May 2009 Improving Health Care Quality and Values: Local Challenges and Local Opportunities By Katherine Baicker (Harvard School of Public Health) and Amitabh Chandra (Harvard Kennedy School) At both the state and national level, covered by the same insurance Rappaport Institute/Taubman Center sustainable, long-term health-care program (Medicare). Moreover, the Policy Briefs are short overviews of new and reform has three goals: extending research has found that places where notable research on key issues by scholars affi liated with the Institute and the Center. health insurance to the currently care costs the most, such as greater This brief is part of a longer forthcoming uninsured, improving the quality of Boston, are not always the places work by Katherine Baicker and Amitabh Chandra. Funding for this research was care, and ensuring that costs refl ect the where patients receive the highest provided in part by the Rappaport Institute value of the care that patients receive. quality care. Rather, as Figure 1 for Greater Boston and the Taubman Center for State and Local Government. The question is whether these goals shows, there is a negative relationship Katherine Baicker are both compatible and achievable. between Medicare spending and the Katherine Baicker is a professor of health Policies that use local benchmarks to quality of care received by Medicare economics at the Harvard School of Public Health. improve quality and hold down costs benefi ciaries.3 It is not clear what may be an effective and feasible way drives this relationship, but the areas Amitabh Chandra Amitabh Chandra is a professor of public to achieve these goals. with higher spending and lower quality policy at Harvard’s Kennedy School of also have a physician workforce Government. Background: comprised of more specialists rather © 2009 by the President and Fellows of Coverage, Cost, and Quality than generalists. It is also possible that Harvard College. The contents refl ect the views of the authors (who are responsible specialization in high-tech “intensive” for the facts and accuracy of the research Extending insurance coverage, as medicine may crowd out the delivery herein) and do not represent the offi cial Massachusetts has done in the last views or policies of the Rappaport Institute of lower-tech medicine. or the Taubman Center for State and Local three years, is no guarantee of high Government. 1 value care. An exclusive focus on the These national statistics play out in Rappaport Institute for Greater Boston Harvard Kennedy School uninsured may be predicated on the the Boston area as well. Figures 2a 79 JFK Street, Cambridge, MA 02138 idea that the insured are receiving high Telephone: (617) 495-5091 and 2b show the rising health care Email: [email protected] quality care, equating higher spending costs of Medicare benefi ciaries in http://www.hks.harvard.edu/rappaport and higher quality. Yet, the likelihood Boston and surrounding areas. Costs A. Alfred Taubman Center for State and of getting high quality care may have for Medicare benefi ciaries in Boston Local Government Harvard Kennedy School more to do with geography than are high and rising, and, although 79 JFK Street, Cambridge, MA 02138 insurance status or spending. Telephone: (617) 495-5140 spending levels are persistently higher Email: [email protected] than in neighboring regions, most are http://www.hks.harvard.edu/taubmancenter A substantial body of research – which experiencing similar trends. There originates in large part from the work is evidence that Medicare and non- of John Wennberg and colleagues in Medicare patients are treated similarly the Dartmouth Atlas of Health Care2 within hospitals.4 Like many high- – has shown large disparities in the intensity utilization areas, hospitals quality and cost of care delivered in Boston are providing life-saving across the U.S., even among people Improving Health Care Quality and Value Rappaport Institute | Taubman Center POLICY BRIEFS Figure 1: Medicare Spending and the Quality of Care Source: Baicker & Chandra, Health Aff airs, 2004 therapies to patients from a wide geographic The substantial variation in local practice area, but it is not obvious that incremental care patterns presents both challenges and provided generates substantial gains in quality opportunities. Quality and value improvements or length of life that are commensurate with the in some hospitals may have spillover effects additional costs of such care. to neighboring hospitals if physicians and hospital staffs learn best practices from each The wedge between spending and value has other. Improving the performance of hospitals important implications for both public and that lag behind their local peers could go a long private insurance. Increasing spending on way towards improving health care delivery health care is placing a growing strain on the and reducing disparities. The focus on local federal and state budgets that fi nance Medicare peers may also be more practical and politically and Medicaid. The increasing costs of