hospital impact

A post by Andrew Barna

So we are all on board with price transparency in healthcare, right? Well maybe it is not so simple. Apparently, a John’s Hopkins study has found that specialized cancer facilities have higher costs at the time of service, but they “yield lower cost per quality-adjusted life year” in the long-run. That is a mouthful, but in a nutshell, it means you are going to pay more for cancer treatment at a Sloan Kettering or a M.D. Anderson, but you will probably live longer and with a better quality of life. I think this would make sense to most Americans – you get what you pay for – but the picture is not so clear when you look at hospital/physician comparison websites.

Most of the websites I have seen have been pulling quality data from the CMS quality demonstration project. This is not a bad start. The CMS measures cover some of the highest volume procedures and they draw attention to practices that promote better outcomes. And by “better outcomes,” they mean you are more likely to leave the hospital alive. I am not knocking the CMS measures. I think the CMS Demonstration project, as well as the IHI campaign, have created systematic improvements in patient safety and outcomes… but…these measures do not necessarily give consumers an indication of the long term value of the services they are purchasing.

Let’s go back to our health economics class. The value of a healthcare intervention is measured in terms of lengthened life or improved quality of life. Indeed, this is how a lot of medical research is done. One treatment is shown to have better long term impact than another. But by their very nature, the CMS measures focus on short-term outcomes that can be measured during your hospital stay. So on one of the hospital comparison websites you could find out that the in-hospital mortality rate for your heart procedure is lower at Hospital A rather than Hospital B. OK, easy choice go with Hospital A. But what does that outcome mean relative to cost. Are you willing to pay an extra $5,000 for less of a chance to die? Or could you save a $1,000 and take a tenth of a percent in additional risk? Now the decision is not so clear. We aren’t typically equipped to make such a call.

Americans are expert consumers and we want to know every detail about what we are buying. I won’t even buy a CD until I know how other people who like similar music like that CD. When we have the right information about what we are purchasing, we make better choices (I should say that we make choices that we are happier with). Granted that purchasing healthcare is not equivalent to purchasing a CD, but it is not different on this point. The more that hospitals can demonstrate their overall and long-term value, the more consumers will make better choices.

Post Script: I just received the spring copy of Frontiers of Health Services Management and the featured topic is “Price Transparency: Meeting the Market Demand for Clarity”. So as I read the articles, I am sure I will be writing posts retracting the comments above. Hey Tony, your old boss Richard Clarke wrote the lead article. It looks good from the summary.