The cost-saving effect of continuity of care (COC): an analysis of institutional COC on diabetic treatment costs using panel 2SLS regressions

BACKGROUND: The high costs of chronic conditions call for new treatment approaches that reduce costs while ensuring desirable health outcomes. There has been a growing transformation of care delivery models from conventional referral systems to integrated care models. This study seeks to evaluate the cost-saving impact of integrated care delivery model under pay-for-performance (P4P) scheme with continuity of care at institution level (ICOC). METHODS: We analyzed the Taiwan National Health Insurance claim data of 21,725 diabetic patients who visited clinics and/or hospitals at least four times a year for 8 years. Using average local provider P4P participation rate (for each accreditation level) as an instrumental variable in two-stage least squares (2SLS) regressions, we have estimated consistent estimates of the ICOC elasticities for all-cause inpatient and outpatient costs. RESULTS: Our results show that ICOC significantly reduced inpatient costs but increased outpatient costs with the elasticity for treatment costs of -11.6 and 1.03, respectively. The decrease in inpatient costs offset the increase in outpatient costs and the resulting total cost saving showed significant association with ICOC. The saving effect of ICOC is especially robust among patients who used clinics as their principal source of care. CONCLUSIONS: Institutional continuity of care has a substantial impact on the treatment costs of diabetes patients. In the context where inpatient care costs are significantly higher than that of the outpatient care, ICOC would lead to a meaningful cost-saving effect. For new diabetes patients, care by clinics demonstrated the strongest saving effect.