Part One: It’s Time We Purchase Healthcare on Quality – WHY Employers Must Purchase Healthcare, Not Just Pay for It

Bob Smith, Executive Director

In our recent survey, CBGH members unanimously agreed with the statement, “Overall, we’re as concerned about the quality of care our employees receive as the costs.”

I take them at their word.  Aside from the fact that Colorado employers pay so dearly for healthcare[1], employers clearly have a vested interest in seeing that their employees receive the highest quality hospital care.  Nevertheless, across Colorado’s employers, it’s just as clear that oftentimes – and perhaps for the most part – employees simply do not receive the best care possible.

Using quality scores from Quantros, CBGH has profiled Colorado hospitals, and physicians, based on clinical outcomes at the overall hospital level as well as along specific clinical services.  The results are eye-popping and should be carefully considered by every employer.

Quantifying Hospital & Physician Quality.  Quantros has developed, and quarterly updates, a sophisticated quality scoring and rating methodology which includes a robust risk adjustment as well as statistical algorithms to provide appropriate comparisons across providers.  Their model consolidates multiple quality measures into a single percentile score at both the state and national level to assess – and rank – hospital and physician performance. Individual quality measures include risk-adjusted indices of mortality, complications, unanticipated readmissions, AHRQ (Agency for Healthcare Research and Quality) patient safety events, and AHRQ inpatient quality indicators as well as the process of care indicators and patient satisfaction scores.  (An overview of their methodology can be viewed here.)

Quality Variations.  Quality scores for Colorado hospitals vary significantly from virtually every perspective.

  • Across Colorado’s Hospitals.  For broad conditions, Colorado hospitals’ national rankings vary as follows:
    • Pulmonary: From as high as the 98th percentile to as low as the 1st
    • Cancer: From as high as the 95th percentile to as low as the 2nd
    • Neuro: From as high as the 93rd percentile to as low as the 1st
    • Cardiac: From as high as the 91st percentile to as low as the 2nd
  • Within Individual Hospitals. Variations within hospitals can also vary widely in several regards:
    • By service. The same hospital that ranked highest in cardiac and pulmonary care ranked in the 50th percentile for cancer care and in the lower quartile for hip fractures.
    • By procedure. While three Colorado hospitals rank in the top decile nationally for joint replacements, two of the three rank low in the bottom quartile for vascular surgery and the third is in the middle of the pack.
    • By surgeon. Within any given hospital, surgeon complication rates can vary by a factor of four or more.  Within the same hospital, one surgeon scored in the 99th percentile for joint replacements and another scored in the 1st.
  • Within Health Plan Networks. Since contracting largely takes place at the health system (rather than service line) level, it should be no surprise that variation within networks reflects that in the hospital market as a whole.

Three Observations.  While the implications of the above could be voluminous, here are three key observations.

  1. Most Employees Don’t Receive the Best Care Possible. Employees can, regardless of network, get care in Colorado that’s as good as anywhere in the country.  But they don’t always.   In fact, for a given service, there’s a given Colorado hospital that performs worse than 98-99% of hospitals in the country!  Overall, if we define the top decile of outcomes as the highest quality, it seems likely that most employees do not receive the best care, even if they have access to it.
  1. Employer’s Responsibility. The people accessing care – our employees, our parents, and our children – are generally unaware of these variations.  We should not and cannot that, left to their own devices, they have the means to determine quality.   Nor would it be wise to ask them to rely on the hospital’s own rating systems.   Employers need to provide employees with support for accessing high quality using legitimate, independent measurement models.  (See Part 2 of this blog.)
  1. It’s the Market, Stupid. We’ve known about provider variation in both effectiveness and efficiency since the ‘70’s. Yet medical errors are now the third leading cause of death in the US and health care costs more than ever.   Little has changed since the 1999 report “To Err is Human: Building a Safer Health System.”  Why not?  It’s not that physicians don’t want to provide good care.  It’s not that hospitals aren’t willing to address quality.  The reality is, today’s healthcare market rewards being big, not being good.  It rewards volume, not value.  And it’s not likely to get better absent any pressure from employers.

Conclusion:  A key mantra of the quality improvement movement is “Fix problems, not blame.”  If we recognize and accept that only employers have both the incentive and the means to change this, they can do so by purchasing health care and not simply paying for it.


Part two of this three-part blog will outline how they can do that.

[1] Not only does the US overall pay double or triple what other countries pay for care, in Colorado, hospital prices, in particular, have tripled during the same time frame that prices nationally doubled.