LDI Research Seminar- Is Blood Thicker Than Water? Cardiologist Peer Effects in the Use of Drug Eluting Stents 12_16_11

1. Since you cannot do good to all, you are to pay special attention to those who, by the accidents of time, or place, or circumstances, are brought into closer connection with you.

2. Questions Literature Empirics Conclusions Is Blood Thicker Than Water? Peer Eﬀects and Competition Among Interventional Cardiologists Marco D. Huesch Strategy, Health Sector Mgmt, Duke Fuqua School of Business Community & Family Medicine, Duke University School of Medicine Health Policy & Management, UNC Gillings School of Global Public Health USC School of Policy, Planning, and Development March 10, 2011 Huesch Is Blood Thicker Than Water?

3. Questions Literature Empirics Conclusions A little about me MBBS (Medicine and Surgery), Sydney Uni MBA, INSEAD MA (Economics), PhD (Strategy); UCLA Teaching Healthcare provider strategy Research Mostly processes, structure and interactions in health care Setting Mostly large-scale cardiovascular and cancer treatment claims data Research philosophy Health economics as a bridge between public health and clinical science Huesch Is Blood Thicker Than Water?

4. Questions Literature Empirics Conclusions Francis Moore on health economists ... Huesch Is Blood Thicker Than Water?

5. Questions Literature Empirics Conclusions Francis Moore on health economists ... “Economists should be advised to spend at least twelve months in a hospital or medical school, either as a patient or as an observer and to pass an elementary examination on this period ... ... we would [then] be spared the problem of redressing the distortions bred of unfamiliarity.” Moore, 1977: 460 Huesch Is Blood Thicker Than Water?

6. Questions Literature Empirics Conclusions ... and on bridge-building... “The surgical investigator must be a bridge tender, channeling knowledge from biological science to the patients bedside and back again. He traces his origins from both ends of the bridge, he is thus a bastard, and everyone calls him this. Those at one end of the bridge say that he is not a very good scientist, and those at the other end say he does not spend enough time in the operating room.” Moore [1958:1] in Brennan, 2002 Huesch Is Blood Thicker Than Water?

7. Questions Literature Empirics Conclusions ... and Dogbert on the value of multiple approaches Huesch Is Blood Thicker Than Water?

8. Questions Literature Empirics Conclusions Research interests across the value chain Insurer-provider selection effects Provider quality assessment Human capital dynamics Insurer retention and selection Payment policy vs. outcome and Technology Nudging vs. shoving spending measurement specificity Regulators Hospitals Providers Payors Patients ‘Fit’ between hospitals and surgeons Preferences for resource Interdependencies without strategic distribution complementarity Physician peer effects Closed vs. open organizations Huesch Is Blood Thicker Than Water?

9. Questions Literature Empirics Conclusions Executive summary 1 We know too little about adoption and abandonment of products, practices and technology, especially in the markets for medical care 2 Important, interesting but tough questions on the diffusion dynamics of coronary stents Overall, did group use influence individual use? Yes, but small effects Were solo cardiologists influenced by others? No Was group use influential when partners were at other cath labs? No Even when sharing labs, did competing cardiologists influence alters? No 3 Slight interventional cardiologist peer influences appeared to require both shared organizational and physical setting Practice variations may not easily be amenable to ‘key opinion leaders’ Fragmented industry may leave solo practitioners ‘out of the loop’ ‘Non-marketability’ of spillovers may justify more private, public investment; may support an even broader case for EHR use Huesch Is Blood Thicker Than Water?

13. Questions Literature Empirics Conclusions Impetus “Some interventional cardiologists are beginning to talk among themselves about a problem some of them think they have seen with drug coated stents.” Rich Fogoros, clinical cardiologist, weblog 9/30/2005. Huesch Is Blood Thicker Than Water?

