Do Healthcare Quality Requirements Lead to Dynamic Inefficiencies? Evidence from Organ Transplantation

The literature in health economics identifies effects from quality standards on static outcomes such as patient survival or readmission rates, but the potential for dynamic inefficiencies resulting from the use of such standards is unknown, even as the Affordable Care Act seeks to expand their use. Given evidence of cream-skimming in the literature and the inherent risk associated with experimental procedures, providers may delay adoption of new practice patterns or even revert to older protocols than those which they otherwise would have used, but for the quality standards. In organ transplantation, survival-based quality standards have been in place since 1990 with significant variation in risk adjustment and enforcement. Using data on all U.S. organ candidates waitlisted between July 2001 and July 2013 and organs transplanted between July 2001 and July 2012, we study the effect of enforcement and noncompliance with required risk-adjusted post-transplant survival rates on practice patterns and find that the existence of enforcement causes centers to revert to prior practice patterns in corticosteroid use. Centers noncompliant with enforced quality standards revert to prior practice patterns in donor acceptance criteria as well. Our results indicate that even if static efficiency gains exist, they should be weighed against the potential negative dynamic effects of even sophisticated quality standards.