Cost of Health Care

04 Apr Hospitals In Better Financial Shape Do Not Necessarily Have Better Outcomes

MedicalResearch.com Interview with: Oanh Kieu Nguyen, MD, MAS | Assistant Professor UT Southwestern Medical Center Divisions of General Internal Medicine and Outcomes and Health Services Research Dallas, TX MedicalResearch.com: What is the background for this study? What are the main findings? Dr. Nguyen: The impetus for this study was Steven Brill’s 2013 Time magazine award-winning article, “Bitter Pill: Why Medical Bills Are Killing Us.” This report investigated inflated charges for hospital bills, and and suggested that a major driver of irrationally high charges was the disproportionate negotiating power of hospitals, as evidenced through their high profit margins. As hospital physicians, our reaction was “But what if hospitals that make more money are delivering more value and better outcomes to patients? If that’s the case, wouldn’t most people say that their profits justifiably earned?” Surprisingly, we found that no one had really looked at this issue in a systematic way. We set out to answer this question using hospital financial data from California’s Office of Statewide Health Planning and Development (OSHPD) and outcomes data on 30-day readmissions and mortality for congestive heart failure, acute myocardial infarction (‘heart attacks’), and pneumonia from the Centers for Medicare and Medicaid Services (CMS) Hospital Compare website. California has more hospitals than any other state other than Texas, and also has a wide diversity of hospital types. The OSHPD financial data are also audited, so we thought these would be more reliable than using data from other sources. Because the outcomes reported on Hospital Compare are viewable by the general public, we thought hospitals would be most motivated to target improvements in these outcomes. We found that there was almost no association between how much money a hospital made and its subsequent performance on outcomes. The exception to this was we found that hospitals that had better finances reported higher rates of 30-day mortality for congestive heart failure, which was counterintuitive. We’re not sure why this was the case but speculate that it is possible that hospitals with better finances take care of sicker heart failure patients because they have more advanced (and more expensive) treatments available. Additionally, we looked to see if hospitals with lower readmissions rates subsequently made less money. This is a specific area of policy concern given federal penalties in the U.S. for excessive hospital readmissions. Many critics of these penalties have argued that reducing readmissions makes no financial sense for hospitals, since readmissions still generate hospital revenue despite the penalties. Thus, reducing readmissions would reduce a key source of hospital revenue and lead to poorer hospital finances. However, our analysis showed that lower readmissions rates were not associated with poorer hospital finances, as has been feared.