It's time to retire CPT® in health care
Living in the HealthCare IT Bubble

Changing the Language of Healthcare from Cost to Outcomes and Productivity

The US healthcare system has been warped by reimbursements for care.  In Sharin's piece "The End of Hospital Cost Shifting", he talks about the impact on hospitals of the Medicare cutting reimbursements to hospitals based on work done by Austin Frakt

  • Cost shifting: Increasing the prices it charges commercially-insured individuals to compensate for reduced Medicare reimbursement.
  • Cost cutting.  Reduce cost for all patients to ensure average profitability across the entire Medicare/commercial payer mix.
  • Reduce profit margins.  Reduced Medicare reimbursement could simply eat away at hospital profits.

And he notes that cost cutting is the most likely result and that would impact patient outcomes:

Wu and Shen (2011) found that hospitals that faced large payment cuts from the 1997 Balanced Budget Act cut operating costs and staff and experienced increased mortality rates of heart attack patients relative to those seen at hospitals that faced smaller cuts.  They calculated that a 1 percent cut in payment results in a 0.4 percent increase in heart attack mortality rates.

And he concludes:

Such a trade-off calls to mind what Mark Pauly expressed in a 2011 paper in Health Affairs, “Perhaps a little less quality for a lot less money might be acceptable to consumers and taxpayers, as we work to keep medical spending from siphoning off funds required for other needs” (Pauly 2011). Whether it is acceptable or not, it may be what consumers and taxpayers get.

Let me break it down: Lower quality = worse patient outcomes = increased mortality = more people die.   And that's o.k. because it costs less.

And that's where the vocabulary is just wrong.  Nowhere does he focus on productivity improvement, resource utilization and the impact on outcomes.  They just don't think like that.  But every other industry does, except healthcare.  

I don't accept that more people dying in hospitals or post acute care is an acceptable tradeoff for lowering costs and I hope you don't either.


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