Medicare names names on hospital quality, but don’t expect consumers to notice

December 19, 2013
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The Obama administration just started calling out the best and worst hospitals when it comes to hip and knee replacements.

In new data posted this month to its Hospital Compare web site, the Centers for Medicare and Medicaid Services cited the roughly 5 percent of hospitals nationwide that were either significantly better or significantly worse than the national average on two metrics: the percentage of patients that had complications such as blood clots after the surgery and the percentage of patients that had to be readmitted to the hospital for the same condition within a month after surgery.

Seven hospitals in Indiana made the list—six for being better than average and one for being worse, according to this analysis by Kaiser Health News.

Only one hospital was better than average on both fronts—readmissions and complications: Orthopaedic Hospital at Parkview North in Fort Wayne.

Two Indianapolis-area hospitals made the list. The Indiana Orthopaedic Hospital, run by the OrthoIndy physician practice, was better than average on limiting complications after surgery. But St. Vincent Regional Hopsital in Anderson—which used to be called Saint John Health System—was worse than average on complications after surgery.

Will anyone care?

If history is any guide, not many.

The Kaiser Family Foundation asked Americans for more than a decade how much they used quality information to choose doctors and hopstials. From 1996 to 2008, the percentages hardly budged from its low levels. The percentage of patients using quality information on doctors rose from 4 percent to 6 percent during that time period. The percentage using quality information for hospitals rose from 6 percent to 10 percent in 2006, but then fall back down to 7 percent in 2008. (See page 7 of this document for the data.)

That’s a problem for anyone who hopes the U.S. health care system will be improved by patients acting more like consumers in health care. And since Obamacare is accelerating the trend toward the high-deductioble health plans that require Americans to be rational consumers, there’s wider-spread hope for this kind of consumerism than ever before.

If consumers only have price information—which they’ve been able to get in a few more cases recently—but don’t have quality information, they’ll tend to make one of two errors: either they will assume that hip and knee replacements are all alike, so the cheapest provider will be best. Or else, they will assume that there are good surgeons and there are bad surgeons, and the good ones must be the ones charging the most.

Numerous studies have shown both assumptions to be wrong in health care--a weird world in which price and quality have nothing but a random relationship to each other.

Only when consumers have both price and quality information can they make rational decisions about the value of the care provided by different hospitals or doctors.

But that information must also be relevant and understandable. So far in health care, it is neither. And until it improves, I don’t see the “consumer-driven” movement coming anywhere close to its promised potential.

Since I live in Indianapolis, I suppose I might be interested that the Indiana Orthopaedic Hospital was better than average on reducing complications and the St. Vincent Anderson Hospital was worse. But how much worse? St. Vincent Anderson had a complication rate of 5.2 percent, compared with a national average of 3.4 percent. The Indiana Orthopaedic Hospital had a complication rate of 1.9 percent.

But is a 5 percent chance of complications versus a 3 percent chance or a 2 percent chance so significant that I should drive to another city to get surgery? I have no idea.

It might further sway my opinion to know that the list price for a knee surgery at the Indiana Orthopaedic Hospital is about $10,000 cheaper than St. Vincent Anderson--$33,500 vs. $43,500, according to data compiled by Hospital Pricing Specialists. But as I have explained before, such price information is of little value to patients, because no one pays the list price and health insurance prices often don’t even use it as a starting point for negotiation anymore.

Even if I could get meaningful price and quality information on knee surgeries, that would not help me decide if surgery is the right choice, or whether physical therapy might be the better choice for my budget, needs and current family circumstances.

There is no source that will help me conduct this kind of cost-benefit analysis of different treatment options—which is probably the more common situation patients find themselves in.

“Consumers want clear and concise information that they can understand on factors such as out-of-pocket costs, the effectiveness of a procedure or treatment, and applicability to their personal condition and social situation. … We are far from cracking this code,” wrote Robert Huckman, a Harvard Business School professor that focuses that co-chairs the school’s management track in health policy, in a recent piece in the New England Journal of Medicine.

“To move health care in this direction, public reporting must shift from ‘one size somewhat fits all’ to an approach that reports metrics reflecting the varied concerns and preferences of consumers,” he added. “With better information, millions more patients can become smart shoppers and, in the process, help bend the health care cost curve.”

  • Prices - schmices
    Medical procedures are not commodities so waiting for prices to reflect value will be a long wait. Quality information will probably get better and insurance firms are in a position to use big data approaches to assess quality/cost comparisons. I don't see individual patients being able to assess those relationships. I agree, consumer directed health care impacting costs is a chimera.
  • Out of touch PhDs
    Your right when you say medical procedures are not commodities. It is a service industry where services are performed for a price. The reason you don't see patients assessing those relationships in pricing, quality and value is because health care cost have gotten combined with health care insurance and the consumer has gotten disconnected from pricing and the service provider (doctors, nurses ect.....). If want to see a truly more efficient and effective health care system then disconnect health care cost from health insurance. You then bring into the market millions of price and value conscience consumers. This will force the industry to become more transparent on procedure pricing and value. At this point an PhD would like to say that the average consumer isn't smart enough to evaluate all their medical situations and you might be right. They might not be able to evaluate on their own a knee replacement or an open heart surgery but they can evaluate cold, flu, ear infection and numerous other cases they will confront hundreds of times before they encounter something on the scale of a major medical procedure. And being price/value conscience when they encounter those minor health issues will force price/value efficiencies that will carry through the medical market. And when they do confront a major medical issue I put my bet on a market of millions of consumers evaluating millions of major medical situations to produce an efficient solution to educating consumers on major medical decisions and thus value/price efficiency long before a few federal agencies, insurance companies, doctors and producers figure it out.
  • Minor Correction
    The new CMS joint replacement readmission measure is for any unplanned readmission within 30d of discharge from the hospital. It is not limited to readmission for the "same condition" as you have written. That would be an irrelevant measure for joint replacements because no one will care that a patient had another joint replacement within 30d of the first one,...unless it is a revision,...which would technically be a different condition. Measure specification is here:

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