Hospital Costs And Quality: Ashish Jha’s View
June 11th, 2009
 by
Ashish Jha
|
Editor’s Note: Health Affairs has recently published two studies looking at the association between hospital costs and quality. The first, by Ashish Jha and coauthors, appeared in our May-June issue, and the second by Laura Yasaitis, Amitabh Chandra, and coauthors, was published online.
Variations in spending and intensity of care, and the effects of these variations on quality and outcomes, have become a major focus of the current health reform debate. Therefore, the Health Affairs Blog asked Jha and Chandra to each describe the major findings of the two studies, and then to explain whether they viewed the studies as consistent with each other or as contradictory. Jha’s response is below and Chandra’s response is here.
The two researchers touch on differences between the methods and conclusions of the two studies. However, both researchers appear to essentially agree that, in Jha’s words, “unlike most sectors of the U.S. economy, where we usually have to make a cost-quality trade-off, no such sacrifice is likely to be necessary in the health care sector. There is ‘plenty of fat’ that can be removed to identify the high-quality, low-cost institutions.”
We examined whether hospitals that cost more provided better care than hospitals that had lower risk-adjusted costs. We found no relationship between risk-adjusted costs and patient outcomes but did find a small but consistent relationship between risk-adjusted costs and somewhat better clinical care. For those who have assumed that “you get what you pay for,” our findings are largely disappointing: hospitals that spend more don’t seem to have better outcomes and have only marginally better quality.
Why we did this study
High costs and variable quality are two of the main challenges facing clinical leaders and policymakers. There have been very few systematic examinations of whether health care providers that spend more money on their patients produce better outcomes (as one might imagine from other industries). We sought to determine whether this hypothesis had any validity in the hospital sector.
How we did the study, and what we found
We used data from the Hospital Cost Reports, which are reported by the hospital to Medicare. These data allowed us to calculate the average cost per case in each hospital. Given that hospitals see very different types of patients, we adjusted these data for a variety of factors that are likely out of the hospital’s control, including the sickness of the patient population, local prevailing wages, and whether it was a teaching hospital (which are inherently more expensive because of the extra costs of trainees).
We then examined whether high-cost hospitals (those that might be termed “less efficient”) provided better care using both risk-adjusted mortality rates and clinical process measures.
We found no relationship between a hospital’s risk-adjusted cost per case and patient outcomes. However, we did find that hospitals that tended to spend more in the inpatient setting had modestly better quality of care.
How our findings compare with those of Yasaitis, Chandra, and colleagues
At first blush, our findings seem to contradict those of Laura Yasaitis and colleagues. However, more careful examination of the two studies shows that the two different approaches lead to slightly different conclusions but largely the same message.
Our study and that of Yasaitis and colleagues come to broadly the same conclusion: there is little or no association between the costs and quality of care provided in U.S. hospitals. However, there are important other differences that should be highlighted.
Yasaitis and colleagues used spending in the last two years of life as the primary cost measure. We used the single episode of hospital care (i.e., cost per case). Each approach has important advantages and disadvantages. The main advantage of Yasaitis and colleagues’ approach is that they were able to more comprehensively capture cost over a long time period. All the costs of a patient’s care at the end of his or her life — inpatient, ambulatory, specialty, radiologic, and every other type of cost is accounted for. This allows for a more comprehensive examination of costs.
The major disadvantage of Yasaitis and colleagues’ approach is that they attribute all of those costs to a single hospital, which usually has no ability to control most of the costs that occur beyond its four walls. A hospital could be “efficient” and spend little money — but the ambulatory care providers in that community could be spendthrifts who waste a lot of money on unnecessary tests and procedures. All of those costs would, in Yasaitis and colleagues’ approach, be attributed to the original hospital. Our study focused just on the costs that occur during that hospitalization. Therefore, we could directly examine two sets of factors that are both squarely within the hospital’s control: its costs of care as they occur in the hospital, and the quality of care provided. From a policy perspective, we can hold organizations responsible for only activities within their control.
In summary, what is eminently clear from both of these studies is that, unlike most sectors of the U.S. economy, where we usually have to make a cost-quality trade-off, no such sacrifice is likely to be necessary in the health care sector. There is “plenty of fat” that can be removed to identify the high-quality, low-cost institutions. However, as we move forward in these areas (through mechanism like pay-for-performance, tiering, or regulatory efforts), ensuring that we hold providers accountable for things under their control and paying attention to both costs and quality will be critically important.
Email This Post
Print This Post
