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August 10, 2022
David Burda
Outcomes Policy System Dynamics
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Your Hospital Is Average

If you want great medical care, you should move to Lake Wobegon, where all the hospitals are above average.

Anywhere else, chances are your medical care will be average. At least according to a short but revealing research letter published recently in JAMA Health Forum. You can download the four-page letter here.

Three health services researchers affiliated with Beth Israel Deaconess Medical Center in Boston and the Weill Cornell Medical College in New York had the clever idea of taking a look at how general, acute-care hospitals performed across all three of Medicare’s largest and long-running value-based reimbursement systems. The three programs are the:

  • The Hospital Value-Based Purchasing Program, or HVBP, which increases or decreases Medicare payments to hospitals based on how well they do on performance measures in four areas: clinical outcomes, person and community engagement, patient safety and efficiency and cost reduction.
  • The Hospital Readmissions Reduction Program, or HRRP, which cuts Medicare payments to hospitals that have excessive 30-day unplanned readmission rates for certain medical conditions like heart attacks, heart failure and pneumonia.
  • The Hospital-Acquired Condition Reduction Program, or HACRP, which cuts Medicare payments to hospitals that perform poorly on quality measures like infection rates.

The researchers identified 2,725 hospitals that participated in all three VBR programs in fiscal 2020. That meant they had their Medicare payment rates go up or down in any of the three programs in fiscal 2020 based on their performance in a program’s reporting period that preceded the payment period.

The researchers then divided the hospitals into quartiles. They dubbed hospitals that finished in the top 25 percent of all three programs as high performers. They dubbed hospitals that finished in the bottom 25 percent of all three programs as low performers. And any hospital in in the middle 50 percent across all three programs were just average.

Here’s how it shook out:

  • 87, or just 3.2 percent of the hospitals were high performers
  • 74, or just 2.7 percent of the hospitals were low performers
  • The rest, or more than 2,500 hospitals, were average

That’s some steep bell curve.

The researchers then compared high-, average- and low-performing hospitals across the three programs using a number of variables and found some interesting things.

For example, 42 percent of the low-performing hospitals were for-profit compared with just 14 percent of the high-performing hospitals. Low-performing hospitals tended to be located in counties with higher percentages of immigrants and racial and ethnic minorities.

But the more interesting thing to me was, most hospitals were average. A handful excelled at all three VBR programs. A handful stunk at all three programs. And the vast majority had mixed results.

To many experts, the variables could help explain the results. I get that. But to me, who’s no expert, the results scream market failure.

First, the massive consolidation in the hospital sector has watered down everyone’s performance. Great hospitals got a little worse after a merger. Lousy hospitals got a little better after a merger.

Second, we’re not paying for superior performance or the best outcomes. Not even close. The rewards and penalties in the three VBR programs aren’t enough to move the needle in any substantive manner. Until we get serious about paying hospitals for the most effective and safest care, it’s OK to be average in a non-competitive hospital market.

That’s not OK to me.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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