United Healthcare and Aetna are introducing a trial program in Columbus, OH, which will encourage patients to seek doctors whom the insurers rate more highly. According to MSNBC,Columbus doctors are expressing concern that this program will evolve into a "pay for performance" program. One problem apparently, is that "performance" is unclear.
Fierce competition among hospitals and physicians for profitable specialty services is driving costly inpatient and outpatient expansions, especially in more affluent areas with well-insured populations, according to initial findings from the Center for Studying Health System Change's (HSC) 2005 site visits to 12 nationally representative communities, according to a news release.
"As hospitals and physicians compete more broadly for profitable services, more and more diagnostic and surgical services are shifting from hospitals to physician offices and physician-owned ambulatory centers," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded primarily by The Robert Wood Johnson Foundation.
Competition among hospitals�and between hospitals and physicians�has focused on key, profitable service lines, including cardiac, orthopedic and cancer care, researchers found. Facing stagnant growth in professional fees and pressure from growing malpractice premiums and other practice expenses, physicians increasingly view facility fees as an important new revenue source, according to the study.
The medical building boom and intensified service-line competition identified in the fifth round of HSC site visits potentially have consequences for local health care markets. Whether meeting or creating new demand, the capacity expansions are destined to lead to higher rates of care use and costs.
The intense competition for profitable services also may influence the availability of health care services and patients' access to care. For example, many hospitals are struggling to get physician specialists to provide on-call emergency department coverage. Increasingly, hospitals are paying physicians to provide on-call coverage�historically part of physicians' obligation in return for hospital privileges. As specialists provide more services in their practices or in other facilities they have a financial interest in, they become less dependent on having privileges at general hospitals, potentially diminishing access to specialty care for some patients.
"All the signs in the 12 communities are pointing toward higher costs and growing gaps in access to care by income and geographic location," Ginsburg said. "Continuing high cost trends threaten the affordability of health insurance, especially for low-wage workers and small firms, increasing the likelihood that the number of uninsured Americans will continue to rise."
The movement of profitable services out of hospitals and into physician practices and physician-owned facilities poses a threat to some hospitals' ability to subsidize care for less profitable services and for low-income patients. And, as hospitals expand lucrative services, some are cutting back on less profitable ones such as inpatient psychiatric care.
The study's findings are detailed in a new HSC Issue Brief�Initial Findings from HSC's 2005 Site Visits: Stage Set for Growing Health Care Cost and Access Problems�by Cara S. Lesser, M.P.P., HSC director of site visits; Ginsburg and Laurie Felland, M.S. an HSC health researcher. The Issue Brief and five new Community Reports describing market changes in Indianapolis; Cleveland; Little Rock, Ark.; northern New Jersey; and Orange County, Calif.; are available online at www.hschange.org
Every two years, HSC researchers visit 12 nationally representative communities across the country, conducting intensive interviews with local health care leaders, including health plans, providers, policy makers, employers and consumer advocates. In addition to the five community reports released recently, HSC will issue reports in the coming months covering Lansing, Mich.; Greenville, S.C.; Syracuse, N.Y.; Boston; Miami; Phoenix; and Seattle.
Other key initial findings from the fifth round of HSC site visits include:
* Employers and Health Plans Fall Back on Patient Cost Sharing. Employers and health plans have launched few initiatives to control rising costs beyond increasing patient cost sharing. Since traditional managed care tools, such as administrative utilization controls, have fallen into disfavor as a result of the managed care backlash, health plans largely have focused on new product designs aimed at engaging consumers to make more cost-conscious decisions about service use and choice of providers. Plans across the 12 markets quickly developed consumer-driven products-high-deductible coverage linked to spending accounts, including health savings accounts (HSAs) and health reimbursement accounts (HRAs), but enrollment to date is limited.
* Safety Net Strained as Demands Increase. While health care costs continue to rise and health insurance becomes less affordable, the public sector has fewer resources to respond to growing needs for coverage or subsidized care. The combination of ongoing state budget constraints, unwillingness to raise taxes and federal budget pressures have left state and local governments hard pressed to keep up with growing needs. Many community health centers and safety net hospitals report that funding support has not kept pace with the increasing numbers of uninsured patients they treat.
