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What Is “High-value Health Care?”

January 30, 2012

Ask any person (or family member) facing serious illness or injury what is most valuable to them, and they will tell you it’s having the chance…the hope…of getting better, regardless of the cost. And yet the providers that care for these patients are criticized for being “wasteful” and for providing care that is too costly.

Teaching hospitals fill a unique role in caring for the sickest, most vulnerable patients in both inpatient and outpatient settings. These institutions offer groundbreaking treatments for the most complex illnesses and injuries and have trauma centers, burn units, and specialists available 24-7 “just in case.” But teaching hospitals also are where the nation’s lower income citizens get care when no one else will take them. These facilities, representing only 6 percent of hospitals, provide 40 percent of the charity care in our communities.

The outpatient centers at teaching hospitals serve a similarly vital and irreplaceable role, caring for far more uninsured and Medicaid patients than other hospitals. These centers also are where Medicare (and other) patients go if they have health care needs and conditions that are more complex than the average physician’s office is prepared to handle.

For example, consider the patient whose breast cancer requires surgery and chemotherapy or radiation. She has emphysema and needs to be seen by the oncologist, breast surgeon, and pulmonologist, all of whom need to communicate with her general internist about her care. There needs to be a social worker and physical therapist at the hospital to coordinate the support she needs at home. The clinic pharmacist is right there, onsite, to explain the range of medications that she needs to juggle. And, because she is deaf, there is a sign language interpreter available at every visit to be sure she understands her treatment plan and can get answers to her questions and concerns.

There are many, many more patients like this than you might think, and they need—and deserve—quality care.

Yet, in this time of budget deficits, policymakers (and often the public), in their zeal to save money, show an unwillingness to invest in the teaching hospital outpatient services that these vulnerable patients rely on.

A perfect example of this disconnect is the Medicare Payment Advisory Commission (MedPAC) recommendation to cut payments for hospital outpatient services to the same level as physician offices—recommendations the commission made despite its own analysis showing the inadequacy of payments to teaching hospitals.

Major teaching hospitals currently lose 1.7 cents for each dollar of care they provide to seniors through Medicare. MedPAC projects that the aggregate overall Medicare “margin” will get even worse, falling from -4.5 percent in 2010 to a projected -7 percent in 2012. Medicare already pays less than the true cost of caring for patients in hospital outpatient departments—MedPAC reported that the Medicare margin for outpatient departments was -9.6 percent in 2010.

In addition to limiting access to care, the MedPAC recommendation to reduce Medicare payments to hospital outpatient departments would jeopardize the ability of these institutions to provide outpatient training environments for doctors, nurses, and other health professionals.

Honest talk about costs

It’s time to have an honest discussion about how high-value health care can, in fact, be very expensive, and how costs get shifted. Rather than acknowledge that shifting costs would force providers either to turn Medicare patients away or to push losses to private payers, policymakers too often make decisions without being honest with the public. The reality of these Medicare cuts is that, ultimately, Americans will bear the burden of this short-sighted policy both in reduced access and increased premiums.

One MedPAC commissioner who opposed the outpatient cuts, George Miller, pointed out that lowering payments for hospital outpatient services disregards the fact that these places are the sole source of primary care for poor Medicare beneficiaries who can’t afford Part B premiums and copayments. He also pointed out that hospital outpatient departments must adhere to the same regulatory standards as hospitals (including 24-hour access to a wide range of specialists).

The costs of hospital outpatient departments are higher…so their payment rates should reflect that fact. If Medicare doesn’t want to pay for it, then it shouldn’t expect timely and convenient access for each and every patient. Similarly, Medicare shouldn’t mandate translation services for patients whose primary language is not English.

The disconnect between patient expectations and federal support goes far beyond Medicare and Medicaid…just ask any member of Congress where they want to get care when tragedy strikes their family. More than likely, it’s a teaching hospital or a practice that’s staffed by medical school faculty with the latest technologies and services available 24-7.

Everyone is frustrated

Providers increasingly are frustrated by the contradictions of the care that patients need and how it is paid for. They are criticized for the cost of the very health care patients expect. In a thought-provoking essay, Dr. Peter Bach highlights the fallacy of measuring success, or “efficiency,” by focusing only on those whose lives physicians fail to save. He eloquently points out that sicker patients require intense treatment (and are also more likely to die), and “the policy conceit that spending money on patients who die is a waste overlooks the core purpose of health care”—to keep people well or as well as possible.

I have cared for many very sick patients both in and out of the hospital. I wish I knew how to predict without doubt who would die within six months so that I could better evaluate how much care—and how much hope—to provide. But people don’t come with a clearly displayed expiration date stamped on their backsides. As Dr. Pauline Chen recently wrote in The New York Times, “With so little research on how to predict how long a patient might live and few resources to turn to, physicians often end up relying on intuition.”

Physicians at teaching hospitals do exactly that. They use their intuition and every bit of skill and knowledge available to them. But they also respect the wishes of patients and their families to do everything they can to make them well again.

Congress (and, in fact, the American public) must reconcile what it wants, what it believes is “high-value care,” and whether (or how) we will pay for it. The time has come to make a conscious decision about whether we pay for the care we want or whether we should adjust our expectations. In an election year filled with talk of values and priorities, perhaps it’s time to get on with this conversation.

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About the Author

Atul Grover, MD, PhD AAMC Executive Vice President

Atul Grover, MD, PhD
AAMC Executive Vice President

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For More Information

Peters Willson
Sr. Specialist, Policy and Constituency Issues
Telephone: 202-862-6029