14. Questions Literature Empirics Conclusions Questions Theme: Diffusion dynamics ⇐⇒ business dynamics Importance: Evidence-based practices. Practice variations and harmonization. Heterogeneous adoption and abandonment. Background: Mixed evidence, under-researched 1 Social influences drives adoption of technology 2 Key opinion leaders drive adoption of medical best practices 3 Information diffusion affected by industry and firm dynamics Setting: rapid abandonment of BMS stents after 2003, migration to DES stents by 2004, decreases in DES use by many physicians ahead of public info on late side-effects. Did social influences drive these dynamics? Did physician practice organization impact this? What about competition? How does this inform efforts to enhance evidence-based practice? Huesch Is Blood Thicker Than Water?

15. Questions Literature Empirics Conclusions Physician ‘peer influences’: multiple disciplinary lenses... Economics lens Sociology lens Combined lens Information spillovers Physician orientation Stochastic network Arrow, 1963 or towards ‘collectivity’ threshold models cascades Bikhchandani Arrow, 1963 Granovetter, 1978 et al, 2002 Social influences from Heterogeneous Adoption locally socially central, susceptibility to reduces others’ costs cohesive alters influence, propensity to Escarce, 1997 or risk Coleman et al, 1966; adopt, and own Burke et al, 2004, or Burke et al, 2007; ‘infectiousness’ Strang increases others’ Iyengar et al, 2011 & Tuma, 1993 productivity Chandra & Structurally equivalent Accounting for Staiger, 2007; Shoder physician rivals and contextual effects such & Lichtenberg, 2010 social status threats as marketing spends Idiosyncratic adoption Burt, 1987 or not Van den Bulte and decision Skinner & Marsden & Podolny, Lilien, 2001; Iyengar et Staiger, 2007 1990 al, 2011 Huesch Is Blood Thicker Than Water?

19. Questions Literature Empirics Conclusions ... several unanswered questions, ... Strategic ‘dummy’-ness? Observability of practices? Info non-marketability? Altruism ⇒ more Can’t see/find out ⇒ Low info spillovers ⇒ trustful cooperation? can’t imitate/learn? practice variations? Expectations of mutual Must acquire info or Strong consensus benefits among some observe for strategic Glover, 1938; Arrow, competitors Ingram & mimesis Greve, 1995, 1963; Wennberg & Roberts, 2000; Uzzi & herding Rao et al, Gittelsohn, 1973; Lancaster, 2003, but 2001, or status anxiety Phelps, 2002; Valente more competition helps Jensen, 2006 & Davis, 1999; too Bothner, 2003 Berwick, 2003 Contacts and info flow Strategic intent informs assumed Huckman, Use key opinion leaders tie formation Ryall & 2003 or inferred from Soumerai, 1998; Sorenson, 2007; Stuart network self-reports Meltzer, 2006 or just & Sorenson, 2008 so Coleman et al, 1966; C force info revelation? flow of knowledge too? & F, 2007-9 InterMountain’s pre-39 Huesch Is Blood Thicker Than Water?

23. Questions Literature Empirics Conclusions ... and unresolved, controversial empirical problems 1 Theoretical model Model in/ex-novation events, or changes in ‘continuous’ levels of use? Influences are a flow, weakly increasing stock, or flexible stock? 2 Statistical model and estimation Theory ⇒ stochastic element, or just ‘add’ to mean structure? Van den Bulte & Lilien, 1999 Joint probability distribution ⇔ theory? C & F, 2007-2009; Lyons, 2010 Estimation ⇔ assumed error covariance structure? CI’s? Lyons, 2010 3 Estimate interpretation Reflection problem Manski, 1993 Exogenous pre-treatment effects Manski, 1993; Sacerdote, 2001; Lyle, 2007 Unobserved heterogeneity McGuire et al, 2003; Armstrong, 2003 Correlated effects - non-random sorting Manski, 1993; Sacerdote, 2001 Correlated effects - common shocks Weber, 1921; Granovetter, 1978; Van den Bulte & Lilien, 2001; Lyle, 2007; Cohen-Cole & Fletcher, 2008 Huesch Is Blood Thicker Than Water?

26. Questions Literature Empirics Conclusions Major intervention treating life-threatening disease Ischemic heart disease Bypass versus stenting PCI/PTCA, BMS and DES Huesch Is Blood Thicker Than Water?

