Lower-Cost Hospital Care May Not Always Be of Lower Quality

Laurie Barclay, MD

February 22, 2010

February 22, 2010 — Lower-cost hospital care may not always be of lower quality or result in poorer outcomes or increased downstream inpatient costs, according to the results of an observational cross-sectional study reported in the February 22 issue of the Archives of Internal Medicine.

"Hospitals face increasing pressure to lower cost of care while improving quality of care," write Lena M. Chen, MD, MS, from the University of Michigan in Ann Arbor, and colleagues. "Might hospitals with lower cost of care and lower expenditures devote less effort to improving quality of care? Might the pursuit of lower cost of care drive hospitals to be 'penny wise and pound foolish,' discharging patients sooner, only to increase readmission rates and incur greater inpatient use over time?"

The investigators examined 2006 data from US hospitals discharging Medicare patients for congestive heart failure (CHF) or pneumonia and evaluated the associations among hospital cost of care and process quality of care, 30-day mortality rates, readmission rates, and 6-month inpatient cost of care.

For CHF care, hospitals in the highest-cost quartile had higher quality-of-care scores than did hospitals in the lowest-cost quartile (89.9% vs 85.5%) and lower CHF-related mortality (9.8% vs 10.8%; P < .001 for both). However, the converse was true for pneumonia. High-cost vs low-cost hospitals had lower quality-of-care scores (85.7% vs 86.6%; P = .002) and higher pneumonia-related mortality (11.7% vs 10.9%; P < .001).

Compared with high-cost hospitals, low-cost hospitals had similar or slightly higher 30-day readmission rates for CHF (24.7% vs 22.0%; P < .001) and for pneumonia (17.9% vs 17.3%; P = .20). Compared with patients initially seen in hospitals with the highest cost of care, however, patients initially seen in low-cost hospitals had lower 6-month inpatient costs of care for CHF ($12,715 vs $18,411) and for pneumonia ($10,143 vs $15,138; P < .001 for both).

"The associations are inconsistent between hospitals' cost of care and quality of care and between hospitals' cost of care and mortality rates," the study authors write. "Most evidence did not support the 'penny wise and pound foolish' hypothesis that low-cost hospitals discharge patients earlier but have higher readmission rates and greater downstream inpatient cost of care."

Limitations of this study include that analysis was confined to Medicare beneficiaries and only 2 clinical conditions, reliance on only a few process measures, lack of data on patient satisfaction or overuse, and estimates of 6-month cost of care limited to inpatient use. In addition, the findings may not be generalizable to all hospitals, and the observational and cross-sectional analyses prevent drawing any conclusions about causality.

"Our findings did not support the hypothesis that hospitals seeking to lower cost of care by discharging patients earlier ultimately use more hospital resources over time," the study authors write. "Although low-cost hospitals had about 20% shorter length of stay, their patients had comparable or marginally higher readmission rates and substantially lower 6-month total inpatient cost of care. Therefore, our findings suggest that initial lower hospital cost of care may not have a deleterious effect on long-term inpatient use."

In an accompanying editorial, Mitchell H. Katz, MD, from the San Francisco Department of Public Health in California, notes that some interventions show promise in reducing hospital costs without harming quality.

"For example, decreasing length of stay for certain conditions can safely decrease costs," Dr. Katz writes. "To increase progress on lowering hospital costs without harming quality, we need more comparative effectiveness studies — specifically, studies that show that 2 interventions of different costs are of equal value."

He concludes, "This research is critical to increasing quality of care at the same time as we decrease cost, so that we can afford to expand health care coverage for the uninsured."

The Commonwealth Fund supported this study, which was also supported by resources from the Veterans Affairs Health Services Research and Development Center of Excellence, the Veterans Affairs Ann Arbor Healthcare System, the Massachusetts Veterans Epidemiology Research and Information Center, and the Veterans Affairs Boston Healthcare System. The study authors have disclosed no relevant financial relationships. Dr. Katz is a paid independent consultant for Health Management Associates.

Arch Intern Med. 2010;170:317-318, 340-346.

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