sharing on steering patients towards higher-tier hospitals.

Main Methods:

• Utilized patient-level claims data from Blue Cross Blue Shield of Massachusetts (BCBSMA) spanning 2009-2012.
• Employed conditional logit models to analyze the effect of the tiered network (TN) on hospital choice.
• Leveraged longitudinal variation in hospital tier assignments (44% changed tiers) for identification.

Main Results:

• The tiered network (TN) was associated with increased utilization of preferred and middle-tier hospitals for planned admissions.
• Projected shift: Nonpreferred tier admissions could decrease by 7.6 percentage points if all members were in a TN plan.
• Projected shift: Middle and preferred tier admissions could increase by 0.9 and 6.6 percentage points, respectively.

Conclusions:

• Differential cost sharing within tiered networks is an effective strategy for directing patients to preferred hospitals for planned procedures.
• Tiered networks demonstrate potential for optimizing hospital utilization and managing healthcare costs.