27. Questions Literature Empirics Conclusions Market-level aggregate use... Diffusion of DES Stent Innovation (Florida, 1998 - 2006, quarterly data) 20,000 FDA Approval Basel Study Out Stent/CABG substitution PTCA 15,000 DES approval Quarterly Admissions BMS decline 10,000 DES Late stent thrombosis problem 5,000 BASKET-LATE trial BMS 0 '98 Q1 '99 Q1 '00 Q1 '01 Q1 '02 Q1 '03 Q1 '04 Q1 '05 Q1 '06 Q1 '07 Q1 Individual spells Huesch Is Blood Thicker Than Water?

28. Questions Literature Empirics Conclusions ... standardized dispersion in cases ... Standardized dispersion of individual DES use Standardized dispersion of practice group DES use (Q1, 2003 - Q4, 2006; coefficient of variation in individuals' quarterly total DES cases) (Q1, 2003 - Q4, 2006; coefficient of variation in groups' quarterly total DES cases) 1.6 1.6 1.5 1.5 1.4 1.4 1.3 1.3 1.2 1.2 1.1 1.1 3 3 2 3 4 4 2 3 4 5 2 3 4 6 2 3 4 7 2 3 4 4 2 3 4 5 2 3 4 6 2 3 4 7 '0 '0 '0 '0 '0 '0 '0 '0 '0 '0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, Q Q Q Q Q Q Q Q Q Q Q1, 2003 value = 8.7 (not shown). Lowess bandwidth = .6 Quarters Q1, 2003 value = 7.2 (not shown). Lowess bandwidth = .6 Quarters Huesch Is Blood Thicker Than Water?

29. Questions Literature Empirics Conclusions ... and standardized dispersion in usage rate over time Standardized dispersion of DES rate of use at individual level Standardized dispersion of DES rate at practice group level (Q1, 2003 - Q4, 2006: coefficient of variation of individual operators' DES/PTCA ratios) (Q1, 2003 - Q4, 2006; coefficient of variation of DES/PTCA ratio) 1 1 .8 .8 .6 .6 .4 .4 .2 .2 0 0 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 3 4 5 6 7 3 4 5 6 7 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q '0 '0 '0 '0 '0 '0 '0 '0 '0 '0 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, Quarter Q Q Q Q Q Q Q Q Q Q Note: Q1, 2003 value = 8.8 (not shown). Lowess bandwidth = .6 Note: Q1, 2003 value = 7.3 (not shown). Lowess bandwidth = .6 Quarters Huesch Is Blood Thicker Than Water?

30. Questions Literature Empirics Conclusions Distribution of public information Regulators FDA Taxus FDA ACC FDA FDA ACC approves stocks changes updates comment warns on Guidelines Taxus recall labelling Guidelines on LST LST updated WSJ Media Fogoros WSJ SCAI on blogs clear on Clinical DES on LST LST Alert cutbacks ESC ACC Conf. WCC TCT Conferences notes finds clear on clear on ESC finds LST LST LST LST good long ESC term finds ACC LST CRT results ESC TCT Conf. Conf. clear on clear on notes notes LST LST LST LST JACC JACC JAMA NEJM Heart The ‘Review’ finds finds clear on on ‘off Academy Lancet notes JACC LAST LST LST label’ finds LST ‘Review’ LST JACC Circul- JACC JACC ‘Review’ ation discusses reports notes clear on LST ESC LST LST 2004 2005 2006 2007+ Huesch Is Blood Thicker Than Water?

31. American Heart Journal June 2006

32. Trends in Medicine, June 2006 Trends in Medicine, July 2006

33. Questions Literature Empirics Conclusions 36 counties, 179 practice groups, 575 group cardios, 414 solos County attenuated competition locally competing Group Group Solo Practice Practice Cardiologists partners Focal Other Competitors Cardiologist cardiologists Competitors IO data Huesch Is Blood Thicker Than Water?

