Association of Hospital Spending Intensity With Mortality and Readmission Rates in Ontario Hospitals

Therese A. Stukel, Elliott S. Fisher, David A. Alter, Astrid Guttmann, Dennis T. Ko, Kinwah Fung, Walter P. Wodchis, Nancy N. Baxter, Craig C. Earle, Douglas S. Lee, JAMA, March 14, 2012 Context: The extent to which better spending produces higher-quality care and better patient outcomes in a universal health care system with selective access to medical technology is unknown. ... Conclusion: Among Ontario hospitals, higher spending intensity was associated with lower mortality, readmissions and cardiac event rates. ... Association

Landmark Study

This is a landmark study. Among Ontario hospitals, higher spending intensity was associated with lower mortality, readmissions and cardiac event rates. Let's see if we can learn the right policy lessons from this.

With our very high levels of health care spending, yet mediocre quality and outcomes, attention has been directed to attempting to identify the basis of these discrepancies, especially by looking at the Dartmouth findings which have suggested that all too frequently there is no relationship or perhaps even an inverse relationship between greater spending in hospitals and high quality outcomes. This task has been made difficult by the fact that several other studies have shown that greater spending has improved outcomes.

The authors of this new study decided to look at hospitals in Ontario, Canada to try to identify more precisely whether or not increased spending does improve quality and outcomes. Although they didn't state this as a reason, this was an astute move since Canadian hospitals are globally budgeted - a fact that dramatically reduces the incentives to increase the intensity of services for the purpose of increasing revenues. Attention is given to using resources to benefit the patient, without the perverse motive of increasing income by adding services of negligible or negative value.

In this environment, it worked. If patients needed more care, they got it, and they were better off for it. Incidentally, even with this extra care, they spent much less per patient than we do in the United States.

In the JAMA editorial accompanying this article, the authors indicate that this confirms further that there is "no free lunch" in trying to recover higher costs while improving quality. They suggest a few policy lessons.

Of great importance, efforts to reduce spending in high cost hospitals should not be indiscriminate since that risks eliminating "exactly those services that are vital for good hospital care." Such reductions can negatively affect patients.

They suggest targeting "poor coordination, wasteful spending, and ineffective care more directly through programs such as bundled payments and accountable care organizations, which encourage coordination and integration first and spending reductions second." Integrated, coordinated care is a great idea, and likely accounts for much of the improved outcomes in Ontario hospitals. But can we in the United States really achieve this through bundled payments and accountable care organizations?

Only certain clinical scenarios are subject to bundling. Even when bundled, the cost containment is achieved by providing a discount to the bundled package. Not only are there pricing issues, such as possible inadequate funding of the services, there is the much greater problem that this does nothing for total global spending. It more likely results in not much more than mere cost shifting. That won't correct the fundamental dysfunctions in US health care financing.

Much has been written about accountable care organizations. Unfortunately, as they are evolving, it looks like they won't be much more than a replay of managed care innovations such as physician-hospital organizations, or loose provider networks under an HMO umbrella - except all dressed up in new clothing. It is particularly difficult to understand how the organization can be accountable for the care of the patient, when that patient is free to obtain care anywhere and may not even be aware that they are assigned to one organization. Again, integration and coordination are great, but that should occur throughout the medical community at large rather than through isolated, commercialized entities.

A most important policy lesson advanced by the editorialists is that "the best way to save money on hospital care is to more aggressively target preventable hospitalizations by bolstering primary care." In fact, Canada has a much more robust primary care infrastructure than the United States, which is likely another contributor to getting the right patients into the Ontario hospitals at the right time. We need to do much more to reinforce primary care in the US - far more than the meager measures in the Affordable Care Act.

The paramount take home policy lesson is that a single payer system such as that in Canada not only has vastly superior methods of financing and distributing health care resources efficiently and equitably, it also creates a milieu in which the patient is placed at the pinnacle, and the health care system is positioned to serve that patient optimally. - Don McCanne, MD, Physicians for a National Health Program