Academic medical centers are lagging behind other facilities in terms of cost and quality measures, according to a new Navigant study.
Researchers found that costs per case were 5.8% higher at AMCs in 2017. That equals $3.1 million on average in added annual operating expense per AMC.
The cost per case disparity between high and low performances was also larger for the centers — 22% for AMCs and 19.8% for non-AMCs. That equals $12 million per AMC and $9.2 million per non-AMC in additional annual operating costs.
Big payers are pushing health systems to make more patient care decisions based on quality indicators, and alternative payment models are putting more revenue at risk.
CMS targets a small portion of revenue for alternative payment models. That's expected to rise in the coming years, so AMCs, which have been active in bundled payments and accountable care organizations, will need to improve quality measures or lose out on funding.
It’s not only happening in Medicare. Private payers are also moving more contracts to risk-based payment models.
Navigant said its results suggest facilities that don't meet value-based program requirements may "face further financial pressures."
The report used CMS data from the Hospital-Acquired Condition Reduction Program, Hospital Value-Based Purchasing Program and Hospital Readmissions Reduction Program for FY 2018 to create a weighted quality score.
Top performing AMCs in the 25th percentile had costs 3.5% higher than non-AMCs; median AMC performers had 5.8% higher costs; low AMC performers, who were in the 75th percentile, had 5.4% higher costs.
The report also found that AMCs received more Medicare value-based program penalties between 2016 and 2018 than non-AMCs. Navigant said 40% of AMCs received at least seven of nine possible penalties. Only 23% of non-AMCs received that amount.
The analysis found that AMCs have improved in some areas, such as readmission and HAC scores. Those statistics are encouraging, but many AMCs still trail behind others in value, Navigant said.
Also, wage and case mix index-adjusted care delivery costs are higher at AMCs. There are additionally higher costs per patient discharge in AMCs, which could hurt those facilities with the shift to value.
“Despite strong value-based program scores for 2018 compared to similar-sized non-AMCs, AMCs need to improve consumer-facing metrics to be at least competitive with non-AMC counterparts,” Navigant said.
Failing to meet care measures lead to lower patient volumes and a loss of revenue because of CMS quality penalties. Plus, fewer payers will want to partner with AMCs. “To minimize these negative implications, AMCs must deliver top-level performance in quality and cost outcomes,” according to the report.
Navigant offered four bits of advice for AMCs: Benchmarking performance, empowering care teams, emphasizing in-network customer retention and using evidence-based clinical protocols.
Despite Navigant's findings, it's not all bad news for AMCs. A recent Health Affairs study found that Medicare patients in AMCs had lower 30-day mortality rates compared to those at nonteaching hospitals.
Meanwhile, a recent Avalere analysis found that CMS' largest alternative payment model, the Medicare Shared Savings Program, appreciably missed federal cost-saving projections. One issue is that most MSSP ACOs are upside-only Track 1. That track doesn't penalize providers with losses if spending exceeds their target.