Data Dives

How Much Do The Nation’s Pre-Eminent Hospitals Cost Medicare?

By Jordan Rau

May 14th, 2012, 12:14 PM

Can you cut health care spending without undermining the quality of care? It’s a major concern as Medicare prepares to prod hospitals to provide medical care more efficiently by giving bonuses to those whose patients cost less and taking money away from places that send the government higher bills.

Last week, Capsules culled through the Medicare data to identify the hospitals whose patients cost Medicare the most, from the three days before admission to a month afterward. Here is an admittedly unscientific first pass at how the nation’s best-regarded hospitals rate in terms of their patients’ Medicare spending.

Kaiser Health News looked at the 16 hospitals that U.S. News includes in its widely followed “Best Hospitals’ Honor Roll,” which is calculated based on a mix of quality indicators and reputation surveys. (One hospital, Johns Hopkins in Baltimore, was omitted because Medicare didn’t provide figures for Maryland hospitals.)

As a group, the average cost to Medicare for a patient at a U.S. News top hospital was $17,808, or 1 percent below the national median spending of $17,988. The least expensive of these hospitals had patients who, on average, cost Medicare 5 percent below the median (represented as a ratio of 0.95). The most expensive hospital had patients who, on average, cost Medicare 3 percent above the median (1.03).

  • New York-Presbyterian Hospital (New York, N.Y.): $17,089 (0.95)
  • University Of Washington Medical Center (Seattle, Wash.): $17,089 (0.95)
  • Mayo Clinic St. Mary’s Hospital (Rochester, Minn.): $17,269 (0.96)
  • Mount Sinai Hospital (New York, N.Y.): $17,269 (0.96)
  • Ronald Reagan UCLA Medical Center (Los Angeles, Calif.): $17,628 (0.98)
  • UCSF Medical Center (San Francisco, Calif.): $17,628 (0.98)
  • Duke University Hospital (Durham, N.C.): $17,628 (0.98)
  • Cleveland Clinic (Cleveland, Ohio): $17,808 (0.99)
  • Barnes Jewish Hospital (Saint Louis, Mo.): $17,808 (0.99)
  • Vanderbilt University Hospital (Nashville, Tenn): $17,808 (0.99)
  • Stanford Hospital (Stanford, Calif.): $17,808 (0.99)
  • UPMC Presbyterian Shadyside (Pittsburgh, Penn.): $18,168 (1.01)
  • University Of Michigan Health System (Ann Arbor, Mich.): $18,168 (1.01)
  • Brigham And Women’s Hospital (Boston, Mass.): $18,348 (1.02)
  • Hospital Of University Of Pennsylvania (Philadelphia, Penn.): $18,348 (1.02)
  • Massachusetts General Hospital (Boston, Mass.): $18,528 (1.03)

None were outliers among the 3,346 hospitals that Medicare evaluated. In fact, more than a quarter of the nation’s hospitals were more costly than all of the “honor roll” hospitals and another quarter of the hospitals were less expensive than all of the “honor roll” hospitals.

Let us know what you think about Medicare’s Spending Per Hospital Patient ratings in a comment below.

7 Responses to “How Much Do The Nation’s Pre-Eminent Hospitals Cost Medicare?”

  1. Vito Danelli says:

    Perhaps it’s not politically-correct, but how about doing a breakdown of the cost of providing medical care to “undocumented immigrants” aka Illegal Aliens? As you know, the president of the American Hospital Association (AHA) sent a letter to President Obama in June 2011 about these costs. I believe in was $40 BILLION DOLLARS in 2009.

  2. K. Gibson says:

    Hey VITO,
    I wonder how many generations ago YOUR family came to this country, and how many of them have come “undocumented”.
    We’re all immigrants really, unless of Native American ancestry!

