Big-city hospitals are once again trying to defend their big-spending ways.  The CEO of New York-Presbyterian Hospital authored a column that appears in this week’s issue of Modern Healthcare.  Facing a federal health care reform package that, at its foundation, recognizes and rewards value in health care, the CEO once again tries to cloud the picture of just what makes up quality, efficiency and value. 

He immediately trots out the tired old arguments about how the high cost of living and large number of impoverished patients drive up health care costs in certain places.  He doesn’t say exactly where those places are, so I’ll assume he means very large cities, like Manhattan, where his hospital is located. 

The problem with this argument is that there are other, similarly high-cost and high-poverty urban areas where health care costs are notably lower.  For example, according to the Dartmouth Atlas of Health Care, which has studied geographic variation in health care costs – specifically in the Medicare program – for decades, hospitals in Manhattan spend an average of $81,143 on each Medicare patient during the last two years of life (at Presbyterian, it’s $91,113).  In Los Angeles, the cost is $77,411.  In Chicago, it’s $62,565.  In Boston, it’s $57,057.  (In Iowa, it’s $33,864.) 

But it’s not just about how much it costs to provide health care, it’s also about how much health care is provided and whether or not it’s necessary.  The first part is about intensity, and one measure of intensity is the number of days a patient spends in the hospital.  In Manhattan, the typical Medicare patient spends nearly 35 days in the hospital during the last two years of life.  In Los Angeles, it’s 28 days.  In Chicago, it’s 26 days.  In Boston, it’s 21 days. (In Iowa, it’s about 16 days.) 

But doesn’t more time in the hospital – more health care – mean healthier patients?  The studies say no. 

Rather than making excuses about high-cost health care, hospital leaders should follow Iowa’s example by learning what creates high-value health care and then implementing it.  And Medicare should recognize and reward that value.

Throughout the lengthy health care reform debate in Washington, D.C. the battle over regional variations in health care continues.  At issue is an IHA-supported provision in the House bill (H.R. 3962) that directs the Institute of Medicine (IOM) to conduct a study on variations in Medicare spending across the U.S. and reward more providers that use resources more efficiently and incent low-performers to become more efficient.

Providers (especially large academic medical centers) in high-cost areas are opposed to this provision, explaining that because they treat sicker and poorer patients and provide medical education as teaching institutions, their costs are inevitably going to be higher than non-teaching hospitals in non-urban areas.

However, a recent Health Affairs study showed that there is no correlation among patient characteristics including race, socioeconomic status or severity of illness that contribute to such huge regional disparities.  The study concluded that, in fact, the opposite is true.

The study showed that hospitals considered to be more efficient (low-cost, high-quality) providers like the University of California-San Francisco (UCSF), Cleveland Clinic and University of Chicago Medical Center are actually treating more black and low-income patients than the less efficient medical centers like New York University Medical Center (NYU) in Manhattan and Cedars-Sinai in Los Angeles.  The study noted that only 4 percent of NYU’s patients and 9 percent of Cedars-Sinai’s patients are African American, compared to 69 percent for the University of Chicago and 28 percent for the Cleveland Clinic.

Removing race from the equation and focusing solely on poverty yields similar results.  The study found “there is no relationship between the number of days patients spend in the hospital and the proportion of patients who are poor” as shown in the chart below.

So what causes these huge regional variations in health care?  The study indicates that the length of time patients with similar characteristics and ailments spend in the hospital could be oen major driver of increased cost.  Looking at two similar academic medical centers, the study concluded that, “In Philadelphia, Hahnemann University Hospital used about 40 percent more days for treating blacks than the University of Pennsylvania. (Patients at Penn still spend more days in the hospitals than comparable patients at more efficient medical centers such as the University of Chicago, UCSF, or the Cleveland Clinic.)”

These findings certainly counter the providers that continue to rely on their patient mix and demographics to support their inefficiencies and overutilization.  The report also highlights a recent study published in the New England Journal of Medicine that also found that poverty and race had virtually no impact on increases in utilization or cost.

