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Analysis

Academic Medical Centers Are Cost, Quality Laggards

By Alexandra Wilson Pecci  
   August 20, 2018

Medicare median wage and CMI-adjusted cost per case was 5.8% higher at AMCs versus non-AMCs in 2017.

When it comes to cost and quality metrics, academic medical centers (AMC) tend to trail non-academic medical centers, finds a new study.

The analysis by Navigant showed that Medicare median wage and case mix index (CMI)-adjusted cost per case was 5.8% higher at AMCs versus non-AMCs in 2017.

This equates to an estimated $3.1 million in average added annual operating expenses for traditional fee-for-service Medicare patients per AMC analyzed.

Navigant’s analysis is based on data from 387 U.S. hospitals (175 AMCs, 212 non-AMCs) with more than $500 million in annual net patient revenue and 10,000 annual discharges.

“As healthcare transparency increases, AMCs performing poorly on analyzed measures of care may face lower patient volumes, a decrease in revenue through CMS and commercial value-based payment models, and less favorable payer partnership opportunities," study author and Navigant Director Christopher Stanley, MD, tells HealthLeaders Media.

For instance, poor performance on value-based metrics could affect patient decisions on where to seek care, especially commercially-insured patients.

In fact, the study found that AMCs received more overall value-based program penalties from 2016-2018, with 40% getting seven or more of nine possible penalties. That's compared to 23.1% of non-AMCs.

The study also found a 22% cost-per-case disparity between high (25th percentile) and low (75th percentile) performing AMCs, compared to 19.8% for non-AMCs.

That means the differential for low performers would amount to approximately $12 million per AMC and $9.2 million per non-AMC in added annual operating expense attributed to Medicare fee-for-service patients, compared to high performers.

Stanley notes that "ACOs are looking to increase their influence on patient-care decisions, and payers are becoming more selective in contracting choices, including through Medicare Advantage plans which continue to increase in popularity."

"Providers with lower quality and cost performance may miss opportunities to partner with these influential entities that drive patient volumes," he says. "Results from this analysis reinforce the need for AMC performance to be on par with non-AMCs.”

Alexandra Wilson Pecci is an editor for HealthLeaders.


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