Lower mortality rates at cardiac specialty hospitals traceable to healthier patients and to doctors' performing more procedures

Physician-owned cardiac specialty hospitals advertise that they have outstanding physicians and results. To test this assertion, we examined who gets referred to these hospitals, as well as whether different results occur when specialty physicians split their caseloads among specialty and general hospitals in the same markets. Using data on 210,135 patients who underwent percutaneous coronary interventions in Texas during 2004-07, we found that the risk-adjusted in-hospital mortality rate for patients treated at specialty hospitals was significantly below the rate for all hospitals in the state (0.68 percent versus 1.50 percent). However, the rate was significantly higher when physicians who owned cardiac specialty hospitals treated patients in general hospitals (2.27 percent versus 1.50 percent). In addition, several patient characteristics were associated with a lower likelihood of being admitted to a cardiac hospital for cardiac care, such as being African American or Hispanic and having Medicaid or no health insurance. After adjustment for patient severity and number of procedures performed, the overall outcomes for cardiologists who owned specialty hospitals were not significantly different from the "average outcomes" obtained at noncardiac hospitals. In contrast to previous studies, patient outcomes were found to be highly dependent on the type of hospital where the procedure was performed. To remove a potential source of bias and achieve a more balanced comparison, the quality statistics reported by physician-owned cardiac hospitals should be adjusted to incorporate the high rates of poor outcomes for the many procedures done by their cardiologists at nearby noncardiac hospitals.     

Specialty hospitals: the economics and policy issues they pose

Specialty hospitals are not a new phenomenon. From psychiatric and tuberculosis hospitals to children's and eye hospitals, they have long existed. The current interest lies in the development of single specialty hospitals for certain conditions or illness such as cardiology or orthopedics for which such hospitals were previously uncommon or non-existent. We include physician-owned surgical hospitals in our definition of single specialty hospitals. Some have claimed that these specialty hospitals (hereafter SSH) are an efficient way of producing services by concentrating them in one institution. They argue that SSHs avoid inefficiencies of scheduling and use of facilities not expressly designed for the illness or condition. Critics contend that doctors are simply trying to get the general hospital's profits and the ultimate impact will be a financial weakening of the general hospital. They argue that the cross-subsidy from these procedures and services are necessary to give general hospitals the ability to provide services to the uninsured and the poor. This debate led to a 30-month moratorium on new specialty hospitals which was lifted in August 2006. General acute care hospitals have responded by denying privileges to physicians who own or participate in competing SSHs. The appropriateness of such economic credentialing will be investigated. Further, we shall examine issues associated with Medicare pricing structures that encourage the development of SSHs as well as self-referral rules for physicians involved with SSHs. The real issue which has not been addressed is whether specialty hospitals create more value for the patient than the traditional acute care hospitals.     

Does certificate of need affect cardiac outcomes and costs?

Several U.S. states enforce Certificate of Need (CON) regulations, which limit the number of hospitals performing open heart surgery or coronary angioplasty. CON regulations were intended to restrain cost growth and improve quality of care. This study compares mortality rates and costs for cardiac care in states with and without CON. CON appears to raise hospital procedure volume and lower the average cost of care. However, CON is associated with little reduction in inpatient mortality, and it may lead hospitals to operate on more patients than they would otherwise. The claimed welfare benefits of CON regulations require careful reconsideration.      

Acute Myocardial Infarction and Coronary Artery Bypass Grafting Outcomes in Specialty and General Hospitals: Analysis of State Inpatient Data

