In health care, high cost not necessarily the same as high quality

Just an excellent article in today's NY Times about a study that shows significant disparities between health care charges and health care quality. This is a must read for teachers of health care law survey courses. Here's a bit from the early paragraphs:

Stark evidence that high medical payments do not necessarily buy high-quality patient care is presented in a hospital study set for release today.

In a Pennsylvania government survey of the state’s 60 hospitals that perform heart bypass surgery, the best-paid hospital received nearly $100,000, on average, for the operation while the least-paid got less than $20,000. At both, patients had comparable lengths of stay and death rates.

And among the 20 hospitals serving metropolitan Philadelphia, two of the highest paid actually had higher-than-expected death rates, the survey found.

Hospitals say there are numerous reasons for some of the high payments, including the fact that a single very expensive case can push up the averages.

Still, the Pennsylvania findings support a growing national consensus that as consumers, insurers and employers pay more for care, they are not necessarily getting better care.

Expensive medicine may, in fact, be poor medicine.

“For most consumers, the fact that there is no connection between quality and cost is one of the dirty secrets of medicine,” said Peter V. Lee, the chief executive of the Pacific Business Group on Health, a California group of employers that provide health care coverage for workers.

Some Pennsylvania employers said the state’s findings, based on data from 2005, might put more pressure on insurance carriers and hospitals to start demonstrating the value of care. “It now provides us a tool to have a serious dialogue with our carriers,” said Mark Dever, a benefits consultant for Duquesne Light, a regional utility in Pittsburgh.

“We have to question,” he said. “There’s a big difference in price — why?”

The report by the Pennsylvania Health Care Cost Containment Council, a state agency, provides a rare public glimpse of detailed information about hospital payments and patient outcomes. And the seemingly random nature of the payments is striking.

Although federal Medicare payments are largely fixed, they varied somewhat among the Pennsylvania hospitals surveyed. The far greater disparity involved commercial insurers, which must negotiate their rates hospital by hospital.

And the survey found that good care can go unrewarded. One Philadelphia area hospital, Main Line Health’s Lankenau center, which performs a large number of bypass surgeries and has a high success rate, according to the survey, was paid an average of $33,549 by private insurers. That was less than half the nearly
$80,000 in average payments received by the other hospitals, with poorer track records.

“It doesn’t make sense,” said Marc P. Volavka, the executive director of the Pennsylvania Health Care Cost Containment Council. “Certain payers are paying an awful lot for poor quality.”

He points to some of the experiments to change how hospitals are paid, like Geisinger Health System in central Pennsylvania, which is trying to demonstrate its commitment to high-quality care by offering a 30-day warranty on its cardiac surgery.

“The current reimbursement paradigm is fundamentally broken,” said Dr. Ronald Paulus, an executive with Geisinger, who says there is no current financial incentive
for a hospital to provide the kind of care that leads to better outcomes and lower payments.

What's up when the rich and well-insured can't get standard-of-care? You could teach an entire health law course on the basis of this one article, if you wanted to explore the in's and out's of this article.

The study is here and the press release about the study is here.