Between 2002 and 2011, US hospitals increased their productivity in treating Medicare patients for several serious illnesses, refuting fears about a “cost disease” in health care and potentially mitigating concerns about provider payment under the Affordable Care Act.
The study, released today by Health Affairs as a Web First, addresses the quality of care and the severity of patient illness (considerations not fully taken into account by previous studies on this topic) found that during those years, the annual rates of productivity growth were 0.78 percent for heart attacks, 0.62 percent for heart failure, and 1.90 percent for pneumonia.
When the authors John Romley, Dana Goldman, and Neeraj Sood calculated productivity growth rates without factoring in trends in the severity of patient conditions or outcomes achieved after hospitalization, the annual productivity rates were different: -0.64 percent for heart attacks, -0.91 percent for heart failure, and -0.39 percent for pneumonia.
According to the authors, these negative trends resulted from increasing treatment costs during this period. They also found that the productivity trend line became more positive over time, conceivably related to relatively slow growth in health spending in the United States in the later years being studied.
The study data were culled from the Medicare Provider Analysis and Review (MedPAR) File for 2002–11; the cohorts ranged from 403,253 patient stays at 3,315 hospitals for heart attacks to 906,918 stays at 3,621 hospitals for heart failure.
“The pattern of growth documented here suggests that in recent years, hospitals have not suffered from a so-called cost disease, where heavy reliance on labor limits opportunities for efficiencies stemming from technological improvement,” observe the authors. “Our study finds that concerns about linking provider payment to economywide productivity growth may be overstated.”
The authors are affiliated with the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California, in Los Angeles; Romley and Goldman are also associated with the University’s Sol Price School of Public Policy, and Sood with the School of Pharmacy.
This study, which will also appear in the March 2015 issue of Health Affairs, was supported by the National Institute on Aging and the Schaeffer Center.