* Quality Improvement. Hospitals have increased attention to quality improvement over the past two years. Some hospitals, especially those that lagged in adopting quality improvement initiatives, pointed to Medicare's linking a portion of the hospital inpatient payment update to public reporting of data on the quality of care as an important catalyst. This initiative has helped focus hospital quality improvement efforts. Indeed, many hospitals expect payer demand for demonstrated quality to increase and, therefore, view these activities as important investments to be able to compete in the future.
* Information Technology Investment. While information technology (IT) investment has increased, the scope is more limited than some policy makers and industry proponents would suggest. Hospitals and a handful of large physician groups are at the forefront of significant IT investment.
* No Silver Bullet. Overall, the promise of quality improvement initiatives and IT investments pales in comparison to the scope of the cost and access problems confronting the health care system today. If current trends continue unabated, communities are likely to face growing numbers of uninsured people and increasing disparities in access to care by income and geographic location.
Stakeholder Comments on the HSC Study
Carmela Coyle, senior vice president for policy, American Hospital Association, www.aha.org
"Society faces a balancing act as we weigh the benefits of improved care and longer lives with the growing cost of health care. Advances in medicine can dramatically improve the quality of life for patients. This comes with higher costs, but these investments can make a difference in the health of Americans. With demand for care increasing and the cost of providing that care on the rise, we need
to look at ways to improve care through better management of chronic illness and coordination among providers. The trend toward physician-owned, limited-service hospitals hinders rather than helps this coordination."
Donald W. Fisher, Ph.D., C.A.E., president and CEO, American Medical Group Association, www.amga.org
"The Center's findings underscore the fact that market forces are becoming the primary drivers of the business of medicine today. While this is understandable, given the economics of the times, it is imperative that we remain vigilant in upholding the highest standards of quality and outcomes and, in the process, change our payment system to one that assures the financial recognition of this value in medical
care. The American Medical Group Association has begun its Result-Based Payment System Initiative to look for useful ways to link medical reimbursement to outcomes and not processes. AMGA's multi-year study seeks to develop a system that rewards providers and facilities who achieve or improve health care delivery with regard to efficiency, timeliness, quality, appropriateness of care, patient-centricity and other factors of health care traditionally absent from the fee for service or pay for transactions structure."
Karen Ignagni, president and CEO, America's Health Insurance Plans, www.ahip.org
"Health insurance plans have developed a new generation of cost containment tools and techniques that are providing results. For example, the upward trend in spending on prescription drug benefits has been cut dramatically over the past three years as these tools and techniques have been more widely used. The new HSC study looks at emerging patterns in the use of new technologies that may make it more difficult to bring down cost trends and provide coverage for more Americans. This points to a key role for government in overall planning and in evaluating the efficacy of new technologies and their diffusion into practice."
Citing high costs and overuse, insurers are beginning to require pre-certification for high tech medical imaging such as CT scans, MRIs, and PET scans, according to the Philadelphia Inquirer.
A new report, Hospital Care in the 100 Largest Cities and Their Suburbs, 1996-2002: Implications for the Future of the Hospital Safety Net in Metropolitan America, released today from State University of New York (SUNY) Downstate Medical Center, sheds new light on the struggle to meet the health care needs of all communities across the nation.
More public hospitals were lost between 1996 and 2002 (16 percent in cities and 27 percent in the suburbs) than for-profit (11 percent in cities and 11 percent in suburbs) and non-profit hospitals (11 percent in cities and 2 percent in the suburbs), a stark contrast to the relatively moderate decline in the number of hospitals nationwide. Public hospitals typically serve the most vulnerable populations, and those that face major challenges in accessing private health care services.
However, as previously reported, a hospital building boom is going on in wealthy suburbs, as hospitals seek well-insured, high paying customers living there or for a few specialties. As noted below, according to this report, poorer suburbs are doing poorly.
�Public hospitals may become an endangered species,� said Dennis Andrulis, Ph.D., lead study author, formerly of SUNY Downstate Medical Center, and now with Drexel University School of Public Health. �Not only are public hospitals disappearing from inner cities across the country; they are disappearing from the suburbs as well.�
The report funded by the Robert Wood Johnson Foundation shows that urban public hospitals provided less inpatient and emergency care in 2002 than in 1996, with for-profit hospitals now surpassing public hospitals in total admissions for the 100 largest cities. Yet, public hospitals continue to care for more seriously ill patients, as measured by the average length of a hospital stay.
