Teaching Hospitals Have Similar or Lower Costs of Care as Nonteaching Hospitals for Medicare Patients

As increasing attention is paid to the cost of healthcare, there are growing efforts to steer patients toward high-value care. New research published in JAMA Network Open compared teaching hospitals with nonteaching hospitals to determine the total cost for common conditions.

The study analyzed the cost of hospitalizations for Medicare beneficiaries age 65 and older from January 1, 2014, to November 30, 2015, for 15 medical conditions and 6 surgical procedures. The sample included 1,249,006 hospitalizations at 3064 hospitals. The hospitals were categorized as major teaching (n = 232, 7.6%), minor teaching (n.= 837, 27.3%) and nonteaching (n = 1995, 65.1%). Hospitals were considered major teaching if they had reported membership in the Council of Teaching Hospitals, they were considered minor teaching if they did not have that affiliation but were affiliated with the American Medical Association, and all other hospitals were considered to be nonteaching.

“Teaching hospitals, where health care professionals are educated and trained, are generally considered to be more expensive than nonteaching hospitals in part because of higher prices, and some insurers and policy makers have advocated shifting care from these institutions to lower health care spending for publicly and privately insured patients,” the authors explained.

The researchers examined 3 questions:

1. Is hospital teaching status associated with differences in total spending for Medicare beneficiaries within 30 and 90 days of hospitalization across a broad range of clinical conditions?
2. Are there different patterns of spending on the individual components of cost associated with a hospitalization among major, minor, and nonteaching hospitals?
3. To what extent do these patterns of spending among teaching and nonteaching hospitals vary by clinical condition?

They found that treatment at a major teaching hospital was associated with lower total 30-day standardized costs compared with minor teaching and nonteaching hospitals ($18,605 vs $18,793 and $18,873, respectively). While treatment at a major teaching hospital was associated with higher spending for the hospitalization, it was associated with lower physician costs. Post-acute care costs at 30 days were also lowest at major teaching hospitals ($6015 vs $6239 at minor teaching and $6260 at nonteaching hospitals).

“Although initial hospitalization costs were higher at major teaching hospitals, in part owing to higher outlier payments for the sickest patients, spending on readmissions and post-acute care services was lower, leading to lower overall spending at 30 days,” the authors explained.

The authors admitted that the reason why spending after hospital discharge is generally lower for major teaching hospitals was unclear, although they conjectured that it may be the result of greater treatment intensity, better care processes that reduce downstream complications, or the fact that major teaching hospitals are better able to coordinate with outpatient practitioners.

At 90 days, costs between major teaching, minor teaching, and nonteaching hospitals were similar, the authors found.

“These findings support efforts that might shift payments away from individual services toward clinical episodes across the entire care spectrum,” they wrote. “Alternative payment models, including bundled payments, which encourage hospitals to take responsibility for spending beyond their traditional locus of control, are becoming more common. These results suggest that major teaching hospitals may be reasonably well positioned to adapt to these new payment models.”

Reference

Burke LG, Khullar D, Zheng J, Frakt AB, Orav EJ, Jha AK. Comparison of costs of care for Medicare patients hospitalized in teaching and nonteaching hospitals. JAMA Netw Open. 2019;2(6):e195229. doi:10.1001/jamanetworkopen.2019.5229.