Hospitals Closing – Difficult Choices

Today’s Managing Health Care Costs Indicator is 850

Much of the potential to lower health care costs involves decreasing preventable hospital admissions.  Among those patients with high costs, inpatient care represents the bulk of all costs.  Hospitals are high fixed cost businesses – so saving real money in the system means we have to take fixed costs out of the hospital sector.  This usually means eliminating hospital beds and closing hospitals.

A story in yesterday’s New York Times  points out how painful this is.

Huron Hospital, in East Cleveland, Ohio, is owned by Cleveland Clinic, one of the most successful integrated delivery systems in the country.  Cleveland Clinic announced that it will close Huron Hospital, which it says will cost 850 jobs.    It’s simultaneously opening a new ambulatory center nearby – but the number of jobs in the community will diminish.  

The headline in the Times talks about the inexorable march from inpatient care to outpatient care.  It is more silent on the social cost of hospital closure on a low-income community.

New York state faced this problem in 2006, when the governor appointed a commission to identify and eliminate excess hospital capacity in the health care system to lower overall health care costs.   The Berger Commission identified substantial excess capacity, and in many instances a poor neighborhood was adjacent to a middle class neighborhood, and each had a hospital.  The hospital in the low income neighborhood often had lower quality scores –but was almost always a major source of good jobs with benefits in the community. 

Closure of the hospital in the poor community would mean people with heart attacks would take longer to get to a hospital, but would also decrease the economic standard of living in a community already on the edge.   That commission ultimately recommended eliminating 7% of hospital beds in New York – and most of the closures were in middle class communities rather than in impoverished communities.

Hospitals have a complex relationship to community health.  Expensive health care can make a community less attractive to business, which can cause economic stagnation.  Closure of a hospital can help lower health care costs. However, loss of hospital-related jobs, especially in an impoverished community, can worsen health both by decreasing access and by eliminating good jobs from that community.  

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Flawed measurement can suggest illusory savings

Today’s Managing Health Care Costs Indicator is 10

I gave a series of talks in 2003 about how poor measurement in the disease management industry generated misleading claims of cost savings.  

Fast forward to this decade, and we see promises from the wellness industry of “returns on investment” appear too good to be true.  If they seem too good to be true, they are probably false.

When employers, health plans, government or others reviewing claims of cost savings, here are a few things they should look for

What’s the comparison group?

We should insist on comparison groups that are really comparable.  It’s useless to compare refuseniks to those who voluntarily participate in an optional program.  Even propensity matching to control for differences between groups can only adjust for known cofounders – like age, gender and job class.  The differences that matter, like readiness to change, are often not adequately adjusted for.

What’s the participation in the intervention?

What if I offered an intervention, no one participated, but the results were good anyway?  Would you give me credit for my intervention?  I don’t think so.  This is a face validity issue- let’s be sure that enough members really participated to have the type of impact claimed by a medical or health management company.

Is it plausible that the intervention would lead to the promised cost savings?

Does it make sense that the intervention would have the impact claimed? Some wellness programs offer no intervention beyond serial health risk assessments, but infer huge claims savings from changes between the first and second HRA administration.  HRAs can be instructive – but they are not likely alone to lead to huge behavior change.

Are all costs of identification, enrollment, and intervention included in the evaluation?

There is a tendency to only include a limited portion of the total costs of a program when evaluating the results.  For a health plan which hires a medical management company, there are substantial interface costs, including data transfer, contracting, and supervision, that are easy to overlook.

Are any substitute claims costs included in the return on investment calculation?

If a hospitalization is averted through the appropriate use of home services, it’s important to look at the net savings, removing the incremental costs of home care. 

I suggested in 2003 that there were ten ways to “cook the books” and make an intervention seem more effective than it really was.  They were:

1. Overstate the savings
2. Understate the costs
3. Report only some of the data
4. Ignore effects of timing
5. Mistake “gross” for “net” savings
6. Inappropriately extrapolate from experience
7. Ignore risk of failure
8. Claim credit for savings realized by other parties
9. Overstate the inflation factor
10. Tell a story that is “too good to be true”

These observations appear as appropriate in 2011 as they did almost a decade ago.

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Hospital Improves Maternity Care and Lowers Cost

Today’s Managing Health Care Costs Indicator is $3.5 billion

Maternity care really matters.  Earlier prenatal care, prenatal vitamins, and cigarette, alcohol and drug cessation help us have healthier children – and prevent excess health care costs. Still, maternity represents 20% or more of hospital admissions for many employers, and sick newborns often represent a quarter of all catastrophic care cases. 

Caesarian section delivery is shockingly common in the US – about 1/3 of all deliveries at this point.  The World Health Organization has recommended an optimal rate of 15%.  C-sections increase the likelihood of complications of subsequent deliveries –and they decrease the new mom’s ability to immediately bond with the newborn.  Once a woman has an initial c-section, it’s unlikely she’ll have a future vaginal delivery, as VBAC deliveries are increasingly rare.

Induction (intravenous drugs to start the labor process) is also quite common in the US– and can start the cascade toward C-sections – since if induction is begun before the cervix has started to dilate, it’s likely to lead to prolonged labor that is ended by Caesarian section.

The variation in elective induction is dramatic across different institutions – here’s a link to the Leapfrog Group’s website , where you can see elective induction rates by hospital. 

Health Affairs just published an article from Intermountain Health describing its focus on system variation (not merely variation of individual clinicians).   Intermountain’s efforts began over a decade ago – and cover a range of medical care.  I’ll focus here on the results of their maternity process improvement.

Intermountain recognized that 28% of their elective inductions in 2001 did not meet medical criteria –and imposed the following rule. 

When an expectant mother arrived at the hospital for an elective induction, nurses completed an electronic check sheet that summarized appropriateness criteria. If the patient met the criteria, the induction proceeded; if not, the nurses informed the attending obstetrician that they could not proceed without approval from the chair of the obstetrics department or from a perinatalogist—a specialist in high-risk pregnancies.

With the initiation of this rule, the percent of elective inductions which did not meet clinical criteria dwindled to 2%!  Intermountain’s c-section rate is 21% now – over a third lower than the national average.

The authors state that $50 million in annual medical costs have been averted through this simple program, and extrapolate that a national effort like this could save $3.5 billion per year.

This is a great example of making care better for moms and babies and saving money at the same time.  I often talk about how we have to make difficult choices to improve value in health care.  The only tradeoff necessary to lower inappropriate elective inductions, and thereby lower c-section rates and premature deliveries is a small decrease in physician autonomy.    Seems like a very good tradeoff indeed!

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