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Top Hospitals Show Better Care Can Be Achieved at Lower Costs

The highest-performing hospitals in 2019 had fewer deaths, complications, and readmissions all while achieving lower inpatient costs and higher profit margins.

Top hosptials

Source: Thinkstock

By Jacqueline LaPointe

- What does it take to be a top hospital? According to the most recent 100 Top Hospital study from IBM Watson Health, hospitals achieving operational and care quality excellence in 2019 had several characteristics in common, including fewer patient complications, lower hospital readmission rates, and reduced in-hospital and aftercare expenses.

“From small community hospitals to major teaching hospitals, these diverse hospitals have demonstrated that quality care, higher patient satisfaction, and operational efficiency can be achieved together,” Kyu Rhee, MD, MPP, VP and Chief Health Officer at IBM Watson Health, stated in an official press release.

“In this era of big data, analytics, transparency, and patient empowerment, it is essential that we learn from these leading hospitals and work to spread their best practices to our entire health system which could translate into over 100K more lives saved, nearly 40K less complications, over 150K fewer readmissions, and over $8 billion in savings.”

In the 26th annual study, IBM Watson Health described a top hospital as a facility that “successfully negotiated the fine line between running highly effective operations and being innovative and forward-thinking in ways that grow their organizations over the short and long term.”

A handful of hospitals living up to the healthcare company’s standard in 2019 according to public data included Cedars-Sinai Medical Center in California, Mayo Clinic Hospital in Florida, UCHealth University of Colorado Hospital, CHRISTUS St. Michael Health System in Texas, St. Luke's Hospital in Iowa, and Memorial Hermann Memorial City Medical Center in Texas.

Hospitals making the most recent list ranged from major teaching hospitals and large community hospitals to small community hospitals.

While the hospital size significantly varied, the top facilities had several characteristics in common. Overall, the highest-performing hospitals according to IBM Watson Health:

  • Achieved 24 percent fewer deaths compared to a benchmark, considering patient severity
  • Had 23 percent fewer patient complications than expected
  • Reported 35 percent fewer hospital-acquired infections (HAIs) than expected
  • Had lower 30-day mortality and 30-day readmission rates by 0.6 and 0.4 percentage points, respectively, compared to non-winning hospitals
  • Achieved a median severity-adjusted average length of stay that was 0.5 day shorter than their peers
  • Delivered faster emergency care with wait times 8 percent less than non-winning hospitals
  • Scored high patient ratings for overall hospital experience, with a 3 percent higher median Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) overall rating score

In addition to care quality excellence, the study also found top hospitals outperformed their peers in terms of operational and financial performance in 2019.

The study showed that the median for case mix and wage-adjusted inpatient expense per discharge at the highest-performing hospitals was lower than the median for non-winning facilities. The difference between inpatient expenses per discharge for winning and non-winning facilities was $830, or 11.9 percent.

Additionally, top hospitals were more profitable, the study showed. Overall, the highest-performing hospitals had a median operating profit margin that was 11.9 percentage points greater than their non-winning peers. The median profit margin for winners was 15.6 percent.

If all hospitals in the US could achieve the performance benchmarks established by the top hospitals in 2019, then hospitals would save over $8.2 billion in inpatient costs. Hospitals would also:

  • Save over 103,000 additional lives within their organization
  • Prevent over 38,000 additional patients from experiencing complications
  • Release patients a half a day sooner, resulting in 12 percent fewer episode costs compared to the median patient
  • Reduce 30-readmissions by over 155,000
  • Achieve emergency room wait times that we 17 minutes less per visit

Hospitals across the country should be looking to their highest-performing peers to move the needle with operational and care quality improvements because the overall performance of all hospitals analyzed in the report has not significantly advanced as of late.

Researchers pointed out that winning and non-winning hospitals only really improved on one metric from 2013 to 2017. For 30-day readmission rates, fewer than 75 percent of in-study hospitals were categorized as “no statistically significant change in performance” by the end of the study period.

All other metrics, including 30-day mortality rate, severity-adjusted average length of stay, adjusted inpatient expense per discharge, and operating profit margin, had at least 76 percent of hospital reporting no statistically significant change in performance from 2013 to 2017.

Hospitals may be significantly improving their readmission rates in light of value-based purchasing models that tie incentive payments and penalties to 30-day hospital readmission rates, researchers noted. About 56 percent of hospitals improved their 30-day readmission rate from 2013 to 2017.

While overall hospital performance did not dramatically advance since 2013, researchers did point out that that does not necessarily mean the facilities did worse. For example, almost 90 percent of hospitals had no change in their 30-day mortality rate, and 81 percent maintained inpatient operating expenses during the period.

But more can still be done to help bend the healthcare cost curve while improving care quality.

“At a time when research shows that the US spends nearly twice as much on healthcare as other high-income countries, yet has less effective population health outcomes, the 100 Top Hospitals are setting a different example by delivering consistently better care at a lower cost,” stated Ekta Punwani, 100 Top Hospitals Program Leader.


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