private palatable than a strategy of implementing insurance, which is largely purchased through national benchmarks where hospitals in an area employers, erodes the wage increases that may be asked to perform at a higher level than workers might otherwise see and, especially any other provider in the area. for low-wage workers, puts jobs in jeopardy and could thus drive even higher rates of Measuring Quality and Cost uninsurance.5 The goals of increasing value and increasing coverage are thus intertwined, To estimate potential gains, we follow previous and improving the value delivered through the research and construct measures of quality of health care system could have wide-ranging care and end-of-life spending that also take into benefi ts. account potentially large differences in the mix of patients seen at particular hospitals. 2 Improving Health Care Quality and Value Rappaport Institute | Taubman Center POLICY BRIEFS Figure 2a: Part A Medicare Reimbursements in Boston and Nearby Regions, 1992 - 2006 Figure 2b: Part B Medicare Reimbursements in Boston and Nearby Regions, 1992 - 2006 3 Improving Health Care Quality and Value Rappaport Institute | Taubman Center POLICY BRIEFS Measuring Quality:To measure quality, we to differences in the ways similar patients used data from the Hospital Quality Alliance are treated. Spending data were adjusted for (HQA), a public-private collaboration differences in age, sex, race, and the relative between the Centers for Medicare and frequency of chronic illness among the Medicaid Services (CMS) and several hospital benefi ciaries studied. organizations, that publicly reports hospital performance on select process-of-care Defi ning Geographic Areas: To compare each measures through an online website.6 These hospital’s performance to local benchmarks, measures focus on three major conditions for we used the Dartmouth Atlas’s 306 Hospital which evidence-based treatments are supported Referral Regions (HRRs). We linked these by a solid body of evidence: Acute Myocardial data with the American Hospital Association Infarction (AMI, or heart attack), pneumonia, Annual Survey database, which has information and Congestive Heart Failure (CHF). We on hospitals’ staffi ng, capacity and patient pooled data from 2005-2007, and used only pool characteristics. In particular, we used the measures for which a majority of hospitals information on the racial composition of each reported at least 25 observations.7 We then hospital’s patient population to estimate effects created a measure of the quality of care: the of quality improvement on racial disparities. number of times a hospital performed the National and Local Variation in Quality and appropriate action across all measures for that Cost condition by the number of “opportunities” the hospital had to provide appropriate care for Overall, most patients receive high-quality each hospital. care. The average score for the quality of care is 87.9 percent (meaning that in 87.9 Measuring Low-Value Spending: To measure percent of the instances, appropriate care spending that is likely to be of low value such as aspirin at admission for heart attack is to patients we used spending on Medicare in fact administered). However, hospitals in benefi ciaries in the last two years of life. the bottom quartile provide this appropriate As The Dartmouth Atlas of Health Care has care 85.8 percent of the time, and only 77.3 shown, this measure is not correlated with percent of the time for heart failure patients. By the delivery of health care whose effi cacy contrast, hospitals in the top quartile delivered is determined by well-articulated medical appropriate care 92.5 percent of the time theory, much less by scientifi c evidence. For overall, and 90.0 percent of the time for heart example, higher utilization of end-of-life failure patients. As important, 68 percent of care is associated with multiple specialist the variation in overall quality occurs within visits, shorter revisit intervals, and the use of Hospital Referral Regions (HRRs), with only imaging and diagnostic technologies. Each 32 percent driven by differences between those of these services is clearly therapeutic for regions. This means that there is much more some patients, but clinical trials and medical variation in quality among the hospitals within textbooks offer little guidance to the “right a given area, such as greater Boston, than rate” for these technologies. Moreover, by there is variation between the average quality focusing on variation in the treatment of provided at Boston-area hospitals and the patients with identical life expectancy, the end- average quality provided in other regions. of life (EOL) spending measure better refl ects the portion of spending that is attributable 4 Improving Health Care Quality and Value Rappaport Institute | Taubman Center POLICY BRIEFS Average spending for Medicare benefi ciaries Table 1: Spillovers from Neighboring Hospitals (expressed in 2005 dollars) in the last two Quality EOL years of life is similarly variable.