In this fifth installment of the series The Social and Health Landscape of Urban and Suburban America, the focus is on key factors of hospital use and availability. The data, provided by the American Hospital Association, were analyzed by ownership type (for-profit, non-profit and public) and by levels of poverty (low, medium and high). The review covers the volume of inpatient and outpatient care, including emergency department visits; number of beds, average length of stay (ALOS) and occupancy rate; three types of specialty care: level 1 and level 2 trauma centers, neonatal intensive care beds, and positron emission tomography (PET) scanners; and hospital revenues and margins.
Perhaps the most unexpected and potentially troubling finding was that high-poverty suburbs appear to be relatively underserved by hospitals, compared to low-poverty suburbs, which appear to have an abundance of hospital resources. Among the metropolitan areas of the 100 largest cities, high-poverty suburbs made up 44 percent of the total suburban population in 2000, but accounted for only 20 percent of total admissions, inpatient days, and outpatient and emergency visits in 2002. For the same years, low-poverty suburbs comprised only 26 percent of the total suburban population, yet had more than more than 40 percent of all suburban hospital admissions, outpatient visits and emergency department visits.
�While we all may read more about the impact of public hospital closures on inner cities, the fact is we are also seeing the potential for an impending access crisis in suburbs with high-poverty populations,� said Andrulis. �These high-poverty suburbs exist disproportionately in California, Texas and other areas in the south.�
The report finds that on average high poverty suburbs have five times the percentage of Latino residents as low-poverty suburbs (26.4 percent versus 5.3 percent) and twice the percentage of population that is foreign-born.
Prior surveys have documented these groups as having the highest uninsured rates in the country. Lack of health coverage for a significant share of population may be a contributing factor in the much lower levels of use and availability of hospital care in high-poverty suburbs. Conversely, residents of low poverty suburbs, on average, are the most affluent residents of metropolitan America, and are likely the best insured.
�A major question the study raises is how the hospital safety net will adapt to meet the health care needs of the poorest and sickest residents of our nation,� said Andrulis. �As the number of public hospitals continues to decline, the concern remains to what extent non-profit and for-profit hospitals are taking or will take on greater responsibilities as safety net providers, and to what degree their focus is on attracting the healthiest of Medicaid patients, leaving the sickest and costliest patients to the care of the remaining public or major safety net hospitals.�
For a link to the report, go to www.downstate.edu/healthdata The report will be posted by 12:01 a.m. ET on Wednesday, Aug. 17. Or you may contact Dennis Andrulis via email at [email protected] or by phone at (215) 762-6957.
Responding to criticisms that diagnostic imaging costs are out of control, imaging companies are now asserting that their technologies deliver high value,according to the Boston Globe.
As previously reported, diagnostic imaging is the fastest growing element in the U.S. health care budget.
The Globe's article does not discuss teleradiology, the use of long-distance communication by which low cost radiologists from India help keep diagnostic imaging costs under control.
Both the high cost of health care and inadequate health insurance coverage are undermining the financial security of millions of Americans, according to a new Fund analysis. Based on results from the Commonwealth Fund Biennial Health Insurance Survey, an estimated 77 million Americans struggle with medical bills, have recent or accrued medical debt, or both.
In Seeing Red: Americans Driven into Debt by Medical Bills, Fund researchers Michelle M. Doty, Ph.D., Jennifer N. Edwards, Dr.P.H, and Alyssa L. Holmgren report that while medical bill problems and debt are experienced most often by the uninsured, even many working-age adults who are continually insured have problems paying their medical bills and have medical debt. The study also found that working-age adults incur significantly higher rates of medical bills and debt than adults 65 and older.
These financial burdens ultimately affect the likelihood that people will get the care they need. About 63 percent of those reporting medical bill problems or medical debt went without needed care because of the cost, compared with 19 percent of adults without any medical bill problems or debt.
Current clinical practice guidelines are not written with older adults with multiple illnesses in mind, according to a study in the August 10 issue of JAMA. The use of CPGs as the basis for pay-for-performance initiatives that focus on specific treatments for single diseases may be particularly unsuited to the care of older individuals with multiple chronic diseases.
