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In this study involving 1655 men who had been treated for localized prostate cancer, differences between prostatectomy and radiotherapy were noted in the first 5 years after treatment, but these differences tended to disappear after 15 years of follow-up. Patients with clinically localized prostate cancer have a favorable long-term overall and cancer-specific rate of survival regardless of treatment choice. 1 – 3 There are currently no completed prospective, randomized trials that evaluate differences in survival outcomes between radical prostatectomy and external-beam radiation therapy. Consequently, predicted functional outcomes have become essential components of treatment decision making. 4 , 5 Although studies with short-term follow-up (1 to 3 years) and intermediate-term follow-up (4 to 5 years) have identified incremental differences in functional outcomes between patients undergoing prostatectomy and those undergoing radiotherapy, longer-term outcomes remain largely unknown. Since the median life expectancy after treatment for prostate . . .

Based on case studies indicating that apologies from physicians to patients can promote healing, understanding, and dispute resolution, thirty-nine states (and the District of Columbia) have sought to reduce litigation and medical malpractice liability by enacting apology laws. Apology laws facilitate apologies by making them inadmissible as evidence in subsequent malpractice trials. The underlying assumption of these laws is that after receiving an apology, patients will be less likely to pursue malpractice claims and will be more likely to settle claims that are filed. However, once a patient has been made aware that the physician has committed a medical error, the patient’s incentive to pursue a claim may increase even though the apology itself cannot be introduced as evidence. Thus, apology laws could lead to either increases or decreases in overall medical malpractice liability risk. Despite apology laws’ status as one of the most widespread tort reforms in the country, there is little evidence that they achieve their goal of reducing litigation. This Article provides critical new evidence on the role of apology laws by examining a dataset of malpractice claims obtained directly from a large national malpractice insurer. This dataset includes substantially more information than is publicly available, and thus presents a unique opportunity to understand the effect of apology laws on the entire litigation landscape in ways that are not possible using only publicly available data. Decomposing medical malpractice liability risk into the frequency of claims and the magnitude of those claims, we examine the malpractice claims against 90% of physicians in the country who practice within a particular specialty over an eight-year period. The analysis demonstrates that for physicians who regularly perform surgery—a context in which patients are more likely to be aware of potential risks—apology laws do not have a substantial effect on the probability that a physician will face a claim or the average payment made to resolve a claim. For nonsurgeons, we find that apology laws increase the probability of facing a lawsuit and increase the average payment made to resolve a claim, a finding which is consistent with the presence of asymmetric information. Overall, our findings indicate that on balance, apology laws increase rather than limit medical malpractice liability risk.

This paper examines the incentives of chief executive officers (CEOs) in a large sample of nonprofit hospitals. The evidence indicates that both turnover and compensation of these CEOs are significantly related to financial performance (return on assets). We find no evidence that nonprofit hospitals provide explicit incentives for their CEOs to focus on altruistic activities. The turnover/performance relation appears stronger in nonprofit hospitals than in for‐profit hospitals and other for‐profit corporations (our data do not allow us to compare compensation incentives). Past research suggests that there is little distinction between the outputs and behaviors of private nonprofit and for‐profit hospitals. Consistent with these findings, our study suggests that managers face incentives to concentrate on financial performance in both types of organizations.

Economists generally view standard franchise contracts as efficient, while franchisee advocates view them as exploitive. Consistent with the economic view, we find that contract duration is positively and significantly related to the franchisee’s physical and human capital investments (which are often firm specific). In contrast to assertions by franchisee advocates, we find that these relations exist in subsamples containing only the most established franchisors (as measured by size and experience) and that larger, more experienced franchisors tend to offer longer‐term contracts than do newer franchisors. Our evidence also suggests that there is learning across firms about optimal contract terms.

This paper examines the staffing, division of labor, and resulting profitability of primary care physician practices. Division of labor is viewed as a mechanism to increase the efficiency of production processes through specialization. At the same time, division of labor also introduces coordination cost as handoffs and communication needs increase. We attempt to empirically assess the net effect in primary care physician offices. We collected data from a sample of these practices and tested two hypotheses: (H1) controlling for staff size, greater delegation through the use of more staff types will decrease the throughput of visits, and (H2) controlling for staff size, income per unit time generated by the practice is decreasing in the number of staff types. We find evidence supporting both hypotheses. We conclude that many physicians are gaining little financial benefit from delegating work to support staff. This suggests that small practices with few staff may be viable alternatives to traditional practice designs.

In a roundtable discussion, executives from different health care organizations talked about executive compensation in a nonprofit organization. Ken Ackerman, MHA, president of Clark Consulting-Healthcare Group in Minneapolis, said that compensation decisions need to be based on a well thought-out compensation philosophy, specific to the organization. It gets all the board members on the same page in terms of the basis for a competitive pay system to attract and retain the best senior executives. Glenn D. Steele, Jr, MD, PhD, president and CEO of the Geisinger Health System in Danville PA, said that as you take an organization from one stage to another, the compensation philosophy is extraordinarily important to articulate and, in fact, to disseminate. William E. Kibler, Jr, VP of investment with Smith Barney, said that they do not use fund raising as a criterion to measure their CEO's performance.

This article examines the investment of patient care information technology (IT) systems by a nationwide sample of U.S. short-term acute care hospitals and the resulting impact these systems have in the productivity of institutions from 1990-1998. Of particular interest is the extent to which for-profit and not-for-profit hospitals obtain different results from the adoption of lT systems. We find that the marginal effect of IT on for-profit hospital productivity is to reduce the number of days supplied, while in not-for-profit hospitals the marginal effect of IT is to increase the quantity of services supplied. This resulting effect is consistent with the differing objectives of not-for-profit and for-profit hospitals and demonstrates the positive marginal value of IT as a sustainable and prudent investment.

Economists generally view standard franchise contracts as efficient, while franchisee advocates view them as exploitive. Consistent with the economic view, we find that contract duration is positively and significantly related to the franchisee's physical and human capital investments (which are often firm specific). In contrast to assertions by franchisee advocates, we find that these relations exist in subsamples containing only the most established franchisors (as measured by size and experience) and that larger, more experienced franchisors tend to offer longer-term contracts than do newer franchisors. Our evidence also suggests that there is learning across firms about optimal contract terms. Reprinted by permission of the University of Chicago Press. © All rights reserved

In this paper we discuss the potential role capital markets will play in health care restructuring. According to theory, agency costs, asymmetric information and strategic interactions cause the cost of capital for nonprofit entities to slope upward. Freestanding nonprofits are particularly disadvantaged in this regard. We conclude that some organizational forms will be less viable due to problems of capital access. Empirical work examines the capital structure of nonprofit entities. Our results indicate that chain hospitals are able to access more debt, both taxable and tax-exempt, than freestanding hospitals. Capital markets also associate for profit market presence with capital risk. We conclude that freestanding hospitals are at a relative disadvantage is accessing capital markets.