In the last two years, the results in several published papers suggest that higher, and more costly, hospital treatment intensities produce lower mortality rates. These results are in stark opposition to claims that because there is no observable relationship between variations in end-of-life hospital spending and mortality, a large fraction of high intensity care is wasteful. They also cast doubt on related claims that 20 to 30 percent of U.S. medical spending does no good.
In a refreshing departure, Kaestner and Silber (Milbank Quarterly, December 2010) begin by noting that it is curious that such waste would persist despite the existence of numerous market participants, including large for-profit corporations that self-insure medical expenditures, large health insurers in competitive markets, and large managed care organizations, with both the “expertise and financial incentive” to eliminate wasteful spending. They are therefore surprised that the available evidence (much of it from the Dartmouth group) suggests that huge waste still exists. They are also surprised that so “many people believe that the cause of the problem is easy to identify” and that it can be cured simply by “using capitated and bundled payments that encourage integrated systems of care and restrain the use of unproven treatments.”
Using several techniques to address the reverse causality problem that likely biases estimates of the relationship between treatment intensity and mortality, they find that a 10 percent increase in inpatient spending is associated with a 3.1 to 11.3 percent increase in 30 day survival. They conclude that more credible assessments of the causal relationship between spending and health are needed, and that believing that inefficiency is rife is inconsistent both “with economic incentives and a growing body of empirical evidence.”
Doyle et al. (NBER Working Paper No. 17936, March 2012) used differences in ambulance assignments to compare outcomes for emergency patients at high and low cost hospitals in New York State. They found that conventional estimates likely underestimate the returns to treatment intensity because they cannot account for patient selection. When patient selection is accounted for, higher-cost hospitals are associated with improved patient mortality outcomes and the returns are substantial. High cost hospitals reduce mortality by 2 to 2.3 percent relative to the average. A two-standard deviation increase in hospital costs is associated with a 15 to 30 percent decline relative to the average.
Teaching and high tech hospitals both tend to have higher average costs. Being taken to a teaching hospital reduces average mortality by 3.9 percent, over 10 percent of average mortality. Being taken to a high-tech hospital reduces average mortality by 4.7 percent. Hospital ratings using the best practices measures for heart failure, heart attack, and pneumonia endorsed by CMS had no statistically significant effect on mortality.
Finally, Bernato et al. (Medical Care, February 2010) analyzed the Pennsylvania Health Care Cost Containment Council discharge data set from April 2001 to March 2005 to estimate a Cox survival model. They also found that admission to hospitals that used more intensive care and life-sustaining resources was associated with a moderately higher likelihood of survival.
These papers join a small literature of earlier papers with similar findings. These include Silber et al. who found that more aggressive treatment in Medicare surgical patients was associated with lower mortality. Cooper (2009, Health Affairs) used broad measures of system quality to show that states with higher per capita total health spending had better quality care. Higher per capita Medicare beneficiary spending apparently is a sign of a disproportionately high social burden and lower health spending overall. Cooper (2009, JAMA) reviews the context of the debate and suggests the distribution of poverty may be responsible for many of the unexplained variations in both health inputs and health outcomes. More specific variations with respect to poverty are detailed in Cooper et al. in the Journal of Urban Health (2012). Doyle (2007, NBER Working Paper No. 13301) found that people visiting Florida who endured health emergencies had lower mortality if they went to hospitals in high-spending areas than if they went to hospitals in low-spending ones.