In what it calls "the first ranking to evaluate cost efficacy" for more than 3,000 U.S. hospitals, the Lown Institute released a list of the top 50 hospitals for cost efficiency, highlighting those hospitals that were able to achieve high-quality outcomes—and low mortality—with low cost to Medicare.
For the list, the Lown Institute developed a cost-efficiency metric to assess how well more than 3,000 hospitals in the United States achieved quality outcomes with minimal cost to Medicare.
To develop the metric, Lown looked at a ratio of mortality rates in hospitals compared with their Medicare costs. According to the methodology, mortality was calculated using hospitals' risk-standardized 30-day and 90-day mortality for Medicare patients who were hospitalized between 2016 and 2018.
To evaluate costs, Lown looked at 30-day and 90-day total risk-standardized Medicare payments for Medicare patients hospitalized during the same period. The organization did not include commercial billing in the cost data. To prevent hospitals with sicker patients from being penalized, researchers standardized payments for patient risk.
According to Vikas Saini, president of the Lown Institute, the organization combined the metrics into scores by placing them on a scatter plot and measuring each hospital's distance from the ideal score. The hospitals that received the best cost-efficiency scores were those with the lowest mortality rates and the lowest per-patient Medicare costs.
The top 50 hospitals on Lown Institute's rankings were:
Notably, the rankings found that if all hospitals included in the analysis achieved the same outcomes and costs as the top 750 most cost-efficient hospitals on the list, Medicare would save $8 billion every year.
However, Medicare costs varied widely—with costs among hospitals of the same type, size, and location varying by thousands of dollars per patient. For example, Lown found that Medicare costs ranged from $9,000 to $27,000 per patient among hospitals with average 30-day mortality rates.
"It looks like if everybody could do as well as the best, we would definitely save money and save lives," Saini said. "But it's hard to say for any given hospital: This is the magic formula."
While Lown's report was the first ranking to evaluate cost efficiency for over 3,000 U.S. hospitals, some health experts have criticized the methodology for using mortality as the only quality metric, saying it could not provide an accurate measure of quality outcomes, Modern Healthcare reports.
For instance, Michael Abrams, managing partner of Numerof & Associates, said the measurement was too high level to provide any useful information—and argued that something such as heart attack outcomes would have been a more useful measurement. "There's got to be something short of death that you would call not good quality," Abrams said. "It doesn't go very far in explaining what is the quality of care."
However, Saini said Lown chose mortality because it is the "hardest to argue with." In addition, Lown said it plans to look at other metrics as it expands its research.
"When clinicians put their minds to it, there's probably a lot of ways of improving care—both quality and cost—that require focused attention," Saini said, "and then the innovation and the creativity of the clinical community, when it's brought to bear, can actually generate a lot of interesting and good results." (Lown Institute 2021 Winning Hospitals: Cost Efficiency list, accessed 11/9; Bannow, "Transformation Hub," Modern Healthcare, 11/9)
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