Top hospitals dispute cost rankings

Teaching centers fear Medicare, Medicaid cuts

  • Dr. Naudia Lauder, far left, an assistant chief of service at Johns Hopkins Hospital, prepares to lead the rounds for residents and interns, from left, Dr. Tinsay Woreta, Dr. Lisa Patel, nurse Cheryl Durant, Dr. Timothy Harris, Dr. Jeremy Schneider and Dr. David Heller.
Dr. Naudia Lauder, far left, an assistant chief of service at… (Baltimore Sun photo by Barbara…)
November 29, 2009|By Kelly Brewington and Jamie Smith Hopkins

Leaders of Maryland's renowned teaching hospitals are feeling vulnerable as the push for a health care overhaul focuses attention on the tremendous differences in hospital costs around the country.

Urban academic medical centers such as top-ranked Johns Hopkins Hospital and the University of Maryland, with its world-class trauma center, are more expensive to run than community hospitals and rural teaching hospitals. The difference can mean patient bills that are higher by thousands of dollars.

Administrators at these urban medical centers fear the national focus on cost-cutting will hurt their ability to train doctors, research diseases and treat complex problems. Community hospitals don't perform these expensive tasks, but medical centers say such work is essential to their mission.

And, the urban centers argue, they're more pricey than rural teaching hospitals because they treat poorer and sicker patients in an area with higher costs.

"To do what we do takes a certain infrastructure, making teaching hospitals more expensive," said Jeffrey A. Rivest, president and chief executive officer of the University of Maryland Medical Center, which trains half the doctors in the state. "If there are specific reductions through Medicare and Medicaid revenue cuts, this will hinder the nation's ability to be a leader in innovation and creators of advancement in care and more cost-effective care."

The U.S government has long paid urban teaching hospitals higher rates through Medicare. But now legislative proposals would slow the growth of Medicare payment rates overall and would study geographic disparities in spending - findings that could limit the amount of money going to pricier hospitals nationwide.

Maryland hospitals are not specific targets - in fact, the state has been hailed by some analysts for efforts to keep hospital costs down. But influential and hotly debated research from Dartmouth College on the cost of care at the end of chronically ill patients' lives ranks the state sixth-highest in the nation. Lawmakers and the White House have seized on this research, which shows big differences in regional health care spending, as evidence of waste.

Hopkins and the University of Maryland are the state's costliest hospitals, according to Dartmouth data from 2001 to 2005. Medicare reimbursed the University of Maryland, the highest spender, $95,000 per patient in the last two years of life. The national average was about $53,000.

"It's just remarkable how much it differs from place to place," said Dr. David Goodman, director of Dartmouth's Center for Health Policy Research. He added, "Being an academic medical center is not really an important explanatory factor for why costs are higher. This is the immediate response from these hospitals when you talk to them."

Differences show up even within the same region. The state of Maryland, which sets hospital rates, follows the lead of the federal government by allowing teaching hospitals to charge more for care. Thus, Hopkins can charge $155 for a chest X-ray, while St. Joseph Medical Center in Towson - not a teaching hospital - can charge $84.

Hopkins and the University of Maryland say they support the goals of health reform but don't want it to mean fewer resources for training and innovation. "Medicine will not advance by doing the same thing over and over again," said Dr. Edward D. Miller, dean and CEO of Johns Hopkins Medicine.

Cutting costs is part of the strategy to help pay for expanding coverage to most of the nation's uninsured. Reform proposals would cap the annual increases in Medicare rates paid across the system, and they would also reduce the extra funds going to hospitals caring for a large share of uninsured patients. Fewer patients without insurance would be good for medical centers, but the centers are wary of reductions to Medicare - typically a hospital's largest payer - before the benefits are clear.

"So, everyone's trying to do the math - how do the cuts compare to the add backs," said Carmela Coyle, president of the Maryland Hospital Association.

The economic implications go beyond the hospitals' bottom lines. Big medical centers are a key economic engine in Baltimore and some of the largest employers in the state. Teaching hospitals and medical schools in Maryland employ 75,000 people, said the Association of American Medical Colleges.

But everyone, hospitals included, agrees that a health care overhaul won't be successful if it doesn't make the system more efficient and affordable. From 2000 to 2007 alone, annual health care spending per person in the U.S. jumped more than 50 percent to about $7,400, according to federal figures provided by the Henry J. Kaiser Family Foundation. The overall cost of living - and incomes - increased far less.

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