Objective. Compare characteristics and outcomes of patients hospitalized in specialty cardiac and general hospitals for acute myocardial infarction (AMI) and coronary artery bypass grafting (CABG).
Data. 2000–2005 all-payor administrative data from Arizona, California, Texas, and Wisconsin.
Study Design. We identified patients admitted to specialty and competing general hospitals with AMI or CABG and compared patient demographics, comorbidity, and risk-standardized mortality in specialty and general hospitals.
Principal Findings. Specialty hospitals admitted a lower proportion of women and blacks and treated patients with less comorbid illness than general hospitals. Unadjusted in-hospital AMI mortality for Medicare enrollees in specialty and general hospitals was 6.1 and 10.1 percent ( p <.0001) and for non-Medicare enrollees was 2.8 and 4.0 percent ( p <.04). Unadjusted in-hospital CABG mortality for Medicare enrollees in specialty and general hospitals was 3.2 and 4.7 percent ( p <.01) and for non-Medicare enrollees was 1.1 and 1.8 percent ( p =.02). After adjusting for patient characteristics and hospital volume, risk-standardized in-hospital mortality for all AMI patients was 2.7 percent for specialty hospitals and 4.1 percent for general hospitals ( p <.001) and for CABG was 1.5 percent for specialty hospitals and 2.0 percent for general hospitals ( p =.07).
Conclusions. In-hospital mortality in specialty hospitals was lower than in general hospitals for AMI but similar for CABG. Our results suggest that specialty hospitals may offer significantly better outcomes for AMI but not CABG.     

Do hospitals cross-subsidize?

Despite its salience as a regulatory tool to ensure the delivery of unprofitable medical services, cross-subsidization of services within hospital systems has been notoriously difficult to detect and quantify. We use repeated shocks to a profitable service in the market for hospital-based medical care to test for cross-subsidization of unprofitable services. Using patient-level data from general short-term hospitals in Arizona and Colorado before and after entry by cardiac specialty hospitals, we study how incumbent hospitals adjusted their provision of three uncontested services that are widely considered to be unprofitable. We estimate that the hospitals most exposed to entry reduced their provision of psychiatric, substance-abuse, and trauma care services at a rate of about one uncontested-service admission for every four cardiac admissions they stood to lose. Although entry by single-specialty hospitals may adversely affect the provision of unprofitable uncontested services, these findings warrant further evaluation of service-line cross-subsidization as a means to finance them.     

Hospitals respond to Medicare payment shortfalls by both shifting costs and cutting them, based on market concentration

The coverage expansions planned under the Affordable Care Act are to be financed in part by slowing Medicare payment updates to hospitals, thereby reigniting the debate over whether low prices paid by public payers cause hospitals to increase prices to private insurers--a practice known as cost shifting. Recently, the Medicare Payment Advisory Commission (MedPAC) proposed an alternative explanation of hospital pricing and profitability that could be used to support policies that pressure hospitals to reduce overall costs rather than to only raise prices. This study evaluated the cost-shift and MedPAC perspectives using 2008 data on hospital margins for 30,514 Medicare and privately insured patients undergoing any of seven major procedures in markets where robust hospital competition exists and in markets where hospital care is concentrated in the hands of a few providers. The study presents empirical evidence that, faced with shortfalls between Medicare payments and projected costs, hospitals in concentrated markets focus on raising prices to private insurers, while hospitals in competitive markets focus on cutting costs. Policy makers need to examine whether efforts to promote clinical coordination through provider integration may interfere with efforts to restrain overall health care cost growth by restraining Medicare payment rates.     

Are general practitioner hospitals cost-saving? Evidence from a rural area of Norway

OBJECTIVE: We aimed to determine whether general practitioner GP hospitals, compared with alternative modes of health care, are cost- saving. METHODS: Based on a study of admissions (n = 415) to fifteen GP hospitals in the Finnmark county of Norway during 8 weeks in 1992, a full 1-year patient throughput in GP hospitals was estimated. The alternative modes of care (general hospital, nursing home or home care) were based on assessments by the GPs handling the individual patients. The funds transferred to finance GP hospitals were taken as the cost of GP hospitals, while the cost of alternative care was based on municipality and hospital accounts, and standard charges for patient transport. RESULTS: The estimated total annual operating cost of GP hospitals was 32.2 million NOK (10 NOK = 1 Pound) while the cost of alternative care was in total 35.9 million NOK. Sensitivity analyses, under a range of assumptions, indicate that GP care in hospitals incurs the lowest costs to society. CONCLUSION: GP hospitals are likely to provide health care at lower costs than alternative modes of care.      

