Relationship Between Quality of Care and Medical Spending?

By October 18, 2016Commentary

One thesis consistently supported by academic and think tank health care researchers is that higher quality care will lead to lower health spending.  A study carried by Health Affairs appears to support that notion, at least in regard to certain procedures in hospitals.   (HA Article)   The researchers examined spending related to coronary artery bypass grafting, pulmonary lobectomy, aortic aneurysm repair, colectomy and hip replacement, during the hospitalization and for 30 and 90 days after the admission.  Their quality measure was a composite of 30-day mortality and patient satisfaction.  Personally, I find patient satisfaction to be a dubious indicator of the actual quality of most care.  The results took into account a variety of hospital and patient characteristics.  Hospitals were divided into quartiles based on the quality measure.  For both 30 day and ninety day spending, the initial hospitalization accounted for half of all spending, post acute care about 22% and provider payments about 19%.  There was little effect of hospital size on quality categorization, but high-quality hospitals were more likely to be in the Midwest, less likely to be in the Northeast and tended to treat sicker patients.  Patients at high-quality hospitals were a little younger, less likely to have certain co-morbidities, more likely to be white and more likely to be discharged to home.

There was a moderate difference in overall spending.  Thirty day payments, when fully adjusted for patient characteristics, were $30,156 at high-quality hospitals and $32,854 at low quality ones.  For ninety days, the figures were $34,017 at the high-quality quartile facilities, and $36,374 at the lowest quartile ones.  Most of the spending difference was accounted for by lower post-acute spending, consistent with the findings of other research.  On an individual procedure basis, the results were statistically significant only for hip replacement and colectomy, although the pattern was the same for other procedures.  The findings give support to the use of bundled or episode payments, although those programs need to be carefully designed to avoid unintended consequences.  And while the findings suggest there is an association between better quality care and lower health spending, that is the context of a specific medical procedure.  If by quality we mean ensuring that individual get both all the care and only the care that is needed to help them be in optimal health, and that individual treatments or products are performed or delivered at the highest possible quality, I am dubious that lower lifetime health spending results.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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