Important notice: It is likely that you will read the abstract of this report, yawn, and then delete the message. Don’t delete it! This study addresses one of the most important issues in health care today. It is crucial that we understand the work of John Wennberg and his colleagues if we ever hope to achieve our goal of affordable, high quality health care for everyone.
Evaluating The Efficiency Of California Providers In Caring For Patients With Chronic Illnesses
By John E. Wennberg, Elliott S. Fisher, Laurence Baker, Sandra M. Sharp, Kristen K. Bronner
Health Affairs
November 16, 2005
Abstract
In this paper we compare the relative efficiency of health care providers in managing patients with severe chronic illnesses over fixed periods of time. To minimize the contribution of differences in severity of illness to differences in care management, we evaluate performance over fixed intervals prior to death for patients who died during a five-year period, 1999-2003. Medicare spending, hospital bed and full-time equivalent (FTE) physician inputs, and utilization varied extensively between regions, among hospitals located within a given region, and among hospitals belonging to a given hospital system. The data point to important opportunities to improve efficiency.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.526v1
This release from the California HealthCare Foundation places in perspective the significance of this report:
Amid debates over the long-term solvency of Medicare, questions about hospital bed capacity, and the rising cost of health care, a new study finds that care for patients with similar illnesses costs Medicare significantly more at some California hospitals but results in no better quality of care or patient satisfaction.
The study by researchers at Dartmouth Medical School looks at the performance of individual California hospitals in managing chronically ill patients over a five-year period that ended in 2003. The findings, along with a comparison of data from hospitals in five regions in California-Sacramento, San Francisco, Los Angeles, Orange County, and San Diego-are published in the online edition of the journal Health Affairs.
The study finds significant variation in Medicare spending for chronically ill patients in California. For example, hospitals in Los Angeles received an average of 60 percent more for inpatient reimbursement for Medicare patients during the last two years of life than Sacramento-area hospitals. In fact, Medicare paid some hospitals in the state as much as four times more than other hospitals to care for patients with similar conditions.
Yet the additional care provided did not improve medical outcomes or patient satisfaction. Rather, as the volume of care increased, the quality of care and patient satisfaction actually declined.
The comparisons suggest that savings could be achieved by improving efficiency with no impact on quality. For example, Medicare could have saved $1.7 billion in the Los Angeles area alone if medical practice patterns there, the most expensive region, resembled those of Sacramento, the least expensive.
http://www.chcf.org/topics/hospitals/index.cfm?itemID=115921
And…
Variations In California Hospital Regions: Another Wake-Up Call For Sleeping Policymakers How long must John Wennberg and colleagues howl in the wind before the policy community pays attention to their critical findings?
By Uwe E. Reinhardt
Health Affairs
The paper by John Wennberg and colleagues poses a renewed challenge to federal and state policymakers to handle the taxpayers’ hard-earned money responsibly-a task both have shunned for many decades. With the federal government’s deficit growing apace and California state’s budget, properly accounted for, in deep deficit as well, health policymakers can sustain the inefficiencies now apparent in our health care system only by pricing more and more low-income Americans out of health care. One could question the ethics of that approach.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.549v1
Comment: John Wennberg and his colleagues have significantly improved their model for identifying wasteful excesses in health care delivery. Their data describes specifically the care received by Medicare beneficiaries, and for a very good reason. Our Medicare social insurance program has robust data resources that enable analyses of variations in spending, inputs, utilization, and quality. These data simply are not available through the fragmented commercial insurance payers. So one more important advantage of a single payer system is that it makes it much easier to correlate variations with cost and quality outcomes.
Once we have valid information on system performance, then we can modify funding to reduce waste and promote more favorable outcomes. This sounds easy, but what would have to be done? This study demonstrates once again that excess services correlate with excess capacity. But could Medicare alone influence capacity when there are so many other payers in our fragmented system? Physicians who practice in a high-capacity environment sincerely believe that they are giving the best care possible. What would their response be when Medicare tells them to cut back on the services that they are providing? We had a taste of that at the peak of the managed care revolution.
What if we had a single social insurance program? Although there certainly would be turf issues, funding could be tuned to adjust capacities to more appropriate levels. An improved data base could identify better practice outcomes, and physicians are certainly amenable to changing practice patterns if solid data demonstrates that it would improve the health care of their patients.
Many believe that the public and private payers can work together to resolve these important issues. They’ve already had thirty years, but we don’t see any improvements yet. If we had a single, public system of funding care for everyone, we would be demanding change immediately.
There is hope. A few more words from Uwe Reinhardt:
“Wall Street’s financiers, ostensibly the vigilant and savvy guardians over efficient resource allocation in our economy, also have happily financed so far whatever added capacity health care leaders have wanted to put in place, needed or not, as long as those who pay for health care could be counted on to underwrite whatever inefficiency was put in place. An economist, of course, has little trouble understanding these financiers’ behavior.”
“In health care, efficiency also supports equity. The alternative, after all, is continued funding of relatively inefficient care in some parts of the health system, all the while cutting the fiscal lifeblood out of public programs intended to provide relief for the nation’s large, low-income population, which increasingly finds itself priced out of health care.
“Should financially pressed public policymakers ever respond constructively to Wennberg and colleagues’ research, Wall Street’s financiers might be in for a rude surprise. Given the federal government’s mounting deficits and California’s severe fiscal straits, such a surprise is now a distinct possibility.”