34. Questions Literature Empirics Conclusions Use of DES will be positively correlated between cardio group members County attenuated competition locally competing H1 Group Group Solo Practice Practice Cardiologists partners Focal Cardiologist + Other cardiologists Competitors Competitors Huesch Is Blood Thicker Than Water?

35. Questions Literature Empirics Conclusions Solo cardios’ practice will not be correlated with anyone else County attenuated competition locally competing Group Group Solo Practice Practice Cardiologists partners H1 Focal Other Cardiologist cardiologists Competitors ~ Competitors Huesch Is Blood Thicker Than Water?

36. Questions Literature Empirics Conclusions But production is at cath labs not practice group oﬃces 6q3 Huesch Is Blood Thicker Than Water?

37. Questions Literature Empirics Conclusions Even if producing at diﬀerent sites, partner cardios’ practice will correlate County attenuated competition locally competing Group Group Solo Practice Practice Cardiologists partners H2 Focal Cardiologist + Other cardiologists Competitors different cath lab different cath lab Competitors Huesch Is Blood Thicker Than Water?

38. Questions Literature Empirics Conclusions Even if producing at same site, competitors’ practice will not correlate County attenuated competition locally competing Group Group Solo Practice Practice Cardiologists partners H3 Focal Other Competitors Cardiologist cardiologists ~ Competitors shared cath lab Huesch Is Blood Thicker Than Water?

39. Questions Literature Empirics Conclusions Statistical model and inference problems OwnUsei,p,t = α + βPartnerUsei,p−i,t−1 + γCompUsei,c−p,t−1 + δCharacteristicsi + i,p,t = α + βPartnerUsei,p−i,t−1 + γCompUsei,c−p,t−1 + δCharacteristicsi + Timet + Areai + ζi,p,t = α + βPartnerUsei,p−i,t−1 + γCompUsei,c−p,t−1 + Timet + Areai + PhysicianFEi + Selecti,p + ηi,p,t = α + βPartnerUsei,p−i,t−1 + γCompUsei,c−p,t−1 + Timet + Areai + PhysicianFEi + Selecti,p + MainHospi,t + θi,p,t Empirical problem Don’t observe variation in i’s matches with practice groups p Physician fixed effects will be ‘collinear’ with exogenous, pre-treatment effect of partners Can’t control for (likely additional) time-varying homophily at the practice group level Huesch Is Blood Thicker Than Water?

44. Questions Literature Empirics Conclusions Point diﬀerences between group and non-group PTCA physicians Selected physician characteristics Group practitioners Solo practitioners Female gender 3.1 5.8 Overseas MD or training 6.1 5.1 Last year of training 1991 1991 Training as internist 84.7 75.7 As cardiologist 78.0 69.6 As interventionalist 17.2 16.7 Trained in ‘Honor Roll’ institution 20.3 17.1 In ‘Heart Hospital’ institution 45.6 37.7 In ‘Top 25’ institution 28.3 22.5 In ‘Top 10’ institution 17.1 13.1 Staﬀ privileges, number of hospitals 2.8 2.4 Licensed outside of FL 78.6 81.9 Outside USA 1.1 2.0 Holds faculty post 0.2 0.2 Credentials in internal medicine, number 1.6 1.3 In cardiology 1.0 0.8 In interventional cardiology 0.2 0.1 Quarterly stent cases 23.3 18.5 Practice size, members 5.5 1.0 Participation, quarters 12.0 10.2 Total patients in 2003-2006 279 189 In 1998-2002 348 238 Early DES adoption in 2002 Q4 1.5 2.3 In 2003 Q1 1.7 1.3 In 2003 Q2 65.8 65.5 %, unless noted. N = 575 for group, 414 for solo. Institutional ranks as per 2007 USN&WR. Huesch Is Blood Thicker Than Water?