Market reform in New Jersey and the effect on mortality from acute myocardial infarction

OBJECTIVE: To determine whether mortality rates for patients with acute myocardial infarction (AMI) changed in New Jersey after implementation of the Health Care Reform Act, which reduced subsidies for hospital care for the uninsured and changed hospital payment to price competition from a rate-setting system based on hospital cost. DATA SOURCES/STUDY SETTING: Patient discharge data from hospitals in New Jersey and New York from 1990 through 1996 and the Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS). STUDY DESIGN: A comparison between states over time of unadjusted and risk-adjusted mortality and cardiac procedure rates. DATA COLLECTION: Discharge data were obtained for 286,640 patients with the primary diagnosis of AMI admitted to hospitals in New Jersey or New York from 1990 through 1996. Records of 364,273 NIS patients were used to corroborate time trends. PRINCIPAL FINDINGS: There were no significant differences in AMI mortality among insured patients in New Jersey relative to New York or the NIS. However, there was a relative increase in mortality of 41 to 57 percent among uninsured New Jersey patients post-reform, and their rates of expensive cardiac procedures decreased concomitantly. CONCLUSIONS: The introduction of hospital price competition and reductions in subsidies for hospital care of the uninsured were associated with an increased mortality rate among uninsured New Jersey AMI patients. A relative decrease in the use of cardiac procedures in New Jersey may partly explain this finding. Additional studies should be done to identify whether other market reforms have been associated with changes in the quality of care.     

Quality and Cost of Care by Hospital Teaching Status: What Are the Differences?

Policy Points

• In two respects, quality of care tends to be higher at major teaching hospitals: process of care and long‐term survival of cancer patients following initial diagnosis. There is also evidence that short‐term (30‐day) mortality is lower on average at such hospitals, although the quality of evidence is somewhat lower.
• Quality of care is mulitdimensional. Empirical evidence by teaching status on dimensions other than survival is mixed.
• Higher Medicare payments for care provided by major teaching hospitals are partially offset by lower payments to nonhospital providers. Nevertheless, the payment differences between major teaching and nonteaching hospitals for hospital stays, especially for complex cases, potentially increase prices other insurers pay for hospital care.

ContextThe relative performance of teaching hospitals has been discussed for decades. For private and public insurers with provider networks, an issue is whether having a major teaching hospital in the network is a “must.” For traditional fee‐for‐service Medicare, there is an issue of adequacy of payment of hospitals with various attributes, including graduate medical education (GME) provision. Much empirical evidence on relative quality and cost has been published. This paper aims to (1) evaluate empirical evidence on relative quality and cost of teaching hospitals and (2) assess what the findings indicate for public and private insurer policy.MethodsComplementary approaches were used to select studies for review. (1) Relevant studies highly cited in Web of Science were selected. (2) This search led to studies cited by these studies as well as studies that cited these studies. (3) Several literature reviews were helpful in locating pertinent studies. Some policy‐oriented papers were found in Google under topics to which the policy applied. (4) Several papers were added based on suggestions of reviewers.FindingsQuality of care as measured in process of care studies and in longitudinal studies of long‐term survival of cancer patients tends to be higher at major teaching hospitals. Evidence on survival at 30 days post admission for common conditions and procedures also tends to favor such hospitals. Findings on other dimensions of relative quality are mixed. Hospitals with a substantial commitment to graduate medical education, major teaching hospitals, are about 10% to 20% more costly than nonteaching hospitals. Private insurers pay a differential to major teaching hospitals at this range''s lower end. Inclusive of subsidies, Medicare pays major teaching hospitals substantially more than 20% extra, especially for complex surgical procedures.ConclusionsBased on the evidence on quality, there is reason for patients to be willing to pay more for inclusion of major teaching hospitals in private insurer networks at least for some services. Medicare payment for GME has long been a controversial policy issue. The actual indirect cost of GME is likely to be far less than the amount Medicare is currently paying hospitals.     

