A Review and Synthesis of the Cost and Benefits of Health Facilities Regulation in the U.S.
- Presenter:
Chair: Joel Hay; Discussant: TBA Tue June 6, 2006 15:30-17:00 Room 225
Rationale: No one previously has developed a comprehensive estimate of the costs and benefits of health facilities regulation.
Objectives: The central objective of this paper is to develop a comprehensive estimate of the costs and benefits of health facilities regulation derived by summing the results of fine-grained cost estimates in 18 different domains of health facilities regulation; a companion objective is to identify domains of health facilities regulation in which regulation currently appears not to be cost-effective.
Methodology: A formal literature search was conducted for each separate domain of health facilities regulation, including regulations focused on access to care (e.g., EMTALA), cost control (e.g., certificate of need) and quality (e.g., nursing home accreditation and licensure. For each domain, a synthetic estimate of regulatory costs is obtained using a standardized procedure that systematically assembles evidence from the literature regarding government regulatory costs (such as monitoring and enforcement costs) and compliance costs (including both industry costs and patient time losses), and indirect costs such as costs associated with health losses (morbidity and mortality losses, all monetized using a common value of statistical life year) or increases in uninsured risk (monetized using a standardized estimate of the external cost of being uninsured and the monetized value of the increased mortality risk faced by the uninsured). Corresponding monetized estimates of benefits were developed based on empirical evidence of benefits derived from the literature, including efficiency gains, quality improvements or reductions in uninsured risk. Lower and upper bound estimates were derived using minimum and maximum parameter estimates for the various components used to calculate regulatory costs.
Results: The preliminary base case result for the cost of health facilities regulation in the U.S. is $47.7 billion (2002 $); the minimum estimate is $23.7 billion and the upper bound estimate is $277.6 billion. [final estimates updated to 2004 $ to be available in early February]
Conclusions: The domains of health facilities regulation having the highest net cost include hospital accreditation/licensure, hospital uncompensated care pools and Clinical Laboratory Improvement Act (CLIA). These areas warrant closer examination to determine how regulatory objectives might be achieved more cost-effectively.
