NCPA - National Center for Policy Analysis

Using HMOs To Rate Hospitals

April 22, 1999

Until now, the reputation of a hospital has been largely formed by the experiences of patients and word of mouth. Is there a more objective way of determining which are the best and which the worst?

Anthem Blue Cross & Blue Shield in Ohio has spent years evaluating that state's hospitals based on heart surgery deaths and "adverse outcomes" such as heart attacks, strokes and infections. While the study itself has not been made public, certain facts have emerged.

  • Some health-care centers regarded as top-notch by the public were actually delivering substandard care -- while those with mediocre reputations or those little-known outside the profession were among the best performers.
  • The study motivated Ohio heart surgery units to improve their performance.
  • After Anthem used the study in 1995 to eliminate all but the top 15 units from its HMO operations in Ohio, rates of death and other adverse outcomes have consistently fallen among its members undergoing heart surgery.
  • For example, the rate of heart attacks following bypass surgery -- about 2.8 percent in 1993 -- fell to just 0.9 percent in 1997.

This suggests that a national grading system for hospitals might improve overall care.

But critics contend that might punish providers who treat the sickest patients. When Anthem tried to duplicate its program in Kentucky last year, the Kentucky department of insurance objected following protests from the Kentucky Hospital Association and legislators.

HMOs are often accused of caring more about controlling costs than assuring quality care. But Anthem claims to have saved about $15 million over four years by negotiating lower rates with network hospitals and several times that amount by avoiding subpar surgical care -- which can lead to later complications.

Source: Thomas M. Burton, "HMO Rates Hospitals; Many Don't Like It, But They Get Better," Wall Street Journal, April 22, 1999.


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