Are teaching hospitals more expensive? A new JAMA study may surprise some

By | June 11, 2019

Dive Brief:

  • Major teaching hospitals are less expensive compared with nonteaching hospitals over the course of an entire episode of care and the costs incurred at 30 days, researchers found after analyzing 1.2 million Medicare hospitalizations for common medical and surgical conditions.
  • Major teaching hospitals continued to have similar costs of care as minor teaching hospitals and nonteaching hospitals when researchers expanded the time window to 90 days into the episode of care for a surgical procedure and subsequent treatment.
  • Spending at major teaching hospitals was lower on post-acute care and readmissions than nonteaching hospitals, although initial hospitalization costs were higher.

Dive Insight:

The findings may be surprising to some, given the belief that teaching hospitals can be among the most expensive places at which to receive care. That assumption has led some payers and policymakers to call for moving care away from major teaching hospitals to lower healthcare spending for patients.

Researchers argued the findings are important because “little empirical work has been performed on whether teaching hospitals are more expensive when considering total costs of care for an acute care episode,” according to the study published in JAMA Network Open.

The reason behind the lower costs, however, is unclear. The researchers speculate it may be due to a “greater treatment intensity” or better processes that either help eliminate the need for post-acute care or better coordinate post-acute care.

The study authors note that more research will have to be conducted to understand this link better.

The researchers, include those who are affiliated with the Harvard T.H. Chan School of Public Health and Beth Israel Deaconess Medical Center, were surprised to find lower readmission costs for patients treated at teaching hospitals.

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“Prior work suggests that mortality rates are lower at teaching hospitals; therefore, some of the sickest patients who might have died at other hospitals are likely surviving at teaching institutions. Thus, one would expect that their readmission costs would be higher,” the study said. 

​There are more than 1,000 teaching hospitals in the U.S., according to the American Hospital Association. These hospitals train and educate healthcare professionals. Although these hospitals add value to the healthcare system through research capacity and high-end clinical care, those same factors may hinder them when it comes to the shift to value-based care, Moody’s Investor Service said in April.

However, these new findings support the ongoing push to alternate, value-based payment methods, and suggest teaching hospitals could actually be better positioned than nonteaching facilities to adapt to new payment methods.

“These findings support efforts that might shift payments away from individual services toward clinical episodes across the entire care spectrum,” the study said.

The study was funded by the Association of American Medical Colleges, although the group had no role in the design of the study or the decision to submit it for publication, according to the report. The study included data from more than 1.2 million Medicare hospitalizations at more than 3,000 major, minor and nonteaching hospitals from 2014 to 2015 for common medical and surgical conditions.

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