  3. Susan Anthony says:

    Hey Gibson,
    Your comparison is irrelevant to the topic. Immigrants did not have healthcare benefits – no one did – society was a pay as you go society or services were not provided. This is not the case today —

  4. The factor that must be considered is that people who seek care at these expensive (tertiary) care facilities are often those who have very complex and/or unusual diseases that might not be able to be treated in other settings. Are we comparing apples and oranges here? Without looking at multiple variables in the patient population receiving care at these facilities, this information should be interpreted cautiously.

  5. Harriette Seiler says:

    I can’t help but think of the racial disparities in health care. All those African Americans–particularly in the South, who worked and contributed to Medicare, but who died before age 65 due to a lack of access to care during their working lives. They never received the benefits. The monies tabulated in this study were never spent on them.

    We really need to improve Medicare and expand it to everyone. One giant risk pool; one giant national health savings account. When you need it–at any age– the care is there for you. See HR 676 at Thomas.loc.gov

  6. Excuse me if I’m a bit cynical, but the effort by Medicare to incentivize hospitals to deliver quality care will lead to more sophisticated ways to game the system. The goal in my opinion should be that all hospitals and other healthcare providers provide top quality care as measured by clearly defined outcomes.

    If one it to assume that the U.S. News “in its widely followed “Best Hospitals’ Honor Roll”, offers the best indicator of health care quality, then clearly the analysis in this article is worthy of serious attention. To most knowledgeable observers, however, the Best Hospital Honor Roll is a PR and marketing tool rather than an objective indicator of quality for specific healthcare conditions treated at the hospital. Comparing only Medicare costs doesn’t account for what these U.S. Honor role hospitals charge private payers for treatment of various conditions. What the U.S. News honor roll and other so called ratings allows these hospitals to do is become more and more dominate in their markets and charge more and more for private pay thus increasing the cost for employers and patients at no demonstrated added quality for most conditions.

    A better way would be to develop an assessment of the value of healthcare delivered for various conditions and to provide clearly defined agreed upon outcome measures.
    How about using currently available outcomes for commonly occurring health conditions causing hospitalizations at community hospitals, VA hospitals as well as academic hospitals to assess the actual value of care? For example starting with
    outcome measures for heart disease and pneumonia available on the Medicare Compare and VA Compare websites and expend it to public reporting of outcomes for all patients receiving care at hospitals.

    The likely reason that Medicare doesn’t report on the cost of care at for Maryland hospitals including Johns Hopkins in Baltimore (the number one hospital according to U.S. News, is probably that the state has an All Payer Rate Setting System. (see link below)

    Perhaps an analysis using the established price/cost structure for Maryland hospitals and applying it to all hospitals may provide useful information on how to improve the value of healthcare delivered in all US hospitals, and likely “bend the cost curve”.

    Shimon Waldfogel, MD
    http://www.citizens4health.org
    shrinkthegovernment.org
    twitter: @shrinkm

    http://mhcc.maryland.gov/consumerinfo/hospitalguide/hospital_guide/cost_report.html

    The Health Services Cost Review Commission (“HSCRC” or “commission”) was established by the General Assembly in 1971. The Commission’s mandate includes reviewing and approving rates that Maryland hospitals can charge for their services and making Maryland hospitals’ financial information available to the public. The HSCRC sets rates for all payers including private insurance companies, HMOs, MCOs, Medicare and Medicaid. This system is referred to as the “all-payer” system, in which all payers pay their fair share of hospital costs.
    In establishing the HSCRC, the Maryland General Assembly set out to accomplish the following objectives:
    • keep hospital services affordable;
    • expand access to hospital care for those without insurance; and
    • provide accountability for hospital performance to the public and state government
    As part of its rate-setting activities, the HSCRC collects data from hospitals, which are used to monitor hospital utilization and charges, as well as to set inpatient rates. These data are used to generate the statistics reported in this guide..

  7. Bob Bronfen says:

    How can so many hospitals have the exact dollar average cost of one or more others? Something doesn’t seem correct here.

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