Hospitals in Iowa provide some of the highest quality of care in the nation at some of the lowest costs.  However, Medicare reimburses Iowa hospitals at a much lower rate than other less efficient hospitals that simply cannot continue to justify their waste.

Rewarding efficiency based on true value (high quality, low cost) should remain a top-priority during the remaining debate on health care reform, and once and for all put an end to overpaying for waste and inefficiency in health care, but rather put the resources to a better use and reward those providers that have the best outcomes at the lowest cost.

The issue of geographic payment disparity in the Medicare program is once again in the headlines, and it’s good news for Iowa that this fight continues to be fought. 

As many Iowans know, our state’s hospitals spend far less (and receive far less) Medicare funds than most other states.  The Dartmouth Atlas of Health Care has documented that higher-spending hospitals and states are not providing any better care and, in fact, much of that extra spending is simply wasted.  The White House and much of Congress is in agreement, and this is making some high-spending hospitals nervous, the New York Times reports: 

The issue pits hospitals in more rural states like Iowa and Minnesota, where spending tends to be lower, against those in areas like New York City and Los Angeles, and revolves around a question that has bedeviled the medical establishment for decades: how much money do hospitals need to provide adequate care for patients…

Urban hospitals are countering that they serve poorer, sicker patients.  But that does not explain why similar hospitals – such as highly regarded academic medical centers in urban areas – have extraordinary differences.  Take a look at the table below (this information all pertains to Medicare patient averages during the last two years of life): 

Hospital	Physician visits	Medicare spending	Days in the hospital
Barnes-Jewish Hospital (St. Louis)	61	$63,281	27
Cleveland Clinic	63	$55,333	24
Hospital of the University of Pennsylvania	72	$80,727	31
Johns Hopkins Hospital	57	$85,729	29
Massachusetts General Hospital	75	$78,666	29
New York-Presbyterian Hospital	83	$91,113	39
UCLA Medical Center	101	$93,842	32
UCSF Medical Center	63	$78,046	22

 

These hospitals all happen to appear at the top of U.S. News & World Report’s “Best Hospitals” list and they all serve very urban populations.  Yet the differences are stark and raise many questions.  Why, for example, are patients spending 10 more days at UCLA Medical Center then its sister institution in San Francisco?  Why are 26 more physician visits needed at New York-Presbyterian than Johns Hopkins? 

Now, just for perspective, here are the numbers for Iowa’s major medical centers, along with the overall U.S. average: 

Hospital	Physician visits	Medicare spending	Days in the hospital
Alegent Health Mercy Hospital	58	$40,831	20
Allen Memorial Hospital	47	$39,386	18
Covenant Medical Center	57	$41,998	18
Finley Hospital	56	$38,696	19
Genesis Medical Center	58	$39,964	25
Iowa Methodist Medical Center	66	$44,068	25
Jennie Edmundson Memorial Hospital	65	$40,357	22
Mercy Hospital	47	$31,229	20
Mercy Medical Center-Cedar Rapids	52	$36,590	20
Mercy Medical Center-Des Moines	73	$42,091	24
Mercy Medical Center-Dubuque	47	$32,403	16
Mercy Medical Center-Mason City	43	$37,920	14
Mercy Medical Center-Sioux City	57	$42,272	22
St. Luke’s Hospital	50	$37,263	20
St. Luke’s Regional Medical Center	59	$37,581	19
University of Iowa Hospitals & Clinics	51	$48,427	24
U.S. Average	70	$52,838	25

 

One last thing:  Though it’s convenient from a media perspective, this is not necessarily an urban vs. rural issue.  There are, as the tables above show, urban hospitals that are providing value to the Medicare and there are rural facilities that are extreme outliers when it comes to Medicare spending.  The point is it is time for Medicare, as a health care consumer, to seek out and reward value – wherever it is found.