Study Finds That More Initial Spending on Emergency Care Can Reduce Mortality

Ryan Black

Value-based care is not necessarily cheap. A new MIT study finds that hospitals more reliant on outpatient nursing facilities often yield higher mortality rates.

Value-based care is not necessarily cheap: as is often the case, a larger initial investment may yield savings in the long term. Of course, in healthcare, dollars aren’t the only thing people are trying to save.

Researchers out of MIT published a report this week that hospitals with higher initial spending on emergency care yielded better results for patients than those that rely more heavily on assigning patients to nursing facilities.

The researchers looked at 10 years of mortality statistics from patients aged 66 and up, derived from Medicare claims data on hospital admissions between 2002 to 2011. The study’s database includes over 1.5 million patients. Given that ambulances deliver patients typically by proximity, arrangements, and hospital availability rather than patient preference or hospital specialty, the researchers considered their data set strong: “the ambulance companies are essentially delivering a randomized set of people to certain hospitals,” according to a relevant press release.

With a base average of about $27,500 spent per patient over a 90-day period, the team found a 2% decrease in one-year mortality risk for every additional $8,500 spent. For hospitals with a higher percentage of spending on downstream nursing facilities, there was a 5% increase in mortality rates.

“It suggests that the “bundled” payments made to providers for care might be better disaggregated according to the effectiveness of the type of care provided,” MIT’s press release notes. The findings may indicate that higher reimbursement to providers for effective inpatient care could be a route to reducing healthcare spending waste.

Joseph Doyle, a co-author of the study and Professor of Management at the MIT Sloan School of Management, called it a “potentially novel quality measure for hospitals.”

“Hospitals that have that profile where they send patients to skilled nursing facilities have higher spending downstream, and they have worse outcomes,” Doyle says. The US historically spends significantly more on healthcare than any other developed nation, and the study hinges heavily on the importance of reducing waste: the first line of its abstract reading that there is “widespread agreement that the US healthcare system wastes as much as 5% of GDP.”

Entitled “Uncovering waste in US healthcare: Evidence from ambulance referral patterns,” the study was published in the July issue of the Journal of Health Economics.