100 Top Hospitals: Top performers notch lower Medicare spending

New data from Truven Health Analytics show that many top-performing hospitals are saving money for the Medicare program. According to an exclusive study Truven conducted for Modern Healthcare, data show the best performers in Truven's 100 Top Hospitals study do better in reducing Medicare spending for inpatient admissions and post-discharge, resulting in higher overall quality scores and greater patient satisfaction.

Truven's top-performing hospitals also regularly outpace their peers across a variety of clinical, financial and performance metrics, including achieving fewer patient complications, fewer readmissions and lower costs per discharge.

Jean Chenoweth, senior vice president of performance improvement and the 100 Top Hospitals program at the Ann Arbor, Mich.-based data and analytics firm, said she's not surprised that the top performers achieve lower Medicare spending.

“High-performing hospitals on a nationally balanced scorecard actually have high balanced performance across the organization, which has an impact on reducing Medicare spending,” she said. “The outcome of fewer readmissions and lower costs overall reflect the changes that have happened with the continuum of care. And that's a proxy for refocusing on greater patient-centered care.”

Medicare spending per beneficiary, or MSPB, has been included as a test metric for the past year in Truven's methodology for determining the hospitals that qualify for the annual 100 Top Hospitals list. It was added this year as a part of Truven's key performance measures—including 30-day mortality rates, 30-day readmission rates and severity-adjusted average length of stay—for identifying the 100 Top Hospitals. MSPB is based on the most recent information from the CMS' Hospital Compare database and is risk-adjusted.

An MSPB episode includes all Medicare Part A and Part B claims paid during the period three days prior to a hospital admission through 30 days post-discharge. When Truven looked at MSPB for 2,560 hospitals, reflecting 5.3 million discharges in fiscal 2013, it found that overall for the organizations on the 100 Top Hospitals roster, lower MSPB was correlated with better overall performance compared with all hospitals with higher MSPB.

The differences in MSPB varied by region, using the U.S. Census Bureau's divisions. The 100 Top Hospitals versus all hospitals showed significantly better performance in East South Central (70% had lower MSPB compared with all hospitals), Pacific (63%) and Mountain (60%). The 100 Top fared less well in New England (31% had lower MSPB compared with all hospitals), Middle Atlantic (36%) and West South Central (45%).

There also were differences in MSPB based on hospital ownership structure. Truven found that 52% of non-system hospitals—those that are not part of a larger health system—had lower MSPB compared with all hospitals, while 46% of hospitals in the 100 Top study that are part of healthcare systems had lower MSPB compared with all hospitals.

Truven researchers concluded that among the 100 Top Hospitals, more favorable overall performance is associated with lower MSPB. Unplanned readmissions were lower and length of stays shorter, while patient satisfaction and patient-safety performance were higher.

On the other hand, the Truven study found that 30-day mortality, heart failure mortality and pneumonia mortality trended slightly higher at hospitals with lower MSPB, possibly indicating that lower Medicare spending in some cases could carry negative consequences despite overall higher quality scores. David Foster, Truven's lead scientist, could not fully explain these findings. “It could be that maybe the use of certain types of brand-name versus generic drugs or differences in wound care could impact adversely on mortality,” he said.

As for the finding that non-system hospitals have lower MSPB than hospitals in a larger system, Foster speculated that could be related to leadership structure. “The administrators and leadership in a hospital have more ability to effect change than in a system,” he said. “In a system, you're dealing with multiple hospitals with a fair amount of heterogeneity, so the challenge is to integrate policy across a system that is more complex.”

Some hospitals directly focus on reducing their Medicare spending per beneficiary, using the MSPB numbers as a benchmark. Others find reduced Medicare spending is a byproduct of quality and patient-safety initiatives they have implemented.

At St. Joseph Mercy in Ann Arbor, Mich.—which has been on the 100 Top Hospitals roster seven times since 1996—administrators, physicians and nurses recently started using the MSPB data to improve service quality and patient safety.

Dr. Mark Cowen, chief of clinical decision services for the hospital's parent, St. Joseph Mercy Health System, also based in Ann Arbor, said MSPB offers information about what happens to patients leaving the hospital, which sub-acute nursing facilities they use, and whether they are admitted to another hospital. He said the trends, along with billing data, offer insights the system's leaders wouldn't otherwise have for these patients.

Those data can be used to steer patients to post-acute facilities with better quality of care. “We are trying to work on better outcomes for patients once they leave the hospital,” he said. “We are doing partnerships with sub-acute nursing facilities and nursing homes regarding the patients we send them.”

In contrast, at Poudre Valley Hospital in Fort Collins, Colo., which has been on the 100 Top Hospitals list nine times, MSPB trends are viewed more as a byproduct of the hospital's quality and safety initiatives, said CEO Kevin Unger. “We're always looking at our complication rates and trying to drive them down and reduce our outliers for patient safety,” he said. “We also focus on our readmission rates and use electronic health records, for example, to reduce duplication of testing.”

Regardless of how the findings are used currently, MSPB is expected to become a more important factor as the CMS moves away from fee-for-service payment to value-based payment models such as bundled payments for hip replacements and congestive heart failure treatment. That's because MSPB can be used as a global measure of efficiency when providers are required to meet cost and quality targets for defined populations of patients.

“We know we have to provide higher quality at a lower cost, and that's what's spurring us to make sure we're really streamlined and using our resources as appropriate,” Unger said. His hospital is tracking Medicare spending as a metric for its performance.

Cowen sees MSPB data helping providers focus on both cost and quality. “Medicare is trying to control the cost and improve quality and safety at the same time, such as looking at readmissions to improve quality as well as not having to pay for a hospitalization,” he said. “That message resonates with physicians who have some altruism recognizing there's waste.”

Truven's Chenoweth said the findings from Truven's study can serve as a path forward for hospitals. “This is just the beginning,” she said. “The learning process will go on for a decade or more as we move from the highly measured focus in the hospital to focusing measurement across the full continuum of care.”

Mike Mitka is a freelance writer based in River Forest, Ill.