Author Insights: Parsing the Link Between Health Care Costs and Quality

Ashish K. Jha, MD, MPH, of the Harvard School of Public Health in Boston, cautions policy makers and payers that the relationship between health care costs and quality is nuanced. (Image: Harvard School of Public Health)

The Dartmouth Atlas of Health Care, which documents variations in how medical resources are distributed and used in the United States, shows that US medical costs and medical outcomes vary widely and that high prices do not always lead to better care. This inconsistency has the effect of persuading some payers that they can indiscriminately cut costs while improving outcomes. But this is not necessarily so, according to study findings published in today’s JAMA by researchers from Canada and Dartmouth Medical School, Lebanon, NH.

In the study, the researchers found that higher spending intensity was associated with lower mortality, hospital readmissions, and rates of heart events such as heart attacks among patients admitted to some hospitals in Ontario, Canada, from 1998 through 2008. But higher spending was not associated with better outcomes at all of the hospitals studied. The improved outcomes were seen at higher-spending facilities that were higher-volume teaching or community hospitals—places that also had high-volume specialist attending physicians and that featured specialized programs, such as regional cancer centers.

An accompanying editorial considers the cost and quality relationship and warns policy makers and payers who hope that cost cutting can improve efficiencies and automatically result in better health outcomes about the problems with this assumption. Ashish K. Jha, MD, MPH, of the Harvard School of Public Health in Boston and coauthor of the editorial, discusses his position:

“The Dartmouth Atlas shows that among communities, there are large variations in health care costs and large variations in quality, and some with high costs also have low quality. This convinces a lot of people that there can be a free lunch—that if we can get spending down in high-costs communities like McAllen, Texas, to levels seen in Minnesota, where spending is low and quality is high, we can save money and improve outcomes. But how you implement this in policy is hard, and often policy makers misunderstand what to do.

“What policy makers conclude is that being a high-cost provider must be associated with being a low-quality provider and spending more money must be wasteful and not benefitting patients. But the Dartmouth Atlas looks at community-level data, and using it to evaluate individual hospitals or providers is disappointing. But you don’t want to go haywire the other way and say that all increased health care spending is good. When systems become fragmented, you end up doing extra stuff, and that extra stuff is not better—there are extra specialty visits, testing, and repetition, but not coordinated care that can improve quality and outcomes.

“Policy makers should not think about doing blanket, across-the-board cuts in spending. Because when you do that, some hospitals will become more efficient, but a lot of them will cut into quality because they cannot find efficiencies. In industry, when companies can’t respond to price pressures, they go out of business; in medicine, when hospitals can’t respond to price pressures, patients die.”

Categories: Health Policy, Medical Practice, Quality of Care