Economist Links Higher ER Spending to Lower Mortality

Hospitals that spend more money on emergency department care for cardiac patients have lower mortality rates for those patients, a Massachusetts Institute of Technology study has found.

"More intensive and expensive treatment leads to better outcomes," Joseph Doyle, the Alfred Henry and Jean Morrison Hayes Career Development Associate Professor of Applied Economics at the MIT Sloan School of Management, said in a statement.

In a paper published in the July issue of the American Economic Journal: Applied Economics, Doyle examined tens of thousands of cases in which out-of-state visitors were admitted to emergency rooms in Florida hospitals from 1996-2003. He discovered that an increase of about $4,000 per patient in hospital expenditures led to a 1.4 percentage-point decrease in the mortality rate. Overall, a 50% increase in what Doyle calls a hospital's "spending intensity" allows it to reduce mortality rates due to heart problems to about 26% below the mean, the study found.

The findings are sure to prompt more debate about the linkage between cost and quality care.

Some previous studies have shown that patients who receive more-expensive care do not necessarily have a lower mortality rates. Other studies, however, have shown that additional spending makes a difference, or that hospitals that spend more money with similar outcomes may be treating sicker patients.

In an attempt to reduce the impact of local patient variations on medical spending, Doyle's study examined nearly 37,000 hospitalizations in Florida from 1996 to 2003, using patient-discharge data available through the Florida Agency for Healthcare Administration.

Doyle analyzed the patient data by ZIP code, age, and even season of the year to make sure that he was studying demographically similar tourists being treated throughout Florida.

Doyle said Florida is a microcosm of the nation, because the state has significant variations from place to place in how patients are treated for heart attacks, and per capita income for a particular area does not correlate with hospital spending. 

As a result, the variations Doyle found do not stem from the prior health of patients, but from the level of care itself. Specifically, the greater expenses — and benefits — in heart treatment seem to come from a broader application of ICU tools and having more medical personnel on hand. "The higher-spending hospitals use more ICU services, and they have higher staff-to-patient ratios, so they use more labor. And that's expensive," Doyle said.

Doyle said he has yet to identify the precise medical technologies that provide the greatest additional benefit per dollar spent. "There are smart ways to spend money and ineffective ways to spend money, and we're still trying to figure out which are which, as much as possible," he said.