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Study Indicates that Medicare Costs are Higher - and Survival Rate is Better - at Major Teaching Hospitals

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Duke Health News 919-660-1306

DURHAM, N.C. - A study conducted by Duke University
researchers has found that while it costs more to treat people
for hip fractures and other conditions at major teaching
hospitals, the survival rate is also higher among people
initially treated at these facilities.

The study findings, published in the Jan. 28 issue of
The New England Journal of
Medicine
, examines the survival rates among patients
initially treated in five different types of hospitals: major
teaching, minor teaching, government-run, for-profit and
nonprofit. The researchers compared the survival rates for four
conditions -- hip fractures, stroke, coronary heart disease and
congestive heart failure -- and found that "survival is better
for these common conditions for those initially treated in
major teaching hospitals."

The Duke researchers used data from Medicare and the 1982,
1984, 1989 and 1994 National Long Term Care Surveys --
longitudinal surveys of the nation's elderly population that
were sponsored by the government's National Institute on Aging
-- to measure the costs and survival rates. Adjustments were
made for about 20 variables, including age and the health of
the patient prior to having a stroke or one of the other three
health conditions.

"Basically what we found is that, not surprisingly, major
teaching hospitals, primarily those located at universities,
cost the Medicare program more than non-teaching hospitals do,"
said Donald Taylor Jr., an assistant research professor of
public policy studies at Duke and one of the study's authors,
in an interview. "But we did find evidence that such teaching
hospitals did deliver better results."

To calculate costs, the Duke researchers looked at Medicare
payments for the initial hospital treatment as well as the
first six months of after-care, including home health care and
outpatient visits. The study found that:

for hip fractures, the six-month cost at major teaching
hospitals came to $17,501, compared to $14,917 at minor
teaching hospitals, $14,586 at for-profit hospitals, $14,569 at
nonprofit facilities and $13,266 at government hospitals.

for strokes, the cost at minor teaching hospitals was
$14,216, compared to $13,874 at major teaching hospitals,
$12,681 at nonprofits, $11,840 at for-profits, and $9,097 at
government facilities.

for coronary heart disease, the six-month cost was $14,220
at major teaching hospitals, $11,679 at for-profits, $11,046 at
minor teaching facilities, $10,484 at non-profits, and $8,205
at government-run hospitals.

for congestive heart failure, the cost was $14,161 at
for-profits, $12,756 at major teaching facilities, $10,596 at
minor teaching, $9,453 at nonprofits, and $8,343 at government
hospitals.

The study also found major teaching hospitals "had the
highest crude survival rate for hip fractures, stroke, and
congestive heart failure, and were second to minor teaching
hospitals for coronary heart disease.

"Overall, controlling for other determinants of survival,
Medicare patients at major teaching hospitals had lower
mortality than those admitted to other hospitals," the authors
wrote. "Compared to for-profit non-teaching hospitals,
mortality was 25 percent lower among patients initially treated
in a major teaching hospital."

The researchers defined major teaching hospitals as those
with more than one physician resident for every 10 beds; minor
teaching hospitals had fewer than one physician resident per 10
beds, but did have some residents.

Frank Sloan, director of the Center for Health Policy, Law
& Management at Duke and one of the study's authors, said
the three-year study, funded by the National Institute on
Aging, adds to the debate about whether Medicare funds are
being well-spent.

"Medicare is under substantial financial strain, and one of
the subsidies that is on the table is the payment to teaching
hospitals for indirect medical education and possibly the
disproportionate share subsidies for treating an unusually high
number of Medicare and Medicaid patients," Sloan said in an
interview. "These are the subsidies for many teaching
institutions that are going to make the difference between
possibly surviving and not surviving, or at least having
financial health and not having financial health.

"Some people say we have too many specialists in this
country, maybe we shouldn't have so many of these facilities.
But here we're seeing in this case there is a reason that a
Medicare beneficiary should care about where they go; that at a
teaching facility they seem to do better."

Taylor said the results raise an important question that
this study cannot answer: "What is it about what these major
teaching hospitals that produce these better outcomes?" Taylor
said the Duke researchers, which included Dr. David Whellan of
Duke's cardiology division, hope to answer that question in the
near future.

In a related study that was presented at a meeting this
month of the American Association for the Advancement of
Science (AAAS) in Anaheim, Calif., researchers compared
Medicare payments, survival rates and quality-of-life issues
for patients admitted to for-profit, nonprofit and public
hospitals. Teaching hospitals were not part of this study.

Medicare payments for the initial treatment as well as the
first six months of after-care for patients with a stroke, hip
fracture, coronary heart disease or congestive heart failure
were about 6 percent to 8 percent higher at for-profit
hospitals than non-profits, and about 20 percent to 25 percent
higher than public hospitals, which include city-, county- and
state-run hospitals but not federally operated hospitals.

The researchers also wrote that "when quality was measured
in terms of survival, the non-profits were better than the
for-profits. However, conditional on surviving, patients
admitted to for-profit facilities did as well or slightly
better in terms of staying out of nursing homes and cognitive
and functional status following major health shocks."

The researchers who worked on this study were Sloan, Taylor,
Gabriel Picone of the University of South Florida and Duke
graduate student Shin-Yi Chou.

Sloan noted in an interview that for-profit companies are
becoming increasingly involved in services that were once
handled exclusively by government and nonprofit entities,
including prisons, schools and medical clinics.

"The argument for for-profits has been, 'Let's bring in
efficient business practices. The nonprofits and the public
facilities are inefficient, people haven't been given the
incentives to be efficient, and we're going to bring in modern
methods to this very old and important but not-yet- up-to-date
industry.' But what you see here is that the for-profits
brought in good methods for getting higher reimbursements, but
they didn't necessarily bring in the methods that would save
the public programs money."

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