Improving large‐scale estimation and inference for profiling health care providers

Provider profiling has been recognized as a useful tool in monitoring health care quality, facilitating inter‐provider care coordination, and improving medical cost‐effectiveness. Existing methods often use generalized linear models with fixed provider effects, especially when profiling dialysis facilities. As the number of providers under evaluation escalates, the computational burden becomes formidable even for specially designed workstations. To address this challenge, we introduce a serial blockwise inversion Newton algorithm exploiting the block structure of the information matrix. A shared‐memory divide‐and‐conquer algorithm is proposed to further boost computational efficiency. In addition to the computational challenge, the current literature lacks an appropriate inferential approach to detecting providers with outlying performance especially when small providers with extreme outcomes are present. In this context, traditional score and Wald tests relying on large‐sample distributions of the test statistics lead to inaccurate approximations of the small‐sample properties. In light of the inferential issue, we develop an exact test of provider effects using exact finite‐sample distributions, with the Poisson‐binomial distribution as a special case when the outcome is binary. Simulation analyses demonstrate improved estimation and inference over existing methods. The proposed methods are applied to profiling dialysis facilities based on emergency department encounters using a dialysis patient database from the Centers for Medicare & Medicaid Services.