Tuesday, July 15, 2014

All Things to All People Isn't Working

When it comes to hospitals, we may need to paraphrase Lincoln: they can treat all of the people some of the time, and some of the people all the time, but they can't -- or, rather, they shouldn't -- try to treat all of the people all of the time.

US News & World Report just released their annual "Best Hospitals" rankings.  They evaluated nearly 5,000 hospitals against a detailed methodology.  It's a fascinating report, although not without critics, and the results are widely used in marketing campaigns by hospitals that do well in it.

What struck me was that, out of those nearly 5,000 hospitals, only 144 scored a national ranking in even one specialty.  None -- I repeat that, none -- ranked in all 16 specialties.  Only Boston, Los Angeles, and New York had more than one Honor Roll hospital.  Several states have no hospital with a national ranking in any specialty.

There's a lesson there.

A few days ago Clayton Christensen, the Harvard-based guru of "disruptive innovation," told Forbes that the U.S. health industry is "sick and getting sicker."  He offered several suggestions for what he thinks need to change, but I want to pick one in particular, his emphasis on cutting administrative waste. 

It is not unusual to cite administrative waste as a problem in our health care system, but Christensen comes at it from a different angle.  As he said:
An increasing proportion of [health care] cost is spent on administrative and overhead activities that are not productive in any way.  They exist because we assume every hospital should be able to do everything for everybody. But that’s not possible if we want quality and efficiency. Overhead creep is the result.
His key diagnosis is the assumption about doing everything for everyone.  With more specialization, he sees significant reductions in overhead costs.  That's probably true, but I suspect costs generally could be lower, due to both improved efficiency and -- most important -- to better patient outcomes (e.g., shorter ALOS or reduced readmissions) that should come with such specialization.

It has become the conventional wisdom that increased volume results in better patient outcomes, particularly for surgeries, and there are data to support this belief.  For example, Birkmeyer (2002), Boudourakis (2009), Lau (2012), Sammon (2013), or The Advisory Board (2014).  Other studies support similar conclusions for medical courses of treatment as well, such as Coté (2013), Joynt (2013) or Hellinger (2008)

Hmm, more specialization of services should lead to lower costs and better patient outcomes.  What's not to like?

Toby Cosgrove, the CEO of The Cleveland Clinic, gets it as well (or at least, says the right things).  As he recently said at the Aspen Ideas Festival: "What we need to understand is that not all hospitals can be all things to all people."

Versions of that quote are starting to be a cultural meme, although seemingly spoken more than actually acted upon.  Cosgrove noted The Cleveland Clinic's expertise in cardiothoracic surgery, done on a scale that he believes results in care that is cost-effective and of high quality.  They draw patients for these services not just from their metro area, their region, or even just the U.S., but also internationally.  He wants to see a future where we get patients to the right physicians, rather than trying to have expertise available everywhere.

Frankly, though, I'd have been more impressed if Cosgrove had cited the services that they stopped providing because other facilities were better at them.

Given the solid data on the importance of volume/experience, then, why are each of my local hospitals trying to make themselves the leader in, say, open heart surgery?  Or in cancer, neurology, or sports medicine for that matter?  They each still want to be all things to all people -- and there just aren't enough of us patients to ensure that they each get the volume that would result in the best patient outcomes.  And I don't think my market is unique in that standpoint..

Somehow it is hard for me to believe they've got my interests -- the patient's interests -- as their top priority. 

There has been a tidal wave of hospital mergers and acquisitions in recent years.  Oft-cited reasons include to gain more negotiating leverage against ever-bigger payors, and ability to improve clinical integration, hopefully resulting in higher quality/lower costs.  Affiliations are seen as another way forward, and could, in theory, help address the specialization issue, with affiliated hospitals agreeing which types of care each would focus on. 

Unfortunately, that may not be their goal.  Becker's Hospital Review recently hosted an Executive Roundtable on affiliation, and I was struck by a comment one of the hospital CEOs made:
There are too many tertiary facilities' values are not aligned with rural hospitals' values: Their goal is to pull patients out of smaller communities, which is not what smaller communities are looking for in an affiliation. Keeping patients close to home is what's important.
Wouldn't you like to think that doing what is best for the patient is what's important?

There's a calculation some health economist is going to do someday.  Illustratively, it might be something like this: in communities under 50,000 people, we can take care of 20% of the community's medical needs.  Between 50,000 and 250,000, 40%.  Between 250,000 - 1 million, maybe 60%.  Between 1 - 3 million, 75%.  And so on.

The point is, most of us don't live in places where we should be expecting that we're going to get the best care for every condition locally.  Nor should we expect that even the "best" hospital/health system for some conditions are best for other conditions as well.  Who is treating you where for what matters.

That's a very hard conceptual change -- for us as patients, and for health care professionals as well. 

I'd like to think that for serious conditions -- and I would hope that would be most things that would cause one to be hospitalized, other than emergencies -- people would be willing to travel further if they knew the outcomes were likely to be better and the costs comparable or lower. 

That is, after all, the rationale for medical tourism, whose annual market revenues have been estimated to be as high as $55b, with perhaps 1.2 million Americans going outside the U.S. each year.  We tend to use the term in the context of patients going overseas, but maybe we should rethink that.  With that many potential customers spending that much money, one would like to think we'd be able to get more inter-city, intra-state and inter-state medical tourism going, especially for high-cost, high value conditions/procedures where a small difference in outcomes can literally be life-changing.

What we need, of course, are institutions able to offer a compelling story -- not just fluffy marketing slogans and nicer rooms, but documented outcomes and clearly lower costs, neither of which many health care organizations have historically been able to produce, much less compete on.  But one can always hope.

In the meantime, it is up to us as consumers to seek out the best care, not just settle for the most convenient.

(For more thoughts on how we could change hospitals, check out A New Way of Looking at Hospitals) 


  1. Kim

    More great insight. One huge issue however is the proliferation of narrow networks, especially on marketplace plans. As carriers build ACOs or simply eliminate specific facilities (often academic medical centers) or systems, they leave consumers with in network coverage at facilities that are not necessarily the best available near where they live. This will continue to cause community hospitals and other smaller facilities to work to broaden the scope and quality of care they provide. Most will only be able to do so with affiliations. We see it in Western PA where Highmark's Allegheny Health Network has had to enhance their network by partnering with John's Hopkins for cancer care in order to fill the giant hole in their Community Blue product.

  2. Thanks, Jim, and good to hear from you. Yes, I have great concerns about narrow networks. In fact, I think the concept of a network per se is outdated and would like to see it go away.

    Check out: http://kimbellardblog.blogspot.com/2014/01/20th-century-health-plans-in-21st.html or http://kimbellardblog.blogspot.com/2014/05/not-choosing-very-wisely.html

  3. I wanted to note a new study -- this one on OB -- that re-emphasizes that picking the right hospital really matters. http://content.healthaffairs.org/content/33/8/1330.abstract