The editorial page of the Boston Globe provides a brief item on the importance of evidence-based medicine with regard to reducing costs and improving health care.  The editorial points to two examples: A 2007 study that showed that drugs work just as well as stents in treating chest pain and a 2002 study that showed generic drugs work just as well as name brands. 

The central point of the editorial is that neither of these cost-saving approaches has been as widely adopted as one might expect.  Why?  Because the insurance companies – both public and private – have provided few, if any, incentives to adopt them. 

This is yet another illustration of how health care spending is being driven by something other than value.  Instead, it is driven by a system that rewards quantity – a physician who does more testing and procedures will be paid, even if those tests were not the best or possibly even unnecessary. 

The Globe emphasizes evidence-based best practices and notes that “Medicare should have the authority to weigh both comparative effectiveness and cost in steering doctors to the best practices.”  In other words, Effectiveness + Cost = Value. 

In Iowa, we are fortunate to have a health care system that, particularly in the community hospital setting, is dominated by a culture of patient-centered primary care.  This means care tends to be provided in a coordinated fashion with the primary care physician at its foundation.  Patient-centered primary care works when best practices are emphasized.  And when that happens, real value in health care is the result.  

This is why Medicare would save billions of dollars every year if it demanded, as the Globe editorial suggests, the same value from others that Iowa already provides.

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.

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.

Except for perhaps the very rich, the economic concept of “value” is something all consumers are familiar with, mostly because they practice it almost every day.  Value is simply the judgment each of us arrives at as we consider an item’s cost against its quality.  If the cost outstrips the quality, conscientious consumers tend to look elsewhere.

In health care, value works differently.  One big reason is that most of us are insured and therefore insulated from the actual cost of care.  But you would think those who do pay – the insurers, mostly – would care about value.  Well, for the most part, they don’t.

Start paying for value, not volume

Iowa hospitals want this to change, particularly in the Medicare program.  IHA has consistently and continually lobbied for “value-based purchasing,” which would require Medicare to rethink how it pays hospitals and physicians.  Essentially, it would move Medicare away from simply paying for volume and start paying for value.

Why is this important?  Because there is strong evidence that Medicare spends enormous sums of money on care that is simply wasted.

Research shows that more spending does not equal better care

As we’ve discussed before, the Dartmouth Atlas of Healthcare has shown, over decades of research, that some parts of the country spend much, much more on health care without getting any better results.  Even more evidence was released recently by the Agency for Healthcare Research and Quality (AHRQ), the federal agency whose mission is to improve the quality, safety, efficiency and effectiveness of health care for all Americans.

AHRQ released state-by-state health care quality data that looks at a broad list of quality measures:  type of care (preventive, acute and chronic care), setting of care (hospitals, ambulatory, nursing homes and home health care) and clinical area (cancer, diabetes, heart disease, maternal and child health, and respiratory disease).  Iowa happened to rank 11th in the nation based on a composite score based on these measures.

The AHRQ results become much more interesting when they are graphed along with the cost of care (in this case, Medicare’s annual spending per beneficiary) as a way of illustrating value.  As this graph shows, there are states that offer low value (poor quality at high cost) and those that offer high value (higher quality at relatively low cost), and that is where you find Iowa.

At least geographically, there is a clear pattern to these results; many of the states that fall into the high-quality/low-cost quadrant are in the Upper Midwest.  Some states with high costs would argue it’s more expensive for them to provide care.  That may be true to some extent, but it doesn’t explain why it costs so much more to care for essentially the same population of patients.

And looking more closely, it doesn’t explain why some expensive cities – like San Diego, Orlando and Seattle – have much lower costs than other similarly pricey cities – like Miami, Boston and Los Angeles.  And it certainly doesn’t explain why McAllen, a small city in Texas, spends far more than Houston, one of the largest cities in the country.

These disparities need to be understood and corrected

Beginning with the well-researched and documented information from Dartmouth, Medicare and other insurers need to find out why these disparities exist and what can be done to make more of the country more like Iowa.

Paying for the right care in the right place and at the right time would probably be a good place to start.

Barack Obama was in Green Bay, Wisconsin today because of the high value hospitals there have exhibited in terms of controlling medical spending while also providing good outcomes.  The trip is a direct response to the president’s recently acquired affection for the Dartmouth Atlas of Health Care, which does an outstanding job of measuring health care value and clearly shows that there is immense waste in U.S. health care spending.

We wrote about that earlier and noted, as the New York Times did, that Iowa is also a high-value state.  How does Iowa compare to Green Bay?  Well, a few minutes spent working with Dartmouth’s data tables revealed that the president chose well, but he could have done better by coming to Dubuque…or Mason City…or Iowa City…or Cedar Rapids.

When looking at Medicare spending during the last two years of a Medicare recipient’s life, a key measure in the Dartmouth report and in the Post story, the hospitals in those Iowa cities spend less than Green Bay, which came in at $33,334.  And the hospitals in Sioux City and even Des Moines – and the average for all of Iowa – were only about $500 higher. Overall, Iowa ($33,864) is a significantly better value than Wisconsin ($37,217).  (The national average is $46,412, while the average in the president’s hometown of Chicago is $62,565).

Patients in Dubuque and Mason City also spent less time in the hospital than in Green Bay, and patients in Mason City and Iowa City spent less time in intensive care units.  Patients in Mason City, Sioux City and Iowa City also had fewer visits with medical specialists, which helps keep costs lower.

Obviously, there are other factors at work to bring the president to Green Bay (including access to media).  But know this:  When the president talks about doing medicine the right way – the high-value way – he’s also talking about Iowa.