Nationwide, health systems have continued to lead the way in healthcare quality improvement and cost-effective care. Innovations and efficiencies put in place by hospital providers have had a direct effect on healthcare spending, contributing to the slowest rate of increase since the government began tracking spending in 1960. At the same time, hospitals have also made great strides to improve patient safety and overall quality. Yet, despite these efforts, Medicare payments have not kept pace with the savings generated. In fact, the Medicare Payment Advisory Commission (MedPAC) this month reported that overall Medicare margins will be 9 percent below care delivery costs in FY 2015.
Hospitals are creating and sustaining care delivery improvements to benefit patients
- We learned last month from the CDC that hospitals have reduced central line-associated bloodstream infections (CLABSI) by 46 percent, surgical site infections by 19 percent and methicillin-resistant Staphylococcus aureus (MRSA) bloodstream infections by 8 percent from 2011 to 2013.
- Spurring this progress, which is outpacing efforts in other care sites, are new care processes, delivery and payment models and best practice collaboratives that hospitals have pioneered.
- A shining example is the more than 350 hospitals in the Premier QUEST® collaborative that have reduced CLABSI rates by 82 percent by testing and sharing improvement strategies based on standardized data collection and transparent measures.
- Reducing complications both improves quality and reduces unnecessary costs of complications. To help providers prioritize and focus their quality improvement efforts, Premier conducted an analysis to identify the most common inpatient complications associated with high rates of mortality, costs and length of stay.
These efforts are decelerating the pace of healthcare spending
- For the fourth year in a row, growth in healthcare spending remained at historic lows. In 2013, health spending grew at 3.6 percent, below the average growth in GDP and down from 4.1 percent in 2012.
- The QUEST hospitals were able to reduce inflation-adjusted mean cost per discharge by $1,287 over 5.5 years, for a total savings of $11.65 billion -- enough for one-third of Americans to get a free annual primary care checkup.
Hospital payment cuts have consequences
- Despite this progress, providers continue to grapple with serious payment issues that affect their financial health, including the ongoing impact of sequestration cuts, uncompensated care, payment penalties imposed by the Affordable Care Act and added investments required to comply with electronic health records 'Meaningful Use' and alternative payment models such as bundling or shared savings.
- As the debate over how to pay for urgently-needed physician payment reform and other policy changes, the Premier healthcare alliance urges lawmakers to reject additional payment cuts that would threaten hospitals' ability to maintain their current level of service to patients and communities.
- Instead, Congress and the administration should create additional incentives to reward healthcare transformation. One idea it to offset sequestration by the savings delivered by ACOs and bundled payment programs.