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The Battle Over Rewarding Efficient Providers



November 17th, 2009

Editor’s Note: In the post below, John Wennberg and Shannon Brownlee discuss the controversy over a proposed study of regional variations in Medicare spending. Wennberg and Brownlee rebut claims that spending and utilization variations among academic medical centers are due to differences in patient income, race, and health status. In another post coming next week, Wennberg and Brownlee will rebut claims that academic medical centers with higher utilization and spending produce better outcomes.

To the casual observer of health care reform legislation, the reaction from several prominent medical centers to a modest provision in the House health reform bill might seem perplexing. The bill provides funding for a two-year study by the Institute of Medicine (IOM) looking at regional variation in Medicare spending, something that has been documented several times over by the Dartmouth Atlas.

It’s a seemingly sensible provision, yet the response from more than a dozen academic medical centers makes it seem as if this study represents a major threat to the lives of thousands of patients. In op-eds, blogs, letters to members of Congress, broadsides in the press, and now in a report from the American Hospital Association, administrators and physicians decry both the Dartmouth Atlas’ findings and the proposed IOM study as a threat to “the future quality of American health care” and a lot of “malarkey.”

Of course, it isn’t the Dartmouth Atlas or the study that these medical centers object to, but rather what the Centers for Medicare and Medicaid Services (CMS) might do with the information. The House bill gives CMS the power to use the results of the IOM study to rein in Medicare spending by rewarding more efficient providers – those that use fewer medical services to care for a given population while maintaining equal or better outcomes compared with the national average. CMS would also be permitted to clamp down on reimbursements to providers that are less efficient.

And there’s the rub. Many of the academic medical centers that are objecting to the bill already know from the Dartmouth data that they fall into the latter category and could very well see revenue go down. They are fighting back with an old argument: their utilization and spending profiles are higher than most because their patients are poorer and sicker. They claim that more of their patients are urban, poor, and African American, and need more care than patients being cared for by more efficient hospitals.

Higher Utilization And Spending Is Not Accounted For By Poorer And Sicker Patients

This theory simply doesn’t stand up to scrutiny. First, many of the more efficient academic medical centers – the University of California, San Francisco (UCSF), Cleveland Clinic, and University of Chicago Medical Center, to name just a few – are also located in urban areas and have a high percentage of black, low-income patients. For example, African Americans using the Cleveland Clinic and University of Chicago spent an average of 16 days in the hospital during the last six months of life. Compare that to the 30 days black patients in the last six months of life spend in New York University Medical Center in Manhattan and Cedars-Sinai in Los Angeles. Is this because NYU and Cedars are serving more of the urban poor? Just the opposite: only 4% of NYU’s patients and 9% of Cedars-Sinai’s patients are African American, compared to 69% for the University of Chicago and 28% for the Cleveland Clinic.

Race and poverty do affect utilization, but where patients get their care matters far more than the size of their income or the color of their skin. Take a look at the table below, which shows the number of days spent in the hospital among chronically ill blacks and non-blacks (which includes whites, Hispanics, and other races) during the last two years of life. (The data are drawn from the Dartmouth Atlas and cover Medicare recipients who died between 2001 and 2005. Each region contains at least one academic medical center.)

What the table shows is that all patients are hospitalized more often and/or spend more days in the hospital in some areas compared to others, regardless of race. For instance, the percentage of patients who are black is right in the middle for Manhattan, but all chronically ill patients in Manhattan spend a lot of days in the hospital, regardless of race. Chicago, on the other hand, has the highest black population of all, but the number of hospital days is right in the middle.

Region

Percent Black Days in Hospital
Blacks Non-blacks
Newark

21.2%

47.9

30.9

Manhattan

16.7%

43.5

34.4

Los Angeles

10.2%

38.7

27.0

Miami

6.7%

36.6

28.3

Philadelphia

15.2%

32.5

24.1

Chicago

35.2%

32.1

26.8

St. Louis

9.6%

29.1

19.7

Baltimore

19.6%

28.3

19.3

Atlanta

15.6%

25.6

17.7

Cleveland

12.1%

25.4

18.8

Boston

2.8%

25.2

19.5

San Francisco

9.9%

23.5

18.3

*Adjusted for age, sex and type of chronic illness

The critics argue that it’s unfair to compare utilization at community hospitals to that of academic medical centers, which like to point out that they are caring for a larger percentage of the sickest and the poorest and have the added burden of training the nation’s doctors. So let’s just look at what happens to patients at individual academic medical centers.

Utilization Varies Widely Among Academic Medical Centers Regardless Of Patient Characteristics

It turns out that all races get more services at some academic medical centers than at others — sometimes a lot more. For instance, both the University of Medicine and Dentistry of New Jersey (UMDNJ) and the University of Chicago are located in the middle of poor, urban, black communities. Yet blacks at the UMDNJ spend an average of 25.2 days in the hospital in their last two years of life – 60% more than blacks at the University of Chicago. Blacks at NYU Medical Center spend 35.5 days in the hospital in their last six months of life — 2.5 times more days than blacks using the University of California at San Francisco (UCSF) Medical Center. Compare that to the rate of hospital days for non-blacks, who also spent more than twice as much time in the hospital at NYU compared with UCSF.

Even when we look at academic medical centers in the same city, we see wide variation in how they treat similar patients. In Philadelphia, Hahnemann University Hospital used about 40% 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.)

In Boston, Tufts-New England Medical Center used 25% more hospital days in treating its black patients than did Beth Israel Deaconess Medical Center.  In Los Angeles, blacks using Cedars-Sinai experienced 44% more days in hospital than blacks using UCLA. Non-blacks at Cedars used 31% more days in hospital than their counterparts at UCLA, and administrators and physicians at these institutions – “America’s best hospitals”  – cannot account for why they vary so widely in the manner in which they treat similar patients.

What about poverty? Maybe the hospitals with higher utilization take care of poorer patients of all races. Under the poverty hypothesis, as the percentage of patients below the federal poverty line in a hospital’s patient population increases, the average number of days spent in the hospital would also increase.  But take a look at the figure below, which shows the relationship between poverty (which we measured by looking at the percentage of Medicare patients who were also eligible for Medicaid) and days in the hospital among academic medical centers.


The association among academic medical centers between the number of days spent in hospital by patients with chronic illness during the last six months of life and the percentage of patients eligible for Medicaid

This figure shows that there is no relationship between the number of days patients spend in the hospital and the proportion of patients who are poor. A recent study published in the New England Journal of Medicine by some of our colleagues found that poverty and race had virtually no impact on utilization.

As guardians of the scientific basis of medical practice, academic medical centers have a special responsibility to understand why they treat similar patients differently, and to untangle the implications of those variations in the practice of medicine. It matters for patients and it matters for the nation, because we can’t keep paying for medical services that do not appear to be based on sound science.

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3 Trackbacks for “The Battle Over Rewarding Efficient Providers”

  1. Academic Medical Centers and the Poor: Dartmouth Data Revisited - Better Health
    November 29th, 2009 at 9:00 am
  2. Dartmouth Malarkey Loses to the Poor « PHYSICIANS and HEALTH CARE REFORM Commentaries and Controversies
    November 25th, 2009 at 12:27 pm
  3. New Studies Show Poverty, Race Do Not Account for Regional Variations in Spending : Iowa Hospital Association Blog
    November 18th, 2009 at 4:36 pm

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