The aging of the population and the increasing prevalence of chronic diseases pose challenges to the development and application of clinical practice guidelines (CPGs), according to background information in the article. In 1999, 48 percent of Medicare beneficiaries aged 65 years or older had at least 3 chronic medical conditions and 21 percent had 5 or more.
Clinical practice guidelines are based on clinical evidence and expert consensus to help decision making about treating specific diseases. Most CPGs address single diseases in accordance with modern medicine's focus on disease and pathophysiology. However, physicians who care for older adults with multiple diseases must strike a balance between following CPGs and adjusting recommendations for individual patients' circumstances. Difficulties escalate with the number of diseases the patient has. The limitations of current single-disease CPGs may be highlighted by the growth of pay-for-performance initiatives, which reward practitioners for providing specific elements of care. Because the specific elements of care may be based on single-disease CPGs, pay-for-performance may create incentives for ignoring the complexity of multiple comorbid (related illnesses) chronic diseases and dissuade clinicians from providing optimal care for individuals with multiple comorbid diseases.
Cynthia M. Boyd, M.D., M.P.H., from the Center on Aging and Health, Johns Hopkins University, Baltimore, and colleagues examined how CPGs address comorbidity in older patients and explored what happens when multiple single-disease CPGs are applied to a hypothetical 79-year-old woman with 5 common chronic diseases. Selection of these diseases were based on data from the National Health Interview Survey and a nationally representative sample of Medicare beneficiaries (to identify the most prevalent chronic diseases in this population). The National Guideline Clearinghouse was used to locate evidence-based CPGs for each chronic disease. Of the 15 most common chronic diseases, the researchers focused on CPGs for hypertension, chronic heart failure, stable angina, atrial fibrillation, hypercholesterolemia, diabetes mellitus, osteoarthritis, chronic obstructive pulmonary disease, and osteoporosis.
Two investigators independently assessed whether each CPG addressed older patients with comorbidities, goals of treatment, interactions between recommendations, burden to patients and caregivers, patient preferences, life expectancy, and quality of life. For a hypothetical 79-year-old woman with chronic obstructive pulmonary disease, type 2 diabetes, osteoporosis, hypertension, and osteoarthritis, the authors aggregated the recommendations from the relevant CPGs.
The researchers found that most CPGs did not modify or discuss the applicability of their recommendations for older patients with multiple comorbidities. Most also did not comment on burden, short- and long-term goals, and the quality of the underlying scientific evidence, nor give guidance for incorporating patient preferences into treatment plans. If the relevant CPGs were followed, the hypothetical patient would be prescribed 12 medications (costing her $406 per month) and a complicated nonpharmacological regimen. Adverse interactions between drugs and diseases could result.
"For the present, widely used CPGs offer little guidance to clinicians caring for older patients with several chronic diseases. The use of CPGs as the basis for pay-for-performance initiatives that focus on specific treatments for single diseases may be particularly unsuited to the care of older individuals with multiple chronic diseases. Quality improvement and pay-for-performance initiatives within the Medicare system should be designed to improve the quality of care for older patients with multiple chronic diseases; a critical first step is research to define measures of the quality of care needed by this population, including care coordination, education, empowerment for self-management, and shared decision making based on the individual circumstances of older patients," the authors conclude.
Hospitals and physicians are aggressively expanding capacity to deliver profitable specialty services in suburban areas of northern New Jersey, fueling concerns about health care costs, according to a new community report released today by the Center for Studying Health System Change (HSC).
The improving financial performance among suburban hospitals has fueled expansion and modernization efforts, while the smaller community hospitals in the urban communities surrounding the city of Newark are confronting declining admissions, growing charity care burdens and deteriorating financial performance. At the same time, safety net hospitals in Newark have financial and institutional protections that-for the time being-protect them from the economic decline experienced by smaller hospitals in surrounding urban communities.
"These developments raise the prospect of widening disparities in care among the three groups of hospitals and the patients they serve," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.
Other key findings of the report, Urban-Suburban Hospital Disparities Grow in Northern New Jersey, include:
* Growing numbers of specialist physicians are terminating contracts with health plans�or threatening to do so�in an effort to obtain higher payments.
