Spending and Quality

One of the premises of the geographic variation in health spending research is that differences are not justified if higher spending is not correlated with better health outcomes.  The Dartmouth Atlas research findings suggest that in the United States those regions with higher per person spending don’t have better outcomes and in some cases have worse ones.  Other researchers have contested the applicability of those findings, largely based on Medicare spending, to the larger population and have criticized the fullness of the analysis.   Research published in the Journal of the American Medical Association  based on spending in Canada comes to a different conclusion.   (JAMA Article)   The basic aim of this study was to see whether Canadian patients with acute conditions who were treated in hospitals that spent more on their care had lower mortality and lower readmission rates and better overall quality of care.  The conditions were heart attack, heart failure, hip fracture and colon cancer surgery and the researchers designed the study to avoid issues about the comparative severity of illness of the patients seen at different hospitals.  The hospitals were in Ontario, Canada.  The hospital end-of-life expenditure index was used to calculate intensity of care and spending.

On an adjusted basis there was about a two-fold variation in resource use and spending, from about $22,000 per person to $45,000.  High spending hospitals tended to be high volume teaching ones located in urban areas and to use more specialists in patients’ treatments.  They had more capability to, and did, use more imaging and procedures.  Across all conditions, the high-spending hospitals had lower mortality and readmission rates and greater compliance with evidence-based quality of care measures.  The causal chain appears to be that quick access to certain skilled nursing, specialist physician and evidence-based items of care led to better outcomes.  Supplying these resources is expensive.  Because the study focused on relatively short-term measures, it is hard to know what the longer term effects on overall spending might be.  But, for example, if the patients in these hospitals had lower readmission rates, that might reflect some savings.  The bad implication of the study is that if you want improved quality of care and health outcomes, you may have to spend more to get those uniformly across a health system.  In a system like the United States’, where spending is perceived as out-of-control, that is not a good thing.