Low-Quality, High-Cost Hospitals, Mainly in South, Care for Sharply Higher Shares of Elderly Black, Hispanic, and Medicaid Patients Ashish K. Jha, E. John Orav, and Arnold M. Epstein HEALTH AFFAIRS 30,NO. 10 (2011): 1904–1911 Presented by: Nayan Krishna Joshi October 11, 2011

I. Background  The Affordable Care Act of 2010 authorizes the Centers for Medicare and Medicaid Services (CMS) to make higher payments to high quality, efficient hospitals and to cut payments to hospitals that fail to meet them or improve (value based purchasing program).  Prior studies show that low quality hospitals are more likely to provide services to minority and poor patients. So, act may widen disparities by cutting payments to low quality hospitals.  However, there are no previous studies that examined hospitals simultaneously on the extremes of both cost and quality.

II. Objectives i.What are the structural characteristics of high- quality, low-cost US hospitals—the “best” hospitals? ii.How do these best hospitals differ from other types of hospitals, especially high-quality, high- cost or low-quality, high-cost hospitals? iii.Are underserved patients, such as minority and poor patients, more likely to receive care at one or more of these types of hospitals? iv.How do clinical and patient-reported outcomes vary among these groups of hospitals?

III. Methodology Data sources: a.2007 Hospital Compare data b.2005 Medicare Provider Analysis and Review c.2007American Hospital Association annual survey of hospitals d.2007 Medicare Impact File e.2007 Area Resource File f.2008 Hospital Consumer Assessment of Health-care Providers and Systems survey Econometric methodology: logistic regression model

III. Methodology contd… Measuring Quality: Quality is based on the hospitals’ performance on a set of process measures for four conditions: acute myocardial infarction, congestive heart failure, pneumonia, and prevention of surgical complications. For example, a process measure is giving an aspirin to patients that are admitted for acute myocardial infarction (Source: Medicare Hospitals Compare program ). Total quality score is given by the sum of scores on each condition. Note that process measures represent only a small proportion of care provided in the hospital. Measuring Cost: Computes risk adjusted cost. The procedure involves identifying the 100 most common conditions for Medicare patients and then computing cost for each patient for each condition. Aggregating across all patients and all conditions give the total risk adjusted cost for each hospital (Source: Medicare Provider Analysis and Review, American Hospital Association annual survey of hospital Medicare Impact File and Area Resource File).Note that cost data are based on unaudited data reported by hospitals for Medicare.

III. Methodology contd… Categorizing Hospitals by Quality and Cost Four categories: a.High quality, low cost hospitals (best hospitals): hospitals in the highest quartile of quality and lowest quartile of costs. b.Low quality, high cost hospitals (worst hospitals): hospitals in the lowest quartile of quality and highest quartile of costs. c.High quality, high cost hospitals: hospitals in the highest quartiles of quality and costs. d.Low quality, low cost hospitals: hospitals in the lowest quartiles of quality and costs. Also collects information on hospital and patient characteristics, risk-adjusted mortality rates for each hospitals acute myocardial infarction, congestive heart failure, and pneumonia and patient experience.

IV. Results a)Hospital characteristics grouped by quality and cost quartile

IV. Results b) Percentage of Elderly Black Patients in Hospitals, by Quality and Cost Quartile Worst hospitals have more than twice the proportions of elderly black patients than the best hospitals (15% vs 7%).

IV. Results c) Percentage of Medicaid Patients in Hospitals, by Quality and Cost Quartile Worst hospitals have higher proportions of Medicaid patients than the best hospitals (23% vs 15%).

IV. Results d) Thirty-Day Risk-Adjusted Mortality Rates In Hospitals, By Quality And Cost Quartile For acute myocardial infarction or pneumonia: low-cost, low-quality hospitals had 12–19 percent higher odds of death—and patients at the worst hospitals had 7–10 percent higher odds—compared to best hospitals. There is no difference for congestive heart failure.

IV. Results e) Patients experience: Hospital Consumer Assessment Survey Ratings, By Quality And Cost Quartile Patients discharged from the best hospitals were more likely to rate the hospital highly and to “definitely” recommend the hospital than patients discharged from the worst hospitals.

V. Policy Implication  The findings of the paper have an important implication for national value based purchasing program of Centers for Medicare and Medicaid Services (CMS).  Under the program, federal government will make higher payments to high quality, efficient hospitals and will cut payments to hospitals that fail to meet them or improve.  Paper finds that worst hospitals have higher proportions of Medicaid patients and elderly black patients than the best hospitals. So, these hospitals will have to improve on both costs and quality to avoid incurring financial penalties and exacerbating disparities in care.

V. The Economics Q1: Is it possible for some hospitals to provide high quality care at comparatively low cost (cost-efficient). In other words, do “you get what you haven’t paid (enough) for” in hospitals? A:Unclear “…the evidence to date on how to achieve both of these goals [high quality and low cost] is primarily anecdotal and needs to be tested more broadly”. Q2. Is it true that equity (e.g. providing services to higher proportions of Medicaid patients and elderly black patients) consideration in hospitals conflicts with both the quality and cost? A:Unclear

Thank you!!!