DENVER – July 23rd, 2019. To empower employers and consumers with critical information on the price and performance of Colorado hospitals, the Colorado Consumer Health Initiative (CCHI) and Colorado Business Group on Health (CBGH) have released the state’s first “Hospital Value Report.” This resource provides both pricing and performance benchmarks for each of Colorado’s general acute care hospitals.
Designed to provide previously unavailable insights into the value offered by hospitals, the report offers hospital-by-hospital pricing as a percentage of prices paid by Medicare for both inpatient and outpatient services alongside performance and quality data for a three-year period from 2015-17. Clinical outcomes comparisons are provided for each hospital’s highest and lowest performing services.
Payment data for the report was taken from the recently released RAND Corporation price transparency project that found Colorado hospitals are among the most expensive of the 25 states studied by RAND. Commercial plans pay Colorado hospitals, on average, 276% or almost three times what Medicare pays. Across the state, inpatient payments ranged from just under Medicare payments to as much as 329%. Outpatient payments ranged from 123% of Medicare in Aspen to 782% of Medicare in Fort Morgan. Hospital performance data were calculated by the CareChex Hospital and Health System Quality Rankings and Ratings using three years of clinical outcomes from Medicare, the country’s largest database.
“Quality performance, adjusted for patient acuity and risk, ranged almost as widely as pricing,” noted Robert Smith, Executive Director of CBGH, a non-profit coalition seeking market-based solutions to escalating health care costs. “And, overall, there appears to be no reliable correlation between price and quality.”
“The Colorado Hospital Value Report allows for an apples-to-apples comparison of pricing across hospitals in an easy to understand manner, which is important in and of itself,” noted Colorado Consumer Health Initiative Executive Director, Adela Flores-Brennan. “Because the report also provides outcomes information, we are able to compare hospitals based on clinical performance and price at the service line level for the first time ever. As we seek to support greater transparency in all parts of the healthcare system, we believe that this report provides essential information that is useful for consumers, consumer advocates and policy makers seeking to improve the healthcare system so that it works better for Coloradans.”
Of the 25 states evaluated by RAND, Colorado’s data is the most robust, representing the vast majority of all commercially insured lives in Colorado, including many self-insured employers. The data for Colorado comes from the Colorado All Payer Claims Database (CO APCD), which includes actual payments made by health insurance companies, employers, and patients to providers. The RAND report noted that Colorado hospitals had a greater rate of increase than all but one other state for the three year period of the study.
“The RAND study found that for a procedure for which Medicare pays $1,000, local school districts, city governments and employers may be paying $5,730 or more,” stated Smith. “Pricing varies widely and inexplicably across the state. Employers in Fort Collins – the most expensive insurance region in the state – pay about double what employers pay in the Boulder area for hospital care. These prices seem as unwarranted as they are unsustainable. The economic impact on individuals and families, on employers both public and private throughout our state is significant. Remember, half of Colorado schools operate on a four-day week due to lack of funding. Yet our hospitals have tax-exempt hospitals have profit margins several times the national average.”
“Medicare’s method for establishing hospital pricing is transparent, adjusted to each individual hospital’s patient mix and other market circumstances, and designed to adequately cover the costs of relatively efficient hospitals,” Smith noted, adding that an independent commission carefully examines and annually reports to Congress on the adequacy of hospital payments. “For the last several years, that report concluded that efficient hospitals can break even on Medicare but that most hospitals lose money on Medicare because excessive payments in the commercial market negate the need for hospitals to effectively cost controls.”
In 2017, CBGH selected CareChex rankings for its employer members, offering benchmark data on clinical quality, patient safety and performance of virtually all acute care hospitals and health systems throughout the US at the individual clinical service line level (e.g., for cardiac, orthopedic, cancer and other care). “We must evaluate hospitals at the service line level, which is particularly important for consumers,” added Smith. “The so-called ‘five star’ hospital is the unicorn of health care. We can describe it but it does not exist. Across Colorado and the rest of the country, performance varies significantly within and across hospitals. It’s hard, if not flat-out impossible, to be excellent at 24-36 different and complex clinical services and procedures – particularly without high volumes.”
Conclusions of the report and implications for various stakeholders align with recommendations from the Governor of Colorado’s Roadmap to Affordability as well as reports from the Colorado Commission on Affordable Health Care. “It’s our intent to not only have employers collaborate with each other, but with both public and private groups seeking to make health care more affordable and consistently effective for all Coloradans. Improving quality and cost is a team-sport,” Smith said.
About Colorado Consumer Health Initiative
The Colorado Consumer Health Initiative (CCHI) is a nonprofit, consumer-oriented, membership-based health advocacy organization that serves Coloradans whose access to health care and financial security are compromised by structural barriers, affordability, poor benefits, or unfair business practices of the health care industry. To learn more visit cohealthinitiative.org and follow us on Twitter.
About Colorado Business Group on Health
CBGH is a purchaser-led, multi-stakeholder non-profit coalition committed to collaboratively improving the health care value-proposition for all Coloradans and their communities. Since 1996, CBGH has worked on initiatives designed to restructure health care delivery and improve quality and costs. For additional information visit: cbghealth.org and follow us on Twitter and LinkedIn.
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Adela Flores-Brennan, Executive Director
Colorado Consumer Health Initiative
Robert Smith, Executive Director
Colorado Business Group on Health