Variations on health care costs and quality and the markets themselves are hampering employers’ abilities to get a handle on rising costs and the best value.
That’s a takeaway from a panel Thursday afternoon on provider quality data and the use of it by the private companies who pay for the bulk of their employees’ health care costs. The panel was part of the annual Pittsburgh Business Group on Health Symposium, which drew western Pennsylvania employers interested in getting at better health care value.
If value in health care is defined as the outcomes achieved per dollar spent, then panel members said the health care system is stuck in neutral despite movement toward value-based care. Robert Smith, president and CEO of the Colorado Business Group on Health, said that the way employers pay for and how much it pays — fee for service far above what Medicare pays hospitals and providers — directly interferes with efforts to improve.
Smith showed data from Colorado showing while most hospitals there lose money — or, at best, break even — on Medicare reimbursements, hospitals are seeing high net incomes and some are making 40 percent margins. He showed data of health care price variations of up to 1,100 percent, not on the provider side, but facilities. Some hospitals have increases over Medicare prices between 242 percent and 350 percent for inpatient and 324 percent and 694 percent for outpatient — far above what’s needed to cover Medicare losses, he said.
And more than that, said Shane Wolverton, SVP of health care quality analytics firm Quantros, health care quality and cost aren’t as related as commonly believed. Variation in quality is widespread, and even in the Pittsburgh market with its highly evolved system, he said there are providers who are providing the highest quality compared to others in the nation as well as the lowest quality compared to others nationwide.
Wolverton said quality and value — including being above-average on rates of readmission, mortality and other factors — are becoming the primary differentiator with work toward fixed price and fixed quality being the major drivers of innovation.
Two of the innovations include Blue Shield of California’s moving of some complex cases from the hospital to ambulatory-care centers which saved 30 percent to 60 percent off hospital rates with only the highest quality care as well as an Oklahoma program that offers 100 percent price transparency, second opinions and only the highest quality providers with a waived copay.
“Those are two small examples of what is possible by being creative,” Wolverton said.