High Medical Costs Do Not Equal Better Care Quality, Study Finds

Hospitals in Pennsylvania paid the most to perform cardiac bypass surgery had lengths of stays and death rates comparable to the lowest-paid hospitals, according to a report released on Thursday by the Pennsylvania Health Care Cost Containment Council, the New York Times reports.

Pennsylvania is the first state to make publicly available hospital information on pricing and patient outcomes. The findings -- based on 2005 data collected from the state's 60 hospitals and payment information collected from insurers -- bolster "a growing national consensus that as consumers, insurers and employers pay more for care, they are not necessarily getting better care," according to the Times.

According to the survey, the highest-paid hospital received nearly $100,000 on average for cardiac bypass surgery while the lowest-paid received less than $20,000 on average for the same procedure. Costs of the procedure varied the most for private insurers, which negotiate payments on a hospital-by-hospital basis.

The council also found that two hospitals in the greater-Philadelphia area that were among the highest paid had higher-than-expected death rates.

Hospitals contend that one high-cost case can drive up the average for all surgeries and that cases with complications can extend the average length-of-stay, which does not reflect general patient experiences.

However, "fully explaining the discrepancies in payments and quality of care is difficult," according to the Times.

Marc Volavka, executive director of the council, said, "It doesn't make sense," adding, "Certain payers are paying an awful lot for poor quality."

Some state employers said the findings "might put more pressure on insurance carriers and hospitals to start demonstrating the value of care," the Times reports.

Mark Dever, a benefits consultant for Duquesne Light, said the survey "now provides us a tool to have a serious dialogue with our carriers," adding, "We have to question. There's a big difference in price -- why?"

Under the current payment system, there are no financial incentives for hospitals to provide quality care that leads to better outcomes, according to Ronald Paulus of Pennsylvania-based Geisinger Health System. "The current reimbursement paradigm is fundamentally broken," Paulus said.

Independence Blue Cross said the challenge is in determining the appropriate measures to use to pay for quality (Abelson, New York Times, 6/14). The report is available online.