Much ado about nothing? The financial impact of physician-owned specialty hospitals

The U.S. hospital industry has recently witnessed a number of policy changes aimed at aligning hospital payments to costs and these can be traced to significant concerns regarding selection of profitable patients and procedures by physician-owned specialty hospitals. The policy responses to specialty hospitals have alternated between payment system reforms and outright moratoriums on hospital operations including one in the recently enacted Affordable Care Act. A key issue is whether physician-owned specialty hospitals pose financial strain on the larger group of general hospitals through cream-skimming of profitable patients, yet there is no study that conducts a systematic analysis relating such selection behavior by physician-owners to financial impacts within hospital markets. The current paper takes into account heterogeneity in specialty hospital behavior and finds some evidence of their adverse impact on profit margins of competitor hospitals, especially for-profit hospitals. There is also some evidence of hospital consolidation in response to competitive pressures by specialty hospitals. Overall, these findings underline the importance of the payment reforms aimed at correcting distortions in the reimbursement system that generate incentives for risk-selection among providers groups. The identification techniques will also inform empirical analysis on future data testing the efficacy of these payment reforms.     

Teaching status and resource use for patients with acute myocardial infarction: a new look at the indirect costs of graduate medical education.

To investigate whether the process of graduate medical education increases costs in teaching hospitals by causing longer lengths of stay and greater resource use, we compared lengths of stay, hospital charges, and the use of cardiovascular procedures for patients with acute myocardial infarction admitted to the teaching and nonteaching services of a university-affiliated community hospital. After adjusting for severity of illness and demographic characteristics, patients on the teaching services had a mean length of stay that was shorter by 0.6 days (p = 0.04) and mean charges that were $2,060 lower (p = 0.15) than for patients on the nonteaching service. Patients on the teaching service also had 15 percent (95% CI: -26, -4) fewer cardiac catheterizations and 9 percent (-18, 0) fewer procedures for myocardial revascularization (angioplasty or cardiac bypass surgery). These findings suggest that graduate medical education per se may not directly increase the use of health care resources and that the cost differences between teaching and nonteaching hospitals may be largely a consequence of other factors. These factors may include epiphenomena of teaching such as a specialized organizational structure, specialized patient care services, and continuing medical education for the nursing and medical staffs. They may also include factors not related to teaching such as differences in patients' severity of illness and sociodemographic characteristics.     

Ethics policies on euthanasia in hospitals--A survey in Flanders (Belgium)

OBJECTIVE: To determine the prevalence, development, stance, and communication of written institutional ethics policies on euthanasia in Flemish hospitals. METHODS: Cross-sectional mail survey of general directors of all hospitals (n=81) in Flanders, Belgium. RESULTS: Of the 81 hospitals invited to participate, 71 (88%) completed the questionnaire. Of these, 45 (63%) had a written ethics policy on euthanasia. The Belgian Act on Euthanasia and centrally developed guidelines of professional organisations were the most frequently mentioned reasons for and sources used in developing ethics policies on euthanasia in hospitals. Up to one-third of hospitals reported that they developed the policy upon request from physicians or nurses, or after being confronted with a euthanasia request. Development and approval of institutional ethics policies occurred within a multidisciplinary context involving clinicians, ethicists, and hospital administrators. The majority of hospitals restrictively applied the euthanasia law by introducing palliative procedures in addition to legal due care criteria. Private Catholic hospitals, in particular, were more likely to be restrictive: euthanasia is not permitted or is permitted only in exceptional cases (in accordance with legal due care criteria and additional palliative care procedures). The majority of hospitals took the initiative to communicate the policy to hospital physicians and nurses. CONCLUSIONS: Since the enactment of the Belgian Act on Euthanasia in 2002, the debate on how to deal with euthanasia requests has intensified in Flemish hospitals. The high prevalence of written institutional ethics policies on euthanasia and other medical end-of-life decisions is one possible outcome of this debate.     