45. Questions Literature Empirics Conclusions Strong impact of observed physician characteristics How many DES cases did a physician perform in the quarter? Female gender -2.23∗∗∗ Staff privileges, (#) -0.25∗ (0.97) (0.10) Last year of training -0.01 Licensed outside of FL 0.87∗∗∗ (0.02) (0.15) Overseas MD or training 1.96∗∗ Outside USA 2.75∗ (0.72) (1.39) Training as internist 2.74 ∗∗∗ Solo in a multi-specialty center -1.98∗ (0.59) (0.99) As cardiologist 2.47∗∗∗ Solo in a standalone office -2.34∗∗∗ (0.51) (0.44) As interventionalist 4.17∗∗∗ Group partners (#) 0.14∗ (0.48) (0.06) Trained in ‘Honor Roll’ institution -2.18 ∗∗∗ Use of DES before FDA mktg approval 9.87∗∗∗ (0.54) (0.40) In ‘Heart Hospital’ institution 1.30∗∗ Quarterly average cath labs worked across 7.87∗∗∗ (0.45) (0.37) In ‘Top 25’ institution 1.97 ∗∗ (0.57) Credentials in internal medicine, (#) 0.58¶ Quarterly fixed effects, F -test 87∗∗∗ (0.33) In cardiology -2.91∗∗∗ Main hospital fixed effects, F -test 26∗∗∗ (0.51) In interventional cardiology 6.09∗∗∗ R2 0.35 (0.61) F -test 122∗∗∗ Holds faculty post 0.44 Obs (physician*qtrs) 10,895 (0.45) Obs (physician) 989 Pooled least squares regression on physician quarterly DES cases for all operators. Estimates (¶), (*), (**), (***) at p-values ≤ .10, .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

46. Questions Literature Empirics Conclusions DES use by group physicians: null model with physician characteristics How many DES cases did a group physician perform in the quarter? Lagged variables Model 0a Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a DES cases by partners By group competitors By solo competitors Quarterly fixed effects County operators (#) Physician covariates Yes Physician f.e. Main hospital f.e. R2 0.17 F -test 15∗∗∗ Obs (physician*qtrs) 6,815 Obs (physicians) 568 Pooled least squares (models 0-4) and physician fixed effects panel regressions (models 5-6) on quarterly DES cases of interventionalists in group practice. Estimates (*), (**), (***) at p-values ≤ .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

47. Questions Literature Empirics Conclusions Impact of partner use... How many DES cases did a group physician perform in the quarter? Lagged variables Model 0a Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a DES cases by partners 0.083∗∗∗ (0.012) By group competitors By solo competitors Quarterly fixed effects County operators (#) Physician covariates Yes Yes Physician f.e. Main hospital f.e. R2 0.17 0.24 F -test 15∗∗∗ 16∗∗∗ Obs (physician*qtrs) 6,815 5,760 Obs (physicians) 568 549 Pooled least squares (models 0-4) and physician fixed effects panel regressions (models 5-6) on quarterly DES cases of interventionalists in group practice. Estimates (*), (**), (***) at p-values ≤ .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

48. Questions Literature Empirics Conclusions ... adding impact of competitor use at county level... How many DES cases did a group physician perform in the quarter? Lagged variables Model 0a Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a DES cases by partners 0.083∗∗∗ 0.086∗∗∗ (0.012) (0.012) By group competitors -0.007∗∗ (0.002) By solo competitors -0.004∗∗∗ (0.004) Quarterly fixed effects County operators (#) Physician covariates Yes Yes Yes Physician f.e. Main hospital f.e. R2 0.17 0.24 0.24 F -test 15∗∗∗ 16∗∗∗ 16∗∗∗ Obs (physician*qtrs) 6,815 5,760 5,760 Obs (physicians) 568 549 549 Pooled least squares (models 0-4) and physician fixed effects panel regressions (models 5-6) on quarterly DES cases of interventionalists in group practice. Estimates (*), (**), (***) at p-values ≤ .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

