For the study, researchers examined Medicare cost and quality data from 175 U.S. academic medical centers and 212 U.S. non-academic medical centers. These are hospitals with more than $500 million in annual net patient revenue and 10,000 annual discharges. The study excluded facilities that didn’t report financial data in 2016 and CMS value-based program scores for fiscal year 2018.
Three findings:
1. In 2017, the Medicare median wage and case mix index-adjusted cost per case was 5.8 percent higher at academic medical centers compared to non-academic medical centers. Navigant said this represents an estimated $3.1 million in average added annual operating expenses for traditional fee-for-service Medicare beneficiaries for each academic medical center.
2. The study also found there is a 22 percent cost per case disparity between high (25th percentile) and low (75th percentile) performing academic medical centers. That compared to 19.8 percent for non-academic medical centers. Researchers said this cost per case disparity represents $12 million in added annual operating expense for each studied academic medical center and $9.2 million per non-academic medical center.
3. From 2016 to 2018, academic medical centers received more Medicare value-based program penalties than non-academic medical centers, with 40 percent of academic medical centers receiving seven or more of nine possible penalties, compared to 23 percent of non-academic medical centers.
Navigant recommended academic medical centers take various steps to minimize future negative implications — from trends such as “growing revenue at-risk through alternative payment models” — and improve quality and cost. These included comparing performance against peers with benchmarking data, as well as addressing clinical variation by leveraging evidence-based protocols.
Access to the full report is available here.
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