News | Cost Effectiveness of Health

Healthcare News of Note: Medicare would save $8 billion a year if all hospitals achieved the outcomes of the most cost-efficient performers, says Lown Institute

News | Cost Effectiveness of Health

Healthcare News of Note: Medicare would save $8 billion a year if all hospitals achieved the outcomes of the most cost-efficient performers, says Lown Institute

  • The most cost-efficient hospitals in America and how billions of dollars could be saved for Medicare were shared by Lown Institute in its latest report.
  • Telemedicine and mental health are two areas where employers have adapted benefits to meet employees’ changing needs due to the COVID-19 pandemic, according to a survey.
  • Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022, according to a Guidehouse analysis of an HFMA survey.

Over the last few weeks, I have found these industry news stories that should be of interest to healthcare finance professionals.

1. The 50 most cost-efficient hospitals in America are identified by Lown Institute in a study of data from more than 3,000 hospitals

The Lown Institute identified the most cost-efficient hospitals in America in a new analysis and, in a Nov. 9 news release, highlighted “how potentially billions of dollars could be saved in the nation’s Medicare program.”

“The study analyzed data from more than 3,000 hospitals, looking at how much Medicare was billed and comparing that to how many patients died, both 30 and 90 days from admission,” wrote author Aaron Toleos.

Analysis highlights

Key takeaways from the analysis include:

  • Medicare would save $8 billion each year if all hospitals in the Lown Hospitals Index achieved the same outcomes and costs as the best 750 hospitals for cost efficiency.
  • Some hospitals cost Medicare thousands more per patient than other hospitals of the same type, size and location.
  • Among hospitals with average 30-day mortality rates, Medicare costs varied three-fold, ranging from $9,000 to $27,000 per patient.

In the release, Vikas Saini, MD, president of the Lown Institute, said: “If we want to keep costs low for the Medicare program and provide quality care for the 60 million Americans who depend on it, hospitals must be as efficient as possible. The best hospitals prove that you can save Medicare dollars and deliver great patient outcomes at the same time.”

10 most cost-effective hospitals

  1. Pinnacle Hospital, Crown Point, Indiana
  2. St. Mary’s Regional Medical Center, Reno, Nevada
  3. Mercy Medical Center Dubuque, Dubuque, Iowa
  4. Encino Hospital Medical Center, Encino, California
  5. Park Ridge Health, Hendersonville, North Carolina
  6. Oroville Hospital, Oroville, California
  7. St. Michael’s Medical Center, Newark, New Jersey
  8. UnityPoint Health-Meriter, Madison, Wisconsin
  9. East Liverpool City Hospital, East Liverpool, Ohio
  10. Maple Grove Hospital, Maple Grove, Minnesota

“The Institute tracked Medicare patients hospitalized from 2016-2018 using claims data and adjusted both mortality rates and cost based on patient risk,” Toleos wrote. “Total Medicare cost included claims from inpatient hospitalizations and post-discharge claims (hospice, skilled nursing facilities, etc.). Hospitals with the lowest mortality rates and lowest costs received the best scores on cost efficiency.” 

The analysis lists the 50 most cost-efficient hospitals in the U.S. and provides a table showing cost comparisons for pairs of large major teaching hospitals in the same city with similar mortality rates.

2. Employers adapt and expand telemedicine and mental health benefits to help workers deal with the effects of COVID-19

Telemedicine and mental health are two areas where employers have adapted benefits to meet employees’ changing needs due to the COVID-19 pandemic, according to the Kaiser Family Foundation (KFF) 2021 Employer Health Benefits Survey.

Telemedicine benefits. The percentages of small and large employers with a telemedicine benefit increased again in 2021, and many employers also made the benefit easier to use, the survey authors said. Changes to telemedicine use include:

  • Expanding the number and types of providers available
  • Expanding the settings or locations where the benefit could be used
  • Supporting additional modes of communication with providers
  • Waiving cost sharing for telemedicine services

“While some of these actions may change when the pandemic ends, employers appear convinced that telemedicine will continue to be important in the future,” wrote the authors. “Almost half (47%) of employers with 50 or more employees offering health benefits agree that telemedicine will be very important in providing access in the future, while only 4% said that telemedicine would be unimportant in the future.”

Mental health benefits. “The significant economic and social dislocations have placed unprecedented stresses on workers and their families, and some employers took steps to enhance benefits and access to services,” the authors wrote. For example, of employers with 50 or more employees:

  • 31%  expanded the ways through which enrollees could get mental health or substance abuse services, such as through telemedicine.
  • 16% developed new resources, such as an employee assistance program.

3. Guidehouse analysis of HFMA survey: Most health systems plan to advance into risk-based Medicare Advantage models in 2022

“Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022, according to a Guidehouse Center for Health Insights analysis” of an HFMA survey, stated a Nov. 9 news release. “This equates to a 14% increase when compared to a June 2019 Guidehouse/HFMA analysis.”

According to the release, in addition to Medicare Advantage models, health systems have diversified their risk-based payment strategy with a broader array of business lines, including:

  • 52% - Commercial employer-based risk contracts
  • 49% - Medicare alternative payment models
  • 36% - Managed Medicaid 33% - Direct-to-employer
  • 12% - Other

The analysis also provides a review of health system leader budget concerns and the top external and internal challenges faced by health systems.

More than 100 provider CFOs and finance and managed care executives participated in the HFMA survey.

HFMA bonus content

Read HFMA’s Healthcare 2030 series: “CFO of the Future,” Workforce of the Future” and “The Future of Consumer Expectations.” The fourth and final part of the series, “The Future of Strategic Investments,” is to be published Dec. 6.

Following the COVID-19 liquidity crisis, hospital and health system leaders should give lines of credit a fresh look, according to an Expert Reviewed article in the November edition of hfm.

Jill Geisler, the leadership columnist for hfm, shares things leaders can do to promote civility in the workplace and keep teams working well together in her November column.

About the Author

Deborah Filipek

is a senior editor for HFMA, Westchester, Ill.

Sign up for a free guest account and get access to five free articles every month.

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