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How is patient care at local community hospitals affected by the ever-changing structure of medical markets? Ryan Mutter, a doctoral student in Public Policy, is applying the principles of health economics and the analytic techniques of applied econometrics to study the effects of hospital consolidations and other changes in hospital markets.

Hospitals represent 31 percent of the $1.6 trillion spent on health care in the United States in 2002. Changes in payment structures have contributed to a spate of hospital consolidations numbering in the hundreds, explains Mutter. The Federal Trade Commission (FTC) lost all seven hospital antitrust cases it brought during the mid- to late-1990s, but it has recently refocused its attention on the issue. Mutter is studying the effects of hospital competition and consolidation on the cost and quality of care. Some of his preliminary results were presented at an FTC hearing on May 28, 2003.

Mutter’s dissertation measures the effects of competition on 38 measures of quality in 22 states. His findings show that in the most competitive environments, hospitals generally perform well in measures that are visible and understood by patients and/or which are a reflection of physician skill (e.g., mortality for stroke). Greater competition is associated with lower quality in measures that are difficult for patients to observe and/or which reflect hospital infrastructure and the performance of non-physician staff (e.g., development of bed sores).

“Hospitals are forced to compete for patients and doctors and to be included in health insurance networks—they want good doctors and repeat patients, but when they can cut costs, they do,” says Mutter. In other work with colleagues at the Agency for Healthcare Research and Quality (AHRQ), Mutter has found that more competitive markets are associated with higher hospital costs.

Mutter has published preliminary work related to his dissertation in the International Journal of Health Care Finance and Economics. He and two other health economists were interviewed in the September 13, 2004 issue of the trade journal, Modern Healthcare.

Mutter’s mentor is Marsha Goldfarb, professor of Economics. “She is my dream advisor,” says Mutter. She also supervised his master’s thesis on racial variation in the treatment of heart disease patients, and she encouraged him to apply for an internship at AHRQ where he now works.

“I got the job at AHRQ because of my UMBC master’s degree in economic policy analysis,” says Mutter. “In addition to some very good theory courses, the professors also taught us how to work with real-world data, program using the statistical packages favored by the government and industry, and how to address real-life problems. When I came to AHRQ, I was able to hit the ground running because of the preparation UMBC gave me.”

Mutter earned his bachelor’s degree in economics from William and Mary. He first became interested in applied economics when he took Goldfarb’s health economics class. “I was struck by how the theoretical tools of economics could be applied to tackle real-world questions and give guidance that could actually help people,” explains Mutter.

Mutter expects to graduate with his Ph.D. in Public Policy with a concentration in economics in 2004.