Report: No Correlation Between Hospital Proximity, Quality

Sept. 15, 2016
Despite what patients may think, there are large differences in cost and quality among hospitals operating in the same regions, sometimes within just a few miles of each other, according to a new whitepaper from FairChex, a healthcare provider value measurement tool offered by Canada-based Global Excel Management.

Despite what patients may think, there are large differences in cost and quality among hospitals operating in the same regions, sometimes within just a few miles of each other, according to a new whitepaper from FairChex, a healthcare provider value measurement tool offered by Canada-based Global Excel Management.

FairChex’s quality ratings are based on an evaluation of the process of care, patient satisfaction and clinical outcomes. Quality data examines hospitals at the department/clinical category level, to avoid masking low-value departments operating within hospitals with higher values. Cost data examines hospitals at the procedure level based on diagnoses-related group (DRG) codes using the best available data on Medicare reimbursements (inpatient) and/or CPT codes for outpatient procedures, according to company officials.

The FairChex report, “Closest Hospital Is Rarely the Best Choice,” focuses on three common procedures in three different areas of the U.S.:

• Coronary bypass (New York)—Costs to Medicare for this procedure, the most commonly-performed heart surgery, vary by more than $20,000 between high-quality facilities located within New York City and several, such as St. Francis Hospital in Roslyn, NY, and Englewood Hospital and Medical Center in Englewood, N.J., that are within 25 miles of the city.

• Joint Replacement (San Francisco)—In contrast to New York City, patients in the Bay Area seeking more affordable treatment options need to go substantially inland for their procedures. However, within 100 miles of the San Francisco city center, three facilities in the Modesto-Stockton corridor offer high levels of quality and cost savings in excess of $5,000—potentially large savings for individuals with high co-insurance requirements.

• Mastectomy (Montana)—Unlike the first two case studies, Helena, MT, is not a densely-populated place. There is only one option for treatment within the city and it offers some of the lowest quality outcomes for this type of cancer care anywhere in the U.S. However, within 100 miles there are two other facilities that offer outstanding care (quality outcomes above the 80th percentile) at virtually the same price.

“The U.S. healthcare system has never provided patients the information on cost and quality needed to make informed decisions, which is why we continue to see tens of thousands of patients each year going to more expensive, lower-quality hospitals when there may be far better options operating virtually next door,” said Benjamin Tabah, managing director, FairChex.

The report notes that without objective data, patients “blindly” follow the recommendations of their primary physicians, their co-workers, or even billboards. These practices continue despite broad awareness that preventable hospital errors kill tens of thousands of people each year and that hospitals can charge very different prices for the same procedures.

“Across the U.S. healthcare system, one of the easiest ways to reduce costs would be to redirect patients from low-quality/high-cost facilities to high-quality/low-cost alternatives,” said Tabah. “In the short term, we could save $100 per year per person—or $25 billion annually—with that one simple switch. In the long term, the dynamic effects of competition on hospital leadership would lead to better quality and cost of care.”

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