49. Questions Literature Empirics Conclusions ... controlling for time-varying common shocks... How many DES cases did a group physician perform in the quarter? Lagged variables Model 0a Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a DES cases by partners 0.083∗∗∗ 0.086∗∗∗ 0.065∗∗∗ (0.012) (0.012) (0.014) By group competitors -0.007∗∗ -0.011∗∗∗ (0.002) (0.003) By solo competitors -0.004∗∗∗ -0.003∗∗∗ (0.004) (0.005) Quarterly fixed effects Yes County operators (#) Physician covariates Yes Yes Yes Yes Physician f.e. Main hospital f.e. R2 0.17 0.24 0.24 0.27 F -test 15∗∗∗ 16∗∗∗ 16∗∗∗ 19∗∗∗ Obs (physician*qtrs) 6,815 5,760 5,760 5,760 Obs (physicians) 568 549 549 549 Pooled least squares (models 0-4) and physician fixed effects panel regressions (models 5-6) on quarterly DES cases of interventionalists in group practice. Estimates (*), (**), (***) at p-values ≤ .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

50. Questions Literature Empirics Conclusions ... and for space-varying common shocks, potential zero-sum effects... How many DES cases did a group physician perform in the quarter? Lagged variables Model 0a Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a DES cases by partners 0.083∗∗∗ 0.086∗∗∗ 0.065∗∗∗ 0.066∗∗∗ (0.012) (0.012) (0.014) (0.014) By group competitors -0.007∗∗ -0.011∗∗∗ -0.004∗∗ (0.002) (0.003) (0.004) By solo competitors -0.004∗∗∗ -0.003∗∗∗ 0.006∗∗∗ (0.004) (0.005) (0.007) Quarterly fixed effects Yes Yes County operators (#) -0.137∗ (0.057) Physician covariates Yes Yes Yes Yes Yes Physician f.e. Main hospital f.e. R2 0.17 0.24 0.24 0.27 0.28 F -test 15∗∗∗ 16∗∗∗ 16∗∗∗ 19∗∗∗ 18∗∗∗ Obs (physician*qtrs) 6,815 5,760 5,760 5,760 5,755 Obs (physicians) 568 549 549 549 547 Pooled least squares (models 0-4) and physician fixed effects panel regressions (models 5-6) on quarterly DES cases of interventionalists in group practice. Estimates (*), (**), (***) at p-values ≤ .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

51. Questions Literature Empirics Conclusions ... switching to physician fixed effects... How many DES cases did a group physician perform in the quarter? Lagged variables Model 0a Model 1a Model 2a Model 3a Model 4a Model 5a Model 6a DES cases by partners 0.083∗∗∗ 0.086∗∗∗ 0.065∗∗∗ 0.066∗∗∗ 0.017∗ (0.012) (0.012) (0.014) (0.014) (0.007) By group competitors -0.007∗∗ -0.011∗∗∗ -0.004∗∗ -0.007∗∗ (0.002) (0.003) (0.004) (0.003) By solo competitors -0.004∗∗∗ -0.003∗∗∗ 0.006∗∗∗ -0.011∗∗ (0.004) (0.005) (0.007) (0.003) Quarterly fixed effects Yes Yes Yes County operators (#) -0.137∗ -0.163∗∗ (0.057) (0.061) Physician covariates Yes Yes Yes Yes Yes No Physician f.e. Yes Main hospital f.e. R2 0.17 0.24 0.24 0.27 0.28 0.23 F -test 15∗∗∗ 16∗∗∗ 16∗∗∗ 19∗∗∗ 18∗∗∗ 25∗∗∗ Obs (physician*qtrs) 6,815 5,760 5,760 5,760 5,755 5,785 Obs (physicians) 568 549 549 549 547 553 Pooled least squares (models 0-4) and physician fixed effects panel regressions (models 5-6) on quarterly DES cases of interventionalists in group practice. Estimates (*), (**), (***) at p-values ≤ .05, .01 and .001 with (robust standard errors clustered by physician) Huesch Is Blood Thicker Than Water?

LDI Research Seminar- Is Blood Thicker Than Water? Cardiologist Peer Effects in the Use of Drug Eluting Stents 12_16_11

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LDI Research Seminar- Is Blood Thicker Than Water? Cardiologist Peer Effects in the Use of Drug Eluting Stents 12_16_11