Hospitals' geographic expansion in quest of well-insured patients: will the outcome be better care, more cost, or both?

The emphasis that hospitals place on cutting-edge technology and niche specialty services to attract physicians and patients has set the stage for health care's most recent competitive trend: an increased level of targeted, geographic service expansion to "capture" well-insured patients. We conducted interviews in twelve US communities in 2010 and found that many hospital systems--some with facilities in geographically undesirable areas--have expanded to compete for better-insured patients by building or buying facilities and physician practices in nearby, more affluent communities. Along with extending services to new markets, these hospital outposts often serve to pull well-insured patients to flagship facilities. The acceleration and expansion of such geographically competitive strategies by hospitals has implications for cost and access. Although payers and competitors contend such strategies will lead to higher costs, hospitals assert the expansions will increase efficiency, increase access, and improve the quality of care provided to patients.     

Ethics policies on euthanasia in hospitals—A survey in Flanders (Belgium)

ObjectiveTo determine the prevalence, development, stance, and communication of written institutional ethics policies on euthanasia in Flemish hospitals.MethodsCross-sectional mail survey of general directors of all hospitals (n = 81) in Flanders, Belgium.ResultsOf the 81 hospitals invited to participate, 71 (88%) completed the questionnaire. Of these, 45 (63%) had a written ethics policy on euthanasia. The Belgian Act on Euthanasia and centrally developed guidelines of professional organisations were the most frequently mentioned reasons for and sources used in developing ethics policies on euthanasia in hospitals. Up to one-third of hospitals reported that they developed the policy upon request from physicians or nurses, or after being confronted with a euthanasia request. Development and approval of institutional ethics policies occurred within a multidisciplinary context involving clinicians, ethicists, and hospital administrators. The majority of hospitals restrictively applied the euthanasia law by introducing palliative procedures in addition to legal due care criteria. Private Catholic hospitals, in particular, were more likely to be restrictive: euthanasia is not permitted or is permitted only in exceptional cases (in accordance with legal due care criteria and additional palliative care procedures). The majority of hospitals took the initiative to communicate the policy to hospital physicians and nurses.ConclusionsSince the enactment of the Belgian Act on Euthanasia in 2002, the debate on how to deal with euthanasia requests has intensified in Flemish hospitals. The high prevalence of written institutional ethics policies on euthanasia and other medical end-of-life decisions is one possible outcome of this debate.     

Teaching and hospital costs: the case of radiology

Investigates production and cost effects of teaching in radiology departments. If students are substitutes for physicians, production costs may be less in teaching than in non-teaching hospitals for a given level of output. Empirical results for Veterans Administration hospitals suggest that teaching reduces costs for most radiology procedures. If teaching can reduce costs of primary products, teaching hospitals may be able to provide a given program of patient care at lower costs than non-teaching hospitals. However, costs might still be higher at teaching hospitals than non-teaching hospitals because of differences in case mix, medical techniques, or quality of care.     

Optimal statistical decisions for hospital report cards.

