The following originally appeared on The Upshot (copyright 2018, The New York Times Company). It was jointly authored by Dhruv Khullar and Austin Frakt.
How much you spend on medical care depends on what you get, but also where you get it.
Confoundingly to many, the cost of the same procedure on the same patient by the same physician can vary by thousands of dollars depending on whether it’s performed in a hospital, a hospital’s outpatient department, an ambulatory surgical center or a doctor’s office. It can also vary by who’s paying the bill — which insurer or public program.
And even for the same insurer, cataract surgery might cost twice as much in a clinic affiliated with a hospital compared with an independent surgery center. The cost of cancer care is significantly higher in hospital outpatient departments compared with community practices, partly because insurers often pay hospitals double for chemotherapy drugs. Delivering a baby in a teaching hospital costs about $2,000 more than in a community hospital.
Some of this is a result of different prices. Some reflects differences in how much care is delivered: its intensity.
Either way, such cost variation across care settings has led policymakers to consider paying more evenly for medical services regardless of where they’re delivered, and to shift care from expensive, high-intensity settings to cheaper, low-intensity ones. Doing so, the thinking goes, could result in more efficient use of resources by health systems.
But new research also shows the downside of this approach: A study of Medicare hospitalizations found that almost all patients are more likely to survive at teaching hospitals, which tend to be more expensive. Amid our enthusiasm for more efficient care settings, we should be cleareyed about the limitations: Sometimes less is more, but sometimes more is more.
To some extent the shift toward cheaper settings is already happening. Medicare has started to close the gap in payment rates between hospital-owned clinics and private doctor’s offices through site-neutral payments. The Massachusetts Health Policy Commission has recommended that more patients be diverted to low-cost community hospitals from high-priced academic medical centers. And insurers are encouraging health systems to shift hospital care to less expensive outpatient clinics, rehab facilities and even patients’ homes.
It has long been common for lower-priced community hospitals to transfer patients to higher-priced and more intensive teaching hospitals. But some hospitals like Massachusetts General Hospital, a relatively higher-priced, academic medical center in Boston, now have programs in which they send stable patients from their emergency departments to affiliated, lower-priced community hospitals.
Other academic centers are sending patients not to another hospital, but directly home. In 2014, the Mount Sinai Health System began a hospital-at-home program for patients sick enough to need a hospital but stable enough to be cared for at home. Patients get visits from doctors, nurses, physical therapists and social workers, and they can have intravenous antibiotics, lab draws and breathing treatments in the comfort of their home. Research suggests that care for patients treated at home costs less and results in fewer complications, higher satisfaction and lower mortality.
These efforts are part of a broader trend away from high-intensity-care settings. The use of inpatient care is declining across the United States, including a 6 percent drop in inpatient admissions for Medicare patients from 2004 to 2010. The Department of Veterans Affairs has experienced a 10 percent decline in inpatient use over the past decade, while outpatient visits have increased by 40 percent. New technologies are making outpatient care safer, and new payment models are encouraging a shift to lower-cost settings.
But not all such efforts may serve patients well. There’s concern, for example, that outpatient surgical centers don’t always have the resources and staff needed to handle potential complications of the increasingly complex operations they’re taking on. Other research suggests that hospitals that spend more and do more may have better patient outcomes and lower mortality rates.
Teaching hospitals are generally the costliest medical environments. Some have argued that only the sickest patients — for whom complex services and technologies are most likely to help — should be treated there, while relatively healthy patients should preferentially be cared for in less costly community hospitals. But do sicker patients really do better at teaching hospitals? And do healthier patients fare just as well in either setting?
The new study on Medicare hospitalizations sheds some light. (Both of us were part of the group that conducted this study.) Led by Laura Burke and Ashish Jha at Harvard, the study analyzed more than 11 million Medicare hospitalizations and found that almost all patients — whether very sick or relatively healthy — had lower mortality rates at teaching hospitals. But there are also some differences.
Among patients admitted for operations like hip replacements, the patients with the most health problems over all were the ones likeliest to benefit from a teaching hospital. On the other hand, among people admitted with conditions like pneumonia or heart failure, though all groups did better at the teaching hospitals, the difference was greatest for the relatively healthy patients.
The more advanced technologies available at teaching hospitals explained some, but not all, of the difference. Other factors like subspecialty expertise, more clinicians involved in care, and greater availability of ancillary services may also be playing a role.
Given the high — and sometimes unjustifiable — cost of some health care settings, it seems reasonable to pursue payment parity for comparable care delivered in different settings. And all other things equal, the shift toward lower-intensity, lower-cost settings is a worthy goal. But in some cases, outcomes may not be equal, and it seems we should make sure we’re not cutting quality when we’re cutting costs.