* Employers are shifting health costs to workers, but most are holding off on adopting consumer-driven health plan designs.
* Recent increases in the state's charity care funding pool have helped hospitals, but access to ambulatory care remains limited for uninsured people.
Northern New Jersey is one of 12 communities across the country tracked intensively by HSC researchers through site visits. The new report is based on a March 2005 site visit and interviews with more than 75 Northern New Jersey health care leaders, representing health plans, employers, hospitals, physicians and policy makers.
Provider reimbursement and competition are the subjects of a series of articles published today on the Health Affairs Web site.
In the first article, Sujit Choudry, an associate professor at the University of Toronto, and two colleagues address the legal implications of trying to combat the migration of highly profitable cases and well-insured patients from general hospitals to ambulatory surgical centers and specialty hospitals.
In a brief response to the paper by Choudhry and colleagues, Clark C. Havighurst, professor emeritus at Duke University School of Law, argues against any legal protections for general hospitals that might lead to monopolies.
Finally, Paul Ginsburg and Joy Grossman of the Center for Studying Health System Change examine the ways in which inaccurate and out-of-date cost data drive the heated competition for highly profitable health care cases.
This paper is being published on the Health Affairs Web site with support from the California HealthCare Foundation.
Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Additional peer-reviewed papers are published weekly online as Health Affairs Web Exclusives at www.healthaffairs.org Health Affairs Web Exclusives are supported in part by a grant from the Commonwealth Fund.
Unintentionally inflated prices for certain medical services are spurring intense competition among physicians and hospitals to expand cardiac, orthopedic and high-end imaging services, potentially sparking a powerful new health care cost driver, according to a study by the Center for Studying Health System Change (HSC) published today as a Web Exclusive article in the journal Health Affairs.
�In many communities, hospitals and physicians are racing to expand profitable cardiac and orthopedic care, signaling that we�re inadvertently paying too much for these services,� said Paul B. Ginsburg, Ph.D., lead author of the study funded by the California HealthCare Foundation. Ginsburg is an economist and president of HSC, a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.
[Note:] Low cost specialty care in precisely fields such as this is what is driving the push to medical tourism in South Asia.]
�This research provides further evidence that some aspects of the health care system have evolved in a direction that is both costly and inefficient,� said Jill Yegian, director of the Health Insurance Program at the California HealthCare Foundation. �Intentional or unintentional, these perverse incentives make the already difficult job of reining in health care spending that much harder.�
Current payment systems often rely on provider charges for services rather than the actual costs of providing care, leading to large differences in profitability when charges and costs diverge, the study finds.
Over time, changes in productivity and costs lead to inadvertent variation in profitability across different services, with many newer, more technologically advanced services likely becoming relatively more profitable. While variation in profitability probably isn�t a new phenomenon, growing financial pressures on physicians and hospitals are leading to increased competition for the more lucrative services.
Faced with stagnant payment rates for professional services, many physicians are growing more entrepreneurial, either by adding capacity for more profitable services in their practices or by investing in freestanding facilities. Advances in technology also have made it possible to offer more services in physician practices and physician-owned facilities.
Hospitals often cite the ability to cross-subsidize less profitable services as a motivation for expansion of profitable services, according to the study. And, in some cases, hospitals are responding to perceived competitive threats from physician-owned facilities.
Congress has focused attention on threats to general hospitals from the growth of physician-owned specialty hospitals, but the competition between physicians and hospitals for profitable services and the threat to hospitals is much broader, according to the study, which is based on findings from HSC�s site visits to twelve nationally representative communities and additional interviews with government officials, industry experts and private insurers. For example, such services as magnetic resonance imaging (MRI), radiation therapy and outpatient cancer care increasingly are being provided in physician practices, where physician self-referral restrictions don�t apply.
The study encourages policymakers to consider options to improve the accuracy of Medicare payment systems, such as subsidizing a sample of providers to provide systematic cost accounting data to the Medicare program or assuming higher rates of capacity utilization for equipment in setting payment rates. The study cautions, however, that policymakers must be willing to spend money to save money.
�Although the amounts are likely to be minuscule in relation to the potential reduction in outlays for benefits, funds for administering Medicare have always been tight,� the article states. �If experience prevails, resources will become available only when a major stakeholder decides this investment is important and effectively advocates for it.�
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