PURPOSE: Hospital report cards provide information designed to help patients and providers to make decisions. The purpose of this study was to place the design of hospital report cards into a decision-theoretic framework. The authors' objectives were 2-fold: 1st, to determine what the choice of significance level implies about the relative value of the different types of misclassifications that can arise. Second, to determine optimal significance levels for specific cost functions describing the relative costs associated with different types of misclassifications. METHODS: Using a previously published theoretical model for hospital mortality, the authors computed false positive (i.e., falsely classified as providing poor-quality care) and false negative (falsely classified as providing good-quality care) rates. First, they determined the cost functions for false negatives and false positives that are implicitly associated with the use of significance levels of 0.05 and 0.01 for identifying hospitals with higher than average mortality. Second, they determined the levels of statistical significance that should be chosen to minimize predefined cost functions, thus minimizing costs associated with misclassifying hospitals. RESULTS: The lower the statistical significance level required for identifying hospitals with higher than average mortality, the lower the implicit cost of false negatives compared to false positives. For a given significance level, the greater the number of patients treated at each hospital or the greater the proportion of truly poorly performing hospitals, the lower the value of the implicit cost incurred by a false negative compared to that for a false positive. For cost functions that put a high relative penalty on false negatives compared to false positives, the use of significance levels of 0.05 or 0.01 does not result in optimal decisions across expected number of patients treated at each hospital or proportions of truly poor-quality care. CONCLUSIONS: Hospital report cards that use significance levels of either 0.05 or 0.01 to identify hospitals that have statistically significantly higher than average mortality make implicit assumptions about cost functions, and the values of the optimal cost function vary across scenarios.     

State health reform. Five trends that will transform hospitals.

As states struggle to forge health care reform plans that meet the opposing objectives of cutting costs and improving access, one thing is certain: Their initiatives will create profound changes to health care and to hospital operations. In fact, five factors emerging from the state reform debate could drastically transform hospitals: reregulation, explosive managed care growth, uncertain state funding mechanisms, new insurance measures, and greater hospital accountability for cost and quality. "This is a wake-up call for hospitals to get very realistic about the cost concerns that are out there," says one hospital executive. Especially since these state efforts are a precursor to national reform.     

Hospital cost and quality performance in relation to market forces: an examination of U.S. community hospitals in the “post-managed care era”

Managed care substantially transformed the U.S. healthcare sector in the last two decades of the twentieth century, injecting price competition among hospitals for the first time in history. However, total HMO enrollment has declined since 2000. This study addresses whether managed care and hospital competition continued to show positive effects on hospital cost and quality performance in the “post-managed care era.” Using data for 1,521 urban hospitals drawn from the Healthcare Cost and Utilization Project, we examined hospital cost per stay and mortality rate in relation to HMO penetration and hospital competition between 2001 and 2005, controlling for patient, hospital, and other market characteristics. Regression analyses were employed to examine both cross-sectional and longitudinal variation in hospital performance. We found that in markets with high HMO penetration, increase in hospital competition over time was associated with decrease in mortality but no change in cost. In markets without high HMO penetration, increase in hospital competition was associated with increase in cost but no change in mortality. Overall, hospitals in high HMO penetration markets consistently showed lower average costs, and hospitals in markets with high hospital competition consistently showed lower mortality rates. Hospitals in markets with high HMO penetration also showed lower mortality rates in 2005 with no such difference found in 2001. Our findings suggest that while managed care may have lost its strength in slowing hospital cost growth, differences in average hospital cost associated with different levels of HMO penetration across markets still persist. Furthermore, these health plans appear to put quality of care on a higher priority than before.     

Acute Care for Elders Units

Older patients often experience a loss of independent physical functioning during the course of an acute illness that requires hospitalization. Although functional outcomes are not usually the focus of care in the hospital, they may be critical determinants of the quality of life, physical independence, cost of care, and prognosis among older patients.Based on a conceptual model of the dysfunctional syndrome (functional decline associated with hospitalization) we developed, implemented and evaluated a multi-component intervention termed Acute Care for Elders (ACE), in hospital medical units of two urban hospitals. ACE is a model of care that combines the principles of geriatric assessment and quality improvement. The ACE intervention includes a prepared environment (environmental modification), patient-centered care (interdisciplinary assessment), interdisciplinary team rounds and planning for home, and medical care review. Results of randomized clinical trials support the effectiveness of ACE to improve outcomes of hospitalization for older patients. Improved functional status, lower risk of nursing home placement and higher levels of patient and professional satisfaction with care are achievable with ACE.The challenges of establishing an ACE unit in community hospitals can be met through a systematic process of implementation and evaluation.ACE is a multi-component intervention that is potentially transportable to other hospital units, with benefits for patients, health professionals and hospital administrators.