New HCMS research provides an answer to one of the most vexing questions involving healthcare cost and quality: How do you evaluate provider performance?
Benefit providers and employers have increasingly embraced the idea of steering patients to “centers of excellence,” or providers that deliver the highest quality of care at the best prices. However, providers often resist evaluation on cost and quality performance because the risk of their patients can’t be accurately measured and therefore the performance outcomes are flawed.
HCMS Group’s individual health predictive risk metric provides an answer to that objection. The HCMS Human Capital Risk Index® (HUI, patent pending), can measure how well any medical provider–hospital, specialist, primary care provider–manages the cost and quality risk of patients. The HUI risk index is based on more than 300 personal characteristics including medical diagnoses, prescriptions, and health benefits use.
HCMS researchers evaluated a regional group of nine hospitals. The hospitals had average patient HUI scores several times higher than the overall average score of 1.0 for the general population (see table below). The average cost of a broad mix of hospitalizations ranged from $13,080 to $75,726 per person. The data was from the HCMS Research Reference Database, which includes almost 4 million people covered by more than 200 employers.
Researchers adjusted the cost totals to account for the different risk profile of each patient. The calculation produced a Value HUI (V|HUI) that links cost to the patients’ risk profiles. On this basis, the two top-rated hospitals had risk-adjusted costs of $4,410 and $4,791, putting them in the range of the most effective institutions that HCMS has studied. The lowest-ranked institution had a risk-adjusted cost of $12,116, almost three times as high as the No. 1 provider.
The V|HUI calculation provides an indirect measure of quality. Lower cost relative to individual patient situation suggests less bouncing from specialist to specialist and fewer unnecessary procedures and medications, all of which increase expenses and subject patients to more risk. There is no direct method of rating healthcare quality. The most-often used evidence-based medicine guidelines don’t measure the right things, are subject to small sample sizes, and don’t account for individual conditions.
HCMS researchers also compared the findings with the results of a self-reporting tool widely used for ranking hospitals. There was no correlation. The top hospital based on the self-reporting index ranked 6th in the V|HUI ratings. The two best institutions based on V|HUI scored in the middle and at the bottom of the self-evaluation scale.
HCMS Study of 9 Regional Hospitals
Employers and benefit providers can provide economic incentives in the form of deductibles and cost-sharing to encourage patients to use top-rated hospitals and providers. Further research will refine the analysis to identify centers of excellence in specific procedures of the sort that business groups and insurance companies have singled out, such as hip and knee replacement; bariatric, spine, and transplant surgeries; and cancer treatment.
To learn more about how to evaluate centers of excellence in healthcare reform, listen to our webinar recording here.
— Robert L. Simison, HCMS Communications
On behalf of HCMS Data Analytics