Thursday, January 13, 2011

Making Sense of Hospital Charges Data

This blog post is related to a reading assignment in a course I am taking online taught at Medical College of Georgia -- soon to become Georgia Health Sciences University. The article which was published in The New York Times is titled, "In Health Care, Cost Isn't Proof of High Quality." This article by Reed Abelson observed that there is substantial variation in the costs of various medical services among institutions and that higher costs do not necessarily correlate with better outcomes or higher quality of care. The data was derived from reports submitted by hospitals in Pennsylvania.

Abelson's point appears to be that payers are questioning why they are apparently sometimes paying providers relatively larger amounts of money for medical services that do not appear to be producing better outcomes overall. The data is reported by procedure/treatment, by hospital.

The measures of quality of care include mortality rating, length of stay, and readmission ratings -both for any reason and for reason of complication or infection. Average charge per case (for each selected medical procedure/ treatment) is shown for each surveyed hospital. The data reflects risk adjustment factors for all of the variables. The data is for fiscal year 2009.

So, what are people to make of this? In many instances the number of cases of a particular treatment in FFY 2009 in a given hospital is very few. Averages based upon a very few cases can be dramatically skewed by one or two exceptional cases. The data is reported in a way that is a bit confusing because unexpected high rates of short average lengths of stay are appear with the same large dark circle that otherwise is used to represent high mortality rates and high readmission ratings. It is hard to interpret the data by just looking at the representation of it, which resembles the way years/models of automobiles are rated in Consumer Reports publications. It does not appear to me that high mortality rates tend to be associated with either higher or lower costs per case. Nor does it appear that average length of stay correlates with average charge. It does not appear that the number of cases treated in FFY 2009 is correlated with any of the other data. It would take a substantial amount of quantitative analysis to test hypotheses for each procedure and treatment. It would be helpful if the data that has been published was aggregated by hospital rather than only by procedure/treatment.

My guess is that detailed quantitative data analysis would not produce any clear explanation of why some hospitals charge substantially more (on average) than others for the same procedures/treatments. I think a qualitative approach to data analysis might produce more insights. I suggest identifying the hospitals that tend to produce higher charges across most categories of procedures/treatments and then ask insiders what other attributes those hospitals share. They might be hospitals that provide high levels of charitable services and need to shift the cost burden onto patients with insurance or other sources of revenue. They might be hospitals that offer up-scale accommodations. They might tend to be for-profit hospitals, or hospitals deeply in debt. Given the list of the "high chargers," I bet one or more explanatory themes would quickly become apparent.

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