Wednesday, September 23, 2009
Indianapolis scores a 'C' on Obama's cost test J.K. Wall - jwall@ibj.com IBJ staff President Obama wants the authority to take an ax to "wasteful" spending by hospitals and doctors across the country. But the tool the Obama administration is using to measure waste shows that Indianapolis might be low enough not to get whacked. Of course, it's not likely to get much praise, either. Obama's budget director, Peter Orzag, cites the Dartmouth Atlas of Health Care, which shows that the federal Medicare program spends wildly different amounts across the country for doctors and hospital systems to care for patients in the last two years of their lives. "The costs associated with that should not vary significantly across different hospitals," said Indianapolis hospital accountant Ed Abel. |
According to the Dartmouth measure, Medicare payments to Indianapolis-area hospitals are 18-percent below the national average. Medicare payments to Indianapolis-area physicians run 23-percent below average. That means Medicare spends more than $18,000 for hospital care in Indianapolis during the last two years of the average patient's life. By contrast, the national average is more than $22,000. For physician care during the last two years of life, Medicare spends $2,800 on doctors in Indianapolis, compared with nearly $3,700 across the country. Medicare adjusts 70 percent of its payment rates according to the different cost-of-living standards around the country, so it's natural to expect Indianapolis to fall below average. But the region also ranks below other Midwestern metro areas, including Kansas City, St. Louis, Louisville, Cincinnati and Columbus, Ohio. That's not to say Indianapolis is a model. Its costs are substantially higher than those in Madison, Wis.-a similar city that, like Indianapolis, has a medical school and teaching hospital, something for which Medicare pays extra. Medicare payments to Madison hospitals are 24-percent below average, and payments to the city's doctors run 44-percent below average. Indianapolis is also far more expensive than Salt Lake City, where Intermountain HealthCare has joined doctors and hospitals in a system that is a model for high-quality, highly computerized and low-cost care. Orzag and Obama want Congress to approve an Independent Medicare Advisory Council that would cap payments in some of the highest-spending locales, while trying to encourage doctors and hospitals to emulate practices of the lowest-cost areas. "If we can move our nation toward the proven and successful practices adopted by lower-cost areas and hospitals, some economists believe health care costs could be reduced by 30 percent-or about $700 billion a year-without compromising the quality of care," Orzag wrote May 15 in The Wall Street Journal. Within Indianapolis, Medicare paid its highest payments to Clarian Health, which may benefit because it includes Indiana University Hospital and serves more acutely sick patients. Clarian was one of three local hospital systems with payments above the national average, along with Saint John's Health System in Anderson and Westview Hospital in Indianapolis. The next most-costly were Community Health Network in Indianapolis, then Major Hospital in Shelbyville, then St. Francis Hospital & Health Centers in Indianapolis and then the St. Vincent hospitals in Indianapolis and Carmel. Wishard Health Services was the lowest-cost hospital in Indianapolis, mainly because it received far less for outpatient services. For inpatient hospital stays, Medicare paid Wishard more than any local hospital except for Clarian. The data are from the years 2001 to 2005. |
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