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.