The Boston Globe recently ran an article discussing layoffs at Baystate Health, a large health system in Western Massachusetts. The system is planing to lay off 300 employees to try to close a $75M deficit. According to the Globe, the deficits are mainly driven by declining Medicaid reimbursement, but, more interestingly, by a $23M hit to Medicare revenue driven by a mistake made by Partners Healthcare, a health system on the other side of the state.
Here’s the fascinating backstory.
The Spring 2016 Medpac report on Medicare payments is out. This annual report to Congress (put together by the 17 members of the Medicare Payments Advisory Committee) provides an assessment of the way Medicare pays for care, and offers recommendations for how to modify payments going forward. It’s a fascinating snapshot:
In healthcare quality circles it’s become a truism that high surgical volume is linked to improved outcomes. If you want to have the best surgical result, the thought goes, find the surgeon who has done the most cases like yours…
Harvard’s Ashish Jha outlines the case in a recent JAMA Forum:
We have always known that volume matters. The notion is simple and intuitive: practice makes perfect; experience creates better physicians.
…For more than 2 decades, work of leading scholars has shown clearly and convincingly that volume matters. Mortality at low-volume centers for certain procedures is as much as 5 times higher than at the highest-volume centers. Such evidence has prompted quality and safety organizations to encourage patients and providers to use high-volume centers.
Here is an interesting exercise and an unfortunate lesson in the law of unexpected consequences:
Pop Quiz: Your elderly Granny comes from overseas without insurance and suddenly needs her gallbladder taken out. You call around the hospitals in town and they agree to extend to you the same rates as they would charge Medicare. (This is hypothetical, of course. They would treat Granny and stick you with the rack rate….. but bear with me.)
Would you expect to get the best deal at:
- The prestigious university affiliated teaching hospital
- A nice community hospital in a fancy part of town
- A large safety-net hospital downtown
- The for-profit community hospital that admits a lot of Medicaid patients in a tough part of town?
One summer afternoon, when I was eight or nine, I impulsively chose to ride my bike down a steep hill near my childhood home. From the top of the hill my bike accelerated at a frightening rate and I remember for brief moments somehow being airborne before landing in a pile of bent metal and bloody asphalt. My adventure ended with a trip to the children’s hospital for a cast and a sling.
After all of these years what I remember most from that visit was being in pain and almost vertiginously looking down a corridor into the massive, soaring atrium of a hospital packed with people that went on forever.
Imagine that you were the “state administrator for hospitals” and were given the unenviable task of shuttering 30% of the hospital beds in your state. How would you decide which beds to keep, and where? Would you shutter a handful of hospitals entirely, or would you reduce capacity at every hospital across your state? Would you be analytic about the task, or would you let market forces determine which beds stay and which ones close?