Academic medical centers are penalized more under the CMS' various value-based purchasing programs than community hospitals, according to a new report.
The study, published Wednesday by the consultancy Navigant, found 24% of academic medical centers received penalties for their performance on three of the CMS' value-based payment programs in fiscal 2018, while 13.7% of community hospitals received the same number of penalties.
Additionally, 9.4% of community hospitals didn't receive a penalty on any of the CMS programs, while just 1.7% of academic medical centers weren't penalized. The three programs referred to are the Hospital-Acquired Condition Reduction Program, the Hospital Readmissions Reduction Program and the Hospital Value-Based Purchasing Program.
The stakes are high for academic medical centers to do well in value-based purchasing programs as the movement toward value continues, said Dr. Christopher Stanley, co-author of the study and director of Navigant's healthcare practice. Although academic medical centers provide vital tertiary care unmatched by community hospitals, Navigant found that as much as 90% of their admissions and procedures can be performed at community hospitals. Their ability to compete in the healthcare marketplace will likely depend in some part on their ability to perform as well as their community hospital peers on outcomes and costs.
"I think it raises the stakes—it broadens the competitor pool and academic medical centers have to figure out how to have an operating cost structure where they can compete," Stanley said.
The study broke down how academic medical centers and community hospitals perform on the three CMS programs. Academic medical centers overall showed improvement in the programs, but still lagged behind community hospitals. For instance, the study found overall weighted quality scores for academic medical centers on the three CMS programs increased significantly from 42.2 in 2016 to 46.6 in 2018, but still had lower scores than community hospitals, which had an overall weighted score of 47.9 in 2018.
Stanley said it's possible that academic medical centers will catch up to or exceed community hospitals in their quality scores because their pace of improvement during the two-year period was much greater than it was for community hospitals, which actually saw a 2-point drop in scores overall.
The study also compared costs between academic medical centers and community hospitals. To little surprise, median costs at academic medical centers were 5.8% higher than at community hospitals. Academic medical centers cost more generally because they must invest in expensive specialty services and staff to fulfill their missions as tertiary providers, Stanley said.
However, the study also found little relationship between higher costs and better quality scores. Academic medical centers and community hospitals with the highest cost per case index had median weighted quality scores just 4.4% greater than hospitals with the lowest costs.
"It really calls into question how a consumer and payers evaluate the value equation," Stanley said. "If there is no correlation between the (cost and quality), you can deliver just as good quality at a lower cost structure."
Considering the majority of services at academic medical centers can be done at community hospitals for lower costs with the same outcomes, Stanley said tertiary centers have to rethink their strategy in order to remain viable. He suggested academic medical centers change up their payment structures and invest in population health services similar to their community hospital counterparts.
But Stanley added "there is no single bullet or single answer."
The Navigant analysis included CMS data for 175 academic medical centers and 212 community hospitals.