October 6th, 2009

Reports the Wall Street Journal:

Be it cereal or cars, buyers usually have an idea of how good the products are and how much they cost before they buy them.

That’s not how U.S. health care works. Patients rarely know which hospitals offer top-quality lung or aortic surgery, and which are more likely to harm them. Hospitals don’t compete on price and rarely publish measurements of their quality, if they measure it at all.

Except in Pennsylvania. For two decades, a state agency has published “medical outcomes” — death and complication rates — from more than 50 types of treatments and surgery at hospitals. The state has found that publishing results can prompt hospitals to improve, and that good medical treatment is often less expensive than bad care.

One reason is that high-quality treatment usually results in shorter hospital stays and fewer readmissions. The state has had less success in publishing hospital prices and has drawn criticism from hospitals that disagree with its reporting methods. But companies or unions in Pennsylvania that have agreed to work only with the best-performing hospitals say they have been able to drive down medical costs.

“High-quality care costs less — always,” says David B. Nash, a medical-quality expert and dean at Thomas Jefferson University’s School of Population Health in Philadelphia. “If the federal government could behave like a savvy shopper, that would change the health-cost game overnight. But the government is a bill payer, not a savvy shopper.”

The Senate Finance Committee could vote late this week on its sweeping health bill, seen as the backbone for any final legislation. That bill would make available $75 million annually for the U.S. Department of Health and Human Services to develop methods of improving quality, including potentially publishing outcomes.

Although at times premium care can be exorbitant, there’s evidence some in Pennsylvania saved money using top-rated hospitals. Hershey Co. offered workers medical coverage based on the state agency’s reported outcomes, and cut the company’s expenses by 50% over several years. The Philadelphia police union’s benefits-management company says it uses the state reports to steer officers to the best hospitals; as a result, it say its costs fall about 17% below those of comparable plans.

…

The theory underlying the Pennsylvania program is that, to create a truly competitive health-care market, consumers need hard information showing which hospitals perform better.

For example, Pennsylvania three years ago published its first report on hospitals’ infection rates that arise largely from intravenous catheters and tubes left in too long. Infection numbers the following year fell 7.8%, as hospitals responded with steps designed to lower infections.

The average payment in 2006 for hospitalization where a patient acquired an infection was $53,915; with no infection, the average payment was $8,311, according to state reports.

By simply getting rid of preventable infections, Pennsylvania estimates its hospitals could lower expenses by nearly $1 billion.

Read the rest of the WSJ’s article.