Teaching Hospitals Aren’t More Expensive Than Non-Teaching Peers
New study shows major teaching hospitals had lower total costs of care for 30-day episodes and similar total costs for 90-day episodes versus non-teaching hospitals.
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By - Medicare beneficiaries treated for common medical conditions and surgical conditions incurred lower total costs of care over a 30-day episode when hospitalized at a major teaching hospital versus a non-teaching hospital, according to a recent study by researchers from Harvard T.H. Chan School of Public Health and Beth Israel Deaconess Medical Center.
Published in JAMA Network Open on June 7, the analysis of over 1.2 million hospitalizations among Medicare beneficiaries age 65 years or older showed that adjusted total 30-day standardized costs were $18,605 at major teaching hospitals versus $18,873 at non-teaching hospitals.
Pushing the episode out to 90 days, total costs of care for Medicare beneficiaries was similar among major teaching and non-teaching hospitals.
“These findings are surprising,” senior author Ashish Jha, director of the Harvard Global Health Institute and K.T. Li professor of global health at Harvard T.H. Chan School of Public Health, stated in a press release. “We always assumed that we had to trade-off the better outcomes at teaching hospitals with higher costs. It appears that, at least as far as Medicare is concerned, their payments for care are actually a bit less when patients go to a teaching hospital.”
Industry experts generally agree that teaching hospitals are more expensive than community hospitals, and some payers have excluded the hospitals from their networks in an effort to keep costs down.
While researchers from Harvard and Beth Israel Deaconess Medical Center confirmed that initial hospitalization costs were higher at major teaching hospitals ($8,529 versus $8,180), total costs of care were about $268 less at the end of 30 days because major teaching hospitals spent significantly less on post-acute care and hospital readmission services.
Compared to non-teaching hospitals, major teaching hospitals spent an average of $245 and $244 less on post-acute care and readmission services, respectively, during a 30-day episode, researchers reported.
Physician costs were also slightly lower at major teaching hospitals, the study showed. Non-teaching hospitals spent about $41 more on physician services during a 30-day episode of care for Medicare beneficiaries.
Researchers linked the lower readmission and post-acute care spending at major teaching hospitals with lower odds of having any readmission or post-acute care service use and lower mean spending per readmission.
For example, treatment at a major teaching hospital was associated with seven percent lower odds of having any readmission spending for common medical conditions. And spending for the Medicare patients that did experience a readmission at the facility was about $123 less compared to treatment at a non-teaching hospital.
Researchers also observed similar readmission spending patterns for surgical procedures and for post-acute care spending after hospitalizations for both medical conditions and surgical conditions.
“This study suggests that although costs are somewhat higher for the initial hospitalization at major teaching hospitals, spending after hospital discharge, particularly on post-acute care services, is generally lower,” researchers stated in the study. “The reason for this association is unclear. It is possible that greater treatment intensity or better care processes reduce downstream complications and the need for post-acute care services or that major teaching hospitals are able to coordinate more closely with post-acute care or other outpatient practitioners, thus reducing redundant or unnecessary care.”
In light of the findings, researchers stated that teaching hospitals may be better positioned to participate in episode-based alternative payment models, such as bundled payments. They also explained that the study sheds light on cost variation in healthcare.
“These findings support the idea that to truly understand variation in healthcare costs, it's important to look not at just what happens in the hospital but on total spending for an acute episode,” stated first author Laura Burke, assistant professor of emergency medicine at Harvard Medical School and Beth Israel Deaconess Medical Center and instructor in the Department of Health Policy and Management at Harvard Chan School.
