Healthcare Quality Vs Spending – Pt. 1

by Bradley Miller on November 16, 2009

Because of all the recent debate on healthcare reform, there’s been a lot of attention on healthcare costs and quality.  A NYTimes Magazine article this last Sunday focused on the evolving principles of effective healthcare spending. Specifically, the article focused on changing physician behavior toward using the most efficient and effective care techniques, rather than what their ‘gut’ tells them. Most often, the “evidence based” techniques mentioned in the article aren’t used because physicians have their own way of doing things. Indeed, the practice of medicine is more of an art than a science and that aspect of the practice of medicine needs to be preserved – not all cases fit a mold. However, most cases do fit  in to evidence based techniques and when these techniques are followed patients have better outcomes.  And in the end that also saves a lot of money.

I’m incredibly glad to see the article in the Times Magazine and to hear this type of conversation taking place in a more mainstream location. For too long we’ve been focusing on the wrong cost centers in reforming healthcare. For example, most people point to rising prices in drugs are the main source of rising healthcare costs. The truth, which most people wouldn’t guess, is that drugs account for only about 10% of healthcare spending (although, granted, costs continue to rise). The big costs are from how we care for our sick, particularly in hospitals (31% of spending) and physician care (21% of spending). The Centers for Medicare and Medicaid Services have some rather amazing healthcare costs data here.  Rather than focusing on what the public perceives as major healthcare costs (which, are often hot-button topics picked to help improve politicians’ chances for re-election), we need to focus on how we can change the real cost centers in healthcare.

The NYTimes article cites work out of the Dartmouth Atlas, which is what I’d like to dive a bit deeper in to. Comprised of Medicare data from all 50 states, and although that only covers people aged 65 and older, it’s one of the best sources of healthcare spending vs quality and outcomes we have. And it’s just about the only public source of data that gets down to a hospital level of resolution. Most databases only look at regional or state-wide data, which makes the Dartmouth Atlas all that more important. From this compilation of data the Dartmouth crew assembles the graphs and charts of the Dartmouth Atlas to help healthcare providers and thinkers generate policy suggestions.

Some of the most important data tracked by the Dartmouth Atlas is not only the spending, but the quality of care provided by a hospital as well. Oftentimes, it’s difficult to discern between the high quality vs high spending. Socially, we’re predisposed to see a business with wood paneling or modern architecture to be of a higher quality than one that’s has beige cubicles in a nondescript office park. While that nondescript business may actually be the better business, it doesn’t have the perception of quality. I’d argue that’s because we’re looking at the wrong measurements of how to determine the quality of the business – they should be judged on how they operate and deliver, rather than the physical office space or location.

The same goes for healthcare (my post on “Cadillac Plans”).  Most people might think that lots of tests or brand new equipment or name brand medicines is what defines high quality healthcare.  However, high quality care relates more to whether you got the right care at the right time that will improve the patient’s outcome.  For example, receiving the right care during the period immediately after a heart attack – the “golden hour” – will decrease the damage done to the heart muscle, and greatly improve the care of the patient.  To further increase the quality of care, that patient’s physician should prescribe specific medicines to help decrease the overall workload on the heart to help it heal.  These medications are often overlooked.

A typical 12-lead electrocardiogram of a heart attack.  Yes, believe it or not, this makes sense to most docs.

A typical 12-lead electrocardiogram of a heart attack. Yes, believe it or not, this makes sense to most docs.

High quality doesn’t mean being taken to the high-class hospital across town with the perception of better care. That “high-class” hospital probably spends much more on care, despite similar (or potentially worse) care and outcome. In other words, high quality means that the care that is delivered is correlated with better outcomes – high cost doesn’t automatically mean high quality. We have pretty good data – it’s time we start using it well. I applaud the NYTimes for tackling such a contentious and often misunderstood issue.

In my post tomorrow I’ll go over some specific trends I’ve picked up through working with the Dartmouth Atlas data and look at hospitals in specific metropolitan areas and compare high-quality, low-spending hospitals with the rest in their regions. I think some of the differences will surprise you.

Leave a Comment

{ 1 trackback }

Previous post:

Next post: